Navigating the new Form 1040
After introducing a new Form 1040 in 2018, the IRS redesigned it again in 2019, consolidating six schedules into three and adding back some items on the 1040. Further changes were made for 2020.
The IRS significantly changed Form 1040 over the past few years.
- In 2018 the IRS introduced a new, shorter version of Form 1040 and moved many items that lived on the old “long form” to six new supplementary schedules.
- For 2019, the IRS again redesigned Form 1040, combining the six supplementary schedules to three and moving some items back to Form 1040.
- The 2020 Form 1040 (and Form 1040-SR) keep the 2019 structure with a two-page form and three supplementary schedules. As in any tax year, there are some revisions for the 2020 form and schedules. Most of these accommodate changes and additions from coronavirus-related legislation. In 2020, the IRS also released Spanish versions of Form 1040(SP) and Form 1040-SR(SP).
Here are the changes for the Form 1040 system.
New Form 1040 (2020)
Front (Page 1): Personal info, income, adjustments, and deductions
- Filing status checkboxes; name, address, and SSN for taxpayer and spouse, if applicable; standard deduction checkboxes; and dependent information all remain on the front of the form.
- The health insurance coverage checkbox is eliminated.
- Foreign address information is included in this section.
- The virtual currency checkbox is included in the personal information section instead of on Schedule 1 (a change from 2019).
Income, adjustments, and deductions
- The lines for income, adjustments to income, AGI, standard/itemized deductions, qualified business income deduction (QBID), and taxable income are moved from the back to the front of the form.
- IRA distributions and pension distributions are on separate lines.
- Capital gain is moved from Schedule 1 back to this section.
- Two forms are referenced to calculate the QBID: Form 8995 for the simplified calculation or Form 8995-A for the complex calculation.
- The above-the-line charitable contribution deduction for 2020 is reported on line 10b.
Back (page 2): Credits, payments, signatures
Tax, credits, and payments
- The lines for taxes, nonrefundable and refundable credits, payments (including income tax withheld), and refund or amount owed remain on the back of the form.
- The EIC, additional child tax credit (ACTC), and refundable American opportunity credit (AOC) are on dedicated lines (the ACTC and AOC are so-named, rather than just showing form numbers).
- The recovery rebate credit (RRC) for 2020 is reported on line 30 and reconciles EIP1 and EIP2 with the taxpayer’s possible RRC for 2020. See Recovery Rebate Credit Calculation FAQs.
- Total tax, total refundable credits, and total payments lines are clearly marked in bold.
- Federal income tax withholding from Form W-2 and Form 1099 is now reported on two separate lines, lines 25a and 25b.
- Estimated tax payments are reported on line 26 instead of on Schedule 3.
- A new caution indicates that the “amount you owe” total may not include all 2020 taxes owed. It is a reference to the deferral allowed for Schedule SE and Schedule H filers (see the Schedule 3 change below) for 2020.
- Third party designee information is moved from Schedule 6 to this section.
- Taxpayer, spouse, and paid preparer signatures are moved from the front to the back of the form on the bottom.
Schedules for new Form 1040 redesigned beginning in 2019
The 2018 Schedules 2 and 4 were consolidated on the 2019 Schedule 2, the 2018 Schedules 3 and 5 were consolidated on the 2019 Schedule 3, and the 2018 Schedule 6 is eliminated with all information moved to the 2019 Form 1040. The 2018 schedules used the “old” line numbers for each relocated item (ex. taxable refunds were on line 10 of the 2017 Form 1040 and line 10 of the 2018 Schedule 1). Beginning in 2019, each of the three schedules has its own numbering sequence starting with “1.”
Schedule 1, Additional Income and Adjustments to Income
- In 2019, a new checkbox has been added for virtual currency: At any time during 2019, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?
- Taxpayers who are required to complete Schedule 1 should check “yes” or “no” as appropriate.
- Taxpayers who do not have virtual currency transactions and no other Schedule 1 items do not have to include the schedule just to check “no.”
- The virtual currency checkbox was added to the first page of the 1040 in 2020.
- The lines for alimony received and alimony paid now include an entry for the date of the original divorce or separation agreement.
- The IRS renumbered “Line 21 income,” i.e. other income.
- A dedicated line for the tuition and fees deduction has been added.
- Total additional income transfers to Form 1040, page 1; total adjustments transfer to Form 1040, page 1.
Schedule 2, Additional Taxes
- Part I – Tax, includes the AMT and excess advance premium tax credit (APTC).
- Part II – Other Taxes, includes the items that were on the 2018 Schedule 5, such as SE tax, the 10% additional tax on early withdrawals form IRAs, and the net investment income tax.
- Total tax from Part I of this schedule transfers to Form 1040, page 2 and total other taxes from Part II transfer to Form 1040 page 2.
Schedule 3, Additional Credits and Payments
- Part I – Nonrefundable Credits, such as the foreign tax credit and nonrefundable education credits.
- Part II – Other Payments and Refundable Credits, includes the items that were on the 2018 Schedule 5, such as estimated taxes and the net PTC to be refunded.
- Total nonrefundable credits transfer to Form 1040, page 2; total other payments and refundable credits transfer to Form 1040, page 2.
- Qualified sick and family leave credits for self-employed (Form 7202) and Schedule H filers are reported in Part II (other payments and credits).
- The deferral of certain social security taxes for Schedule SE and Schedule H filers is reported in Part II. See “How is self-employment tax deferral for 2020 reported on Schedule SE and Schedule 3?”
About the Form 1040-SR
The IRS also provides Form 1040-SR, U.S. Tax Return for Seniors. Form 1040-SR has larger print and includes a standard deduction chart. Otherwise, all line items are the same and the form utilizes the same three supplementary schedules and the same instructions as the “regular” Form 1040 uses. Taxpayers who are age 65 and older may use this form. Joint filers may use the form if either spouse meets the age requirement.