There is quite a bit of buzz surrounding the the new tax laws which have passed for 2018. Among the many perks Trump is touting; the possibility that tax payers can file their income taxes with a simple postcard.
Although it is a lovely idea, the truth is that even the new reformed tax laws will still result in a fairly lengthy 1040. IRS Form 1040, which the majority of taxpayers use to file their income taxes, will still have approximately 98 lines and boxes that need to be filled in. 98 lines makes for a pretty big post card. Tax payers can expect a simpler filing experience, however. An increased standard deduction will encourage millions of taxpayers to skip itemization, thus reducing the time it takes to file their taxes as well as the amount of paper work required.
The Tax Postcard is in fact already a reality for some tax payers. The IRS already offers the 1040 EZ which is approximately 14 lines long. In 2015, 25 million taxpayers took advantage of this super simple filing system. If you are looking for the quickest, easiest way to file your taxes this could be a great solution for you. However, IRS Form 1040 EZ has several exceptions. Tax payers using this form must first have taxable income of $100,000 or less. If you have investment income of more than $1,500 in interest then you also can’t use this simplified form. The real downside to the IRS postcard system is that if you claim any dependents, you are out of the Postcard Club.
Even if President Trump can’t deliver on his postcard promises, there is still a lot of excitement concerning new tax breaks and increased child tax credits. The IRS will be busy for the next year designing and perfecting the new forms that accommodate the drastic tax overhaul. This gives the rest of us plenty of time to do our homework and find out exactly how the new tax laws can best benefit us.