The 2018 Tax Forms Look Very Different!
Besides sweeping tax changes in the tax law that became effective in 2018, the IRS has redesigned the Form 1040. The basic form which was 2 pages is now 8 half pages or large postcards.
Page 1 is for your name, social security number, dependents, and signatures.
Page 2 is for reporting income coming from other schedules, such as wages, interest & dividends, pensions and social security benefits.
Page 3 is a new Schedule 1, which has lines for additional income and adjustments to income.
Page 4 reports the amount of tax.
Page 5 is for any credits that may be available for a taxpayer.
Page 6 is for other taxes that may be due such as the Alternative Minimum Tax.
Page 7 is for estimated tax payments a taxpayer made and tax withheld from their wages or retirement income.
Page 8 is for a foreign taxpayer and for designating a third party.
The above pages will be pretty much standard on all tax returns. Additional schedules will still be required if needed. Other forms such as Schedule A for itemized deductions, Schedule B for detail of interest and dividend income, Schedule C for self-employed persons, Schedule D for capital gains and losses, and Schedule E for rent and royalty income will need to be included when filing the tax return.
As in the past, there are hundreds of other forms to use for taxpayers with unique types of income, deductions or credits.
Many wage earners were allowed to use the simpler Forms 1040-EZ and 1040A in the past, those have been eliminated.
The new forms are intended to be a postcard, 8 big ones. The new format reduces the number of lines from 98 to 93.
Many more taxpayers will be taking the standard deduction in 2018 rather than itemizing their deductions on Schedule A. This is because the new law substantially increased the standard deduction. If your deductions do not add up to more than the standard deduction, then it is more beneficial to use the higher standard deduction.
For example, a married couple both 65 years of age or older, the standard deduction will be $26,600; both under 65 it is $24,000. Singles would divide the above numbers by 2.
Basically Itemized deductions include:
Medical expenses exceeding 7.5% of your Adjusted Gross Income
Taxes, sales or state income tax, and real estate taxes, all limited to $10,000
Charitable contributions
Itemizing your deductions will only be beneficial if they add up to more than your standard deduction.
The tax law is always changing but the forms have typically looked the same for decades. Let’s hope the tax filing season runs smoothly for the taxpayer, preparers and the Internal Revenue Service.
If you are looking for a CPA, please call for an appointment soon as it is gearing up to be a busy tax season. I have now opened an office at 4807 CR 466A in Wildwood. Please call me first at 425 941 5224 if you would like to meet. For those unable to make it to the office, I will accommodate you by coming to your home.
bobbloomcpa@aol.com