As we know by now, no two years are the same when it comes to tax rules. Our tax forms, rules, etc. are updated annually in some way or another, and tax preparers must stay up to date and well informed regarding any changes. The Internal Revenue Service (IRS) has released a draft copy of Form 1040 for the 2020 tax year, which is the return you will be filing in 2021.
Let’s see what’s new for the upcoming year:
The CARES Act made it so that you do not have to itemize to claim charitable cash contribution of up to $300. So now, you will see a reference to charitable contributions before Schedule A on form 1040.
With the IRS getting more serious about cryptocurrency reporting, they have repositioned the virtual currency question. It is now towards the top of the first page, right under the section where you fill out your personal information. This makes it more visible for those who may not have reported any cryptocurrency last year due to the question being on Schedule 1.
There will be a separate reconciliation schedule that will carry over to page two of the form. The draft references the instructions for more details; however, those instructions have not been released yet.
On page two of form 1040, we are used to seeing one line asking for “Federal income tax withheld from Forms W-2 and 1099". This upcoming year we will see this line divided into separate lines for forms 1099, W-2, and “other.” I believe this will make it easier to track the different types of income one person may have.
Keep in mind that only a draft of Form 1040 has been released. Things may change from now until the final version is released. Once the IRS releases the final copy they will make it accessible here. If any of these changes (or taxes in general) confuse you, make sure to visit taxfyle.com when you are ready to file. Taxfyle helps you get connected with a tax pro who will prepare and file your tax return for you.