A New Tax Form for Your Senior Years
Are you age 65 or older? If so, you may have a new tax form available for you to file beginning with the 2020 tax filing season (2019 tax year). A few weeks ago, the Internal Revenue Service (IRS) released a draft of a new tax form they are calling Form 1040-SR, U.S. Tax Return for Seniors.
The new form, which is two pages long, will be available to use by the 17 million or so senior households that will need to file tax returns in 2020. The advantages of the form are purported to be the use of larger print, making it easier to see, as well as a less complicated set of boxes to fill out. My initial reaction to that is, if they can do it for seniors, why can't they do it for the rest of us? But I digress...
A disadvantage of the new form is that it can only be used if taking the federal standard deduction. For convenience, the standard deduction chart is printed right on page one of the form, which is nice. However, those who still can benefit from itemizing deductions, despite the now higher standard deduction amounts, will not be able to use the new form. Itemizers will still need to file the regular Form 1040.
The genesis of this new form can be traced back to the 2017 Tax Cuts and Jobs Act (TCJA). As part of the initial draft of TCJA, it was proposed that the IRS come up with a new simpler form for use by older taxpayers, one that was "as similar as possible to the Form 1040EZ", a form which ironically the IRS killed for the 2019 filing season. The provision requiring the new form, however, never made it into the final version of the TCJA, and therefore didn't appear last year.
Fast forward a year to the Bipartisan Budget Act of 2018 (BBA). This time, it made it into law. BBA again directed the IRS to come up with a form "as similar as practicable to Form 1040EZ", stipulating that is was "only for individuals who have attained age 65 as of the close of the taxable year."
As a result, new Form 1040-SR was conceived.
Unlike the old Form 1040EZ after which it was loosely patterned, there are no income limits on who can use the new form. Neither are there limitations on the types of income that can be reported on this new form. In other words, no matter what kind or type of income you have, you will still be able to use Form 1040-SR, although in some cases you may have to attach additional tax schedules.
However, as stated above, like 1040EZ, to use the form you must take the standard deduction. For the 2019 tax year, the standard deduction amounts by filing status are $12,200 for individuals, $18,350 for heads of household, and $24,400 for married couples filing jointly and surviving spouses. Also, there is an additional standard deduction amount for seniors or the blind of $1,300 for married taxpayers (filing either jointly or separately), or $1,650 for unmarried taxpayers (filing either single or head of household status).
It remains to be seen just how many of the eligible taxpayers actually will benefit from the new form in the way intended. The IRS just within the past few days says that it expects about 17 million 1040-SR forms will be filed in the first year of availability, but only about 1.8 million of those will be paper-filed. That means the vast majority of these filers will be electronically filing, either by using a tax preparer or tax preparation software, making the type of form used essentially meaningless.
Still, for those 1.8 million paper filers, it could be a welcome change.
If you would like to get a look at the draft of the new form, you can do so by going to www.irs.gov/pub/irs-dft/f1040s--dft.pdf.