The Tax Cuts and Jobs Act was sold as a simplification of tax laws and forms. The IRS recently reminded taxpayers that forms 1040A and 1040-EZ have been consolidated into Form 1040. On its face, that comment would seem to make sense, but let’s give it some more thought. The purpose of the 1040A and 1040-EZ was to allow taxpayers with less complex returns to file an abbreviated version of the 1040. It is hard to see how eliminating the simpler option to make taxpayers file a more complex form would be in the interest of simplifying. Furthermore, the Form 1040 itself went through a “simplification” by shortening it to one page from the original two……..except that there are now several schedules and pages that need to be attached.
These changes fit the theme of the Tax Cuts and Jobs Act when it comes to lower and middle income taxpayers – there is always a catch. The standard deduction is doubled, but you no longer get exemptions. The child tax credit is increased, but your state and local taxes are limited. Following this theme – your forms are simplified, but you have to file more forms. You don’t have to choose which form you have to file, but you have to file the most complex one.
In addition to considering these “simplifications,” taxpayers also have the added burden of addressing other changes such as GILTI, the transition tax, and the QBI deduction, just to name a few. Unfortunately, with our current political climate, and the way the IRS dug its heels in on the inappropriate application of the transition tax to individuals, it is hard to imagine any of these concerns will be remedied any time soon.