It's lose three, add one for the Internal Revenue Service when it comes to 2019 tax year forms.
Uncle Sam's tax collector is proposing tweaks to the Form 1040 and elimination of three of the six schedules created to go with that annual individual return that was redesigned last year in the wake of the Tax Cuts and Jobs Act (TCJA) changes.
But the net result of forms available to filers for the 2019 tax year would be minus two, not three, since the IRS has developed another new 1040.
This one is Form 1040-SR, with the appended two letters standing for seniors, as in older taxpayers.
Budget, not tax bill mandate: The genesis of the new 1040-SR that would be used by taxpayers age 65 or older is not the TCJA, but the Bipartisan Budget Act (BBA) of 2018.
While the TCJA actually complicated, rather than simplified, many tax situations, the BBA that became law about a month later provided for simplified tax filing for senior citizens.
Eligible filers won't be required to use it, but if the find it is a good tax fit, they can when filing season starts next year.
Long tax form road: While the 1040-SR will finally be available in 2020, the form has been in the works for a while.
It was first proposed in 2013 as part of the Seniors Tax Reconciliation Act. The AARP, the National Taxpayers Union, and the Association of Mature Americans all supported the bill.
That measure, however, was never able to clear Congress, getting hung up in the Senate.
It was fashioned on the prior 1040EZ, but is a more bulked up version, allowing some tax moves that weren't allowed on that now defunct.
Here's a look at some of the form's requirements and options.
Age obviously counts: Senior taxpayers, in the eyes of the IRS, are those who are 65 or older.
That age threshold applies to the 1040-SR. It could be used by taxpayers who are 65 or older by Dec. 31, 2019, or by the end of the tax year they begin using the form.
When a married couple files jointly, only one spouse needs to meet the age requirement.
Dependents are OK: Today's families take many forms. There are many parents who are supporting adult children, as well as grandparents responsible for their grandkids.
The 1040-SR takes this into account.
Where the old 1040EZ couldn't be used by filers who claimed dependents, it's OK for 1040-SR taxpayers.
Dependent information, including the always critical Social Security numbers for each person claimed, is entered at the top of the 1040-SR.
Income, earned or from retirement plans: You don't have to be retired to use the form. Age allowing, you can still be working and report those earnings on 1040-SR.
If, however, you have decided to call it quits from the cube farm, then you can report your retirement benefits and investment income you might be tapping on 1040-SR.
Self-employment earnings also are reported on this form. For example, money from gig work you've done since leaving your traditional office space can be entered on 1040-SR after you detail the income on Schedule 1.
Standard, but larger, claims only: As for ways to reduce the amount of money detailed on 1040-SR to a lower taxable level, you must use the standard deduction for your filing status.
For the 2019 tax year, those are $12,200 for single filers, $18,350 for heads of households and $24,400 for joint filers.
But since senior taxpayers are allowed a bump to those amounts, the standard amounts that can be claimed on 2019 taxes filed using the new 1040-SR are:
- $13,850 for single filers,
- $20,000 for a head of household taxpayer and
- $25,700 for married joint filers where one spouse is 65 or older or $27,000 if both spouses are older.
The deduction amounts could go even higher where the older filers are visually impaired. As on prior 1040s, the taxpayers must check boxes, now in the top section of the 1040-SR, that indicate they and/or their spouse qualify for the added age and/or blindness deduction amounts.
If you find you have more deductions by itemizing, that's fine. You can still do that filing the regular Form 1040 and Schedule A regardless of your age.
Tax credits, too: On page 2 of the 1040-SR, which is the back of the form, you'll figure your tax amount.
This include the amounts due on other things, like self-employment on those aforementioned gigs, and which are detailed on Schedule 2.
In arriving at your final tax liability, you'll also get on 1040-SR some chances to reduce the final amount by claiming some tax credits.
The child tax credit or credit for other dependents, the Earned Income Tax Credit (EITC), additional child tax credit and America Opportunity tax credit are listed directly on 1040-SR.
Other credits for which you qualify also can be claimed by filling out Schedule 3 and then transferring that amount to 1040-SR.
If you've been doing your taxes for a while, starting as a young taxpayer, then 1040-SR shouldn't pose any problems as you age into it.
IRS accepting public comments: As with the proposed changes to the basic 1040, the IRS is accepting taxpayers' thoughts on the new 1040-SR.
Below is a clip of the proposed form. Click on it to see the full document in PDF format.
If you have suggestions on how to make the new tax return form for senior citizen filers better, email your comments about WI.1040.Comments@IRS.gov by Aug. 15.
You also might find these items of interest:
- 10 retirement plan RMD tax FAQ
- When Social Security benefits are taxed
- Tax help to take care of aging (and injury prone) parents