K. W. “Hutch” Hutchinson, CPA, CFP®

Providing solutions to your taxing problems

By

There are six new schedules some taxpayers will file with the new Form 1040

The 2018 Form 1040 replaces prior year Forms 1040, 1040A and 1040EZ. The 2018 Form 1040 uses a building-block approach that allows individuals to file only the schedules they need with their federal tax return. Many people will only need to file Form 1040 and no schedules.

Electronic filers may not notice these changes as the tax software will automatically use their responses to complete the Form 1040 and any needed schedules. For taxpayers who filed paper returns in the past and are concerned about the 2018 changes, this may be the year to consider the benefits of filing electronically.

While commonly used lines on the prior year form are still on the 2018 Form 1040, other lines are now Schedules 1 through 6 and organized by category. The six new numbered schedules are in addition to the existing schedules, such as Schedule A, Itemized Deductions, or Schedule C, Profit or Loss from Business.

Here’s a guide to help taxpayers determine what schedules they may need to file with the 2018 Form 1040:

Schedule 1Additional Taxes and Adjustments to Income

  • Taxpayers use this schedule to report income or adjustments to income that can’t be entered directly on Form 1040. This includes capital gains, unemployment pay, prize money, and gambling winnings. This also includes the student loan interest deduction, self-employment tax, or educator expenses.

Schedule 2Additional Tax

  • This scheduled is used by taxpayers in specific situations. Those who owe alternative minimum tax or need to make an excess advance premium tax credit repayment will file this schedule.

Schedule 3Nonrefundable Credits

  • Taxpayers use this schedule to report nonrefundable credits other than the child tax credit or the credit for other dependents. These include the foreign tax credit, education credits, and general business credit.

Schedule 4Other Taxes

  • Taxpayers use this schedule to report certain taxes. These include self-employment tax, household employment taxes, tax-favored accounts, and additional tax on IRAs and other retirement plans.

Schedule 5Other Payments and Refundable Credits

  • Taxpayers who claim specific refundable credits or have other payments withheld will file this schedule. These other payments include:
    • Payment made when the taxpayer requests an extension.
    • Payment of excess social security.

Schedule 6Foreign Address and Third-Party Designee

  • Taxpayers use this schedule to enter a foreign address. Anyone who wants to allow someone other than their paid preparer to discuss their tax return with the IRS will also file Schedule 6.

By

Here’s what taxpayers should do to protect private data

Taxpayers should protect their personal and financial data from criminals who continue to steal large amounts of information. Thieves use the data to file bogus tax returns and commit crimes while impersonating the victim.

All taxpayers should follow these steps to protect themselves and their data. Keep a secure computer.

Keep a secure computer. Taxpayers should:

  • Use security software that updates automatically. Essential tools for keeping a secure computer include a firewall, virus and malware protection, and file encryption for sensitive data.
  • Treat personal information like cash; don’t leave it lying around.
  • Give personal information only over encrypted and trusted websites.
  • Use strong passwords and protect them.

Avoid Phishing and Malware. Taxpayers should:

  • Not respond to emails, texts or calls that appear to be from the IRS, tax companies and other well-known businesses. Instead, verify contact information about companies or agencies by going directly to their website.
  • Be cautious of email attachments. Think twice before opening them.
  • Turn off the option to automatically download attachments.
  • Download and install software only from known and trusted websites.

Protect personal information. Taxpayers should:

  • Not routinely carry a Social Security card or other documents showing a Social Security number.
  • Not overshare personal information on social media. This includes information about past addresses, a new car, a new home and children.
  • Keep old tax returns and tax records under lock and key.
  • Safeguard electronic files by encrypting and properly disposing them.
  • Shred tax documents before trashing.