The New 2019 Form 1040-SR U.S. Tax Return for Seniors Generally Mirrors 2019 Form 1040

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Here we are at the start of a new year, and with that the start of a new tax season. Doing taxes ranks up there between having a root canal and preparing for a colonoscopy in terms of things to look forward to.

But when I heard there was a new tax form for 2019 - Form 1040-SR U.S. Tax Return for Seniors - I thought, ok, that’s good news for some folks. Right?

The new Form 1040-SR is, according to the IRS, “available as an optional alternative to using Form 1040 for taxpayers who are age 65 or older.” (That leaves me out of contention.) The IRS further clarifies for 2019 that “age 65 or older” means you were born before January 2, 1955.

OK, so if Form 1040-SR is an “optional alternative” to the Form 1040, what’s different about it and why would any senior want to use a form that reminds them that they are a senior? There must be some benefit to using the form, right? Maybe you get free Geritol for completing this new form?

Well, here’s what the IRS says in the 2019 Form 1040 and 1040-SR Booklet about Form 1040-SR: “The form generally mirrors Form 1040.”

So why are we using taxpayer funds to create a new form that mirrors an existing form?

I did a side-by-side comparison to confirm to what degree Form 1040-SR “generally mirrors” Form 1040.

(By the way, the 2019 Form 1040 looks quite a bit different than the so called “postcard” 2018 Form 1040, which in reality was a terribly designed two page form that easily could have fit onto one page, plus six separate schedules. The 2019 Form 1040 looks more like the previous 2017 Form 1040, when we had the pleasure of choosing among Form 1040, Form 1040A and Form 1040EZ the latter two of which went away in 2018.)

It is true. The two forms are nearly identical, with two minor exceptions:

1) Form 1040-SR includes a Standard Deduction Chart at the bottom of the form showing the Standard Deduction amounts. The Form 1040 tells you to go to the instructions to figure this out. Yet the bottom third of Form 1040 page one is blank. There is PLENTY of room to include the Standard Deduction Chart on the face of Form 1040 too.

The Standard Deduction Chart on 2019 Form 1040-SR simply shows on the face of the form the larger Standard Deduction you can take if you were born before January 2, 1955 or are blind.

(And on a related note, the Standard Deduction in 2019 is $12,200 for single and $24,400 for married filing jointly taxpayers. Single taxpayers receive an additional $1,650 deduction for being 65+ and/or for blindness. Each married taxpayer receive an additional deduction of just $1,300 for 65+ and/or blindness. There’s a bit of a disparity there; perhaps another example of the marriage penalty in our tax system.)

This is the bottom third of 2019 Form 1040. Completely blank. Wouldn’t ya think they would include that same Standard Deduction Chart on Form 1040-SR here too? Nah, that would make too much sense.

2) Font Size- 2019 Form 1040-SR uses two full pages of space, yet 2019 Form 1040 leaves the bottom third of the form blank on both pages. Is this blank space for doodling or what?

Page one of 2019 Form 1040-SR fills the whole page and has larger font than 2019 Form 1040.

Page one of 2019 Form 1040 uses smaller font for us younger folk with 20/20 eyesight in 2020 and leaves a 3rd of the page blank.

Page two of 2019 Form 1040-SR fills nearly the entire page. Nothing wrong with that.

Exact same information on page two of 2019 Form 1040 as Form 1040-SR, but scrunched up in smaller font, leaving plenty of doodling space at the bottom of the form. Makes a lot of sense, doesn’t it.

From a practical standpoint, why wouldn’t our legislators hire smart people that could step back and say, hey, maybe we don’t need a new form to confuse people when this new form adds zero value to society. Maybe we can simply increase the font of the existing form size and call it a day?

Don’t blame the IRS. Let’s dive even deeper into this matter to find out who makes these stupid decisions.

Although the IRS designed these forms, it was at the direction of the 115th Congress (2017-2018), signed into law by Donald Trump on February 9, 2018 in H.R. 1892, the “Bipartisan Budget Act of 2018.”

