On July 12, the IRS posted early drafts of the 2019 Form 1040-SR, U.S. Tax Return for Seniors, and the 2019 Form 1040 and related numbered schedules to IRS.gov/DraftForms. Posting drafts is part of the standard process for inviting stakeholder input into draft forms before finalizing them. Comments should be sent to WI.1040.Comments@irs.gov.
The IRS will continue to work with the tax community to finalize these forms over the summer and will issue related communications later this year. The IRS expects to release the related draft instructions for comment this fall.
As a reminder: the provision creating Form 1040-SR was one of several retirement-related changes to tax policy included in the Bipartisan Budget Act of 2018.
If the taxpayer is 65 or older (or turns 65 any time in 2019), they will have the option to use a new simple tax form for seniors, known as the 1040-SR, 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.
- The new Form 1040-SR is a simplified tax form for seniors who have finances that are not complicated and is like the discontinued Form 1040EZ.
- Form 1040-SR allows an individual to report income from wages, salaries, tips, and other income sources as well.
- The new form requires a senior to be 65 or older by the end of either 2019 or by the end of the tax filing year.
- The new form also has no income tests and expanded income categories.
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.
What About Tax Deductions?
Seniors who fill out Form 1040-SR must take the standard deduction. If the taxpayer (and/or spouse) is 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.
History of 1040-SR
The legislation that resulted in the creation of IRS Form 1040-SR began March 5, 2013, with the introduction of the Seniors Tax Simplification Act by Senators Marco Rubio (R-FL) and Bill Nelson (D-FL), joined by Senators Mike Lee (R-UT) and Tom Carper (D-DE). Following several failed attempts to turn the act into law—and despite endorsements by the AARP, the Association of Mature American Citizens, and the National Taxpayers Union—1040-SR language was adopted as part of the emergency spending bill signed by President Trump on February 9, 2018.
The Bottom Line
If the taxpayer is a retiree under the age of 65 whose income sources include Social Security, pensions, and investment income, they cannot use 1040-SR.