IRS Tax Form 1040 Changes You Should Know About
More changes when you file your tax return in 2020
Survivors of the 2019 tax filing season may recall grappling with a brand new Form 1040 for the 2018 tax year, complete with numerous new schedules that had to be figured out. The IRS touted it as a “simpler” version of the standard tax return, but that didn’t really turn out to be the case.
The new form wasn’t received well at all by taxpayers or tax professionals and, in fact, people were pretty vocal about it. For example, the National Association of Tax Professionals (NATP) reported in a July 2018 letter to the IRS that it got approximately 540 comments—“overwhelmingly unfavorable” ones—from its members when it solicited feedback about the shortened form.
Here’s what the NATP wrote about the newly created form:
“Many of the comments focused on the observation that the form is essentially no different than it was previously, with the removed lines simply moved to another sheet of paper as an attached schedule. Many felt this does not accomplish the goal of simplification, but rather it creates confusion.”
So just a few months after tax season, the IRS went back to the drawing board and effectively undid many of those changes when it released yet another “simpler” draft Form 1040 in July 2019.
This new edition of Form 1040 is for use in 2020 when you file your 2019 tax return.
It’s the second major restructuring of the tax form in recent years, and although it still technically eliminates the 1040-EZ and 1040-A from the tax code—as the 2018 version did—it reverses some of the changes made last year. The IRS also released a new “easier” Form 1040-SR specifically for use by seniors in 2019, which may actually be similar to the now-defunct 1040-EZ.
2018: The First New 1040
The new 2018 tax form slashed 56 lines from the previous form, so it ended up with only 23 lines. While its size was reduced to what may be compared to a postcard, the catch is that all the information that previously went on those now-missing 56 lines wasn’t actually eliminated. It was moved to six new, numbered schedules in addition to all the old lettered schedules, which still stayed on the form.
A fair bit of information was eliminated due to the changes in the tax code made by the Tax Cuts and Jobs Act (TCJA) in 2018. The new form deleted tax provisions that weren’t available anymore, like personal exemptions.
According to certified public accountant (CPA) Sharon Krieder in an interview via Facebook, the old 2017 form needed to be updated. Kreider presents regularly for the American Institute of Public Accountants and the California Society of Enrolled Agents. “It was old and tired with lines added and deleted as tax laws changed each year.”
But the bottom line was that taxpayers who prepared their returns by hand found themselves hunting for lines and spaces that weren’t there anymore. Instead, they were faced with numerous extra pages that they had to cross-reference with the new, smaller 2018 Form 1040.
What’s Changed Now? New Schedules for 2019
According to Kreider, the IRS made some improvements and trimmed those extra six numbered schedules from 2018 down to just three for the 2019 tax year.
All the information from the 2018 Schedule 6 now appears directly on the 2019 Form 1040—exactly where it used to show up before the 2018 changes. Information from the other two deleted schedules is now consolidated into the three schedules that still remain:
- Schedule 1 Additional Income and Adjustments to Gross Income: This was Schedule 1 in 2018, too, but it’s been renumbered. And some information from the 2018 Schedule 1 has been moved back to the first page of the Form 1040 return for 2019, such as the reporting of capital gains. Capital gains (or losses) information now has its very own line on the first page (line 6), as does the qualified business income deduction which also used to be tucked away on Schedule 1 (now on line 10).
- Schedule 2 Additional Taxes: This one includes all the same information that appeared on the 2018 Schedule 2, but now it also includes the information that used to be entered on Schedule 4.
- Schedule 3 Additional Credits and Payments: This, too, includes all the same information from Schedule 3 in 2018, but now it has the information from the 2018 Schedule 5, too.
Schedules 4, 5, and 6 from 2018 are no more.
According to a Sept. 3, 2019, blog post by Tax Policy Center Non-Resident Fellow Robert A. Weinberger, the new form “is more than a tune-up but less than an overhaul.” He wrote that among the key changes from last year are a return of the standard deduction and income reporting and reconciliation to the first page of the income tax return (now including capital gains/losses).
The 2019 Schedule 1 also asks for additional information about alimony payments because these are no longer deductible or reportable for divorces or marital settlement agreements entered into after Dec. 31, 2018.
Changes to the New 1040 Form Itself
The new form (see image of draft below) isn’t the size of a postcard any longer, although it never really was. It was just printed on half of both sides of a regular 8.5-by-11 page in 2018. That said, it’s still not as big as the 2017 Form 1040, so minimalists can relax. Now, it takes up two-thirds of the front and back pages.
“The 2019 version, although another change, is a step in the right direction,” says Kreider. “It’s more sensible.”
Reporting and calculations of taxable income have been moved back to the bottom of the first page on the 2019 Form 1040, just as it was back in 2017. Tax credits and the calculation of tax owed are now on page two. According to Kreider, writing on her website, some of the most popular tax credits, including the Earned Income Credit and the American Opportunity Credit, have been lifted from the 2018 schedules and plunked down again on the second page on the 2019 Form 1040.
