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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