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Tax Facts Help Shield Filers From Tax Day Shock
Published: 2005-04-13
Although people have been paying taxes for more than 2,000 years, April 15th still comes to many as an annual shock. Whether you owe money or are getting a refund, the associated angst may be too much to bear. Tax expert Bill Raabe, who teaches accounting at the Fisher College of Business at The Ohio State University, has compiled a list of facts about the 2004 tax season that may help this year’s filers keep everything in perspective:
• Of the 130 million Forms 1040 forms filed for 2003 income, about one-third of them were filed by the end of February 2004. Presumably, these returns generated refunds for the taxpayers.
• The average refund received by a taxpayer filing a 2003 return was about $2,125. Refund payments for 2003 Forms 1040 came to more than $200 billion.
• For 2003 returns, the IRS received about 18 million Forms 1040EZ, and about 24 million Forms 1040A.
• Over the next 10 years, the alternative minimum tax on individuals will generate an increase of $500 billion in revenues. A tax this large is very hard to modify or repeal.
• The typical Form 1040 requires 7.25 hours to gather records and assemble the return, and 6.25 hours to prepare the form and attachments. The estimated cost of complying with tax rules is $225 billion per year.
• The Internal Revenue Code is now 3.5 million words long, and the Regulations require another 8 million words. Combined, these documents are 12 times the length of Shakespeare’s combined works, and 15 times the length of the King James Bible.
• In filing federal income tax returns, almost 56% of all taxpayers employ a professional tax preparer. This is about a 10% increase in the last decade. The average taxpayer pays about $130 to have the Form 1040 prepared in this manner.
• The IRS goal is for 80% of all Forms 1040 to be filed electronically for the 2007 filing season. The agency expects over half of such returns will be filed electronically in the 2005 filing season.
