New draft schedules that will replace the old Form 1040

There were originally going to be five schedules attached to the new Form 1040, but as of last week, it became six schedules after the IRS provided a draft version of the new form for the public to review.  Although the draft Form 1040 itself has become the size of a postcard, the number of schedules has increased, not even including the original schedules A, B, and C. With the newly constructed draft Form 1040, Sigma Tax Pro suggests that tax professionals get well acquainted with the new draft schedules (1-6).

The draft Schedule 1 is for “Additional Income and Adjustments to Income”.  Lines for business income/losses are also shown on the Schedule 1, where a Schedule C/C-EZ should also be attached along with capital gain/loss information on a Schedule D. Depending on each individual taxpayer’s situation, a Schedule E or F may be required as well.

Draft Schedule 2 is less lengthy than the previous schedule with different lines for Tax information such as child income tax, alternative minimum tax and excess advance premium tax credit.  With these lines may come the requirement to attach other forms needed.

Draft Schedule 3 is also comparatively condensed, with the section being for “Nonrefundable Credits”, including:  foreign tax credit, credit for child and dependent care, education credit, retirement savings credit, and others. These lines will may also require separate forms to be attached.

Draft Schedule 4 is for “Other Taxes”, including:  self-employment tax, Social Security & Medicare tax on tip income not reported to employer, etc.  This schedule also has many Obamacare taxes, namely the health care individual responsibility payment, additional Medicare tax, and net investment income tax.

Draft Schedule 5 handles “Other Payments and Refundable Credits”, including lines that may be used in the future.  Lines here include 2018 estimated tax payments as well as amounts added from the 2017 return.

The unexpectedly developed draft Schedule 6 is devoted to “Foreign Address and 3rd Party Designee”, and is the least lengthy of all the previous schedules.  It has a small number of fields devoted to simply the foreign address and the 3rd party designee information.

Mitch Elbarki of Sigma Tax Pro comments, “Although the new Form 1040 has been recently publicized to be in postcard size, the increased number of schedules and required attachments of several other forms suggest that tax preparation is not going to be any less complex in the coming seasons…tax pros should definitely visit the IRS website and get well acquainted with the new changes as they develop.”