In 2018, taxpayers will use a newly designed IRS form 1040, U.S. Individual Income Tax Return (1040). The most notable changes to the 1040 are:
- A reduction of size and information contained on the 1040. The new Form 1040 has 23 lines, down from 79, and is roughly the size of a postcard.
- An increase in the number of schedules in the 1040. The 2018 Form contains 6 new schedules (outlined below):
- Schedule 1 – For taxpayers with additional sources of income (not from a W-2) or adjustments to income, such as IRA contributions, student loan interest, and health savings account contributions.
- Schedule 2 – For taxpayers with other forms of taxes, such as a child’s unearned income.
- Schedule 3 – For nonrefundable tax credits.
- Schedule 4 – Used by taxpayers to add up other miscellaneous taxes, such as self-employment tax, uncollected Social Security, and Medicare taxes.
- Schedule 5 – Used by taxpayers to add up tax payments, such as estimated tax payments or amounts paid with an extension.
- Schedule 6 – Used by taxpayers to appoint a third-party designee to discuss their tax return with the IRS on their behalf.
Due to these new schedules, the IRS has allocated new data points that are important to the LoanBeam Self Employed Analysis workbooks. Here is a quick comparison of the changes from the 2017 Form to the new 2018 Form:
|Old Form||New Form|
|Wages were on Line 7||Wages are now on Page 2 Line 1|
|Taxable Interest was on Line 8a||Taxable Interest is now on Page 2 Line 2b|
|Tax Exempt Interest was on Line 8b||Tax Exempt Interest is now on Page 2 Line 2a|
|Ordinary Dividends were on Line 9a||Ordinary Dividends are now on Page 2 Line 3b|
|Qualified Dividends were on Line 9b||Qualified Dividends are now on Page 2 Line 3a|
|Taxable Refunds (State/Local) were on Line 10||Taxable Refunds (State/Local) are now on Schedule 1 Line 10|
|Alimony Received was on Line 11||Alimony Received is now on Schedule 1 Line 11|
|IRA Distributions were on Line 15a and 15b||IRA Distributions & Pensions are now combined on Schedule 1 Lines 4a and 4b|
|Unemployment was on Line 19||Unemployment is now on Schedule 1 Lines 19|
|Social Security was on Line 20a||Social Security is now on Page 2 Line 5a and 5b|
|Other Income was on Line 21||Other income is now on Page 2 Line 21|
Additional changes to the 1040 include:
- A new definition of who can use Form 2106.
- The IRS has redefined tax payer eligibility to file for Unreimbursed Employee Expenses under Form 2106. Eligible groups are Armed Forces Reservists, qualified performing artists, fee-basis state or local government officials, and employees with impairment-related work expenses. Any employees who do not fit into one of the listed categories may not use Form 2106.
- A change in Meals and Entertainment allowance.
- The Schedule C for Self Employed borrowers has changed the description for Line 24b from “Meals and Entertainment” to “Meals” to align with 2018 tax reporting guidelines. Note: The change in wording did not affect the 50% deduction.