In keeping with the administration’s vow to simplify tax filing, the Internal Revenue Service is putting finishing touches on its revised 1040 income tax form. Although not quite the postcard size touted by the administration, it is indeed smaller: The revised form has only 23 lines, down from the 79 lines of the current form. The new form is intended to replace the current 1040,1040A and 1040EZ forms. About three-quarters of taxpayers currently use one of those three forms.
So what’s the verdict? Does the new form ease taxpayers’ burden? Maybe – depending on who you are.
Because the new tax law roughly doubles the standard deduction, many taxpayers will not bother to itemize. For them, the new form will be simpler.
For others, the new form won’t simplify much. Here’s why:
- The 19 million taxpayers who according to the Tax Policy Center will continue to itemize, will still need to complete one or more of six associated tax schedules.
- The form has space for five forms of income: wages, salaries, tips, etc; interest; dividends; pensions; IRAs; annuities; and Social Security. If you have other types of income – for example, business income or capital gains income – you will still need to fill out additional schedules.
- According to a recent article in Inc,some very common tax strategies will also require completion of additional tax schedules – for example, reporting retirement savings contribution credits.
You can read more about the new form in this article in the Wall Street Journal(sign-in required to read).