December 28, 1992
Tax Filing Season Starts Saturday
More than 100 million federal income tax packages go in the
mail beginning Saturday, January 2. For millions of Americans this
year, the familiar paper Form 1040 will be a thing of the past as
they may take advantage of new filing options.
Besides 14 million electronically filed tax returns, the IRS
expects to receive millions of returns that look like a standard
computer printout. Taxpayers will prepare these returns on their
home computers using the 1040PC format option available on many tax
preparation software packages.
The 1040PC returns only print lines where taxpayers have an
entry. For example, if a taxpayer had only wages and interest income
to report, the 1040PC format would print only those two lines. This
compares to 17 lines on the Form 1040 for reporting all types of
income. By printing only lines with entries, the 1040PC is much
shorter. For example, a regular 12 page return could be cut to two
The 1040PC format will be available on tax preparation software
for use on either home computers or through professional return
preparers. The IRS provides programming specifications to software
developers and is now testing their products for acceptability. The
software packages may also give the taxpayer the choice of having
the refund check deposited directly into the taxpayer's bank
account. If there is a balance due, the software will print out a
voucher to accompany the tax payment.
The IRS is continuing to test telephone tax filing for some
Ohio taxpayers but with a new twist. Last year more than 126,000
single Ohio residents with income under $50,000 used TeleFile to
file their returns. This year TeleFile will be completely paperless
for taxpayers in southern Ohio who will enter all information--
including the "signature"-- by telephone. The TeleFile system will
ask these taxpayers to say their names and social security numbers
providing the same information as signatures on tax returns. Other
TeleFilers in Ohio will need to sign special forms and mail them to
IRS along with the W-2 forms.
Many taxpayers in 15 states can now file both their state and
federal returns electronically-- all in one transmission to the IRS.
The IRS then sends the state tax agency the data it needs.
Federal/state electronic filing will be available statewide in North
and South Carolina and Kansas. In the following states, this
program is being tested in a more limited way-- Indiana, Kentucky,
Louisiana, Maine, Michigan, Mississippi, New Mexico, New York,
Oklahoma, Utah, West Virginia and Wisconsin.
The 1992 tax forms have few tax law changes but the IRS made
some improvements. The tax tables for Form 1040 now allow people
with taxable income up to $100,000 to compute their liability by
just looking up the amount. For more than 14 million taxpayers this
means using the new tables and avoiding the errors made in figuring
the tax using the tax rate method.
Small business taxpayers have a new, simpler form for computing
their profit. The Schedule C-EZ has 15 lines compared to 44 on the
regular Schedule C. About three million self-employed taxpayers
with gross receipts of $25,000 and $2,000 or less in business
expenses should be able to use this new form.
By the end of the upcoming three and one-half month tax filing
season, the IRS expects to receive more than 116 million tax
returns. The Postal Service is delivering the 107 million tax
packages for filing 1992 tax returns. Almost 11 million taxpayers
who used return preparers last year have already gotten postcard
reminders that include pre-printed labels for use on returns.
By offering various filing options and helping taxpayers choose
the simplest form to file, the IRS now finds that almost half of all
filers use the less complicated Forms 1040A or 1040EZ or an
electronic filing format that reduces errors and speeds processing.
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