With simplicity seemingly in the eyes of the beholder, the Internal Revenue Service (IRS) released the 100+ pages of Draft Instructions for the 2018 Form 1040, U.S. Individual Income Tax Return. The IRS released a draft of the 2018 Form 1040 and six accompanying schedules in June.
The instructions note that the IRS generally does not release tax forms in draft, but is providing this information early as a courtesy, though taxpayers are cautioned that the instructions are subject to change. The instructions further warn taxpayers not to rely on draft forms, instructions, and publications for [their actual tax return] filings, as drafts of instructions and publications generally undergo some changes before being finalized.
The IRS had planned to finalize the new base 2018 Form 1040 this summer, but have not been able to meet that deadline. However, the release of both the forms and drafts are important, and unusual, steps taken by the Service to ensure taxpayers are thinking about the many changes added by the Tax Cuts and Jobs Act (TCJA), enacted on December 22, 2017. Even if additional changes are made to the forms before finalization, these drafts represent a critical step by the IRS to aid both taxpayers and tax practitioners in understanding the mechanics of the new law.
The TCJA was touted by supporters as a major step in simplifying the Internal Revenue Code. A postcard-sized Form 1040 was intended to help ease the burden of many Americans in filing their annual returns. The new Form 1040 reflects many of the simplification provisions within the TCJA, including those made to the standard deduction, personal exemptions and itemized deductions. Details on these changes can be found in our prior posts.
Though shorter in length and with fewer lines than the current version of the Form 1040, the new Form 1040 includes an expansion of supplemental forms to support taxpayers with more complex tax situations and those who still intend to itemize. Details about the changes made to the Form 1040 and supplementary schedules can be found on our previous post.
The new Form 1040 also replaces Forms 1040A and 1040EZ, which were previously used to simplify the tax return filing process for individuals not requiring the full Form 1040. Eliminating these forms by modifying the Form 1040 should work to simplify the process so that all 150 million taxpayers can use the same form. The new Form 1040 will be ready for the 2019 tax filing season.