Tax Insights

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1040 Tax Forms – What Line Is It Anyway?

As I was reviewing a final 2020 individual tax return last week, I needed to go back and look at the client’s 2017 and 2018 1040 tax forms . I already had the 2019 return open, just to make sure all of the carryovers had come over correctly. And I said to myself – “what line is it this year?” And that made me think of the improv show Whose Line Is It Anyway, which is by far funnier and more entertaining, usually, than tax preparation.

Don’t miss: 2020 tax season comes to an end

As I was looking through these returns, it occurred to me – these forms do not look much like the other, even though it is for filing the same type of return. And, yes, part of it is due to the large number of changes that have occurred to the tax law/regulations, etc. in the past several years. But part of it is just moving items around.

It is always a bit interesting at the beginning of each tax season, as we figure out where things have moved to – for example, where is the deduction for Qualified Business Income (QBI) this year? Do capital gains (losses) get their own line on Form 1040, or is it part of Schedule 1 now?

Then I became curious and pulled up the drafts of the 2021 forms for Schedule 1, Schedule 2 and Schedule 3 to review them again.

Schedule 1 has gotten very long and is now two pages, mostly because the items that were all clumped (that is a technical term) together under Other Income have now received their own line item, no matter how obscure some of them may be.

Schedule 2 has one of the best improvements and something I have wanted for a long time – the additional taxes from Forms 8959 and 8960 are finally getting a separate line for each tax, instead of always adding together.

Schedule 3 has also increased in length – from “postcard” sized to two pages long. With the extension payment listed on the second page – that will be a lot of scrolling after April 2022, to get to that amount.

Curious as to how these will show on the 2021 Form 1040? Here is the draft of that form, as well.

What does all of this mean? Not much – we will still figure out where the amounts go. But it makes me think of the people who started in the tax field, with the 2017 filing season (beginning in 2018) who have had to deal with so many changes in such a short space of time. Though maybe they are fine with it, and it is just the “experienced” professionals who are finding it difficult!

If you have any questions or concerns about your forms, please contact your Henry+Horne advisor.

Donna H Laubscher, CPA

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