Taxing Start to ’94 : 86 Million Packages From Uncle Sam Unlikely to Fill Recipients With Feelings of Holiday Cheer
Before the roses even start to wilt on the New Year’s Day floats, millions of Americans will receive what has come to signal the official end of the holidays: federal tax forms.
The U.S. Postal Service is set to deliver the 86 million federal tax packages Monday, although some have slipped through and already found their way into mailboxes.
In the past, the Internal Revenue Service had the forms delivered the day after Christmas. But thanks to complaints about the agency’s Scrooge-like timing--and the IRS’ fledgling effort to promote its kinder image--the agency has stalled delivery of the forms until after New Year’s Day for the past two years.
However, not much has changed in the tax forms--or rates--for most Americans.
While tax law changes approved by Congress earlier this year increased taxes on high-income people, middle-income filers will find their tax liability has remained constant--or may have even fallen slightly as the result of inflation adjustments to standard deductions and personal exemption rates.
For those who do not itemize, the standard deduction has been raised to $3,700 for a single taxpayer, up from $3,600 last year. The deduction for heads of households is $5,450, up from $5,250.
The standard deduction for a married couple filing jointly has been raised to $6,200 from $6,000, while the deduction for a married couple filing separately now is $3,100, up from $3,000 last year.
The value of personal exemptions has been hiked to $2,350 from $2,300.
One result: A family of four that earns $50,000 annually and takes the standard deduction will pay roughly $60 less in 1993 taxes than it did for the 1992 tax year.
However, the picture for high-income filers is a bit more bleak.
The 1993 budget law passed by Congress raised the top tax rates. Singles with more than $115,000 in taxable income now fall into the 36% tax bracket. If you’re married, filing jointly, the 36% bracket hits taxable income above $140,000; heads of household pay 36% on income above $127,500, and married people filing separately pay 36% after earning $70,000.
Regardless of marital status, those who earn more than $250,000 in taxable income fall into the newly created “excise tax” bracket, which boosts their marginal rate to roughly 39.6%.
Other changes this year:
* Residents of Southern California and south Florida can use a new 1040 form written in Spanish. IRS Commissioner Margaret Milner Richardson said the agency is testing the feasibility of using forms in languages other than English in an effort to increase compliance and reduce errors.
* About 2.5 million childless married couples can now file the 1040EZ--the simplest tax form--if their joint income is less than $50,000. Until this year, you could only file the nine-line EZ form if you were single.
* Residents of seven states can file the 1040EZ form by telephone. After experimenting with the program for two years in Ohio, the IRS is adding Florida, Indiana, Kentucky, Michigan, South Carolina and West Virginia.
* The contribution for the presidential campaign fund has been increased from $1 to $3. The donation, made by checking a box on the tax form, doesn’t affect the amount of taxes owed or decrease the amount of a refund.
* W-2 forms have been standardized so that all employers will put the same information in the same boxes.
And one other positive tax note: The IRS is still looking for some 96,000 Americans who are due refunds averaging $518 per check. Last year, the Postal Service returned the refunds as undeliverable because the taxpayers had moved or the names and addresses on the checks were incorrect. If you never got your 1992 refund, call (800) 829-1040. There may be a check waiting for you.
Additionally, 22 million postcards were mailed earlier this month to farmers and other self-employed people who used professional tax preparers last year. The postcards, which mainly provide taxpayers with a prepared label and toll-free number to call to order forms, are sent in lieu of thick tax packages filled with forms and instructions. The IRS reasons that people who are getting their returns professionally prepared don’t need instructions.
Besides, it saves the government money. Last year, when 11 million Americans got postcards rather than full-fledged packages, the IRS saved $1.4 million on mailing. This year, the savings are expected to double.
The government spent $14.6 million printing tax forms and $19.9 million to have the Postal Service deliver them in 1993, a total cost of about 32 cents each. The costs have risen about 2 cents per form over last year.
“Probably unlike almost all of you, I am looking forward to the filing season, my first as commissioner,” Richardson told a news conference. She said she expects recent modernizations to yield better service to taxpayers.
