Easier Job : IRS Reveals Few Changes in Tax Forms

New tax forms are never a welcome after-Christmas present, but the Internal Revenue Service tried to play Santa Claus on Wednesday by unveiling next year’s 1040 with the promise that the forms to be mailed to taxpayers next week contain few changes from last year.

IRS officials said taxpayers would be able to use their 1987 tax returns as a guide to filling out the new forms. That would mark a substantial improvement from last year, when Americans were required to complete returns that reflected the sweeping tax revisions Congress approved in 1986.

Some of the changes in tax law are still being phased in, but only a handful of modifications were required in the tax forms to explain the altered provisions.

For taxpayers who fill out the simpler forms--1040A and 1040EZ--some instructions were reorganized to make them less likely to produce mistakes.

Last year, the IRS found two key areas of difficulty for taxpayers.

A number of taxpayers failed to enter their correct standard deduction on the return, the IRS said, and some failed to check the box indicating whether they were entitled to a different standard deduction. That aspect of the forms was changed.

Bigger Personal Exemption

In addition, the tax tables and tax rate schedules were changed to reflect the lower rates that went into effect last year. Under the new law, most people fall into either the 15% or 28% tax bracket, although some affluent taxpayers face a hidden 33% tax rate on some of their income.

The personal exemption is being raised to $1,950 from $1,900 last year. The standard deduction for those who do not itemize is being increased to $3,000 from $2,540 for singles and to $5,000 from $3,760 for married couples filing jointly.

Low-income taxpayers with children can earn as much as $18,576 and still qualify for the earned-income tax credit, up from $15,432 in 1987. And taxpayers will be able to deduct only 40% of their personal interest expenses from income, rather than the 65% that Congress allowed last year.

The IRS had expected a nightmare during the filing season last spring because of the vast tax law changes. But officials said the error rate rose only slightly--to 21.2% for 1987 tax returns from 19.2% for 1986 for 1987.

“During the last filing season, thanks to tax reform, millions of Americans were asked to handle some very big tax changes,” said Arthur Altman, chairman of the IRS forms committee, “and they did so with a minimum of fuss and far fewer mistakes than any of the so-called experts had predicted.”