How to Use Excel to File Form 1040 and Related Schedules for 2017
Most of the provisions in the Tax Cuts and Jobs Act completely change the tax landscape for the 2018 tax year, while some changes retroactively affect the 2017 tax year.
No matter the machinations of Congress, you can still use Microsoft Excel to determine your clients’ tax liability for 2017, as well as plan for 2018. Let's start with the 22nd spreadsheet-based version of Form 1040, formally known as the US Individual Income Tax Return is now available for free at www.excel1040.com.
Note that this year you must first read through a disclaimer before you can download the spreadsheet, so be on the lookout for the Disclaimer link. Glenn Reeves, an electrical engineer from Burlington, Kansas, has been tweaking and improving this spreadsheet-based tax software since the mid-1990s. In December 2016, the personal finance web site The Balance, dubbed Mr. Reeve's spreadsheet their favorite out of 18 software programs.
Mr. Reeves' spreadsheet empowers anyone to prepare their tax return spreadsheet using Excel 2007 and later. Two years ago, 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. Further, he's received feedback that his software has helped taxpayers reduce their liability by identifying deductions that other tax software programs have failed to reveal.
Figure 1: Yes, you can complete a 2017 federal income tax return in Microsoft Excel.
The 2017 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 1116: Foreign Tax Credit
• Form 2210: Underpayment of Estimated Tax by Individuals, Estates, and Trusts
• Form 2441: Child and Dependent Care Expenses
• Form 2555: Foreign Earned Income
• Form 6251: Alternative Minimum Tax – Individuals
• Form 8283: Noncash Charitable Contributions
• Form 8889: Health Savings Accounts (HSAs)
• 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 (PTC)
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
• 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
• Earned Income Calculation
Five additional worksheets complete the tool:
• A disclaimer worksheet that also includes a high-level summary
• A new Instructions worksheet
• W-2 input forms that maintain up to four employers and their spouse
• 1099-INT interest income input forms for up to ten payers
• 1099-DIV dividends and distributions for up to ten payers
• 1099-R retirement input forms for up to nine payers each for a taxpayer and their spouse
• SSA-1099 input form to record Social Security benefits
• An EIC (earned income credit) 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 purposefully restricts access to the protected cells; and contends that a bit of study will show that there's no need to alter the formulas. As shown in Figure 2, the spreadsheet offers some limited error checking.
Figure 2: The spreadsheet offers limited error-checking prompts.
Never one to rest on his laurels, Mr. Reeves has also released a 2018 Federal Income Tax Planner, which incorporates the 2018 tax law "as best as [he] can figure it out." Although optional, Mr. Reeves does accept donations for his work.
The total donations received grows bigger every year, which 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 local church. Spreadsheet-based versions of Form 1040 are available for tax years 1996 through 2017 at www.excel1040.com.
Direct questions regarding this Excel 1040 form to Glenn Reeves via his website. See the FAQ page if you’re interested in helping him test the spreadsheet and ensure its continued existence.
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.