- The virtual currency question has been moved from Schedule 1 to the first page of the 1040
- Adjustments on page 1 now includes a charitable contribution deduction for taxpayers who take the standard deduction. As part of the CARES act, taxpayers can now deduct up to $300 of charitable contributions even if they take the standard deduction. Schedule 1 is still available for other adjustments.
Page 2 has some additional notable changes:
- The line for withholdings now has three sublines to break out amounts withheld on Form(s) W-2, Form(s) 1099, and Other forms.
- Estimates and applied overpayments are also called out for 2020. Line 26 now reads: “Estimated taxes and amounts applied from the prior year tax return.” Previously these amounts would have been reported under “Other payments and refundable credits.”
- Another new loan on Page 2 is line 30, Recovery rebate credit. This credit will relate to the economic impact payments that were received by taxpayers during 2020 which were considered to be an advance of a credit on the 2020 tax return. The line refers to instructions but those are not yet drafted.
One of the new draft forms is 1099-NEC for 2021 (below). 1099-NEC will be first used for 2020 and the 2020 form was approved in November 2019. Nonemployee Compensation will be reported separately from form 1099-MISC. This form is more straightforward from 1099-MISC as it only reports one type of compensation and will be received by many individuals who are independent contractors. Other income commonly reported on 1099-MISC remains the same, however, keep in mind the boxes may have shifted due to this change.
If you have any questions, reach out to your accountant!