1040 PostCard

[DBerg]

Not sure if anyone else saw this, but thought it would be interesting with all the other changes coming.

 

https://www.foxbusiness.com/politics/new-1040-tax-form-will-be-the-size-of-a-postcard

https://www.wsj.com/articles/smaller-irs-1040-tax-form-will-be-postcard-size-mnuchin-says-1529527839

 

[Lynn EA USTCP in Louisiana]

I saw it this morning reported on my CCH app.  I am not holding my breath.

 

[Max W]

3 hours ago, Lynn EA USTCP in Louisiana said:

I saw it this morning reported on my CCH app.  I am not holding my breath.

 

Lynn, you only have to hold it for a week.

[Crank]

Hmmm, maybe I should cancel my tax package order 

[FDNY]

Must be some really tiny print on those postcards.  

[Abby Normal]

I remember the short form being half a page... in the 70s. But I only print on letter sized paper.

 

[Catherine]

It basically turns the 1040 into even more of a summary page.  Everything pertinent is on worksheets and subordinate forms and schedules.  Meh.

[Lee B]

 

 

 

 

 

 

And here it is without the 6 supporting schedules

 

[Catherine]

The one I saw had income information below the signature section.  It's like they put all the demographic info and signatures in one spot, and then all financial details below.

[SaraEA]

I see the box "someone can claim you as a dependent."  Does that mean dependents don't get the $12k standard deduction?  We must await all those technical corrections they say are coming.  By this time of year I've usually taken a chunk of CPEs, but this year I'm taking the advice of smart folks on this board and waiting until IRS figures out what the heck congress meant, congress to clarify and amend what they meant, and it all gets translated for us.

[jklcpa]

1 hour ago, SaraEA said:

I see the box "someone can claim you as a dependent."  Does that mean dependents don't get the $12k standard deduction?

 

Correct, dependents don't get the new full standard deduction. From Rev Proc 2018-18 on the IRS site:
 

Quote

.14 Standard Deduction.

(1) In general. For taxable years beginning in 2018, the standard deduction amounts under § 63(c)(2) are as follows:

Filing Status	Standard Deduction
Married Individuals Filing Joint Returns and Surviving Spouses (§ 1(a))	$24,000
Heads of Households (§ 1(b))	$18,000
Unmarried Individuals (other than Surviving Spouses and Heads of Households) (§ 1(c))	$12,000
Married Individuals Filing Separate	$12,000

Returns (§ 1(d))

(2) Dependent. For taxable years beginning in 2018, the standard deduction amount under § 63(c)(5) for an individual who may be claimed as a dependent by another taxpayer cannot exceed the greater of (1) $1,050, or (2) the sum of $350 and the individual’s earned income.

(3) Aged or blind. For taxable years beginning in 2018, the additional standard deduction amount under § 63(f) for the aged or the blind is $1,300. The additional standard deduction amount is increased to $1,600 if the individual is also unmarried and not a surviving spouse.

 

I found it on this page on IRS site. Scroll to the section for "Income Tax" and look for that Rev Proc that contains the inflation-related amounts.

Edited June 27, 2018 by jklcpa
add link

[TAXMAN]

Anybody have the draft of the whole thing. I can't seem to find it all. Thanks

[jklcpa]

[jklcpa]

Image above was from this NY Times article.

[Yardley CPA]

As with any change, adapting will take time.  In the case of the new "postcard" 1040, I anticipate the coming tax season to be very challenging.  Time will tell if it will become routine, but a quick review of the forms JKL includes above makes me think more people will initially seek to have their returns prepared by a "professional" versus completing it by themselves.  

[taxxcpa]

That form has no place for a signature 

[Margaret CPA in OH]

Check the bottom of page 1. 

[TAXMAN]

If an form 1041 was started in 2017 with a fiscal year ending in 2018 with income being distributed that the heirs will report in 2018 how do we do the K-1's. Using 2017 k-1 will have a bad where to report on the 2018 form. What now?

