In 2018, the government attempted to “simplify” the tax-filing process by drastically shortening Form 1040. The result was six new schedules that created a lot of confusion. Now the IRS is attempting to ease some of that pain by revising the form and removing some schedules. Here is what you need to know:
- More information on the main form. To make it easier for the IRS to match pertinent information across related tax returns, new fields have been added on the main Form 1040. For example, there’s now a spot for your spouse’s name if you choose the married filing separately status. In addition, there’s a separate line for IRA distributions to more clearly differentiate retirement income.
- Three schedules are gone. Schedules 4, 5, and 6 have been eliminated, but the lines that used to appear on those forms have found a new home on one of the first three schedules. There are fewer forms to complete, but still the same amount of information that needs to be recorded.
- You can keep your pennies! For the first time, the IRS is eliminating the decimal spaces for all fields. While reporting round numbers has been common practice for years, it’s now required.
- Additional changes on the way. The current versions of Form 1040 and Schedules 1, 2 and 3 are in draft form and awaiting comments on the changes. Because of the importance of the 1040, the IRS is expecting to make at least a few updates in the coming weeks and months before they consider it final. Stay tuned for more developments.
How to prepare for the changes
The best way to prepare for these changes is to just be aware that the changes are coming. The information required to file your taxes will remain the same, but some additional hunting will be necessary to find the shifting lines and fields on the modified form.
Remember, changes bring uncertainty and potential for delays, so getting your tax documents organized as early as possible will be key for a timely tax-filing process.