IRS Unveils Draft Form 1040 ‘Postcard’ But Critics Are Not Impressed
The new Form 1040 released by the Treasury Department this week meet the administration’s promise of a smaller “postcard style” tax form, but skepticism remains on whether the revisions are a meaningful step toward tax simplification.
A draft version of the 2018 Form 1040, available here, reduces the number of line-items from 79 to 23 and shortens it from two full-sized pages to a double-sided postcard. However, accompanying the draft Form 1040 are six new schedules to be used for reporting additional income, credits, and other deductions that have been omitted from the form itself.
Readers will recall that during the discussion of tax reform in 2017, Republicans vowed that the tax code overhaul would make filing taxes as simple as filling out a tax return form the size of a postcard.
The “postcard style” system is a simpler and better way to file, House Ways and Means Committee Chairman Kevin Brady (R-Texas) said at a Washington event June 26 when the draft form was unveiled. “The simplicity and fairness of a postcard style system is important to American families,” Brady claimed.
Critics say that while the new law offers simplification in some areas, much of the complexity in the tax code remains because the calculations on the existing Form 1040, necessary to file an accurate return, have simply been moved to other schedules that will be required to be appended to the so-called “postcard.” Even if taxpayers can put all the necessary information on one postcard-sized page, there are calculations and other forms and instructions they will have to refer to in order to complete the tax filing process, which can be time-consuming, they say.
The six schedules that accompany the draft Form 1040 are:
Schedule 1, Additional Income and Adjustments to Income, available here;
Schedule 2, Tax, available here;
Schedule 3, Nonrefundable Credits, available here;
Schedule 4, Other Taxes, available here;
Schedule 5, Other Payments and Refundable Credits, available here; and
Schedule 6, Foreign Address and Third Party Designee, available here.
Brady said this week that he has seen the new Form 1040 and “it’s pretty awesome.” However, it is unclear whether he was aware of the numerous schedules that would be needed to accompany the new form.
“Secretary Mnuchin’s new postcard is as phony as his claim that the average household is receiving $4,500 in additional income this year,” Rep. Lloyd Doggett (D-Texas) said in a June 26 statement. “Replacing the existing 1040 EZ and short form—already used by 65 million taxpayers—with a postcard that, for many, may include schedules on schedules, only adds needless complexity and confusion. Why stop at a postcard, make it a postage stamp, with a catalogue of schedules required to complete filing?”
First Reported in the June National Society of Accountants Alert –