Look for changes on 2008 Form 1040

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The IRS is mixing it up a little and keeping it fresh this year by adding some new lines and moving some items to different places. Here are the changes to the Form 1040. The only changes to the 2008 Form 1040 appear on page 2 of the form.

  • There is a new Line 39c which allows the taxpayer to indicate if the non-itemizing taxpayer is claiming an additional standard deduction for either real estate taxes paid (up to $500, or $1,000 on a joint return) or a net disaster loss, defined as personal casualty losses from a federally declared disaster. See page 34 of the instructions.
  • There is a new part to the exemption calculation on line 42 for taxpayers who provided housing to a Midwestern displaced individual. The additional exemption is $500 per qualifying person, up to a maximum of $2,000.
  • The option to include tax from taxable Health Savings Account distributions as calculated on Form 8889 has been removed from the Form 1040 income tax calculation line, and now taxpayers are asked to add the Form 8889 tax to the Total Tax amount on Line 61 and write in "HSA" on the line next to the total tax amount.
  • There must have been quite a battle for the top spot in the credit section of the Form 1040, but the Foreign Tax Credit came out on top, moving up two places and stealing the coveted top tax credit location on line 47 from the former first-place holder, the Form 2441 Credit for child and dependent care expenses. The Schedule R Credit for the elderly or disabled also got bumped a spot, from second to third place, and the Form 8863 Education credits moved from third to fourth place. The Form 8880 Retirement savings contribution credit beat out the Child tax credit and moved up another spot on the list to line 51. The Child tax credit is next on line 52, the same line it had last year, but only because the Form 5695 Residential energy credits lost their line entirely and are now grouped in with "Credits from Form 8396, Form 8859, Form 5695" on line 54, taking the place of the ubiquitous Form 8859 District of Columbia First-Time Homebuyer Credit. The bottom line is that all of the credits got jumbled up and somehow we ended up with one fewer line in this section than there was in 2007.
  • In another line item showdown, the "Advance earned income credit payments from Form(s) W-2, box 9" lost a line of its own in the "Other Taxes" section of the form and is now grouped with the Schedule H Household employment taxes on line 60.
  • In the "Payments" section of the return, the former line 70 for "payments" calculated on forms 2439, 4136, and 8885 has been renamed "credits" and this new line 68 includes the Form 8801 Credit for prior year minimum tax, a credit that used to get its own line.
  • Line 69 now houses the new Form 5405 First-time homebuyer credit for taxpayers who meet the definition of first-time buyers even if this isn't the first time they have bought a home.
  • The Recovery rebate credit appears on line 70 for taxpayers who deserve an additional credit beyond what was sent to them in 2008 when the government sent out the stimulus payments, or for those who haven't yet received their stimulus payment. A worksheet on page 62 and 63 of the 2008 Form 1040 Instructions helps determine the amount for this line.

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