-
- WASHINGTON (AP) _ It takes more than 22 hours for a taxpayer who itemizes
deductions and has some investment income to finish this year's required
Internal Revenue Service forms, the tax agency estimates. That's three
hours longer than last year.
-
- The U.S. tax code now stands at more
than 1.5 million words and climbing thanks to 1,260 changes enacted by
Congress and signed by President Clinton in the last two years alone.
-
- For this year's filing season, the IRS
had to develop 11 new forms and revise 177 others.
-
- All this has happened at a time when
the same politicians voting for the changes are advocating tax simplification.
Make the code simple enough that returns for most Americans would be the
size of a postcard, say flat tax advocates.
-
- But for millions of taxpayers trying
to do their taxes by April 15, the complexity is so daunting they are almost
forced to seek professional help or a computer software program. A new
ad campaign by H&R Block sums up the fear factor: ``We Know. Do You?''
-
- A major culprit is the trend in the Clinton
administration and Congress to enact tax credits for various social needs
and to tinker with such intricate areas as taxes on capital gains from
investments.
-
- ``Every time there's a new benefit, it
requires an additional line to the form and additional forms to compute
those credits,'' said Sheldon Schwartz, national tax forms and publications
director at IRS. ``It's never as easy as we would like.''
-
- But for politicians, the appeal of a
tax break far outweighs such worries.
-
- ``People will push the complexity into
the background,'' said Rep. Amo Houghton, R-N.Y., a senior member of the
tax-writing House Ways and Means Committee. ``The credits are politically
expedient and attractive.''
-
- This year, some taxpayers for the first
time can get a $400 credit for children under age 17 and two education
credits _ the Hope and Lifetime Learning credits _ that provide up to $1,500
and $1,000 respectively for certain postsecondary education expenses.
-
- Sounds relatively simple. But taxpayers
claiming the child credit must complete an 11-line worksheet, and depending
on the answers, a second 10-line form to determine if they qualify under
the income limits.
-
- The education credits require completion
of an 18-line form and come with their own book of instructions.
-
- Another area of difficulty is IRS Schedule
D, where investors must report their capital gains or losses from investments.
Even small-scale investors must fill out the 54-line form and navigate
its confusing maze of tax rates for different investments _ which changed
dramatically in 1997.
-
- Most forbidding of all is the alternative
minimum tax. Intended to prevent the wealthy from escaping taxes through
deductions and credits, it now threatens more and more middle-class taxpayers
because its thresholds were never indexed for inflation.
-
- This means millions of taxpayers could
be required to calculate both their regular taxes and their alternative
minimum taxes _ and pay the higher of the two. That means completing a
12-line IRS worksheet to determine if a taxpayer is affected by the alternative
tax and then a 50-line form to figure out the amount.
-
- Those who mistakenly believe the alternative
tax doesn't apply to them could get an unwelcome surprise from the IRS
if they don't do both calculations.
-
- For accountants, tax software firms and
preparers such as H&R Block, this uncertainty means big business. The
Block ``We Know'' ad campaign is aimed at giving people confidence that
their taxes are being done right, a spokeswoman said.
-
- ``What it really means is there are more
opportunities to save money,'' said Linda McDougal of the Kansas City-based
firm, which last year did one-seventh of all individual income tax returns.
``To take advantage, you may need the help of a tax professional.''
-
- The leading tax software, TurboTax from
San Diego-based Intuit Inc., sold 3.3 million copies last year. Buyers
``are looking to a trusted source for advice and to help them do their
taxes,'' said Monica Muilenburg, director of product marketing.
-
- Despite talk in Congress of simplification,
it doesn't appear likely anytime soon. Clinton's new budget proposes numerous
credits for such things as care for the elderly and disabled, stay-at-home
parents and disabled workers. Some have Republican support.
-
- On the other hand, Rep. William Coyne,
D-Pa., plans to introduce legislation that would replace the capital gains
form with a single line and would count investment earnings as regular
income. ________
-
- The Internal Revenue Services estimates
it will take a taxpayer an average of 22.7 hours to complete the 1040 form,
Schedule A for itemized deductions and Schedule D for capital gains and
losses. Last year, those forms took an average of 19.5 hours.
-
- Here's how the IRS figures this year's
burden:
-
- Form 1040 Record keeping: 3 hours, 34
minutes. Learning about law: 2 hours, 25 minutes. Preparing form: 4 hours,
55 minutes. Copy, assembling, mailing: 40 minutes. Total: 11 hours, 34
minutes. Schedule A Record keeping: 2 hours, 32 minutes. Learning about
law: 26 minutes. Preparing form: 1 hour, 10 minutes. Copying, assembling,
mailing: 20 minutes. Total: 4 hours, 28 minutes. Schedule D Record keeping:
1 hour, 11 minutes. Learning about law: 2 hours, 18 minutes. Preparing
form: 2 hours, 37 minutes. Copying, assembling, mailing: 35 minutes. Total:
6 hours, 41 minutes.
|
