A New Tax Form for Seniors: A Guide to the 1040-SR

The Bipartisan Budget Act of 2018 introduced a new tax form for seniors effective for 2019 taxes. Known as the 1040-SR, this form is designed to make filing taxes easier for older Americans. “Form 1040-SR is a good option for those ages 65 and over,” says Mark Steber, chief tax officer at Jackson Hewitt Tax Service, headquartered in Jersey City, New Jersey.

As you prepare for taxes this year, start by lining up your age with the available options. If you were born before Jan. 2, 1955, you can fill out Form 1040-SR. The tax form is designed to be easier to fill out than the Form 1040, which is what seniors in the past frequently had to use.

Here’s why retirees should consider filing the 1040-SR:

— Taxpayers born before Jan. 2, 1955, are eligible to file Form 1040-SR.

— The 1040-SR makes it easy to report retirement income from Social Security, pensions and retirement account withdrawals.

— The 1040-SR points out the increased standard deduction available to taxpayers age 65 and older.

— The short, two-page form has senior-friendly features including larger font and bigger text boxes.

— Seniors who are still working can report wages, salaries and tips.

Those who want to use the 1040-SR will need to meet certain requirements, and it can be helpful to understand some of the key changes this form brings. Here’s a look at who can file a 1040-SR is, how the new 65-plus tax form works and what to know about the 1040-SR before you file.

[See: 10 Tax Breaks for People Over 50.]

Who Is Eligible for the 1040-SR?

If you turned 65 on or before Jan. 1, 2019, you can use the new tax form if you are retired or working. In addition, if you are married, only one spouse needs to have a qualifying age. “Married people filing a joint return can use Form 1040-SR regardless of whether one or both spouses are age 65 or older or retired,” says Paul Miller, founder of Miller & Company, a New York City-based CPA firm.

With the 1040-SR, there is no cap on overall income. You also don’t have to be under a limit on interest, dividends or capital gains to file the form.

[See: 10 Ways to Reduce Taxes on Your Retirement Savings.]

How the 1040-SR Works

The 1040-SR allows you to easily report retirement income, such as Social Security payments and distributions from retirement accounts. “It allows income reporting from other sources common to seniors such as investment income, Social Security and distributions from qualified retirement plans, annuities or similar deferred-payment arrangements,” Miller says. If you are still working, there is a place on the 1040-SR where you can record your earnings.

Seniors who use the 1040-SR have the option of taking a standard deduction or itemizing deductions. If you choose to take a standard deduction, the form includes a chart that lists the standard deduction amounts and makes seniors aware of the increased standard deduction available to taxpayers age 65 and older. “This makes it easier for users to see and know what standard deduction to use,” says Andy Panko, a certified financial planner and owner of Tenon Financial in Iselin, New Jersey. In 2019, taxpayers age 65 and older can take an additional standard deduction of $1,650 if unmarried or $1,300 per person when married.

If you choose to itemize, you’ll need an additional schedule. “Taxpayers who itemize deductions can file Form 1040-SR with a Schedule A, Itemized Deductions, when filing their return,” Miller says. There are other instances that will also require additional forms or schedules. If you have income from self-employment or lottery winnings, for instance, you will need to file additional paperwork. Extra forms may also be required if you owe other taxes or have credits or deductions to claim that aren’t directly on the 1040-SR.

[See: 7 New Taxes Retirees Face.]

Why a Tax Return for Seniors Was Created

The 1040-SR is an attempt to simplify the tax filing process. Prior to the tax-year 2018, there were three different versions of the 1040: the unabridged 1040, the 1040-EZ and the 1040-A. “The simplified 1040-EZ severely limited the amounts and types of income, deductions and credits which could be claimed,” Panko says. The 1040-EZ didn’t allow for pension income and Social Security benefits reporting, and Form 1040-A had a limit of $100,000 taxable income for users and didn’t allow taxpayers to exercise incentive stock options. These structures led many seniors to file a cumbersome 1040.

The Tax Cuts & Jobs Act of 2017 eliminated the 1040-EZ and 1040-A and revised the 1040. “While the 1040 was indeed trimmed down into a simpler-looking form with less items, it didn’t actually save any work in preparing taxes,” Panko says. For some taxpayers, it led to more work to file taxes due to the additional required documents.

The 1040-SR is just two pages in length and designed to be senior-friendly. “The form is similar to the Form 1040 with a larger font so it is easier to read,” Steber says. If you used a 1040 in the past, the switch to the 1040-SR may be relatively smooth due to the resemblance.

More from U.S. News

How to Reduce Your Tax Bill by Saving for Retirement

The Most Tax-Friendly States to Retire

How to Minimize Social Security Taxes

A New Tax Form for Seniors: A Guide to the 1040-SR originally appeared on usnews.com

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