After much talk and a few revisions, the IRS has at last released their final, shorter version of next year’s Form 1040, and while it’s not quite as small as the boasted “postcard size”, it is a considerable simplification. A step in the right direction for 2019’s tax season, lawmakers agree, but tax professionals still worry that for certain taxpayers, the new form won’t make that much of a difference thanks to the extra paperwork that comes with it.
Accompanying the 1040 are six schedules that must be filled out if special circumstances apply, and those six schedules are as follows…
S1) Additional Income and Adjustments to Income
Schedule 1 is for taxpayers who have additional income to report that doesn’t qualify for the traditional 1040, such as capital gains, gambling winnings, or prize money. It’s also for claiming any deductions, like a student loan interest deduction or self-employment taxes.
Schedule 2 is for those who qualify under the alternative minimum tax or wish to repay any excess advance premium tax credit.
S3) Nonrefundable Credits
For taxpayers claiming a nonrefundable credit, such as general business credit or foreign tax credit, Schedule 3 is for them – provided the credit being claimed is not child tax credit or any other dependent credit type.
S4) Other Taxes
For all those who owe taxes otherwise not included on Form 1040, like household employment tax, self-employment taxes, or taxes on qualifying retirement accounts, Schedule 4 is where you report it.
S5) Other Payments and Refundable Credits
Schedule 5 is for taxpayers who wish to report additional payments, like an excess social security withholding or the fee for a filing extension, as well as those who claim a refundable credit that doesn’t qualify as either an Earned Income Tax Credit, the Additional Child Tax Credit, or the American Opportunity Tax Credit.
S6) Foreign Address and Third Party Designee
Lastly, as the name implies, Schedule 6 is designated for those who have either an address out-of-country, or a designee that is not their usual CPA.
As of yet and largely thanks to the government shutdown, the IRS has not released a date we can expect to see these new schedules and 1040 form in action, but one thing is for sure: you can expect to be filling them out come next tax year.