The New 2018 Form 1040
The IRS has announced yet another new 1040 form for the 2019 tax year
Along with all the tax changes that came about with the Tax Cuts and Jobs Act (TCJA), taxpayers also had a new Form 1040 to grapple with when they filed in 2019 for the 2018 tax year. The IRS introduced a whole new 1040 tax form in 2018 on the heels of the TCJA, which went into effect on Jan. 1, 2018. And a revised form was issued in mid-2019 for the 2020 tax year.
The form was supposed to be easier for taxpayers, and it might be for simple filings because it's much shorter. But taxpayers with more complex filings will find a number of changes and they'll have to master numerous necessary addendums.
The IRS isn't finished making changes with the 2018 Form 1040. It announced yet another new Form 1040 on July 11, 2019, this one for the 2019 tax year. Yes, you read that correctly. You can anticipate going through all this again, figuring out a new tax form, in tax season 2020.
Why a New Form?
The TCJA turned many tax provisions upside down and inside out early in 2018. As a result, the IRS and the Treasury Department decided that the existing Form 1040 was no longer up to the task. It contained numerous lines for tax provisions that don’t exist anymore, at least until the TCJA potentially expires at the end of 2025.
As an example, no one will be able to claim personal exemptions for the next eight years and maybe even longer if Congress renews the TCJA for another stretch of years in 2025. So the IRS got rid of the line on the old 1040 that let you enter the number of personal exemptions you were claiming. The old form also included several lines for deductions and other items that no longer apply.
The 2018 Form 1040 is much sleeker and simplified with only 23 lines, down from 79 on the 2017 Form 1040.
It Shrunk—But Is It Really Postcard-Sized?
The IRS touted the 2018 tax form as being “postcard-sized,” but don’t get too excited by that description. Form 1040 is still 8.5 x 11 inches. That’s a big postcard.
But the 2018 return fits on one sheet of paper, front and back. The front page just covers basic, identifying information and it includes spaces for signatures. Your financial information is supposed to go on the back—or "page 2."
Perfecting the Changes
The IRS released the initial draft of its new tax form in June 2018 to a good bit of consternation and dismay from tax professionals, not to mention the average Joe Taxpayer. The IRS then went back to the drawing board and tweaked some things.
For example, the original draft of the new form offered only three filing statuses: head of household, married filing separately, or qualifying widow(er). But what if you’re married and want to file a joint return? What if you’re a single taxpayer?
The same five filing statuses still exist—they just weren't included on the original version of the 2018 Form 1040. The IRS indicated that the 1040 would automatically "default" to married filing jointly if it included two names and signatures, or to the single status if it included just one, assuming that none of those other boxes were checked off.
But “default” is a scary word when it comes to things like tax liability or a potential refund. The IRS ultimately revised this issue in the final draft of the 2018 Form 1040, which was made available on Aug. 13, 2018. The single and married filing jointly boxes are back, right there at the very top of the form.
The 2018 Form 1040 replaced the old 1040, 1040A, and 1040EZ, so pretty much 150 million American taxpayers had to use it regardless of their incomes or their personal financial situations. Forms 1040A and 1040EZ are no longer accepted—and, in fact, they're no longer available as of 2018—although you can still use them to file returns for tax years 2017 and earlier.
How to Use It
The IRS states:
"For 2018, you will no longer use Form 1040A or Form 1040EZ as you may have in the past. Instead, you will use the redesigned Form 1040, which now has six new numbered schedules in addition to the existing lettered schedules like Schedules A, B, C, D, E and F."
The IRS has indicated that it expected about 65% of all taxpayers to submit the 2018 Form 1040 with just one additional schedule. Of course, that includes those who only filed the far simpler Forms 1040EZ or 1040A in the past and this skews the percentage a bit.
There's been no word yet from the IRS as to whether or not that 65% is accurate because it's still accepting 2018 returns.
You might be blissfully unaware of all these changes if you’re one of the 89% of filers who use tax preparation software. You’ll still answer a bunch of questions, and TurboTax or TaxAct or whatever software provider you select will obligingly complete and e-file these forms and schedules for you.
If you’ve never e-filed before, this might be a good year to consider doing so. The IRS hopes that you do. It’s long encouraged taxpayers to get away from those paper returns. This might be a not-so-subtle nudge in that direction.
About Those New Schedules
Unless your tax situation is utterly basic, nothing has really changed. The IRS still needs all the same tax information from you. You're just not going to detail it all on the 1040 anymore. A great deal of tax information has been relocated to these other forms or schedules that you must include with your tax return when you file. The IRS calls this a "building block" approach.
For example, you’ll have to complete and submit Schedule 1 if your income includes unemployment compensation. The same applies if you’re self-employed or have any other Form 1099 income. Basically, you’ll have to complete and attach the new Schedule 1 if you normally complete Schedules C, D, E, or F with your tax return.
Yes, those old lettered schedules are still around, and no, they haven’t changed. You still have to complete them, too, just as you always did—in addition to one or more of the other new numbered schedules. While the 2018 Form 1040 has only 23 lines, the latest version of Schedule 1 has 36.
Here's how the numbered schedules work out. You can click on the links to check out the most current version of each.
- Schedule 1: Additional income and adjustments to income
- Schedule 2: Excess advance premium tax credit repayments and alternative minimum tax
- Schedule 3: Non-refundable tax credits
- Schedule 4: "Other" taxes, including the self-employment tax
- Schedule 5: Tax payments and refundable tax credits
- Schedule 6: Third party designees other than paid preparers and foreign addresses
These schedules will accompany the following:
What About Amended Returns?
Form 1040X, the amended tax return, remains the same as it's always been. That's the form you'd file if you realize you made a mistake on your original tax return. And if you want to file a belated original return for previous tax years, the IRS has indicated that you should still use the old form for that particular tax year.
As for the Next Round of Changes...
The IRS has indicated that it plans to release a more finalized draft of the new 2019 return sometime during the late summer of 2019, so stand by. It's basically moving some information from the 2018 return's page 2 back to page 1. Yes, it's undoing a portion of these 2018 changes.
The IRS says it's open to hearing your comments, questions, suggestions, and concerns about this latest round of changes to the tax form. You can send an email to state your opinion to WI.1040.Comments@IRS.gov. Just don't hold your breath waiting for a reply.