The 2019 Form 1040 Facelift

Next year, taxpayers can expect to see their Form 1040 to be different than the postcard-size Form that was introduced as a result of the 2017 Tax Cuts and Jobs Act. The postcard-size Form 1040 was originally designed to "simplify and expedite filing tax returns," according to Treasury Secretary Steven Mnuchin. However, there have been many complaints about the layout of the "simplified" Form 1040.

Before the new Form 1040 was introduced, the old Form 1040 consisted of two full sheets that included all of the taxpayer's information. The postcard-size Form 1040 shifted some line items from the old form's two-page format onto six additional schedules. Each of these new schedules uses its own separate page to calculate the taxpayer's additional income, credits, deductions and taxes. This resulted in the Form potentially reaching eight pages, depending on the taxpayer's situation. The additional schedules have caused taxpayers and their advisors to flip back and forth between these pages, yielding more confusion and time spent to understand their Federal income tax liability or refund.

The IRS is currently redesigning the 1040 due to the concerns and complaints. On July 11, 2019, the IRS released a draft of the Form, which resembles the Form 1040 issued prior to 2018. The draft includes a two-page baseline form and three schedules instead of six. A final draft of the Form 1040 is expected to be posted later this summer, according to the IRS website.

The following are changes between the 2018 Form 1040 and the draft released by the IRS:

Signatures: Signatures are now on the second page. Tax preparers were concerned that their signature was not on the same page as the taxpayer's financial information. This created an opportunity for others to commit fraud and cause other issues.

Filing Status: There is now a space to enter the name of the spouse if the filing status box is checked as married filing jointly or separately.

Health Care Coverage: This checkbox has been removed since health care coverage is no longer mandatory for 2019.

Standard Deduction: The standard deduction amounts have been moved back to page one.

Tax Credits: The previous version of the Form 1040 consolidated the spaces for several tax credits into a line or two. The Earned Income Credit (EIC) and the additional child tax credit have been returned to page one of the Form.

Income Reporting: Schedule D used for capital gains is now moved back to page one of the form.

For more information about this, contact Schneider Downs.