The new Form 1040 has been touted as a simple way for most people to file their income taxes on a page the size of a postcard. Is that really the case? Depending on your situation, it may be. If your only source of income is wages, interest and dividends, IRAs, pensions, and social security, you can file the one-page postcard form. If you have any other type of income, you need to file Schedule 1. If you have any adjustments, such as educator expenses or student loan interest, you must also add on Schedule 1. If you itemize, you must file Schedule A, as usual. If you have any additional taxes, such as an early distribution penalty, you can’t just file the postcard. The only tax credit on the form is the Child Tax Credit and Credit for Other Dependents.
Most people will have to file both Form 1040 and a variety of schedules. Schedule 1 has the remaining types of income that are missing from the Form 1040. It also includes all the adjustments. Schedule 2 must be filed if there is any Alternative Minimum Tax or Advance Premium Tax Credit. Schedule 3 is for reporting nonrefundable credits. Schedule 4 is for other taxes, such as self-employment taxes or additional tax on distributions from an IRA or HSA. If any payments other than withholding have been made, such as estimated tax payments, you must file Schedule 5.
The number of people who can file the postcard return is likely to be small. If you’re not one of them, come see me to find out which schedules you’ll have to file next year.