A major promise around the passage of the Tax Cuts and Jobs Act last December involved making filing taxes simpler for American taxpayers. However, despite what you may have heard, most Americans are unlikely to be submitting their tax returns on a lone postcard any time soon.
In late June, the IRS displayed its new, postcard-sized Form 1040, and announced it’s intended to replace not only the 1040, but forms 1040A and 1040EZ, too. The new form replaced the 79-line-long original with 26 lines. The size and length of this new form may make it seem like taxpayers will be able to file their returns with less paperwork, but that’s likely not the case.
It’s a lot more complicated for most people than simply completing a single, little form. Most American taxpayers will need to include some, or all, of the six new schedules in addition to any necessary existing schedules in order to complete their tax returns.
While all 155 million taxpayers will use the new, simplified Form 1040, they’ll still need to fill out additional forms for various types of income, deductions, credits, and taxes. The postcard comes with six new schedules used to report the information on the 53 lines that are no longer part of the new Form 1040. For example, taxpayers will have to add an additional schedule if they have:
Another source of income, such as side jobs, self-employment, or rental income
Have credits other than the child tax credits such as the credit for daycare expenses
An adjustment to income such as an IRA contribution, educator expenses paid, or student loan interest paid
Estimated tax payments
There are a ton of things that might disqualify you from filing a postcard-sized tax return!
Unless you’re particularly well-versed in the art of preparing your taxes, you’re risking missing out on credits, deductions, and other tax benefits that might save you money. Couple that with the changes made to the tax code by the Tax Cuts and Jobs Act, and getting a little assistance preparing your taxes is probably starting to seem like a great idea.
Do you have questions about the new standard deduction? How about how your family can impact your tax return, or whether you should or shouldn’t itemize deductions? As life goes on, things tend to get more complicated, especially when it comes to having kids, taking care of an elderly parent, paying medical expenses, or experiencing other important life events.
You could be leaving money on the table if you, your tax preparer, or your tax software aren’t asking or answering the right questions. You could miss tax benefits and get a smaller refund, or even owe money.
Maybe filing taxes on a postcard isn’t going to be as simple as we’d all hoped.