[jklcpa]

Will there be a "long form" in addtion to this postcard, or is this it with the use of subschedules for the many items that appear to be missing like Sch C and passthrough income?  It does, however, have the line for the QBI deduction, just nowhere to enter the income side!

It also has no lines for Sch D, 4794, Sch E income, state refunds, or other income.

[Margaret CPA in OH]

From Journal of Accountancy:

Many of the items reported on the 1040 will be calculated on various new schedules, which have also not yet been officially posted. These schedules include:

• Schedule 1, Additional Income and Adjustments to Income, includes items from lines 10 through 37 of the 2017 Form 1040, such as business income, alimony received, capital gains or losses, and adjustments including educator expenses and student loan interest expense.
• Schedule 2, Tax, includes items from lines 44 through 47 of the 2017 Form 1040, such as the tax on a child’s unearned income (commonly called the kiddie tax), the alternative minimum tax, and any excess premium tax credit that must be refunded.
• Schedule 3, Nonrefundable Credits, includes items from lines 48 through 55 of the 2017 Form 1040, such as the foreign tax credit, the credit for child and dependent child care, the education credit, and the residential energy credit.
• Schedule 4, Other Taxes, includes items from 57 through 63 of the 2017 Form 1040, such as household employment taxes, the health care individual responsibility payment (the individual mandate), the net investment income tax, and the additional Medicare tax. It also includes a new line for reporting the Sec. 965 net tax liability installment from Form 965-A — a form that does not yet exist.
• Schedule 5, Other Payments and Refundable Credits, includes items from lines 65 through 74 of the 2017 Form 1040, such as estimated tax payments, the net premium tax credit, and amounts paid with an extension request.
• Schedule 6, Foreign Address and Third Party Designee, provides taxpayers who have a foreign address a place to list their country, province, and postal code (formerly these appeared on page 1 of the 1040) and provides all taxpayers with a place to list information for a third-party designee who can discuss the return with the IRS.

The draft Form 1040 and the new schedules also refer to various existing schedules, which presumably will continue to exist in updated form. These include Schedule A, Itemized Deductions, Schedule C, Profit or Loss From Business, Schedule D, Capital Gains and Losses, Schedule E, Supplemental Income and Loss, Schedule F, Profit or Loss From Farming, Schedule H, Household Employment Taxes, Schedule SE, Self-Employment Tax, and Schedule 8812, Child Tax Credit.

On the other hand, Schedule B, Interest and Ordinary Dividends, Schedule J, Income Averaging for Farmers and Fishermen, and Schedule R, Credit for the Elderly or the Disabled, are not mentioned on the new form and schedules. A line exists for reporting the earned income tax credit, although Schedule EIC itself is not mentioned.

[Lee B]

This is a solution in search of a problem.

This is totally nuts, just so some ******** can hold press conferences, pat themselves on the back, wave around a postcard and tax about tax simplification.

[Abby Normal]

This is simply a scam so politicians can push the false perception that taxes were simplified, when they were not.

[SaraEA]

No Sch B?  Where do taxpayers attest to the fact that they have no foreign accounts or trusts?  And how does one show cap gains/losses without Sch D or 4797?  I don't see a line for cap gains at all.  This is obviously a ROUGH draft.

Thanks Judy for the info on the sd for dependents.  We knew it was too good to be true that kids would not be taxed on $12k of income.  I have clients whose kids make over $10k in dividends.  Not only will they get the same tiny sd, but they now get taxed at the trust rate.  Guess I'll have to recalculate their estimates.

[Jack from Ohio]

It is a very large opening for scammers.  Nothing else.

[rfassett]

Am I missing something?  Are we not still going to be e-filing these things?  And many of the software packages are already schedule driven.

I am just failing to see the big deal.  The post card idea is nothing more or less than a summary of the tax return information of the supporting schedules, in my opinion.