1040-SR: Retirees and Older Earners Get New Tax Form Just for Them

Form 1040-SR, a result of the Bipartisan Budget Act of 2018, is easier to read and spotlights standard deductions.

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Key Takeaways

  • The 1040-SR doesn’t have an income limit, as on the old 1040-EZ

  • You must be 65 or older to use the new form
  • Form 1040-SR uses a larger font and reduced shading

When it comes to your sunset years, it seems like 70 is the new 50. Retirement has evolved to be more than shuffleboard and bingo. There’s a whole world of exciting products and experiences geared just for our more seasoned citizens. Now you can add a new tax form to the list.

As long as you’ve turned 65 on or before January 1, 2020, you’ll be able to file your 2019 taxes with Form 1040-SR.

Also known as “U.S. Tax Return for Seniors,” the form—which the IRS has released in draft form—is a result of the Bipartisan Budget Act of 2018. It has larger text and less shading than the regular 1040 to help older folks whose vision isn’t what it used to be. It also has a standard deduction chart on the first page.

Like the regular IRS Form 1040, the new form includes lines for income typical for many seniors, such as IRA distributions, pensions, and annuities, as well as Social Security benefits. The old 1040-EZ, which the IRS has done away with, didn’t accommodate those types of income.

“The reason for the 1040-SR was that many seniors couldn’t meet the requirements for filing Form 1040-EZ and thus were forced to file the far more complicated Form 1040 due to the nature of their retirement incomes and their ages,” said David Certner, legislative policy director with seniors-focused interest group AARP. “The hope is that the 1040-SR will provide more seniors with a simpler form to use.”

You Don’t Have to Be Retired to Use Form 1040-SR

Still, the new form uses the same instructions as the regular 1040, which has been redesigned for the 2019 tax year. So it seems that the main advantages of the new Form 1040-SR are easier readability for seniors filling out their taxes on paper and the more prominent display of standard deductions. Remember, if you're 65 or older, you're eligible for a higher standard deduction.

If you’re below that age threshold, you’ll have to fill out the regular 1040, even if you’ve retired early, noted Elijah Kovar, partner and lead advisor with Minnesota-based retirement planning firm Great Waters Financial.

Getting Ready for Tax Season?

Check out our Tax Resources Center for articles, tools, and tax calculators to help you prepare your taxes this year and evaluate the potential tax implications of future investment decisions. 

But seniors who are 65 and older don’t have to be retired to use the new form, noted Nicholas Yrizarry, CEO of Align Wealth Advisors in Laguna Hills, CA. As long as you meet the age requirement, you can still be earning money and use Form 1040-SR.

Consider a Tax-Deferred Strategy

Whether they use the new form or not, seniors can avoid overpaying on taxes and keep more of their retirement money with a tax-deferred strategy that only pays taxes on income that has been distributed.

“The goal is to pay taxes only on money you need and, money you’re spending,” Yrizarry said. “It’s wasteful to pay taxes on money you don’t need.”

At the end of the day, even with the new form, if you’re a senior filing your taxes electronically or having a tax professional file for you, then you might not notice much of a difference in your filing experience for the 2019 tax year.

But if you’re still filling out your taxes on paper, the new IRS form 1040-SR might make things easier for you.

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Key Takeaways

  • The 1040-SR doesn’t have an income limit, as on the old 1040-EZ

  • You must be 65 or older to use the new form
  • Form 1040-SR uses a larger font and reduced shading
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