Understanding The New 1040

So, unless you have been living under a rock for the last year and a half or you haven’t filed your taxes yet, you may not know it but your 2018 Individual Tax Return or Form 1040 looks a lot different than it did in 2017. President Trump wanted it to fit on a postcard and the IRS has done just that. However, making it fit on the size of a postcard didn’t make it any smaller or simpler, all it did was push it to other schedules. Six new schedules to be exact, named Schedules 1-6. Below is a quick reference guide or road map of what’s on those schedules so that when you are preparing or reviewing your personal return you have some idea of where stuff is hiding.

• 1040 Page 1 – This is now the Non-Number Information Section of your tax return. It’s the very top of the old page 1 (Name, Social Security Number, Address, and Dependents) and the very bottom of the old page 2 (Signatures, preparer, and occupations).
• 1040 Page 2 – This is a very Basic Summary of Your Personal Taxes. Wages, interest, dividend, retirement income, and social security are specially listed here. It’s a lot like the old 1040 EZ that is no longer allowed to be filed. There is also a lot of lines bringing numbers from other schedules as well. Two things to point out:
  • Line 7 is Line 6 less a number off of Schedule 1 that tends to throw people off at first glance.
  • Line 9: Qualified Business Income Deduction – New to the 1040 this year due to tax reform. For more detail on this topic, click on this link to view a webinar we presented last year.
• Schedule 1 – This is the rest of the Income Items not given a specific line on 1040 and all of the Adjustments to Income, or above the line deductions, that used to be on page 1 of the 1040. You’ll notice there are a lot of reserved lines on there. That’s because the individual tax reform provisions are only temporary and will expire in 2025, so the IRS is keeping those lines around for when that happens.
• Schedule 2 – This is a small schedule that includes the Other Income Based Taxes:
  • Alternative Minimum Taxes (AMT).
  • Excess Advance Premium Tax Credits.
• Schedule 3 – This is where all of your Tax Credits are housed, except for the Child Tax Credit, which is still on the 1040 page 2. This section used to be located in the top third of page 2 of the old 1040.
• Schedule 4 – This is the old Other Taxes section from page 2 of the old 1040. Most notably Self-Employment Taxes, Additional Medicare Taxes, and Net Investment Taxes are located here.
• Schedule 5 – This is where all of your Tax Payments are housed, except for Federal income tax withheld, which is still on the 1040 page 2. This section used to be located in the bottom third of page 2 of the old 1040.
• Schedule 6 – This is a small schedule that includes Other Filing Information that wasn’t able to fit on the 1040 anymore:
  • Foreign Address – top part of page 1 on the old 1040.
  • Third Party Designee – bottom of page 2 on the old 1040.

If you have any questions or issues with understanding your 1040, please do not hesitate to reach out to Charles Eisenhart, Senior Tax Manager with McKonly & Asbury at ceisenhart@macpas.com.