One of the biggest changes that taxpayers faced last year as a result of tax reform was a new 1040 tax form. The IRS eliminated the popular 1040-EZ and 1040A short forms, requiring everyone to use the full revised Form 1040. Last year's 1040s offered a primary return page that was short and chock-full of information, but many found the numerous schedules and attachments difficult to follow.
Now, the IRS is bringing a new option to a key group of taxpayers. Seniors 65 or older will have the opportunity to file on a brand new tax form, Form 1040-SR, which more closely resembles the old short-form returns from before new tax laws took effect. Below, we'll look at the form and the requirements for using it.
What the new senior tax return form looks like
For those who remember the old 1040-EZ return, the newly created 1040-SR will look familiar. Unlike the 1040-EZ, the 1040-SR does involve front and back sides, but the style and formatting bears a close resemblance to the old form.
The new form features some senior-friendly features:
- The spaces for entering information are larger than on the regular 1040 form.
- There's a chart on the front of the page that gives standard deductions by filing status.
- Certain important income categories for seniors are specifically highlighted, including IRA distributions, pension income, and Social Security benefits.
- The tax credit for children or other dependents is also prominently featured on the 1040-SR.
Meanwhile, many items from earlier drafts that would've limited the use of the 1040-SR appear to have been changed to let more people use the form. For instance, Form 1040-EZ didn't allow those who itemized deductions to use the form at all. Form 1040-SR, however, includes provisions for those who wish to itemize their deductions instead of taking the standard deduction. You'll have to include a separate schedule, but you don't lose eligibility for using the 1040-SR as your main tax return.
Does it really matter?
If you compare the new Form 1040-SR to last year's 1040, you'll see a lot of differences. But one aspect of the change that hasn't gotten a lot of attention is that the regular Form 1040 for 2019 has also undergone a significant makeover. Gone is last year's format in which all the numerical information appeared on the back side of the return, with identifying and personal information on the front.
When you compare the two forms line by line, the currently proposed versions of Forms 1040 and 1040-SR are substantially identical. They both have the same 24 lines and sublines, and they both work with the same set of schedules. If a senior were to use the regular Form 1040 instead of the new 1040-SR, the numbers filled in would be exactly the same.
The fact that the two forms have identical information makes the value of the new 1040-SR somewhat questionable. If more people still prepared paper tax returns, then the benefits of having a different layout and graphic design would be larger. However, many taxpayers now use tax preparation software, and so even if a final return ends up getting electronically filed in such a way that's consistent with Form 1040-SR's layout, users will never see a paper copy.
Get ready for tax season
It's good that the IRS is trying to look out for older taxpayers by making a form that's easier for them to read and understand. Even if the differences between Forms 1040-SR and the regular 1040 are mostly cosmetic, it's still something that many seniors might find useful as they prepare their returns in the coming months.