Identifying information for spouses and dependents is back at the top of the first page, where it resided for years and years before 2018. And IRS distributions now have their very own line on page one, too—they used to be lumped together with pensions and annuities.
That tricky question about whether you carried health insurance all year is now gone from tax forms because the tax penalty for not doing so is eliminated as of 2019.
The New Form 1040-SR
Just in case all this doesn’t seem complicated enough, the IRS is also unveiling other new tax forms in 2019, the most significant being the new draft Form 1040-SR, U.S. Tax Return for Seniors.
The Bipartisan Budget Act (BBA) of 2019 first called for a special Form 1040 just for seniors, but it wasn’t signed into law until February 2018, and that was apparently a little late to launch the form for use in that tax year. Thus, the new return makes its debut in the 2019 tax year.
It’s only available for use by taxpayers who are age 65 or older by the last day of the tax year, and its goal is to make tax filing easier for seniors, while the new 1040 is supposed to make things easier for younger taxpayers. Many seniors with pretty basic financial situations might have opted to use Form 1040-EZ back before 2018, but they may have been prohibited from doing so by certain rules. Then, the form was eliminated altogether when the new Form 1040 was launched in 2018.
The thing is, the average taxpayer may be hard-pressed to identify exactly how the 1040-SR is different from the regular 2019 Form 1040. The major distinction is that the senior version includes a breakdown of the standard deductions on the first page, including the additional standard deduction that filers who are blind or over age 65 are entitled to.
It’s available to all filing statuses, and it accommodates:
- Wages and self-employment income
- Interest income
- Retirement distributions
- Social Security benefits
- Capital gains or losses
Taxpayers can still itemize using this form, and they can claim the Earned Income Credit, Child Tax Credit, American Opportunity Credit, and Credit for Other Dependents. And yes, they can claim dependents.
Some older taxpayers with more complicated tax situations might still have to file the regular Form 1040 regardless. All three of the 2019 Form 1040 schedules are designed for use with the 1040-SR form as well.
Some Changes Are Just Cosmetic
The Form 1040-SR deviates a bit from the 2019 Form 1040 in appearance as well, presumably under the assumption that taxpayers age 65 and older might not see as well as they used to. For example, the font size has been increased, and the colored and shaded areas that are on Form 1040 are gone.
As for the 2019 Form 1040, all those pesky spaces for cents have been removed in another effort to simplify the process of preparing your tax return. You can now round off your numbers to the nearest dollar without adding “00” after a decimal point.
And Two More New Forms
Wait, we’re not done yet. The 2019 Form 1040 comes with two additional forms as well, although they don’t apply to all taxpayers.
We now have Form 8995-A and Form 8995, a simpler version of the “A” form for those who fall below certain income thresholds. This form is required for small-business owners who want to claim the qualified business income deduction that went into effect in 2018.
The Bottom Line
Here’s what the IRS said in September 2019 about releasing final drafts of all these tax forms:
“We generally do not release draft forms until we believe we have incorporated all changes, but sometimes unexpected issues arise, or legislation is passed. Also, forms generally are subject to OMB approval before they can be officially released. Drafts of instructions and publications usually have some changes before their final release.”
The drafts had yet to be replaced by final versions as of October 2019, so be sure you have the final draft of Form 1040 when you’re ready to prepare your taxes in 2020.
National Association of Tax Professionals. "Comments on Proposed 2019 Form 1040" sent to IRS July 31, 2018, Accessed Oct. 11, 2019.
Department of Treasury Internal Revenue Service. "Draft Form 1040," Accessed Sept. 10, 2019.
U.S. Congress. "Tax Cuts and Jobs Act of 2017," Accessed Oct. 11, 2019.
Department of Treasury Internal Revenue Service. "Draft 2019 Form 1040 Schedule 1," Accessed Sept. 13, 2019.
Department of Treasury Internal Revenue Service. "Draft 2019 Form 1040 Schedule 2," Accessed Sept. 13, 2019.
Department of Treasury Internal Revenue Service. "Draft 2019 Form 1040 Schedule 3," Accessed Sept. 13, 2019.
Tax Policy Center. "Forms and Follies: IRS Midcourse Corrections of Tax Forms," Accessed Sept. 13, 2019.
Department of Treasury Internal Revenue Service. "Form 1040-SR," Accessed Sept. 10, 2019.
U.S. Congress. "H.R.3877 - Bipartisan Budget Act of 2019," Accessed Sept. 13, 2019.
Department of Treasury Internal Revenue Service. "Form 1040-SR," Accessed Sept. 13, 2109.
Department of Treasury Internal Revenue Service. "Draft Form 1040," Accessed Sept. 10, 2019.