WHAT’S NEW ON THE 2020 FORM 1040 (AND 1040-SR)?

 

Here is what is new on the 2020 federal income tax return.

While the 2020 Form 1040 is still not a full 8½ x 11 page – I have absolutely no clue why it is not – it is a little bigger and has larger print.

A new question is included after entering name(s), Social Security number(s) and address – “At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?”.  All my clients, and I expect the majority of taxpayers, will answer “no”.

Page one has 15 lines – up from the 11 on last year’s return.  Much of the increase represents a replacement of what was previously an “a”, “b” and “c” designation with a number.  The line for “Adjustments to income” has an “a” for carryover from Schedule 1 and a “b” for the new “above the line” deduction for up to $300 of charitable contributions for non-itemizers.

Page 2 continues with Lines 16 through 38 (the 2019 form had only 24 lines) – again most of the additional lines are replacements of letters with numbers.  Estimated tax payments are now reported separately on Page 2 and no longer on Schedule 3.  The category for “Federal income tax withheld” is broken down into 3 items – Form(s) W-2, Forms(s) 1099 and Other forms.  And there is a new line for the refundable “Recovery Rebate Credit”.

The 2020 Form 1040-SR has similar changes.  Page 1 ends at Adjusted Gross Income (the 2019 version ended at “Taxable Income), and the “Standard Deduction Chart” that had been at the bottom of Page 1 is expanded and is now on a new Page 3.

Except for the change to Schedule 3 mentioned above, the 2020 Schedules 1, 2 and 3 appear to be the same as 2019.

There is one major tax law change that is not specifically reflected in the Form 1040 or 1040-SR but is included in the instructions.  According to the instructions for Schedule A Line 19 – “You no longer need to be younger than age 70½ to make a deduction for your contributions to an IRA.” 

As a result of the SECURE Act you can make contributions to a traditional IRA account as long as you have qualified “compensation” – taxable salaries and wages, net earnings from self-employment as a sole proprietor or a partner, nontaxable combat pay, taxable alimony, and nontaxable difficulty of care payments – regardless of your age.  You have until April 15, 2021 to make a contribution to an IRA for tax year 2020.

I will post on changes to the 2020 New Jersey and New York individual income tax returns when the forms are available.

TTFN

2010 NJ RETURN UPDATE

Just wanted to let you know that the 2010 NJ tax forms are now available to view and download at the NJ Division of Taxation website.

There appears to be no major changes to the 2010 NJ-1040. The question on Page 2 about both spouses occupying the same residence has been deleted, and a new line has been added to Page 3 to report excess Family Leave Insurance contributions from Form NJ-2450.

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FYI - "Tax booklets and forms are scheduled to be mailed during the week of December 27, 2010, to every New Jersey household that filed paper returns without using tax preparation software last year."

WHAT’S NEW FOR NEW JERSEY TAXES FOR 2010

The Winter 2010 edition of the “New Jersey State Tax News”, available online only at the NJ Division of Taxation website, has just been released. The top item is “What’s New for Tax Year 2010”.

I have checked and the 2010 NJ-1040 is not yet up at the DOT website. However I thought I would let you know what is new for New Jersey for 2010, as per the State Tax News item.

* Taking a cue from New York, New Jersey will no longer mail out paper 1099-Gs to report the amount of state income tax refund issued in 2010. Of course NJ will still send the information to “Sam”, who will match the info to what is reported on 1040s. Like with NY refunds, you will be able to view and print the 1099-G information somewhere at the NJ Division of Taxation website.

* The maximum property tax deduction of $10,000 was limited on the 2009 NJ-1040 based on level of income. This was a temporary provision for 2009 returns only. For 2010 the full deduction (100% of real estate taxes paid on your principal personal residence or 18% of rent paid), up to the normal $10,000 maximum, will be allowed regardless of income.

• The TR-1040, which had previously been Page 4 of the NJ-1040, is replaced by Form NJ-1040-H (Property Tax Credit Application). This form is to be used by qualifying residents eligible for the property tax credit who do not need to file a NJ-1040.

According to the item –

Filers can use Form NJ-1040-H only if they:

1. Were 65 years of ago or older, blind, or disabled on December 31, 2010, and

2. Had New Jersey gross income for 2010 of $10,000 or less ($10,000 or less if filing status is single or married/CU partner filing separate return), and

3. Have not filed and will not file a 2010 New Jersey resident income tax return, and

4. Were not a New Jersey homeowner on October 1, 2010.

That is a lot of “ands”.

