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However, return preparers and
critics immediately pointed out that the return is shortened only by moving
lines that previously appeared on the Form 1040 itself to six separate
schedules that must be filed along with it. Those schedules contain the
summaries of many of the items of income, adjustment, payments, credits, and
other information that formerly occupied lines on the Form 1040 itself.
Interestingly, the base form
and its six schedules still contain almost the same number of line items as the
old Form 1040 (75, versus 79 on the old form).
Taxpayers will also still have
to fill out the old schedules to detail itemized deductions (Schedule A),
interest and dividends (Schedule B), business income (Schedule C), capital
gains (Schedule D), rental income (Schedule E), and so on. That is, little
seems to be changed except that the Form 1040 itself is shortened by moving
summaries of many items to subordinate schedules that are still part of the
Related: U.S. IRS Launches New Audit Campaigns Targeting Nonresidents
The draft form separates the
most common forms of income (wages, interest, dividends, and social security)
from all other forms of income and includes them on the base form.
While not all taxpayers will
need to use all the six subordinate schedules, return preparers complained that
separating numerous common return items from the basic form complicates filing
and will confuse many taxpayers.
No doubt additional changes
will be made as comments are received on the draft form, but software providers
must immediately begin working on revising their programs to reflect how the
new form will be put completed.
The Treasury Department has
promised to continue working to simplify the forms going forward. However, the
draft form illustrates that while the TCJA made many changes beneficial to
individual taxpayers, it did not substantially simplify the tax code for many
Related: U.S. Treasury & IRS to Address State Tax Deduction 'Workarounds'
Worldwide ERC members should
note that the new form does not require any specific reporting of newly-taxable
moving expense reimbursements or payments. Those will be included in wage
income, as are other taxable relocation costs.