The Internal Revenue Service has opened the 2005 tax filing season by promoting expanded electronic services, easier tax filing rules and new tax law changes and by mailing almost 29.5 million tax packages.

The IRS projects the number of individual taxpayers filing their taxes electronically will surpass 50 percent for the first time. More than half of the expected 133 million individual tax returns will be filed through IRS e-file in 2005. Last year, almost 62 million Americans used e-file.

The IRS is taking steps in several areas to help taxpayers, including:

• The EITC Assistant, available in English and Spanish, will allow taxpayers to type in a little information and follow easy directions to determine if they are eligible for the Earned Income Tax Credit (EITC). Tax professionals, who prepare the majority of EITC tax returns, also can use the EITC Assistant to help determine their clients' eligibility.
  
  
• The newly expanded 1040 Central page connects taxpayers to basic income tax preparation needs such as key forms, answers to frequently asked questions and critical links to key tax issues.
  
  
• The popular "Where's My Refund?" function allows taxpayers to answer the most frequent question they pose during the tax year. All taxpayers need is their Social Security number, filing status and exact amount of their anticipated refund. Last year, it was used 20 million times.
  
  
• The income limits for using the Form 1040EZ and Form 1040A increase from less than $50,000 to less than $100,000. Last year, approximately 18 million taxpayers filed a Form 1040EZ and another 24 million filed a Form 1040A. The change in the threshold will mean 1.6 million more taxpayers are eligible to file the 1040EZ or 1040A.
  
  The one-page Form 1040EZ is for taxpayers who have no dependents, no credits other than the Earned Income Tax Credit and no adjustments to their income. The Form 1040A is for taxpayers who do not itemize their deductions, claim limited tax credits and have few adjustments to their income.
  
  
• The limit on business expenses for self-employed individuals using Schedule C-EZ also increases to $5,000 from $2,500. This change will mean 500,000 more small business owners and self-employed taxpayers can use the simpler version of the expense form.
  
  

In addition, a number of recent tax law changes affect tax returns filed in 2005 for the 2004 Tax Year. One of the biggest involves the new sales tax deduction. Taxpayers who itemize deductions will have a choice of claiming a state and local tax deduction for either sales or income taxes on their 2004 and 2005 returns. Optional tables are available for determining the deduction amount in Publication 600. Other tax law changes affect such areas as charitable donations, child tax credit and combat pay issues.

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...back to 6 January 2005


Further information:
www.irs.gov/newsroom/article/0,,id=133307,00.html