How does that old saying go? “There is nothing guaranteed in this life except death and taxes!” Well, let’s focus on the greater of two evils … taxes.
The IRS has announced a draft version of the 2018 Form 1040, U.S. Individual Income Tax Return. The goal of this new form is to reduce the size from two FULL pages in length to two HALF pages. The new form eliminates more than 50 lines compared to the 2017 version.
How in the world are they going to get the information the IRS needs to make sure you’re reporting everything? One word … schedules. Five new ones at least, and revisions to other existing ones. The 5 new schedules will be … #1-ADDITIONAL INCOME AND ADJUSTMENTS TO INCOME (things like Business Income, Alimony Received, Capital Gains/Losses, adjustments like Student Loan Interest, Educator Expense, etc.); #2-TAX (things like Tax On Child’s Unearned Income, Alternative Minimum Tax, Excess Premium Tax, etc.); #3-NONREFUNDABLE CREDITS (things like Foreign Tax Credit, Child and Dependent Care Credit, Education Credit, Residential Energy Credit, etc.); #4-OTHER TAXES (things like Additional Medicare Tax, Household Employment Taxes, Net Investment Income Tax, etc.); #5-OTHER PAYMENTS AND REFUNDABLE CREDITS (things like Estimated Tax Payments, Net Premium Tax Credit, Amounts Paid With Extension, etc.).
The humor in all this is the IRS drafts don’t currently have anywhere to report Interest and Dividend Income or Credit For The Elderly. So it’s still quite a “work in progress” and may look somewhat different before they finalize everything by this fall.
If you’ve ever seen the old Form 1040-EZ, you’ll get a general idea of where the new Form 1040 is going. There will no longer be a Form 1040-EZ or Form 1040-A, all taxpayers will use the same new Form 1040. Where the complexity will come in, is if a taxpayer has to report anything (other than W-2s, Retirement, and Social Security) not on the new Form 1040, then they’ll have to go to the various sub-schedules.
When you factor in the almost doubled Standard Deduction, a LOT more folks aren’t going to Itemize their Deductions and instead will take the Standard.
Thus, for an estimated 42 percent of all taxpayers, their tax return will just be these two half-pages (Form 1040). This should simplify tax reporting for quite a few folks. On top of the lower tax rate tables causing total tax liability to be less in 2018, filing a simple tax return will be an additional pleasant bonus.
Did you hear? Prov 23:18 says, “Surely there is a future, and your hope will not be cut off.”
Kelly Bullis is a Certified Public Accountant in Carson City. Contact him at 882-4459. On the web at BullisAndCo.com. Also on Facebook.
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