Taxpayers turning 65 years of age in 2019 will have the option to use the new 1040-SR tax form when filing their 2019 taxes in 2020. The new form is provided for in section 41106 of the Bipartisan Budget Act of 2018 (BBA), a two-year budget agreement passed by Congress and signed by President Donald Trump on February 9, 2018.
On July 12, 2019, the IRS published early drafts, which is the standard process for inviting comments before finalizations. The IRS will accept comments through August 15, 2019.
What we know about the 1040-SR tax form so far
Using the new tailored-for-seniors form isn’t mandatory. But for the 10% of taxpayers who still file by paper, the larger font size, and shading in of boxes is a big help. Otherwise, people who efile or use a tax preparer won’t benefit as much from this new “U.S. Tax Return for Seniors.”
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Here are quick points to help senior taxpayers with their 2019 taxes filed in 2020:
- AARP had a hand in developing the draft 1040-SR tax form since most seniors couldn’t use the 1040EZ due to their different sources of income.
- You don’t have to be retired to use the 1040-SR. Eligible filers, both spouses included, must be 65 or older by the end of either 2019 or by the end of the tax filing year.
- 1040-SR clearly lists standard deduction amounts. Previously, many seniors weren’t aware of extra deduction amounts.
- Senior filers who are small business owners, and those with investment income will still use the standard form, including Schedule C.
- Taxpayers are no longer permitted to use Form 1040-EZ once they reach age 65.
Income and deductions
As it stands at this time, 1040-SR contains no income test.
According to the BBA: “The form [1040SR] shall be available without regard to the amount of any item of taxable income or the total amount of taxable income for the taxable year.”
Unlike 1040EZ, which limited interest income to $1,500 and total income to $100,000 or less, 1040-SR has no limit on the amount of your total income for a given taxable year.
Seniors who fill out Form 1040-SR must take the standard deduction.
If the taxpayer and spouse are 65 or over, they are entitled to an additional $1,300. For an individual, that would raise the standard deduction to $13,300 for the tax year 2019, the first year that you can use the form. For a married couple, if one is 65 or over, the deduction would rise to $25,300. And if both are 65 or over: $26,600.
Retirees not yet 65 years of age
Taxpayers who are retired but under the age of 65 whose income sources include Social Security, pensions and investment income, do not qualify to use 1040-SR or 1040-EZ. The best option is Form 1040A if they want to avoid using the full Form 1040.
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