TITLE II--MISCELLANEOUS PROVISIONS

Sec. 41106. Form 1040SR for seniors.

FORM 1040SR FOR SENIORS.

(a) In General.--The Secretary of the Treasury (or the Secretary's delegate) shall make available a form, to be known as “Form 1040SR'', for use by individuals to file the return of tax imposed by chapter 1 of the Internal Revenue Code of 1986. Such form shall be as similar as practicable to Form 1040EZ, except that--

(1) the form shall be available only to individuals who have attained age 65 as of the close of the taxable year,

(2) the form may be used even if income for the taxable year includes--

(A) social security benefits (as defined in section 86(d) of the Internal Revenue Code of 1986),

(B) distributions from qualified retirement plans (as defined in section 4974(c) of such Code), annuities or other such deferred payment arrangements,

(C) interest and dividends, or

(D) capital gains and losses taken into account in determining adjusted net capital gain (as defined in section 1(h)(3) of such Code), and

(3) the form shall be available without regard to the amount of any item of taxable income or the total amount of taxable income for the taxable year.

(b) Effective Date.--The form required by subsection (a) shall be made available for taxable years beginning after the date of the enactment of this Act.

So where did this ineffective new law originate? Who can we blame?

The text of this new law is nearly identical to the “Simple Tax for Seniors Act of 2004” introduced to the 108th Congress by Republican Senator Larry Craig on June 3, 2004, almost exactly four years to the day before he was arrested for indecent behavior in a men’s restroom at the Minneapolis-St. Paul International Airport. The proposed new law didn’t go anywhere, while Craig pled guilty to a charge of disorderly conduct.

The bill made a comeback in 2011, when Republican House Representative John Fleming and Senator Marco Rubio introduced it to the 112th Congress as the “Seniors’ Tax Simplification Act of 2011.” It went nowhere. It was presented again in 2013 and 2015. No changes were made in the bill other than the date.

Then the Honoring Hometown Heroes Act (H.R. 1892) was introduced to the House on April 4, 2017, authorizing governors to fly U.S. flags at half-staff in the event of the death of a first responder who dies while serving in the line of duty. It passed the House on May 18th. It passed Senate on November 28th.

What does this have to do with Form 1040-SR? H.R. 1892 was amended in a massive way in February 2018 and was renamed the Bipartisan Budget Act of 2018. Division A of the law is the Honoring Hometown Heroes Act. Divisions B, C, D and E incorporate other new laws. Division D includes the new Form 1040-SR.

And as mentioned above, the Bipartisan Budget Act was signed into law on February 9, 2018, nearly 14 years after the original vaguely-worded Simple Tax for Seniors Act was introduced.

So now you know the history of Form 1040-SR. If our legislators were competent, the new Form 1040-SR would not exist. Instead, Form 1040 would have slightly larger font size and Standard Deduction details shown on the face of the form to benefit all taxpayers equally.

California Minimum Wages Increased Today, January 1, 2020 by $1 Per Hour

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If you are a minimum wage earner in California, today you received a pay increase of either 9.1% or 8.3%.

Huh? Well it depends on if your employer has 25 or fewer employees or 26 or more employees. If you work for a smaller employer (25 or less employees), the California minimum wage increases from $11 to $12 per hour. If you work for a larger employer (26 or more employees), your wage increases from $12 to $13 per hour.

Hmm, that brings an interesting idea to mind. If you are a minimum wage earner at a smaller company as defined, you could actually receive an 18.2% increase in 2020 simply by finding a larger employer!

In any case, by law, California minimum wage rates for all companies will be raised to $15 per hour with $1 increases on January 1st of each year by 2022 for larger employers and 2023 for smaller employers. See charts below.

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The federal minimum wage for 2020 is $7.25, a rate that has stood frozen in time since it became effective on July 24, 2009.

California minimum wage rates apply to Ventura County residents. But City of Los Angeles and County of Los Angeles minimum wage rates are currently higher than Ventura County/California wage rates. They are currently:

  • $13.25 for employers with 25 or less employees until 7/1/20, when the rate increases to $14.25 per hour. The rate subsequently increases to $15 per hour 7/1/21.

