Instructions For 1040 Ez Form - Internal Revenue Service - 2005 Page 24


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Additional Information on New Taxpayer Burden Tables
Description of New Taxpayer Burden
IRS has developed a new way of estimating taxpayer burden. The new method is based on
taxpayers reporting of the time they spend and costs they incur preparing and filing their income
tax returns. This approach to estimating burden reflects the changes in the way taxpayers
prepare and file their returns.
The complexity of the return has a significant impact on burden and affects both time and out-of-
pocket expenses. Other factors that affect overall burden levels include the taxpayer’s familiarity
and skills with tax preparation and tax software, the type of paid preparer or software used, and
costs in the taxpayer’s geographic area. These specific factors are blended in the nationwide
averages presented in the tables that follow.
Taxpayers choosing to use a paid professional generally trade off higher out-of-pocket
expenses for the benefit of spending less of their time on taxes and assurance that the return is
prepared accurately. Tax preparation fees vary extensively depending on the taxpayer’s tax
situation and issues, the type of professional preparer and geographic area. Note that the new
approach does not substantiate what a taxpayer should expect to pay for tax preparation
How Did the IRS Derive the Time and Dollars?
Using the new approach, IRS developed estimates for a variety of the different tax return
preparation methods. Nearly all individual taxpayers use one of three methods and estimates for
each of these appear in Table 1. The average time a taxpayer spends preparing taxes is shown
in the first column under each method and taxpayers’ average out-of-pocket costs appear in the
The estimates in Table 1, which follows, are nationwide averages. Particular taxpayers will
experience burden that may be larger or smaller than the averages shown. The data is based
on taxpayers’ report of the time and costs they experienced. Time spent by paid preparers is not
explicitly shown in the tables; the fees charged by paid preparers are included in out-of-pocket
expenses. Variations in estimated average burden for some common combinations of returns
are shown in Table 1.
Note. Because of the numerous variables, these nationwide averages should not be used by
taxpayers or tax professionals as a guide for anticipating the cost or time involved with preparing
an individual’s tax return.
What Do These Figures Mean?
Looking across the first row of Table 1, it can be seen that those who prepared their own return
and did not use software spent about 8 hours and $5. This group of taxpayers generally filed the
simplest returns. Those who prepared their own return using software spent nearly 13 hours and
$41. These taxpayers’ returns generally were more complex than those in the first group were
and they spent more time and money on their taxes than those in the first group. The time
estimates for these taxpayers included time exploring various tax scenarios. A substantial


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