The IRS recently released a revised version of the Form 1040, designed to implement the Republican promise that the 2017 tax reform legislation would give taxpayers the ability to file taxes by completing a “postcard” form, rather than the lengthy Form 1040 of the past.
The new Form 1040 is a two-sided, 5 inch by 7.5 inch paper with six new schedules attached. Schedules that were previously required continue to exist. The postcard form also eliminates certain items that were modified by the tax reform legislation, such as the personal exemption and some miscellaneous itemized deductions.
We asked Professors Robert Bloink and William Byrnes, who write for ALM’s Tax Facts and hold opposing political viewpoints, to share their opinions on whether the newly designed Form 1040 would simplify the tax filing process for this year’s filing season, or simply result in more confusion.
Below is a summary of the debate that ensued between the two professors.
Byrnes: For the vast majority of taxpayers, this newly designed postcard Form 1040 will make filing taxes significantly more simple, which was exactly what was promised when we enacted the tax reform package. I think the new form is unquestionably an improvement over what we were working with in past years.
Bloink: This is another Republican ploy to make taxpayers think that something has been changed, that we’ve simplified the process—the new form isn’t more simple at all! It only rearranges what was previously there. Moving a few things around and calling it a simplified “postcard” does not give Republicans the right to tout this as another tax-related victory. If anything, filing will be more confusing for many taxpayers this year.
Byrnes: Just look at the first page—before, it required 17 lines just to list a taxpayer’s income. We eliminated 10 of those lines. That’s just one example of how the 1040 has been simplified. Taxpayers who previously itemized deductions don’t have to worry about that anymore, all of those lines are gone.
Bloink: Those lines weren’t eliminated, they were just moved! The new Form 1040 has six new “schedules” attached to it—in addition to all of the pre-existing schedules and forms for things like HSA contributions and child care expenses. Now, if you have capital gains, instead of reporting it with the rest of your income, you now have to go searching among the old schedules for this new schedule that never existed before. It’s like a wild goose chase; taxpayers don’t even know where to look anymore, creating substantial room for error. I think any taxpayer would tell you that if you have to amend a return, it’s never a simplified process.
Byrnes: The point is that the information on those schedules is irrelevant to most taxpayers. Why force the everyday American to wade through line after line of irrelevant information just to file their taxes each year? This is a streamlined version of the old form, and taxpayers with complicated tax issues will get used to the new format.
Bloink: Not every taxpayer has capital gains each year, but I still think that reporting capital gains is a relatively common occurrence among taxpayers. This “remodel” was a complete waste of money, and a publicity stunt on the part of the Republicans. How many taxpayers even file their taxes by writing numbers onto a piece of paper anymore? The vast majority of taxpayers fill out their Form 1040s online, using IRS resources or a tax preparation software—or they consult with a tax professional who completes the form for them.
Byrnes: Exactly, so we’ve simplified the process for those taxpayers with relatively simple returns who would rather save money and finish their taxes themselves.
Bloink: Bottom line: The instructions to Form 1040 are now 117 pages long—that’s ten pages longer than last year’s instructions. I think it’s fairly obvious to say that if the form was simple, taxpayers would not need 117 pages of instruction in order to complete it successfully and … without confusion.
— More Bloink & Byrnes Go Thumb to Thumb:
- Repeal SALT Cap, Raise Corporate Tax
- Tax Deferral on Stock Options and RSUs
- Should Annuity Products Get a Fiduciary Safe Harbor?
- Should Tax Hikes Need Supermajority Vote?
- Does DOL’s HRA Proposal Go Far Enough?
- Should 2017 Tax Changes Be Permanent?
- Is the Proposed Child Tax Credit Even Needed?
- Is Inflation Indexing of Capital Gains Good?
- Are New USA Plans a Boon to Savers?
- Was It Right to Kill the DOL Fiduciary Rule?
- Is DOL Rule on Health Plans Bad?
- Trump’s RMD Rule Change