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IRS unveils shorter 1040 tax form with added schedules

While it will still not fit on a postcard as promised, the new IRS Form 1040 is smaller. Instead of 79 lines, it has been paired back to 23.

The Wall Street Journal breaks down 10 main changes, including words moving to the front and numbers being relegated to the back. For example, the signature line is more prominent after moving to the bottom of the front page.


Schedules 1 to 6

Additional income (i.e., alimony and business gain/loss) and adjustments to income (a couple include student loan interest and educator expenses) move off the main Form 1040 to Schedule 1. The nonrefundable credits for child and dependent care expenses or residential energy credits are on Schedule 3. Self-employment tax moves to Schedule 4.

So while the 1040 is smaller, the packet of forms needed to complete your tax return might be larger. And because some of the deductions and credits have moved off the main form, they could be easier to miss.

No longer available

The other reason that the form is smaller is that some deductions disappeared with the tax reform. The deduction for moving expenses was one of them. Personal exemptions are also gone.

Qualified business income deduction

On line item 9, this is the 20 percent deduction for income you earn in a partnership, LLC or other pass-through entity. Detailed regulations on what exactly qualifies are not yet available. This is one added complication for calculating estimated quarterly business/self employment taxes in 2018.

Software programs

As more people efile and use software that uses a question and answer format to complete the form, where the information goes does not matter as much. But some issues such as vague language (“other taxes”) and new shorthand could cause problems.

And the IRS is still having a hard time getting its budgets through Congress. For more than a decade it has coped with budget cuts through gradual staff reductions. It is often harder to get through to an agent with questions or after a mistake. While the goal has been to simplify the tax filing process, there is still room for error.

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