  • $14.25 for employers with 26 or more employees until 7/1/20, when the rate increases to $15 per hour.

Looking for a higher minimum wage? Move to San Francisco, where the rate is currently $15.59 per hour and will be adjusted for inflation on July 1, 2020.

Would You Like Slides with That? Fast Food Places in Ventura County with Play Areas!

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Sometimes it's fun to take the kids out where you know they'll be able to burn off some steam after their chicken nuggets and fries. Mind you, my kids much prefer going to a park to play, but sometimes it’s nice to eat and play at these (mostly) indoor play areas.

Here are places to eat that have play areas.  Know of other places?  Well then, give me the scoop (the news, not the fries).

McDonalds Locations with Play Areas

Carl's Jr Locations with Play Areas

Chick-fil-A Locations with Play Areas

Other Places with Play Areas

The Number of Registered Voters in Ventura County Has Increased Nearly 10% Over the Last Seven Years

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The Ventura County Registrar of Voters website has up to date counts of the number of registered voters in Ventura County. We like to track the totals from time to time to see the trends.

On May 12, 2012, there were 406,644 registered voters in Ventura County, consisting of:

  • 157,539 Democrats

  • 150,919 Republicans

  • 77,994 Nonpartisans

  • 20,192 Other

Approximately seven years later, in May 2019, there are 445,217 registered voters, a 9.5% increase, including:

  • 176,712 Democrats, a 12% increase

  • 130,228 Republicans, a 14% decrease

  • 110,225 Nonpartisans, a whopping 41% increase

  • 28,052 Other, also a large 39% increase

Update as of 12/8/19: Total registered voters 454,872, up 2.2% in six months, including 183,994 Democrats (up 4.1%), 132,142 Republicans (up 1.5%), 108,208 Nonpartisan (down 1.8%) and 30,528 Other (up 8.8%).

Can’t remember if you are eligible to vote? Look it up at THIS LINK. What I’ve found with this Voter Eligibility Search function is that, unlike a search engine, your search terms have to be precise. If you are registered as Richard King, if you type Rich King into the search, it will not find you.

Register to vote online at registertovote.ca.gov.

California Minimum Wage Laws as of July 2019

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Barring additional changes in California minimum wage laws prior to 2023, here is the schedule for California minimum wages through that year from the State of California Department of Industrial Relations:

The federal minimum wage for 2019 is $7.25, a rate that has stood frozen in time since it became effective on July 24, 2009. Politics aside, if a federal minimum wage is going to exist and serve any purpose, why would it not change for 10 years? For it to have any meaning, perhaps apply an inflation factor to the rate. Cumulative price changes from 2009 to 2019 were about 19%, which would render a federal minimum wage rate of $8.63 in 2019. Otherwise, perhaps eliminate the federal minimum wage rate and leave it to the states.

I digress. In addition to the state and federal minimum wage rates, many cities and counties have their own minimum wage ordinances, including our neighboring Los Angeles County and City of Los Angeles:

Note that as of July 2019, employees at companies with 26 or more City of Los Angeles based employees will receive a minimum of $14.25 per hour, $2.25 more than the rest of the state, including Ventura County. But if your LA based company only employs 25 employees or less, the minimum is $13.25.

Employees in unincorporated sections of Los Angeles County also receive the above noted rates.

As of July 2019, the County of Ventura and cities in Ventura County have not established separate minimum wage rates.

Now if you’re really looking for a high minimum wage, move to San Francisco, where the current minimum wage is $15.59 per hour as of July 1st.

For local area jobs in Ventura County and nearby areas that pay more than the minimum wage rate, visit THIS LINK.

Filmed at Apricot Lane Farms in Moorpark, "The Biggest Little Farm" Documentary Is a Must See

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My kids had no idea what the film was about. I had heard good things about “The Biggest Little Farm,” and on a hot Sunday afternoon we headed over to the Regency Westlake Village to catch the 1 pm screening.

