Posts Tagged ‘2019.Tax.Season’

The Amazing, Incredible, Expanding Postcard!

Friday, June 29th, 2018

When I was a child, people used postcards to save on postage. Postage for postcards ran a nickel. That was less than a phone call. Today, with the emergence of cellphones, the only postcards I receive are advertisements. But the IRS has a better idea! Let’s put Form 1040 on a postcard! [Insert groans from the tax professional community] “It’s so simple that a child can do it!” [Let’s add some groans from all the parents out there.]

Indeed page 1 of the draft Form 1040 is simple and straightforward. You enter your name, address, filing status, and you sign the return on page 1. Page 2 looks simple: You note your wages, other items of income, write in your tax, note some credits, and you’re done. But then you see some interesting words, like Line 6:

6. Additional income and adjustments to income. Attach Schedule 1.

That’s one way to make things fit on a postcard: Add more postcards! And it’s not as if most people will be skipping Schedule 1; it includes business income (Schedule C), capital gains (Schedule D), rental income and partnerships (Schedule E), and IRA deductions and all adjustments to income. And there’s not one of these schedules, but six of them. Here’s a link to the draft Form 1040 and all six of the proposed schedules.

It’s time to be honest: Nothing has gotten simpler. Indeed, I would argue everything about the 2018 tax return has gotten far, far more complex. Take line 9 of the draft Form 1040 (on page 2 of the form):

9. Qualified business income deduction (see instructions).

I pity those people trying to do that deduction themselves. I guarantee that most who try to do that line themselves will be joining me with gray hair next year. (The best explanation I’ve seen of that deduction runs 32 accountant-friendly pages. That is not a joke. Another tax professional used the line “Rube Goldbergesque” to describe the deduction.) It’s near a certainty that do-it-yourselfers are going to have issues with these forms. They’re not straightforward.

As I’ve told all of my friends I have lifetime employment. I think the IRS just gave me a second lifetime worth of employment!