Here's what taxpayers need to know about the new Form 1040

FINANCIAL ADVISORS


Once you’ve rounded up all of your tax documents, how long it takes you to fill out the new 1040 form will depend largely on how many of the additional schedules apply to you.

“Probably Schedule I is the one that will get used the most,” Steffen said. “That’s the one that’s got additional items of income and then the adjustments to income.”

Few people will probably use Schedule 2, which is aimed at taxpayers who are subject to the alternative minimum tax, or AMT, according to Steffen. Of note, the AMT document — Form 6251 — has changed to reflect changes in the new tax law.

More from Smart Tax Planning:
Why secret cash payments to your nanny could backfire
Getting zero back from the IRS might be a good thing
Five ways to jump-start your tax return

Schedule 3, for tax credits you may claim, such as the foreign tax credit, will likely be more common, according to Steffen.

“Anybody who has an international mutual fund, for example, will probably have to use this form to claim a credit for the withholding that was done,” Steffen said.

Schedule 4 applies to other taxes you may pay beyond normal income tax. This one is for you if you’re self-employed, owe penalties on your retirement plan distributions or are paying the 3.8 percent tax on your investment income.

In addition, you may need to fill out Schedule 5 for other payments and refundable credits or Schedule 6 to report a foreign address or third-party designee.



Source link