The Internal Revenue Service has released a draft version of the Form 1040 for tax year 2020 with several significant changes probably in store for next tax season.
They include moving the question about virtual currency from the attached Schedule 1 to near the top of the main form, right under the name and address, asking, “At any time during 2020, did you receive, sell, exchange, or otherwise acquire any financial interest in any virtual currency?” The question comes at a time when the IRS has made it more of a priority to crack down on cryptocurrency investors who haven’t been reporting their gains on their tax filings, including by issuing summonses to major cryptocurrency exchanges like Coinbase and Bitstamp in recent years seeking information on their customers who trade in digital currency such as Bitcoin and Ethereum.
Another big change, as Kelly Phillips Erb of Forbes noted, is the inclusion of a question about charitable contributions on the main tax form for taxpayers who claim the standard deduction. Normally, taxpayers who claim the charitable deduction have to itemize it on Schedule A, but the CARES Act this year includes a provision for taxpayers to deduct up to $300 in charitable contributions even if they’re only claiming the standard deduction. That’s why there is now a line 10b for “charitable contributions if you take the standard deduction” on the draft Form 1040. Instructions will be provided for taxpayers and tax preparers, according to the form.
The flip side of the form includes a number of changes, including splitting the federal income tax withheld line into separate entries from W-2, 1099 and other forms, as opposed to a single line for federal income tax withholding. This suggests to Erb that the IRS may be planning to do extra scrutiny of gig workers and the self-employed.
A new line has been added to page 2 for the “recovery rebate credit,” which will be reporting the economic impact payments or stimulus checks that went out from the IRS this year as a result of the CARES Act. That too will be explained in the instructions for Form 1040, and Erb says there will be a separate reconciliation schedule that will carry over to that line on the form.
With the presidential election now decided, managers can model empathy and boundary setting to get employees back on track and refocused at work.
For more than 15 years, Pamela has worked in both the public and private sectors, supporting clients and solving complex problems. She currently serves as FranklinCovey's thought leader on inclusion and bias as well as a Global Client Partner responsible for supporting some of the organization’s most strategic accounts. Her solutions-oriented and client-centric approach have resulted in unique solutions that exceed client expectations and achieve results. Pamela works with clients to match the right solution to organizational strategic priorities and is particularly adept at designing tailored, competency-based programs to solve her client's most pressing needs.
Through this work, Pamela has designed programs that have impacted hundreds of thousands of participants, including FranklinCovey’s Unconscious Bias: Understanding Bias to Unleash Potential solution. Pamela has delivered this content and facilitated strategy discussions related to diversity, equity, and inclusion to thousands of leaders across the globe.
She is the co-author ofThe Leader’s Guide to Unconscious Bias: How to Reframe Bias, Cultivate Connection, and Create High-Performing Teams, which launches October 27, 2020 (Simon & Schuster).
Prior to her current role, Pamela served as an EEO & Diversity Analyst and Trainer, where she conceived and implemented proactive diversity programs to include human capital planning, training on unconscious bias and microaggressions, and statistical workforce analysis. For nearly a decade, she also served the non-profit community, executing advocacy, communications, special events, and fundraising strategies.
She is a highly sought-after consultant, speaker, and strategist. Pamela has addressed leaders across the world on unconscious bias, high potential leadership, and building an inclusive and effective culture to include the United Nations System, US federal government, and the Fortune 500. She’s been featured on TD.org, and the Living Corporate podcast in addition to her FranklinCovey thought leadership and writing. Pamela currently lives in South Florida with her husband and children, where they spend their free time exploring all manner of superheroes.
Lorna Sabbia is head of retirement and personal wealth solutions for Bank of America Merrill Lynch.
The “Amount You Owe” section of the form includes a new cautionary note, saying, “Schedule H and Schedule SE filers, line 37 may not represent all of the taxes you owe for 2020. See Schedule 3, line 12e, and its instructions for details.” Schedule3, line 12e is new, according to Erb, and corresponds to another provision of the CARES Act allowing employers to defer their portion of the payroll tax for Social Security.
The form so far does not seem to include a line for the new payroll tax deferral for the employee’s share of Social Security taxes under President Trump’s recent executive order or memorandum. The draft form is likely to change before it’s finalized, though, as the IRS receives comments from the tax practitioner and accountant communities, as well as others.
