“You can do your taxes on a form the size of a postcard,” Speaker Paul Ryan said. Rep. Kevin Brady of Texas boasted the same thing, as did Rep. Steve Scalise of Louisiana. It was the great promise of last year’s major tax overhaul: simplifying tax forms so much that taxpayers will be able to file their returns on a postcard.
But only 9% of Americans filed on paper this year.
“I don’t know why the postcard is some type of a symbol of simplicity,” says CPA Sheila Brandenberg. “There’s nothing simple about this form.”
A new draft of the 1040 form — the main form you submit to the IRS when filing your taxes — was released this week, and more than half of the 78 line items have been lopped off. But they haven’t totally gone away. They’ve just been moved to six different worksheets known as schedules. Self-employment tax, alternative minimum tax, taxable state and local refunds, and student loan interest have all moved off the 1040 and onto a new worksheet.
“If you itemized your deductions in the prior year, and you got a back refund from the state of New York, you would have to report that as a taxable refund,” Brandenberg says. “Well, that line is no longer on the 1040, that is on Schedule 1 now.”
What does this mean for you? Probably not much, if you’re like the 91% of taxpayers who file electronically. One small issue you might run into is the cost of your tax return preparation; Brandenberg says it’s likely to increase to make up for work that will be required to update the software’s back-end.
“One thing that might have been simpler [would have been] for the IRS to expand the number of taxpayers that can actually file free.”
Currently, in order to Free File, you must earn less than $66,000 a year. The IRS does offer free fillable forms for all income levels, but they don’t offer any of the ease-of-use features the for-profit softwares do.
According to the New York Times, this new form is meant to replace not only the 1040, but also the 1040A and the 1040EZ. These two forms were already simplified or shorter versions of the main 1040 form.
“I’m really hopeful there are going to be a lot of people who stand up and say this does n1040ot make sense, this does not serve the taxpayer, it’s more confusing,” said Brandenberg. “I’m hoping this is not what the 2018 tax return looks like.”
Source: Yahoo Finance