Tuesday, October 25, 2005

More Short Form Taxes for all Americans?

SANTA ROSA, CA, October 25, 2005 - With these changes, and others planned, it is likely that more Americans will be filing short form (1040A and 1040EZ) tax forms, instead of the 1040 long form tax return. This may be welcome news for many Americans. But perhaps not for paid tax preparers. With short forms, many Americans are finding they can do their own taxes ("self prepare"). Several new online tax software programs, together with the IRS e-file system are allowing most people to easily, and quickly prepare and efile their own tax returns.

Many Americans are finding they can do their own tax returns, or "self prepare". In recent years, the IRS's e-file system has resulted in a growing number of online tax software programs. Currently the IRS E-File Partnership lists twenty seven (27) IRS-approved efile services (http://www.irs.gov/efile/lists/0,,id=101223,00.html). Some of these efile services, such as www.Taxhead.com, specialize in short form tax returns. This online tax software allows most people to easily, and quickly prepare and efile their own tax returns. According to IRS statistics, almost 70% of all individual federal income tax returns are short form returns (1040-A or 1040-EZ). And in 2005, for the first time, the IRS reported that more than half of all tax returns were electronically filed (e-file).

According to a Taxhead.com official, "We welcome any move that helps simplify the tax code and the tax return process for Americans. We think all Americans should be able to prepare and efile their own taxes. Some of the changes to be proposed by the Bush Tax Advisory Commission may help with this desire for tax simplification. We hope with such changes enacted the growing disparity we've seen in recent years, between rich and poor, may start to come back in line -- to make things fairer across American society as a whole. People should be empowered to take control of their own tax returns. Tax simplification, combined with the power of online taxes and eFile, is a step in that direction."

According to the New York Times (19 Oct, 2005 - David E. Rosenbaum), "President Bush's tax advisory commission agreed on Tuesday to recommend two alternative plans, both of which would limit or eliminate almost all existing tax deductions, including those for state and local income and property taxes." It was further reported that "the plans, if enacted, would amount to the most fundamental change in the American tax system in 20 years. ... One of the chief aspects of the plans is that they would replace personal exemptions and almost all deductions with tax credits. That means a tax break like the one for interest payments on a modest-size mortgage would be worth the same to each taxpayer regardless of income. Deductions and exemptions, by contrast, are worth more to taxpayers in high brackets than to those in lower brackets." Apparently the panel decided early on to recommend abolishing the alternative minimum tax. This is an unpopular tax that may impact by middle-income taxpayers at an increasing rate in coming years.

www.taxhead.com is an online income tax software and e-file service operated by Energy Matters LLC. The Company is an authorized IRS software developer, efile tax return provider, and IRS e-File Partner.

The Company creates secure, easy, accurate and low-cost ways for most individuals to prepare and file their own "short form" (1040A, 1040EZ) income tax return. This covers about 70% of all tax returns in the United States.

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