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Senior Tax Return 1040SR: A Complete Walk-through

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    Are you a taxpayer age 65 or older? If so, then you may be able to use Form 1040SR to complete your senior tax return.

    Introduced in the 2019 tax year, this form is officially titled U.S. Tax Return For Seniors. It features a larger print than the traditional Form 1040: U.S. Individual Income Tax Return. In addition, it also includes an easy-to-read standard deduction chart. 

    As a result, this form is more accessible and simpler to navigate, which can make it easier for older Americans to use. Today, we’re sharing a complete walk-through of how this form works. 

    Form 1040SR: A Brief Background

    Before we dive into how to fill out 1040SR or all of the parts on this form, it helps to know how it originated. This form is a result of the Bipartisan Budget Act (BBA) of 2018, which required the IRS to create a special tax form just for seniors. Yet, its origins go back a little further than that.

    Form 1040SR was originally proposed back in 2013 as part of the Seniors Tax Simplification Act. Ultimately, the Senate failed to pass the bill, although it did garner plenty of support from several major institutions, including:

    • The American Association of Retired Persons (AARP)
    • The National Taxpayers Union
    • The Association of Mature Americans 

    1040-EZ vs. 1040 vs. 1040SR

    The idea was shelved for five years. In the meantime, the IRS continued to issue Form 1040-EZ, which was meant to make the filing process as easy as possible. 

    The only issue? That form was limited in nature. Taxpayers could only use 1040-EZ if their overall income was $100,000 or less, and their interest income didn’t top $1,500 annually. 

    In 2018, Form 1040-EZ was officially repealed, and the IRS debuted a new and revamped Form 1040. As such, even if you were an older adult who met the limitations for 1040-EZ, you were still required to complete the standard Form 1040, as the easier alternative no longer existed. 

    Though it was meant to be a simplified version of the form from years past, Form 1040 was still a challenge for many seniors to access. 

    Then, President Donald Trump signed the BBA into law on February 9, 2018. As a result, Congress tasked the IRS with creating a tax form that would be easier for senior taxpayers to navigate, and Form 1040SR was born. Unlike 1040-EZ, this form does not put any type of limit on the amount of interest, dividends, or capital gains that a taxpayer can earn, nor does it cap their overall annual income.

    When printed, Form 1040SR is more readable than the standard 1040 form, due to a few strategic changes. These include:

    • Larger font size
    • Wider spaces to enter information
    • An easy-to-decode standard deduction table (with larger print) 

    Taxpayer Qualification Requirements 

    To file Form 1040SR, senior taxpayers must be 65 or older as of the first of the year. This year, that means you must have been born before January 2, 1957. 

    Note that you do not have to be retired to use this form. If you’re married and filing jointly, only one spouse is required to meet the age limit. That means that if you’re only 63, you can still file Form 1040SR as long as your spouse is at least 65 or older. 

    Prefer to stick with the standard IRS Form 1040? No problem. Senior taxpayers aren’t required to use this special version, though it can be helpful for those who have a difficult time reading or discerning the traditional fields. 

    Where to Find Form 1040SR 

    If you’re interested in filling out Form 1040SR, then you can access it in a few different ways. 

    If you prefer to complete the form electronically, then head over to the IRS website. Here, you’ll find a digital version of the form for the 2021 tax year.

    You can complete the form entirely online, clicking in each field to enter your information. Then, you’ll simply save the file to your computer and print it out.

    Alternatively, you can contact your local team of experienced tax attorneys to obtain a paper copy. Tax preparation software will also include the form, which you can access as you prepare and file your tax return.

    If you’re drawn to this form for the larger typeface and more spacious fields, then it’s best to print it out and fill it out by hand rather than going the electronic route. This way, you can take advantage of those special features when adding your information. 

    How to File Form 1040SR

    Wondering how to file your completed return? As with a standard 1040R form, you can file 1040R electronically. Or, you can mail a paper version to the IRS. 

    Note that while you have the option to perform either action, it’s quickest and most efficient to submit the document electronically. The IRS can take a long time to process a paper return. This means that if you’re waiting for a refund, it could take longer to receive your payment. 

    Still, you may prefer to mail the form either way. If so, then visit the IRS website for the specific mailing address to use. The location to send yours to will vary depending on the state you live in, as well as whether your return includes a tax payment or not. 

    A tax attorney can walk you through every step required to complete and file this form. Keep in mind that as long as your adjusted gross income did not exceed $73,000 in 2021, you can also use the IRS Free File Program to complete this process. 

    Form 1040SR: Key Fields to Complete

    At first glance, Form 1040SR looks strikingly similar to the standard version of this form. That’s because, for the most part, these two documents are very similar.

    In fact, most of the lines, fields, and sections are exactly the same. Let’s take a look at what you’ll need to do in each section.

