IRS 1040

Form 1040 Draft Released: Major Changes By IRS

The Internal Revenue Service Form 1040 is one of the official documents that U.S. taxpayers will use to file their annual revenue. The form is divided into sections where a taxpayer will be able to report his financial gain and deductions to see the number of tax he owes or the refund will be able to expect to receive. Depending on the sort of financial gain taxpayer report, it’s going to be necessary to attach different forms or schedules to it. Here are some of the major changes made by IRS in Form 1040 for filling 2019 Tax Returns summarised by FinanceShed

Major Changes in Form 1040 for 2019

After the 1040’s major overhaul last year to take into account tax reform, some taxpayers told the IRS that they found the redesigned forms confusing. In response, the agency is attempting to improve 1040 with a variety of tweaks. An overview of expected changes was presented at the IRS Nationwide Tax Forum in National Harbor, Md., in early July.

One big change is the reduction of the schedules. Six new schedules that appeared in 2018 will be reduced to three for 2019. Some information will return to the base 1040 form, while some of the schedules will be combined.

Also Read: New Income Tax Brackets For 2019 In Comparison With 2018

There will be a new line for capital gains in 1040, and IRA distributions will get their line separate from pensions and annuities. In addition to Schedule, 1 is a space to enter the “date of divorce,” which accommodates the change in the tax treatment of alimony enacted by tax reform.

The option to contribute to the Presidential election campaign remains the same. The explanation which accompanies the checkbox has been restored.

As noted earlier, the income reconciliation that blocks on the front page where you used to transfer your items of income from separate schedules has been moved back to the first page of the return. You’ll likely also notice that Schedule D (Capital Gains) is once again on the reconciliation schedule which was disappeared in 2018.

Tax reform also created the qualified business income deduction, which gets its forms in 2019. Form 8995 will be for the simple version of the QBI deduction that is available to taxpayers below certain income thresholds, while Form 8995-A will be for taxpayers subject to the more complex QBI computation.

IRS 1040

Source: cpacanada.ca

And, to modernize, the decimal places for cents are being removed from each line. The IRS says most people around, and the extra room allows for other information to be made larger or clearer.

The previous version of form 1040 consolidated the spaces for several tax credits into a line or two. That proved confusing for taxpayers because separate lines for certain credits, like the Earned Income Credit (EIC) and the additional child Tax Credit vs Tax Deduction have been returned to the form.

The spaces for signatures have moved to page two. This was an issue with the revised form IRS 1040 in 2018 since many tax preparers didn’t love having a full page of figures without a signature fearing it could lead to fraud or other problems.