The New IRS Federal Tax Form 1040 - 5 Things You have to Know

IRS has currently released its draft of the new federal tax Form 1040 which every US taxpayer would use in order to file tax returns of the year 2018. Also, as hoped, this new federal tax Form 1040 is quite different as compared to the one this has replaced. With this in your mind, following are 5 most crucial takeaways from the draft federal tax Form 1040 which US citizens must know.

This is of the postcard size

During the presidential campaign 2016, Donald Trump actually proposed to simplify the tax code to the point where an average American citizen can fill out the taxes on the postcard.

So, this seems like it has come true -- although somewhat. This new federal tax Form 1040 is the postcard-sized card with only 23 lines and down from seventy-nine on the recent form. You could view a draft copy of the IRS on the agency's official site, but in short, front consists of all taxpayer's identifying info, whilst its back consists of actual tax calculation.

There are 6 new schedules

There are so many people for whom the federal tax Form 1040 draft would also make to file the taxes quite simple. But, for American citizens with somewhat complex tax conditions, this might not be the situation.

Along with familiar schedules, several taxpayers need to use like Schedule A is for the itemized deductions & Schedule C is for the self-employment income. There’re at least 6 new schedules that the taxpayers might have to use.

These new schedules are also designated by the numbers rather than letters, and here is an overview of what these new schedules typically are for:

• The Schedule 1 is generally for the taxpayers along with further sources of their incomes (and not from the W-2) or the adjustments to their incomes, that includes student loan interest, IRA contributions, and the health savings account contributions.
• Schedule 2 is usually a form for American citizens with a few other necessary forms of the taxes that include on the unearned income of a child. 
• The Schedule 3 is a form for the nonrefundable tax credit.
• Schedule 4 is a form where the taxpayers would add up some taxes that include self-employment tax, uncollected Medicare taxes and Social Security, among others.
• Schedule 5 is a form where the taxpayers would add up the tax payments that include estimated tax amounts or payments that are paid with some extension.
• Schedule 6 is a form where American citizens could appoint the 3rd-party designee in order to discuss the tax returns with IRS exclusively on your behalf.

In a nutshell, its bottom line is whilst the form 1040 has gotten small, much of what has been eliminated has just been also transferred to the schedules. Hence, the entire paperwork has not become much simpler as the recent Form 1040 may make this seem.

The 1040-A & 1040-EZ are no more

In case you are wondering why IRS will take a tax form (that is the previous 1040) & effectively replace this with 7 (the new federal tax Form 1040 along with the 6 new schedules), there is actually a quite solid reason for this.

Prior, there’re 3 versions of the form 1040. Its standard form 1040 was used by no one, although was a bit complex. The form 1040-A is also known as a "short form," & was used by the taxpayers along with relatively easy tax conditions, that includes not owning some business, not itemizing the deductions, and having the taxable income under 100,000 dollars. Also, the form 1040-EZ was just for the simple tax conditions.

So, the latter 2 forms would no longer be there, and all U.S. citizens would use the Form 1040 in order to file the taxes. On the other side, the topic "which form 1040 do I use?" quite often confuses the taxpayers, hence now this would not be the issue. Also, the taxpayer must contact a professional tax preparer.

A Few parts of the previous form are no more 

To name some, the tax items are now nowhere found because they are removed for the tax year 2018:

• Personal exemption
• Alimony deduction
• Different deductions that were before deductible in case they exceeded 2 percent of AGI
• Deductions for moving expenditures