The Biggest Little Farm is a documentary that follows the dreams of John and Molly Chester and their dog, Todd., as they achieve their dream of creating a certified biodynamic farm. This farm happens to be Apricot Lane Farms, located right here in Moorpark (10700 Broadway Road).

Prior to pursuing the farm, Molly was a private chef and food blogger, while John was a career documentary filmmaker.

The film was truly an engaging tale of how these farmers found the inspiration to create their dream, enlist the help of many others - investors and support team - build the farm and sustain it, encounter numerous obstacles and challenges, and find creative solutions to these challenges.

It was a wonderful film to bring the kids to see. The film brought a lump to my throat many a time. The farm animals played a large part in the film and led us through emotions of joy to sadness, cheerfulness and grief. The story flowed nicely and the hour and a half brought not a dull moment.

While most of us would never entertain the thought of opening a farm, the lessons of perseverance and finding clever solutions in the film is of value to all. I’m glad I brought my teenage sons to the film.

Visit www.thebiggestlittlefarmmovie.com for showtimes at local theaters. Highly recommended!

Learn more about Apricot Lane Farms at www.apricotlanefarms.com. Their produce, meat, eggs and products are available at the Thousand Oaks Farmers’ Market and Calabasas Farmers’ Market, as well as at the Erewhon store in Calabasas.

The So Called "Tax Cuts" and Jobs Act of 2017 Eliminated Deductibility of Alimony for Divorces in 2019

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The Tax Cuts and Jobs Act of 2017 made divorce quite possibly much more expensive. Beginning for divorces executed in 2019, alimony paid by one spouse to another spouse is no longer deductible by the spouse making the payments. Inversely, the alimony is not taxable to the spouse being paid.

On the face of it, this sound pretty good for the payee. You no longer have to pay taxes on your alimony!

But the problem is that the payor, who is likely to be in a higher tax bracket than the payee, will no longer be able to reduce his or her or his taxable income by the amount of the alimony paid.

For grins (or perhaps groans), let’s look at an example.

Billy Bob and Billie Jean get divorced on January 1, 2019. Billy Bob earns $150,000 per year. Billie Jean does not work. As part of the divorce settlement, Billy Bob must pay $30,000 in alimony per year.

Using 2019 federal tax rate schedules, and assuming both deduct only the $12,200 per year 2019 standard deduction, Billy Bob would pay $27,295 in federal taxes in 2019. Billie Jean would pay no taxes on her alimony.

If the divorce agreement had been finalized one day earlier, December 31, 2018, Billy Bob would have reduced his taxable income by the $30,000 in alimony paid to Billie Jean. As a result, his 2019 federal taxes would be $20,095, fully $7,200 less than under the new laws. Billy Bob is in the 24% federal tax bracket.

Billie Jean would have to pay taxes on the $30,000 received had the divorce been finalized in 2018, but after taking into account the $12,000 standard deduction, her federal taxes would be $1,966.

So some might think, GOOD! Now Billie Jean doesn’t have to pay taxes! Good for her!

Well, let’s look at the bigger picture. The total taxes paid on that same $150,000 in total earned income in 2019 has increased by $5,234, from $22,061 ($20,095 plus $1,966) in 2018 to $27,295 in 2019. That’s a 24% increase in federal taxes as a result of the so called “Tax Cuts” and Jobs Act of 2017.

This may result in some particularly more heated discussions in future divorce proceedings.

Unlike other of the so called “Tax Cuts” laws that were changed on a retroactive basis that hurt middle class taxpayers (such as the arbitrary $10,000 per year “cap” on state and local taxes that has hit many in California particularly hard), this change in tax law was not made retroactive.

In other words, if you were divorced prior to 2019, the deductibility of alimony payments was not taken away from you. It just applies on a go-forward basis.

On behalf of all current year and future divorcees, thank you to our brilliant legislators who make these drastic changes in tax laws impacting our financial livelihoods.

More on the treatment of alimony at www.irs.gov/taxtopics/tc452.