The new form is designed to replace the current Form 1040, the shorter Form 1040A, and the simpler Form 1040EZ so that all individual taxpayers are filing the same form. The front of the new Form 1040 still contains basic taxpayer information such as name, social security number, address, dependents, and signature lines. The back of the form contains lines for reporting income and deduction, calculating income tax, and figuring amount due or refund owed.
Form changes due to changes in tax law
The new form has made the individual income tax form simpler due to tax reform’s elimination of some types of income and deduction, such as personal exemptions, the moving expense deduction, the domestic production activities deduction, and alimony income and deduction.
Rearranging of certain lines
While some of the changes in the form are due to changes in tax law, the Treasury has created the shorter form mostly by combining lines and moving certain lines on the existing Form 1040 to additional schedules. Only a few lines have really be eliminated by the elimination of certain items of income and deduction and most of the changes are just reorganizing the current form to consolidate some lines and create new schedules. The following are some of the types of changes:
- The current Form 1040 includes 4 lines to report dependents and the draft of the new form includes only 2 lines to report dependents. This means that families with more than 2 children will now need to file an extra form.
- Taxable and tax-exempt interest income used to be reported on 2 lines and are now on 1 line.
- Business, farm, and rental income that used to appear on Page 1 of the Form 1040 will now appear on the newly created Schedule 1, which you can see here.
- Deductions from adjusted gross income for such things as educator expenses, retirement savings contributions, and health account savings contributions, will now also appear on the new Schedule 1 instead of on the front page of the Form 1040.
- The reporting of tax credits and tax payments, such as withholding and estimated tax payment, has been reduced from 15 lines to 3 with supplemental information appearing on additional schedules.
Whether or not these changes have simplified filing for most taxpayers remains to be seen. The Form 1040 has been shortened, but at least 6 new schedules have been created in the process. We do know, though, that there will at least be significant changes to the forms that are filed for 2018. We will keep you updated throughout the year as additional changes are made and the form and new schedules are finalized.