December 28, 1993
Tax Filing Season Starts Monday
WASHINGTON - On Monday, Jan. 3, more than 86 million income tax
packages will begin to show up in the mail. Twenty-two million
Americans who use professional tax preparers received IRS postcards
earlier this month. The postcards give these taxpayers the option
of requesting a tax package from the IRS or using tax forms supplied
by their preparer.
The good news is that most taxpayers won't face a tax rate
increase. In fact, the higher rates-36 and 39.6 percent-affect less
than two percent of taxpayers. The law created the two higher tax
rates for 1993 for taxpayers with high incomes.
More good news for some joint filers. About 2.5 million
married couples with income under $50,000 and no dependents will be
able to use the easiest of tax forms this year-Form 1040EZ. In the
past, only single persons could use this form.
A significant number of taxpayers will bid farewell to the
familiar paper Form 1040, in favor of high tech filing options.
These options include:
- 1040PC format. This format allows taxpayers to prepare their
returns on home computers using the 1040PC format option available
on many tax preparation software packages. By printing only lines
with entries, the 1040PC is much shorter. For example, a regular
12-page return could be cut to two pages. In many cases, the
software packages will give taxpayers the choice of having the
refund check deposited directly into their bank account or if there
is a balance due, the software will print out a voucher to accompany
the tax payment. The taxpayer then mails Form 1040PC to the IRS.
- TeleFile. This is a telephone tax filing system for certain
Form 1040EZ filers. Originally pioneered in Ohio, TeleFile will be
expanded this year to six additional states: Indiana, Kentucky,
Michigan, West Virginia, South Carolina and Florida.
Telefilers in southern Ohio will continue to test paperless
filing. These taxpayers 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. TeleFilers in
other areas will need to sign special forms and mail them to the IRS
along with the W-2 forms.
- Electronic filing. Over 14 million returns are expected to be
filed electronically this year. Half of the country-23 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.
By offering various filing options and simpler forms, the IRS
now finds that almost half of all filers use the less complicated
Forms 1040A or 1040EZ, the 1040PC format or an electronic filing
format that reduces errors and speeds processing.
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