With the passage of the Tax Cuts and Jobs Act of 2017, there was a promise that for many Americans the new tax law would be so simple that they could file on a postcard. In fact, the IRS has already drafted this so-called postcard tax return, which is larger than most postcards, and will be double-sided. As such, one would want to mail it in an envelope for privacy. In addition, over 90% of taxpayers file their tax returns electronically any way (do millennials even know what a postcard is?), so what is the real benefit of the postcard?
The real gist of the postcard return is that for many, preparing a tax return will be a simpler process. The new postcard is the size of a half a sheet of paper, which is larger than most regular postcards. Plus, there is a front AND back. But, not only have they shrunk the form, they’ve also shrunk the font size. So, essentially the old forms 1040, 1040A and 1040EZ front and back have been reduced. That sounds simpler, right? But, wait. There’s more…
For those of you who file Schedules A through E and beyond, these schedules have not changed considerably, and you will still need to use them. In addition, there are NEW worksheets, Schedules 1-6:
- Additional Income and Adjustments to Income. This is where you report all your non-W2 income, such as investment, business, rental income, and alimony, as well as adjustments such as self-employment insurance and IRA deductions.
- Tax. This worksheet calculates your various components of income tax.
- Nonrefundable Credits. This worksheet lists your various credits, such as dependent care, child, and residential energy credits.
- Other Taxes. This is for non-income taxes, such as self-employment, household employer and healthcare individual mandate taxes.
- Other Payments and Refundable Credits. This is where one would list their estimated tax payments, Premium Tax Credit, and excess Social Security withholding.
- Foreign Address and Third-Party Designee. This form just has these two items, which may be inapplicable to many taxpayers.
This new tax return reminds us of the ancient Greek monster Hydra, where if you chopped off a head, two more grew back. Here, they’ve reduced the main form to a “postcard” but have added six more schedules. While for some taxpayers, the completion of the tax form may be simpler, due to the increased standard deduction and the elimination of personal exemptions, for others the new form and related schedules, may be just as confusing, as ever, if not more so. We encourage you to contact us to assist you in navigating through the necessary forms and requirements of the new tax law.
So will you be able to file on a postcard? Maybe. But you’ll want to e-file anyway….
Photo by Samuel Zeller on Unsplash
