If you’re staring at your 1040 income tax form and feeling lost, you probably aren’t alone. The 1040 tax form was overhauled and revamped in 2018, designed to be shorter and hopefully less confusing. But that doesn’t seem to be the case, according to some tax experts.
“Last year, with the 2018 tax filing, we saw the IRS attempt to minimize the tax return to a postcard size,” says Abby Eisenkraft, CEO of Choice TaxSolutions Inc., a tax and financial services company in New York City and an IRS enrolled agent.”Of course, this ‘postcard’ had to have six additional schedules with it, and both taxpayers and preparers were not huge fans of this new reporting.”
This time around, for the 2019 tax filing, Eisenkraft says the tax return is a little longer than it was a year ago — but it now only has three additional schedules.
If you’re still feeling overwhelmed, hopefully this guide to the 1040 tax form will help simplify it.
What Is IRS Form 1040?
A quick definition: Form 1040 is a federal income tax form that most people use to report their tax information to the IRS. On the form is your income, any tax deductions or credits you can claim and the amount of taxes that you will be refunded — or, sigh, the amount of taxes that you owe.
What Is the Difference Between 1040EZ, 1040A and 1040?
When the Tax Cuts and Jobs Act was signed into law in December 2017, it consolidated the forms 1040, 1040A and 1040EZ into a single and redesigned Form 1040. So unless you’re filing old tax forms, there’s no need to pay 1040A or 1040EZ any mind because they no longer exist. But if you’re curious, they were basically shorter versions of Form 1040.
Who Should Fill Out IRS Form 1040?
Anyone who files taxes. That said, Shann Chaudhry, a San Antonio business and estate attorney who often advises clients on knotty tax issues, says, “Most taxpayers will only have to file a Form 1040 with no schedules.”
He also points out that if you prepare your taxes electronically, you probably won’t notice a difference in this year’s Form 1040.
What to Know About the New 1040 Schedules
As in, how is the 2019 Form 1040 different from the one launched in 2018? Aside from fewer schedules, there are a number of small but significant changes that some taxpayers will want to be aware of:
Cryptocurrency. A new question on the tax return asks, “At any time during 2019, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency?”
Eisenkraft explains the reasoning for the new question this way: “The IRS is looking for taxpayers not properly reporting cryptocurrency activity, and now, under penalties of perjury, taxpayers must check a yes or no box — a big change from prior years. Even if there was no activity and you just held the cryptocurrency, the question must be answered.”
Alimony. You’ll see changes here too. “Alimony was previously deductible for the payer and included as income for the recipient,” Eisenkraft says.
But no more. If you hammered out an alimony agreement after Jan. 1, 2019, the person paying the alimony won’t be able to deduct payments, and the person receiving the alimony won’t be required to claim it as income.
A new form for seniors. While the 1040EZ and 1040A are no more, say hello to Form 1040-SR.
“It’s available for use for those 65 or older, with an increased font size, but those with more complicated tax situations will have to use the regular Form 1040,” Eisenkraft says.
Other Types of 1040 Forms
The 1040-SR isn’t the only other type of 1040 form. There are several different types of IRS 1040 forms that some people may need to fill out.
— Form 1040-NR. If you’re a nonresident alien or the representative of a deceased one, you might need to file this form.
— Form 1040NR-EZ. This is the same form, only an easier (hence the word EZ, which means “easy”) one to fill out.
— Form 1040-ES. This form is for people who pay estimated quarterly taxes.
— Form 1040-V. If you have a balance on the “amount you owe” line of the 1040 or 1040-NR, you might fill this out. It’s a statement that goes along with the taxpayer’s payment.
— Form 1040-X. Did you make a mistake with a previously filed 1040? Want to amend that error? You can make any changes and include them on your Form 1040-X.
Before you sit down to fill out a 1040, you’ll want to make sure you have your W-2 nearby. That will have your earnings information on it. If you’re a freelancer, or you have had part-time gigs throughout the year, you may have a 1099 — or multiple 1099s with earnings information on them.
[See: 15 Tax Questions — Answered.]
On the 1040, those first seven lines are all income-related questions. You’ll need to provide information such as interest, dividends, pensions, annuities, individual retirement account (IRA) distributions or Social Security benefits.
So you’ll want to have handy any paperwork that shows what you’ve earned — if you want to file your taxes as smoothly as possible. If you’re handing off your taxes to a tax preparer, then you’ll want to have all of that information to provide — if you aren’t uploading it onto a tax preparer’s website.
In other words, as you’re likely gathering, Form 1040 may be shorter than it used to be, but it arguably takes as long as ever to prepare for.
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Update 02/18/20: This story was published on an earlier date and has been updated with new information.