    Top Portion: Contact Information

    Both forms begin in the same way. In the top portion of each, you’ll need to enter your personal identification information. This includes:

    • Your filing status
    • Your name 
    • Your address
    • Your social security number (and your spouse’s if filing jointly)

    Before moving on to the next section, you’ll also be prompted to state whether you’d like to donate $3 toward the Presidential Campaign Fund. You’ll also need to tell the IRS if you’ve received, sold, exchanged, or otherwise disposed of any financial interest in any virtual currency over the previous tax year. 

    This field is there to make sure that you’re reporting any virtual currency transactions that occurred during the tax year, such as a Bitcoin purchase. You’ll need to pay taxes on these transactions, so it’s important to disclose them here.   

    Standard Deduction

    In the middle of Form 1040SR, you’ll find the Standard Deduction box. In this section, you will state whether or not anyone can claim you or your spouse as a dependent on their own tax return. There’s also a box to check if your spouse itemizes on a separate return or you are a dual-status alien.

    Before moving on to the next section, you’ll also verify that you or your spouse were born before the cutoff date of January 2, 1957. If you or your spouse are blind, there’s also a box to check to share that information. 

    Dependents

    Under the “Dependents” section, you’ll list any dependents you are claiming on your tax return. You will need to list each dependent by their full name, along with these details:

    • Their Social Security number
    • Their relationship to you 
    • If they qualify for the child tax credit
    • If they qualify for a credit for other dependents

    Sources of Income

    In Lines 1 through 8, you will list the various sources of income that you earned throughout the tax year. These include:

    • Wages, salaries, and tips
    • Tax-exempt interest
    • Qualified dividends
    • IRA distributions
    • Pensions and annuities
    • Social Security benefits
    • Capital gains (or losses)
    • Other income

    Add all of these income sources together, and enter the total on Line 9. On Line 10, you’ll enter your adjustments to income. You can calculate this number via Schedule 1: Additional Income and Adjustments to Income, Line 26. 

    Standard Deduction or Itemized Deductions

    On Page 2 of Form 1040SR, there is a section for deductions (Line 12a through 12c). You have two options, here. You can either claim the standard deduction or you can itemize.

    Note that if you itemize your deductions via Schedule A, then you will need to include a copy of Schedule A with your tax return. If you take the standard deduction, then be sure to claim any charitable contributions on Line 12b. For the 2021 tax year, these contributions can total up to $300 per individual or $600 for married taxpayers filing jointly.  

    Claiming Tax Credits

    On page 2, you’ll also have the opportunity to claim a range of tax credits that might apply to you or your spouse. These include:

    • Child tax credit
    • Credit for other dependents 
    • Earned income credit
    • American opportunity credit
    • Recovery rebate credit

    Depending on which credits you claim, you may need to complete different schedules in addition to Form 1040SR. These include Schedule 2, Schedule 3, and Schedule EIC. If you have any questions about which forms you should complete and include with your return, be sure to reach out to a team of qualified tax attorneys for clarification and assistance. 

    Refund Amount

    When you add all of your total tax payments together (Line 33), you might find that the sum is more than your total tax (Line 24). If this is the case, then you may qualify for a refund. 

    On Form 1040SR, Lines 34 through 36 are dedicated to helping you navigate this refund. You’ll enter the amount that you overpaid on Line 34 and the amount that you want to be refunded to you on Line 35. Here, you’ll also need to include your routing number, account number, and account type to make sure the money goes to the right location.

    If you do not want the full refund sent back to your account, you can also choose to apply all or a portion of it toward your 2022 estimated tax. If you want to do this, you’ll enter the amount of your refund that you want to apply on Line 36. 

    Amount You Owe

    If you compare Line 33 to Line 24 and discover that you owe tax money, then you’ll enter that amount on Line 37. You can also follow the included instructions to estimate your tax penalty, if applicable. 

    Third Party Designee

    Before signing off on the form, you’ll complete one more section: Third Party Designee. Check “Yes” in this box if you want to give permission for someone else to discuss the details on your 1040R form with the IRS. 

    You will need to include that person’s name, as well as their personal identification number (PIN). Their PIN is usually their Social Security number. 

    2021 Tax Year Changes to Note

    Form 1040SR looks virtually the same for the tax year 2021 as it did for the tax year 2020. The only difference to note is that the values on the standard deduction table have been updated. 

    For more information on these specific amounts and the changes that occurred from year to year, check out this breakdown

    Get Help With Your Senior Tax Return

    Tax returns can be complicated, especially ones that require you to perform multiple calculations and cross-reference different schedules. Form 1040 is no exception. 

    Are you an older adult looking for a modified version of this form? If so, then Form 1040SR can be a valuable alternative for your senior tax return. The text is larger, the spaces are more generous, and the standard deduction chart is a little more straightforward. 

    If you have questions about this form or any others, our qualified tax attorneys are here to help. Contact Silver Tax Group today to discuss your tax-related questions today. 

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