The “Tax Cuts and Jobs Act” (TCJA) Congress passed in December 2017 did away with a number of widely used exemptions and deductions. In response, the IRS redesigned over 400 forms and schedules while eliminating many others. The IRS also took this opportunity to make the Form 1040 simpler and to eliminate the optional Forms 1040EZ and 1040A.
However, based on feedback from the public and tax prep companies, the IRS decided to further improve the Form 1040 again for the 2019 tax year.
The IRS looked at the new Form 1040 and the six schedules they’d created in 2018 and realized the form and schedules could be even easier to use. They reduced the number of schedules from six to three, added capital gains to income, changed the order of some information and increased the font size. As a result, the new Form 1040 with three main schedules is now easier to read, flows better, and makes more sense, even if it is longer than the postcard we’d been promised.
Schedule 1. Essentially the same as in 2018, this is where you indicate additional income and adjustments to income.
Schedule 2. Combines Schedules 2 and 4 and renames it “Additional Taxes.” Here’s where you indicate additional taxes you owe such as the Alternate Minimum Tax (AMT), self-employment tax, household employment taxes, and taxes on qualified retirement plans.
Schedule 3. Combines Schedules 3 and 5 and renames it “Additional Credits and Payments.” Use this schedule to indicate additional payments such as estimated taxes as well as refundable and nonrefundable credits. This includes the child tax credit, earned income credit, the child and dependent care credit and the new credit for other dependents, among others.
Yes, the Form 1040 has never been so simple. But many taxpayers will, of course, continue to file supporting forms along with it such as the venerable Schedule C for self-employment, Schedule D for capital gains, a new Form 8995 for qualified business income deduction, and others.
While the new 1040 Form isn’t the simple postcard from 2018; it is easier to understand, which still makes it an improvement over last year.