As with everything in this life, your 1040 tax form will come with a few changes this year. Five to be exact.
Now, the average person might panic in this situation. But you’re not the average person. Just by reading this article, you’re arming yourself with knowledge and information that will help you achieve tax success this April 15.
Don’t confuse tax success with a tax refund. By success, I offer you a chance to understand this year’s changes to the 1040 tax form. Knowing about these updates will go a long way to helping you fill out your tax return without any problems – and who wants problems anyway?
Overhaul of Schedule D
No longer will you fill out your capital gains and losses on Schedule D nor your possible additional items on Schedule D-1. This year, all of your short term capital gain and capital loss transactions will go on Form 8949. That goes for long term transactions as well. Schedule D will still be used, but the difference this year is that Schedule D will contain the totals from Form 8949, acting as a summary schedule.
New Kid on the Block – Form 8938
No, this form has nothing to do with musical talent. Instead, Form 8938 will need to be filled out by those people who call America home, yet have certain foreign assets. Make sure to understand that Form 8938 may also be required as a supplement to the reports of annual foreign accounts you normally list out on your taxes on TD 90-22. Check with your tax professional for a complete education about Form 8938.
Help for the Lone Rangers
This year, like a gift from heaven, we find out that self employment taxes are being reduced. Self-employed professionals get to take advantage of a two percentage-point decrease, thanks in large part to the payroll tax cut. Since you are on your own payroll, essentially, you get to save a little extra cash this year. The reduction can be found in Schedule SE of the 1040 form in your tax return.
On your 2012 taxes, you’ll notice that there is an increase in the amount of Alternative Minimum Tax exemption – thank you very much Uncle Sam. This is reflected on the Form 6251. The AMT amount will see an increase to $48,450 for a single filer, $74,450 for those who are married yet filing a joint return, and $37,225 for people who are married but choose to file separately.
Didn’t Make the Cut
Sadly (or not so sadly depending on your perspective) Schedule M and Schedule L won’t be with us this year. Even if you used these schedules last year, you’re going to have to learn to let go – because they’re gone. Basically, the tax breaks that gave birth to each of these schedules have expired. The purpose of Schedule L was for supplementary deduction values, while Schedule M was filled out to gain the “work-pay” credit.
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