Residents who meet the requirements in 1-3 of above who owned and lived in a principal residence in NJ on October 1, 2010 should not file a Form NJ-1040-H. NJ promised that “the property tax credit for these homeowners will automatically be included with their homestead benefit, provided they file a homestead benefit application”.

* The NJ Earned Income Credit is equal to 20% of the filer’s federal Earned Income Credit.

*The 2010 Form NJ-2450 has been revised to include excess Family Leave Insurance contributions – so you can now claim a refund of excess FLI contributions, along with excess SUI and SDI contributions, on the 2010 NJ-1040. You will not have to file a separate return. So Trenton will not be screwing you out of excess FLI payments as it did for 2009.

* New Jersey will follow the federal Form 1040 with regards to reporting of ROTH conversions made in 2010. If you make the federal election to report ROTH conversion income in equal amounts in 2011 and 2012 you “must report the amount that is taxable for New Jersey in equal installments in 2011 and 2012”. If you elect to report the entire amount on your 2010 Form 1040, you must also report the total amount taxable for NJ purposes on the 2010 NJ-1040.

* As I had previously reported, New Jersey will also follow the federal government on the due date of 2010 returns. “The due date is April 18, 2011, for calendar year taxpayers instead of April 15 because of the Emancipation Day holiday in the District of Columbia.”

The item also tells us that for the Property Tax Reimbursement Program (the “senior freeze”) the income threshold for 2010 is $80,000, which is the same as for 2009.

And “information about the 2010 Homestead Benefit (Rebate) Program is not yet available”.

Once the 2010 NJ-1040 and supplements are available at the NJDOT website I will check them out and report on actual changes to the form.

TTFN

NO CHANGE

In an audit a determination of “no change” is a good thing. But it is not a good thing when it comes to annual inflation adjustments.

The IRS has just told us –

“Tax rate brackets and various tax benefits will remain unchanged or change only slightly in 2010 due to inflation.

By law, the dollar amounts for a variety of tax provisions must be revised each year to keep pace with inflation. As a result, more than three dozen tax benefits are subject to inflation adjustments each year, but because recent inflation factors have been minimal, many of these benefits will remain unchanged or change only slightly for 2010.”

Here are some of the tax provisions for tax year 2010, as per Revenue Procedure 2009-50:

* Personal Exemption = $3,650, unchanged from 2009.

* Standard Deduction-

Single = $5,700, unchanged from 2009
Head of Household = $8,400, up from $8,350 in 2009
Married Filing Joint = $11,400, unchanged from 2009
Married Filing Separate = $5,700, unchanged from 2009
Dependent = the greater of $950 or $300 plus the amount of earned income, not to exceed $5,700, unchanged from 2009

The additional Standard Deduction amounts for age 65 or older and/or blind = $1,400 for Single and Head of Household and $1,100 for Married (Joint and Separate) and Qualifying Widow(er), unchanged from 2009

* Annual Gift Tax Exclusion = $13,000, unchanged from 2009

In IR-2009-94 the Service reported that the 2010 annual contribution limits for retirement plans remain unchanged from 2009. They are:

* $5,000 (plus an additional $1,000 if age 50 or older at the end of 2009) for traditional and ROTH IRAs
* $16,500 (plus an additional $5,500 if age 50 or older at the end of 2009) for 401(k) and 403(b) plans
* $16,500 (plus an additional $5,500 if age 50 or older at the end of 2009) for 457 Plans (Deferred Compensation for state and local government employees)
* $11,500 (plus an additional $2,500 if age 50 or older at the end of 2007) for SIMPLE plans
* $49,000 for Defined Contribution KEOGH plans
* $49,000 for Self-Employed SEP plans (allowable contribution equal to 25% of net earnings of up to $245,000, which translates to 20% multiplied by the total of "net earnings from self-employment" from Schedule C, Schedule C-EZ or Form K-1 less the deduction for 50% of self-employment tax
* $195,000 for Defined Benefit pension plans

The compensation limit for participation in a SEP is $550.00.

I will be compiling a comprehensive report on “What’s New For 2010”, based on currently available information, which will be available soon.

TTFN