So How’s That E-Filing Working Out?
Just great, if you’re the government. You may have noticed that the IRS discontinued its longstanding practice of mailing paper forms and instructions packages to individual taxpayers earlier this year. And as recently reported in The Wall Street Journal, the 2009 cost to the IRS of processing an e-filed tax return was a mere 19 cents, compared to $3.29 for a paper return. Not surprisingly, the Revenooers like this math.
Nearly 70% of the 142 million returns filed last year were e-filed – up from 23% nary a decade ago. And the government will tell you that this is good for you – faster refunds, and ability for direct depositing of the dough into your bank account. But the problems – most of which have been shifted to the back of your tax preparer, are also worth mentioning. Some taxpayers simply can’t e-file, because of IRS system limitations with certain forms. And as for direct deposit of refunds – consider that the government’s systems failed earlier this year, causing up to 200,000 taxpayers expecting direct deposit of their refunds, and planning to spend the money on April 18 were sent notices by Uncle Sam for balances due!
Isn’t technology wonderful?
And speaking of tax reform (Nevada legislators!) check this recent revelation by the New York Daily News: a poll recently conducted by Marist College suggests that 36% of New Yorkers under the age of 30 are planning to move out within the next five years, not to mention more than a quarter of all adults! According to the News, “the New York City suburbs, with their high property values and taxes, are leading the exodus.”
Which leads us to Arizona – we hear the state legislature is considering a major tax reform program which would do away with most deductions, but would also eliminate the multiple tax brackets presently prevailing in the state, and reduce the income tax rate to the lowest level in the good old U.S. of A. As noted by the Tax Foundation, the proposed new rate of 2.08%, which would be phased in over several years, would be the lowest of states which do have an individual income tax.
Sounds good on the surface, but the Tax Foundation goes on to note that although revenue-neutral, the elimination of most deductions will increase the tax liability for those who presently take significant advantage of deductions.
The Revenooers giveth, and the Revenooers taketh away.
CONSULT YOUR TAX ADVISOR – This article contains general information about various tax matters. You should consult your CPA regarding the implications to your own particular situation.
Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno. He can be contacted at 775-831-7288, welcomes comments below, at firstname.lastname@example.org, and invites readers to review his other commentaries at www.taxlawtips.com.