How to Use Excel to File Form 1040 and Related Schedules for 2016
It remains to be seen if 2017 will be a sea-change year for the US tax code, but you can still count on using Microsoft Excel to compute your clients’ 2016 liability.
In case you don’t already know, the 21st spreadsheet-based version of Form 1040, formally known as the US Individual Income Tax Return, is now available for free at www.excel1040.com. Glenn Reeves of Burlington, Kansas, has been tweaking and improving this spreadsheet-based tax software since the mid-1990s.
Mr. Reeves’ spreadsheet empowers anyone to prepare their tax return spreadsheet using Excel 2007 and later. Last year he had to abandon a “lite” version that offered broader compatibility with other spreadsheet applications. Increasing complexity in the tax code requires the modern XLSX document format. The elaborate formatting that replicates the dozens of IRS forms and worksheets comprised in this workbook simply overwhelmed the capabilities of the now obsolete XLS document format.
As always, be aware that Mr. Reeves does not offer any assurance that the IRS will accept printed versions of his spreadsheet. He chooses to file his return online after computing his return in Excel. The spreadsheet can be useful to citizens currently residing outside the country, as the encryption used within traditional tax return software programs often isn’t exportable to other countries.
Figure 1: Yes, you can complete 2016 federal income tax returns in Microsoft Excel.
The 2016 version of the spreadsheet includes both pages of Form 1040, as well as these supplemental schedules:
- Schedule A: Itemized Deductions
- Schedule B: Interest and Ordinary Dividends
- Schedule C: Profit or Loss from Business
- Schedule D: Capital Gains and Losses (along with its worksheet)
- Schedule E: Supplemental Income and Loss
- Schedule F: Profit or Loss from Farming
- Schedule SE: Self-Employment Tax
- Form 2441: Child and Dependent Care Expenses
- Form 2555: Foreign Earned Income
- Form 6251: Alternative Minimum Tax – Individuals
- Form 8949: Sales and Dispositions of Capital Assets
- Form 8959: Additional Medicare Tax
- Form 8960: Net Investment Income Tax – Individuals, Estates, and Trusts
- Form 8962: Premium Tax Credit
The spreadsheet also includes several worksheets:
- Line 10: State and Local Income Tax Refund Worksheet
- Lines 16a and 16b: Simplified Method Worksheet
- Lines 20a and 20b: Social Security Benefits Worksheet
- Line 32: IRA Deduction Worksheet
- Line 33: Student Loan Interest Deduction Worksheet
- Earned Income Calculation
- Line 40: Standard Deduction Worksheet for Dependents
- Line 42: Deduction for Exemptions Worksheet
- Line 44: Qualified Dividends and Capital Gain Tax Worksheet
- Line 52: Child Tax Credit Worksheet
- Line 66: Earned Income Credit (EIC)
Five additional worksheets complete the tool:
- W-2 input forms that maintain up to four employers and their spouse
- 1099-R retirement input forms for up to seven payers and their spouse
- SSA-1099 input form to record Social Security benefits
- An EIC table
- A tax table
- A change worksheet that records revisions to the spreadsheet
All of the worksheets included in the 1040 workbook are password-protected, and most of the formulas are hidden. However, you can add new worksheets to the file or create links to other workbooks. Mr. Reeves contends that users won’t need to access any of the protected cells. As shown in Figure 2, the spreadsheet offers some limited error checking.
Figure 2: The spreadsheet offers limited error-checking prompts.
Although optional, Mr. Reeves does accept donations for his work. The total donations received grow bigger every year, which he writes on his website “feeds his ego” and encourages him to continue to pursue this “labor of love.” Mr. Reeves reports all amounts on his tax return as income, in addition to passing a share of all donations on to his church. Spreadsheet-based versions of Form 1040 are available for tax years 1996 through 2016 at www.excel1040.com.
David H. Ringstrom, CPA, is an author and nationally recognized instructor who teaches scores of webinars each year. His Excel courses are based on over 25 years of consulting and teaching experience. His mantra is “Either you work Excel, or it works you.” David offers spreadsheet and database consulting services nationwide.