Discover the new IRS tax form specially designed for people 65 and over
For the 2019 tax year, your friends at the IRS introduced the new Form 1040-SR (US Tax Return for Seniors). This exciting development is proof that the federal government cares deeply about the tax filing needs of seniors. Not enough. In fact, Congress has asked the IRS to develop a new form that is simpler and easier for older taxpayers. The IRS’s response with the new Form 1040-SR was the least they could do. Literally.
What you need to know about the new form
You can only use Form 1040-SR if you were born before January 2, 1955. In other words, you must have been 65 or older on the first of that year (1/1/20).
To say that the new Form 1040-SR closely mirrors the 2019 version of the “regular” Form 1040 is an understatement.
* The only differences on page 1 of the two forms are that Form 1040-SR has larger characters, larger spaces for information and numbers that older taxpayers must enter, and a more easily decoded standard deduction table with larger characters. Because, you know, some old people have poor vision.
* Page 2 of Form 1040-SR continues with the theme of large print and wide spaces. Otherwise, it is identical to page 2 of Regular Form 1040.
* Instructions for the new Form 1040-SR and the 2019 version of the regular Form 1040 are included in the same document (INSTRUCTIONS FOR 2019 TAX YEAR 1040 and 1040-SR). The instructions for each position also apply to both forms.
So if you, as an elderly taxpayer, choose to use the regular 1040 form instead of the new 1040-SR, the information and numbers you need to fill out on each line will be exactly the same. But you have a little more space to work. It is the government’s idea to proactively respond to the special needs of older taxpayers.
Other things to know about 2019 returns
For the new Form 1040-SR and the 2019 version of the regular Form 1040, IRA distributions and pension and annuity income are reported on separate lines on page 1 of the forms. Use lines 4a and 4b to report the total IRA distributions and the taxable amount, respectively. Use lines 4c and 4d to report the total pensions and annuities and the taxable amount, respectively.
For the new Form 1040-SR and the 2019 version of the regular Form 1040, report the net capital gain or loss on page 1, line 6.
For the 2019 tax year, there are only three additional numbered schedules for both Form 1040-SR and Regular Form 1040, instead of the six additional schedules that pertained to the 2018 version of Form 1040 ordinary.
* Schedule 1 (additional income and adjustments) is used to report items like business income from Schedule C, E or F and deductions that you don’t need to itemize the claim – like the alimony paid under a divorce agreement before 2019, the deductible portion of self-employment tax and HSA contributions). The 2019 version of Schedule 1 is essentially the same as the 2018 version.
* 2018 Schedules 2 and 4 have been combined into the new Schedule 2 (Additional Taxes) for 2019. Use Schedule 2 to identify any additional taxes that must be reported on line 15 of Form 1040-SR and on line 15 of regular Form 1040 (such as as alternative minimum tax (AMT) for the few who still owe it, self-employment tax, additional 0.9% Medicare tax for high income earners and 3.8% net income tax for high income earners).
* Schedules 3 and 5 from 2018 have been combined into the new Schedule 3 (Additional Credits and Payments) for 2019. Use Schedule 3 to identify tax credits that are not claimed directly on page 2 of Form 1040 -SR or on page 2 of the regular 1040 form (such as higher education credits and residential energy credits).
* Schedule 6 (Foreign Address and Designated Third Party) has been removed for the 2019 version of the standard Form 1040 and is not required for the new Form 1040-SR.
Beware of the recently enacted legislation on extensions
At the end of last year, the new Taxpayer Certainty and Disaster Tax Relief Act, 2019 (the Act) came into force. This legislation retroactively resurrected and / or extended a bunch of individual federal tax breaks often referred to as extenders. Extensions typically run until 2020, so keep extensions in mind when preparing your 2019 1040-SR form.
The bottom line
Bigger print on the Form 1040 would be fine for many of us. But it is only available if you meet the conditions to file the new Form 1040-SR. Great news? No. The big legitimate news is the list of extenders that can potentially be claimed by seniors on their 1040-SR large print forms. See the sidebar below for more information. The other news is that the IRS just announced that the 2019 returns are now accepted. So if you have all of your 2019 tax information on hand, go for it.
Side bar: extensions
No, that’s not the name of a new Netflix NFLX,
series. It’s the abbreviated description of a bunch of tax breaks that our beloved Congress usually allows to expire before renewing them for a year or two at the last minute possible. Here are the important extensions for individual taxpayers.
Detailed deduction threshold for medical expenses. The deduction threshold was to increase to 10% of the AGI for 2019 and beyond. The law extends the 7.5% threshold for the more taxpayer-friendly AGI until 2020.
Amortization of tuition fees. This deduction can be up to $ 4,000 per year for lower income levels or up to $ 2,000 for middle income levels. It expired at the end of 2017. The law retroactively resurrects it to cover eligible college expenses incurred in 2018 and expands it to cover costs incurred in 2019 and 2020.
Cancellation for canceled principal residence mortgage debt. The law is retroactively resurrecting the break that allows you to treat up to $ 2 million of canceled principal residence acquisition debt as a tax-free transaction ($ 1 million for married people who file separately). Thus, the break is now available for cancellations of eligible debts that occur in 2018-2020.
Amortization of the mortgage loan insurance premium. Qualifying mortgage insurance premiums on debt to acquire, build or improve a first or second residence can potentially be treated as deductible qualifying residence interest. The Act resurrects this pause to cover the eligible premiums paid in 2018-2020. The deduction is phased out at higher income levels.
$ 500 credit for energy efficient renovations. The Act reinstates the federal income tax credit of up to $ 500 for the installation of certain energy efficiency improvements in a principal residence. This pause is now available for qualifying upgrades installed in 2018-2020.
Key point: The amount of $ 500 is a lifetime limitation. So if you applied for the credit for a year before 2018, the lifetime limit of $ 500 may prevent further credit.
Credit for fuel cell vehicles. You can claim a federal income tax credit for vehicles powered by chemically combining oxygen and hydrogen to create electricity. The base credit is $ 4,000 for vehicles weighing 8,500 pounds or less. Additional credit of $ 1,000 to $ 4,000 is available for cars and light trucks as long as their fuel economy figures meet federal standards. The Act extends the credit to cover eligible vehicles purchased in 2018-2020.
Credit for rechargeable electric motorcycles. The federal income tax credit for the purchase of qualifying electric motorcycles can be up to $ 2,500. The Act extends the credit to cover eligible purchases in 2018-2020.
Credit for refueling equipment for alternative fuel vehicles. The Act retroactively extends the federal income tax credit up to 30% of the cost of installing non-hydrogen alternative fuel vehicle refueling equipment (including electric vehicle recharging units) for cover eligible equipment commissioned in 2018-2020.