1040: only the important stuff has been changed. YOUR TAXES

THE winner of this year's looks-can-be-deceiving award is the Form 1040 for 1987 taxes. It starts out innocently enough, with the usual requests for your name, address, social security number, and your willingness to add another dollar to the presidential election campaign fund. The deeper you get into it, however, the more complex it becomes. Like some deceptive maze, the new 1040 leads taxpayers into ever more complicated twists and turns, with stops at other forms of varying complexity to report things like children's income, mortgage interest deductions, itemized deductions, and business expenses.

``People are really going to be surprised by these things,'' says Joseph M. Flynn, a tax partner in the Boston office of Arthur Young & Co. ``There are some different forms. The form for the home mortgage interest is very complicated. And there's a form for the IRA [individual retirement account] you have to fill out even if you're not deducting the IRA contribution.''

Here are some of changes on this year's 1040. The lines that are different or require new information are circled on the front and back of the tax form reproduced to the right.

The first noticeable change comes on Line 6c, which asks for the names and relationship of any dependents living with you. But this year, it also asks for social security numbers for anyone over five years of age.

``A lot of children have income that has been taxed at their rate,'' says Kaye Ferriter, a tax partner at Coopers & Lybrand in Boston. ``Now, if they're under 14 years old, any income over $1,000 will be taxed at their parents' rate.''

To help keep track of all these taxpayers and their income, the Tax Reform Act of 1986 required that children over the age of five have social security numbers. Since it takes a few weeks to get a number from the Social Security Administration, parents with numberless children should apply for one as soon as possible.

Listing these children also means you're claiming them as dependents, and there's a change here, too.

``If you have a kid in college, it used to be that the child could claim himself as a dependent and you could, too,'' says Diane Cornwell, a tax manager in the Chicago office of Arthur Andersen & Co. ``Now you can't do that.'' In fact, she says, some parents may find that while their college-age children can't claim themselves as dependents, neither can the parents. If you're paying for college bills and your children are working, too, check with your accountant to make sure somebody gets credit for a claim.

Line 9 is another new one. This asks for tax-exempt interest income. This doesn't mean you're going to be taxed on income from things like municipal bonds or bond funds, but the IRS wants the information to help enforce other tax laws. You can't, for instance, claim a deduction on a loan if the money was used for tax-exempt investments.

Line 13 looks the same as before, in asking for business income, but tax reform had its say here, too. For example, a portion of the medical insurance premiums paid by an individual for his or her own benefit can be deducted as a business expense.

At the same time, rules have been revised in several areas affecting business owners. For instance, only 80 percent of business meals and entertainment expenses is now deductible, and recovery periods for depreciation of assets have been lengthened, which means the deduction each year for business equipment will be smaller.

If you are self-employed, you are liable for self-employment tax, which is the social security tax for yourself as employee and employer. In other words, if you were working for a corporation, the company would pay a dollar in social security taxes and you'd pay a dollar. As a self-employed person, you get to pay both dollars.

Line 17 is also the beginning of a new procedure. This asks for income from rents, royalties, partnerships, and estates. Rental property used to be a great tax shelter. Not anymore. Now, FORMif your rental expenses are greater than your rental income, these are called ``passive activity'' losses and they can be deducted only against an equal amount of passive-activity income.

There is a break for people who own property like two- or three-family houses. As long as their income is less than $150,000, they can deduct up to $25,000 of their passive losses.

At first, Line 23 looks similar to the old line for deducting employee business expenses. Before, unreimbursed employee business expenses could be put in here and taken off your income. Now, those expenses are lumped in with itemized deductions on Schedule A, where they won't save you as much, and may not be useful at all if you don't itemize.

If you put money in an individual retirement account last year, you may or may not be able to deduct part of it. Lines 24a andb will lead you to Page 13 or 14 of the instructions, where you can find out how much if any of the IRA contribution you or your spouse can deduct. On joint incomes between $40,000 and $50,000, the IRA deduction gradually disappears.

On the other side of the 1040, Line 32a asks whether you or your spouse is 65 or over, or legally blind. Last year, these taxpayers got an extra personal exemption. Now, it means a larger standard deduction. But because exemptions from income are more generous than deductions from taxes, this could mean a higher tax bill - even though the standard deduction for a single person over 65 is $3,750, compared with $2,540 for a single person under 65.

Line 33a is where you say goodbye to the ZBA. The ``zero bracket amount'' was invented by Congress several years ago. Then, just when people were getting used to it, it was removed by tax reform. No longer do you add up your deductions and then subtract the ZBA. Now all that's been built into the tax tables. The fact that many items are no longer deductible, or won't go above certain ``floors,'' means many people won't be able to itemize anyhow, so all this may now be moot.

This is also where you put the results of several other forms for itemized deductions you may have figured on a couple of lines of Schedule A.

Until this year, taxpayers claiming deductions for home mortgage interest and property taxes could put all this on Schedule A. The deduction now has to be computed on a separate form.

Another one is Form 8598. Anyone who refinanced a mortgage to take advantage of lower interest rates, took out a home-equity loan, or obtained a mortgage for anything other than buying a primary residence after Aug. 16, 1986, will have to use it. The Internal Revenue Service has estimated it will take nearly an hour and a half to complete this form alone so you can find out how much of the interest on that mortgage is deductible.

Income averaging, which used to help people with big jumps or declines in income, has been eliminated.

Line 36 shows your taxable income. If it's under $50,000, you can find your tax in the tax tables in the instruction booklet. If it's over $50,000, you must use the tax rate schedules. Taxpayers with capital-gains income may benefit by using Schedule D, while children under 14 with more than $1,000 of investment income will figure their tax on Form 8615.

Upper-income taxpayers who might be subject to the alternative minimum tax will have had to fill out most of the 1040 twice: once using regular deductions, and once using the AMT. Because of stiffer new AMT rules, more people will fall into this category and will have to pay more taxes. If they are subject to the AMT, they'll have to fill out Form 6251 and put the result on Line 49.

If all of these new forms and changes completely throw you, you may be able to file for an extension. In that case, you still have to pay the taxes you owe, put the figure on Line 57, and file Form 4868.