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Form 1040 Gets a Makeover for 2018

We encourage you to familiarize yourself with the new Form 1040 layout and complexities so that you will be prepared to review your 2018 tax returns when they are completed.

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We encourage you to familiarize yourself with the new Form 1040 layout and complexities so that you will be prepared to review your 2018 tax returns when they are completed.

Not to be outdone by the massive tax law changes wrought by Congress’s passage of the Tax Cuts and Jobs Act (TCJA), the IRS decided to make significant changes to the format of the 2018 individual tax return (Form 1040).  The new form may appear incredibly simple, but the format belies the complexity inherent in many of the provisions of the new law.  The first page of the form is only a half-page and consists solely of taxpayer and dependent identification information and signature lines at the bottom.  Even page two is a streamlined version of the old familiar Form 1040.  See below for pages one and two of the 2018 Form 1040.

 

You can download the Form 1040 by clicking here.

The IRS eliminated Forms 1040A and 1040EZ that were used by taxpayers with less complicated tax situations.  The new Form 1040 will now be used by all taxpayers.  As a result, the form utilizes a building block approach whereby taxpayers with simple tax situations will just complete the two pages above while taxpayers with more complex tax situations will be required to complete and attach additional schedules.  There are six new schedules which may be required to be attached to the 2018 Form 1040.  Therefore, while the Form 1040 itself has gotten smaller (from 79 lines to 23 lines), most of what was removed has been transferred to these new schedules.  So, the overall paperwork and effort to prepare the tax return has not decreased, and in many cases will increase.  For taxpayers who are accustomed to the old format, there may be confusion and it may take longer to navigate the schedules to find the information you were used to seeing on the face of Form 1040.

Here is a summary of when each new schedule will be required

If you have additional income, such as capital gains, unemployment compensation, prize or award money, self-employment income, rent, royalty or pass-through entity income or gambling winnings. Or if you have any adjustments to income, such as student loan interest deduction, self-employment tax, IRA or self-employed retirement plan deductions or educator expenses. Schedule 1
If you owe AMT or need to make an excess advance premium tax credit repayment. Schedule 2
If you can claim a nonrefundable credit other than the child tax credit or the credit for other dependents, such as the foreign tax credit, education credits, general business credit. Schedule 3
If you owe other taxes, such as self-employment tax, household employment taxes, additional tax on IRAs or other qualified retirement plans and tax-favored accounts. Schedule 4
If you have made any payments toward your 2018 tax (other than withholding taxes), such as estimated tax payments, an amount paid with a request for an extension, or an overpayment from your 2017 return.  Or if you can claim a refundable credit other than the earned income credit, American opportunity credit, or additional child tax credit. Schedule 5
If you have a foreign address or a third party designee other than your paid preparer. Schedule 6

 

If you wish to see what the new schedules look like, you can visit the IRS website at https://www.irs.gov/forms-pubs/about-form-1040.

We encourage you to familiarize yourself with the new Form 1040 layout and complexities so that you will be prepared to review your 2018 tax returns when they are completed.  We are available to assist you with understanding the new layout.  Do not hesitate to contact us if you have any questions.

 

Disclaimer: Any written tax content, comments, or advice contained in this article is limited to the matters specifically set forth herein. Such content, comments, or advice may be based on tax statutes, regulations, and administrative and judicial interpretations thereof and we have no obligation to update any content, comments or advice for retroactive or prospective changes to such authorities. This communication is not intended to address the potential application of penalties and interest, for which the taxpayer is responsible, that may be imposed for non-compliance with tax law.

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