What Is a Postcard? To You … To the IRS?
You’ve heard that the new tax law provides for a “postcard-sized” tax return. The intent was to simplify filing Form 1040 for the 2018 tax year and presumably beyond. Like most of us, you immediately came up with a postcard-like image.
Well as it turns out, the IRS vision of a postcard-sized 1040 comes out like this.
And wait! There’s a side 2 as well!
On Side 1 of the postcard you’ll enter informational stuff like your name, address, Social Security number, dependents, and filing status … plus your signature.
On Side 2 you may recognize similar information from the old Form 1040, i.e. numbers (income, deductions, taxes, and credits).
OK … in fairness, size does matter and the revised 1040 is considerably shorter than last year’s Form 1040. That said, there’s more to the story. There are now six new schedules which may apply to you depending on the complexity of your circumstances relating to such things as additional sources of income and qualifying for tax credits.
Assuming your tax situation is super-simple, you will only have to file the base postcard return. However, the reality is that you’ll most likely also have to file one or more of the new schedules.
Here’s the IRS matrix summary to help you know which new schedules may apply.
If you have a thirst for further knowledge here’s a link to the IRS for total detail of the six new schedules for the 2018 tax year.
As ever … always mindful of your wellbeing as a taxpayer… if you are feeling a headache coming on induced by tax information overload, please click here to immediately skip to Summary.
Note: The new form 1040 is intended to replace not only the current form 1040 but also forms 1040A and 1040EZ. The instructions state: For 2018, you will no longer use Form 1040A or Form 1040EZ as you may have in the past. Instead, you will use the redesigned Form 1040, which now has six new numbered schedules in addition to the existing lettered schedules like Schedules A, B, C, D, E and F.
Speaking of lettered Schedules A, B, C, D, E and F … you may still be required to file one or more of these along with any of the new numbered schedules. A quick review of A through F:
• Schedule A if you itemize deductions. However, many folks won’t be itemizing for 2018, because the standard deduction amounts were almost doubled by the Tax Cuts and Jobs Act. For 2018, the standard deductions are $12,000 for unmarried individuals, $24,000 for married joint-filing couples, and $18,000 for heads of households.
• Schedule B if you had more than $1,500 of income from interest and/or ordinary dividends or if you had certain types of interest and dividend income (such as tax-free interest from U.S. Savings Bonds used to pay qualified higher education expenses).
• Schedule C if you had a profit or loss from one or more business activities.
• Schedule D if you had capital gains or losses.
• Schedule E if you had royalty income or income or loss from rental real estate, a partnership, an LLC treated as a partnership for tax purposes, an S corporation, or an estate or trust.
• Schedule F if you had income or loss from a farming or ranching activity.
And of course there are a few others as well.
• Schedule SE if you owe the self-employment tax.
• Schedule H if you owe payroll taxes for household employees.
• Schedule EIC if you are claiming the earned income tax credit.
• Schedule 8812 if you are claiming the refundable additional child tax credit.
And then there may be additional tax forms to add to the mix. Here are a few examples.
• If you owe the AMT, you must file Form 6251.
• If you had capital gains, you must Form 8949 in addition to Schedule D.
• If you claim the credit for child care expenses, you must file Form 2441.
As in the past, the list goes on and on.
So where does this leave you in filing your 2018 taxes?
Well, if your tax circumstances prove to be of the simplest in nature … the postcard Form 1040 is a Godsend.
However, if your tax situation has any elements of complexity, preparation of your 2018 return is not likely to be a DIY undertaking. The new Form 1040 is alluringly simple, but potentially far more intricate to execute. As a matter of fact, a sound caution is “Don’t try this at home!”
As a case in point, the IRS instructions for the Form 1040 bulk up to 117 pages of guidance. You can check them out here.
Better yet, invest your time this tax season with a proven tax professional. You’ll benefit from enhanced peace of mind and know that your tax bite, or refund, is accurate and to your maximum benefit based on your unique circumstances.
As ever, Blair + Associates stands ready to help!
Give us a call or an email. We’ll respond promptly.