While the 2020 tax filing season promises to be less confusing than 2019, there are still a number of changes that taxpayers should be aware of.
New, Revised or Updated Tax Forms
Form 1040: Revised and Redesigned
The IRS released a draft Form 1040 for 2019 tax returns that has been updated from the 2018 version. Of significance is that there are now three schedules instead of the six that appeared in the 2018 Form 1040. Schedule 6 is now part of Form 1040. Schedules 2 and 4 have been combined into a single schedule as have Schedules 3 and 5. Schedule 1 remains as is. Another notable change is that the signature line is once again, at the end of the form. While the new Form 1040 for 2019 is no longer "postcard size," it is still shorter than it was in 2018 - although slightly longer than the 2019 version.
Form 1040SR: U.S. Tax Return for Seniors
The new Form 1040SR for 2019, was created in response to the Bipartisan Budget Act of 2018 and is intended for taxpayers age 65 and older. While similar to the standard Form 1040, the font size is larger and it includes a chart of the standard deduction and additional standard deduction amounts for taxpayers over 65 years old or blind. Taxpayers with more complicated tax situations should use the regular Form 1040.
Other New Tax Forms for 2019
- Forms 8995 and 8995-A: Qualified Business Income Deduction Simplified Computation
- Form 8985: Pass-Through Statement [Pass-Through Statement — Transmittal/Partnership Adjustment Tracking Report]
- Forms 965-C, 965-D, and 965-E: Inclusion of Deferred Foreign Income Upon Transition to Participation Exemption System
- Form 8978: Partner's Additional Reporting Year Tax
- Form 8997: Initial and Annual Statement of Qualified Opportunity Fund (QOF) Investments
Important Tax Changes
Health Insurance Mandate Penalty Eliminated.
The penalty for failing to obtain health insurance expired at the end of 2018. As such, for 2019 tax returns there is no box on Form 1040 to check off indicating you had health insurance.
Some states have their own individual health insurance mandate requiring coverage. If you live in a state with a mandate and don't have insurance (or an exemption) you must pay a fee when you file your state taxes. Currently, Massachusetts, New Jersey, and Washington, D.C. have such mandates (effective for 2019) in addition to Vermont whose mandate is effective starting in 2020.
Alimony is No Longer Deductible.
Starting January 1, 2019, alimony is no longer deductible to the payer and is no longer taxable to the payee for separation or divorce agreements or decrees in effect on this date or later.
Medical Expense Deduction Threshold Remains at 7.5 Percent.
For tax years 2017 and 2018 the medical expense deduction threshold was rolled back to 7.5 percent of adjusted gross income (AGI). In 2019 it was scheduled to revert to 10 percent; however, the Further Consolidated Appropriations Act, 2020, extended the 7.5 percent threshold through 2020 (including tax year 2019).
Deduction for Qualified Tuition and Related Expenses Extended.
This above-the-line deduction was extended through 2020.