It's over. It didn't seem like it would ever end, but it has. All that remains is filing away the paperwork substantiating each item on each return and, if you're lucking, waiting for their refund check. Across the country, accountants have had their first weekend off in months. But before we file Tax Day away, let's take a last look at the tax season that was.
According to the Associated Press (AP), Americans spent 6.6 billion hours preparing their tax returns. Form 1040, the most common form filed, accounted for 1.6 billion, or nearly 25 percent of the hours spent on taxes this year. The National Taxpayers Union estimates that it took 26 hours and 48 minutes to prepare Form 1040 and supporting schedules, including record-keeping, copying, and mailing.
Almost nine million are expected to file for automatic extensions according to the Associated Press. The IRS automatically grants extensions to anyone who files, however, each request for an extension must be accompanied by a estimate of the taxes due and a check for that amount. If the IRS finds the estimate unreasonable, the extension can be voided. If inability to pay was the motivating factor behind requesting an extension, the IRS has also made the process of paying off the tax debt in monthly installments easier for those owing less than $25,000.
On April 13, 2005, the Internal Revenue Service reported that more than four million tax returns had already been filed through Free File, the no-cost tax preparation software and electronic filing system. That is a 44.2 percent increase over the same period the previous year. Free File is wrapping up its initial three-year contract and plans are being made to extend the program for another three years. Free File is a segment of the IRS e-file program. More than half of all taxpayers are expected to file their returns using e-file.
Despite efforts like e-file and installment payments, a poll conducted by AP-Ipsos found that 70 percent of Americans still find their federal taxes too complicated. President Bush has created a federal panel whose goal is simplifying the tax system. Two possible solutions: instituting a national sales tax to reduce income taxes and instituting a flat tax where everyone pays the same amount regardless of income, are likely to come up but support for either is controversial and difficult to gauge.
So ends the tax season. Some of the news was good. Some of the news was bad. Most of it will be forgotten, along with the urge to start preparing now for next year, as soon as the checks are cashed.