Here's what taxpayers need to know about the new Form 1040

Key Points
  • The IRS has debuted a new, streamlined Form 1040 for this tax year.
  • While the new form does not fit on a postcard, the main section is condensed.
  • But don't be fooled: Additional schedules mean you will likely take the same time to do your taxes as you did in previous years, tax experts say.

Taxpayers need to be prepared to use new tax forms this year.

The 2017 Tax Cuts and Jobs Act brought a lot of changes to the U.S. tax system. One big change, of course, is the new Form 1040, which is now more streamlined.

While it doesn't quite fit on a postcard as once promised, it is shorter.

Daniel Acker | Bloomberg | Getty Images

For some individuals, the form could result in a faster filing process. Many taxpayers, however, probably will not see a dramatic difference when filing this year, according to experts.

That is because the form still asks for all of the same information. In addition to the main form, there are six related schedules you might have to fill out based on your personal financial situation.

"A lot of the same information is still ultimately attached to the return, it's just not on the face of the return for certain items," said Susan Allen, senior manager for tax practice and ethics at the American Institute of Certified Public Accountants. "It's kind of just shifted from one place to another place."

If you typically turn to a CPA or tax software to prepare your return, you probably will not notice a difference, said Tim Steffen, director of advanced planning at Baird Private Wealth Management.

"The inputs that they'll put into the computer are going to work exactly the same," Steffen said.

But as you get ready to tackle your returns this year, there are some things to consider.

Gather your forms

If you are preparing your return yourself, how quickly it goes will depend on the complexity of your financial situation.

This reporter tried it. And filling it out from start to finish took less than half an hour.

But full disclosure: My tax situation is mostly uncomplicated — filing singly, no dependents and no major life changes this tax year.

But that doesn't mean it's not still work to keep track of — and pull together — all of my tax documents.

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Ready, set, file

For example, I now have both a flexible spending account and a health savings account from my current and former employers. While the FSA doesn't require a tax document, the HSA does. Owners of HSA accounts will receive a 1099-SA, whereby they are required to report all distributions for the year.

Moreover, if you move retirement funds from one plan administrator to another, as I did because I changed jobs, you should receive a Form 1099-R in the mail. That is because your rollover is reported as a distribution, even when you move the funds directly to another retirement account.

There are other tax documents to watch out for, such as a Form 1095-C to show you obtained health insurance coverage through your employer, or Form 1095-A, if you bought if you purchased health coverage independently.

Bottom line: "You will still need to get together the same amount of information that you did last year," Allen said.

Get on schedule

Once you've rounded up all of your tax documents, how long it takes you to fill out the new 1040 form will depend largely on how many of the additional schedules apply to you.

"Probably Schedule I is the one that will get used the most, " Steffen said. "That's the one that's got additional items of income and then the adjustments to income."

Few people will probably use Schedule 2, which is aimed at taxpayers who are subject to the alternative minimum tax, or AMT, according to Steffen. Of note, the AMT document — Form 6251 — has changed to reflect changes in the new tax law.

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Schedule 3, for tax credits you may claim, such as the foreign tax credit, will likely be more common, according to Steffen.

"Anybody who has an international mutual fund, for example, will probably have to use this form to claim a credit for the withholding that was done," Steffen said.

Schedule 4 applies to other taxes you may pay beyond normal income tax. This one is for you if you're self-employed, owe penalties on your retirement plan distributions or are paying the 3.8 percent tax on your investment income.

In addition, you may need to fill out Schedule 5 for other payments and refundable credits or Schedule 6 to report a foreign address or third-party designee.

Learn from the process

One key difference this year is that there is no longer a Form 1040-A or Form 1040-EZ. Everyone will work from the same new Form 1040.

The key thing you will learn from filing this year is whether you withheld enough, judging by whether you are getting a refund or if you owe. Ideally, you want to come out about even.

One thing that will be more difficult to assess: exactly how the new tax law affected your bottom line.

"You won't necessarily be able to tell, did I pay more tax or less tax under the new system," Steffen said. "But you will be able to see the items that have changed or moved."

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Here's how the new tax law could impact tax refunds

Even though your return likely won't tell you how the tax law affects you, you should still take away some lessons for next year.

The most obvious step to take is to change your withholding so that you do not receive a large refund or have to write a big check to the IRS next year.

Another key thing to consider: Get one-on-one feedback from a professional CPA. That will help you make sure you're taking all the deductions for which you are qualified, according to Allen.

"The takeaway really is that there's such a significant tax law change now that I think it's time to really talk to a good CPA to look at your full financial picture," Allen said.