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 pages.

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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