TAP News

New Form 1040-SR, Alternative Filing Option
Available for Seniors

The Internal Revenue Service wants seniors to know about the availability of a new tax form, Form 1040-SR, featuring larger print and a standard deduction chart with a goal of making it easier for older Americans to read and use.
 
The Bipartisan Budget Act of 2018 required the IRS to create a tax form for seniors. Taxpayers age 65 or older now have the option to use Form 1040-SR, U.S. Tax Return for Seniors. Form 1040-SR, when printed, features larger font and better readability.
 
Taxpayers who electronically file Form 1040-SR may notice the change when they print their return. More than 90% of taxpayers now use tax software to prepare and file their tax return.
 
Taxpayers born before January 2, 1955, have the option to file Form 1040-SR whether they are working, not working or retired. The form allows income reporting from other sources common to seniors such as investment income, Social Security and distributions from qualified retirement plans, annuities or similar deferred-payment arrangements.
 
Seniors can use Form 1040-SR to file their 2019 federal income tax return, which is due April 15, 2020. All lines and checkboxes on Form 1040-SR mirror the Form 1040, and both forms use all the same attached schedules and forms. The revised 2019 Instructions cover both Forms 1040 and 1040-SR.
 
Eligible taxpayers can use Form 1040-SR whether they plan to itemize or take the standard deduction. Taxpayers who itemize deductions can file Form 1040-SR with a Schedule A, Itemized Deductions, when filing their return. For those taking the standard deduction, Form 1040-SR includes a chart listing the standard deduction amounts, making it easier to calculate. It also ensures seniors are aware of the increased standard deduction for taxpayers age 65 and older.
 
Married people filing a joint return can use the Form 1040-SR regardless of whether one or both spouses are age 65 or older or retired.
 
Both the 1040 and the 1040-SR use the same "building block" approach introduced last year that can be supplemented with additional Schedules 1, 2 and 3 as needed. Many taxpayers with basic tax situations can file Form 1040 or 1040-SR with no additional schedules.
 
 

National Taxpayer Advocate Delivers Annual Report to
Congress: Focuses on Taxpayer First Act Implementation,
Taxpayer Service, and IRS Funding

Acting National Taxpayer Advocate Bridget Roberts today released her 2019 Annual Report to Congress.  Key challenges highlighted in the report include implementation of the Taxpayer First Act, inadequate taxpayer service, and limited funding of the agency.
 
Roberts also released the third edition of the National Taxpayer Advocate's "Purple Book," which presents 58 legislative recommendations designed to strengthen taxpayer rights and improve tax administration.
 
The report highlights that the Taxpayer First Act, enacted into law on July 1, 2019, has made the most comprehensive revisions to IRS procedures since the IRS Restructuring and Reform Act of 1998, including some 23 provisions previously recommended by the National Taxpayer Advocate.
 
Roberts also noted that long-time National Taxpayer Advocate Nina E. Olson retired five months ago, and a permanent replacement has not yet been appointed. "While I am honored to serve as the Acting National Taxpayer Advocate," Roberts wrote, "the Office of the Taxpayer Advocate – and taxpayers – deserve a permanent appointee."
 
Highlights of the report are summarized below.
 
The IRS Is Struggling to Accomplish Its Mission
 
According to its mission statement, the IRS aims to "[p]rovide America's taxpayers top quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all." The report says the IRS is struggling to meet both of those goals.
 
The IRS Does Not Receive Enough Funding to Meet Taxpayer Needs
 
The report urges Congress to increase IRS funding and to change the budget rules to account for the revenue additional IRS appropriations are likely to generate. In FY 2018, the IRS collected nearly $3.5 trillion on a budget of about $11.4 billion. "It is economically irrational to underfund the IRS," the report says. "If a company's accounts receivable department could generate an ROI [return on investment] of 300:1 and the chief executive officer (CEO) failed to provide enough funding for it to do so, the CEO would be fired. Yet in general, the federal budget rules exclusively take into account outlays and ignore the revenue those outlays generate."
 
Other Major Issues Addressed
 
The National Taxpayer Advocate's 2019 annual report has been consolidated and differs from prior reports in two ways. First, the Taxpayer First Act reduced the number of "most serious problems" the National Taxpayer Advocate must identify from at least 20 to ten. Second, the National Taxpayer Advocate initiated the Purple Book two years ago as a supplement to more detailed legislative recommendations proposed in the main volume of the report. This year, all legislative recommendations have been consolidated into the Purple Book, and the longer-form recommendations have been eliminated.
 
TAS Research Studies
 
The report presents research studies on the following topics: 
  • The subsequent compliance of taxpayers who received educational letters from the National Taxpayer Advocate after they appeared to have claimed the Earned Income Tax Credit (EITC) in error in the prior year.
  • IRS compliance with rules governing the imposition of two-year bans on eligibility for refundable tax credits.
  • The specific deterrence implications of increased reliance on correspondence audits.
  • The extent to which the IRS continues to erroneously approve Form 1023-EZ applications.
 
Please visit www.TaxpayerAdvocate.irs.gov/2019AnnualReport for more information.
 
 

 

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