For American taxpayers, the dreaded April 15 income tax deadline is looming. By that day Americans are expected to have mailed in or electronically filed their income tax returns for 2009 to the Internal Revenue Service (IRS).
Between now and then, moaning will be heard from coast to coast as Americans tally up what they owe or what they have already paid to the government and won't be getting back. The whining will be not just about taxes themselves. It will also be about all the time and trouble it takes just to collect the data and figure out the tax forms.
Form 1040
Just how much time will it take to do taxes? For a typical individual filing a basic Form 1040, it will be 21.4 hours, according to Eric Toder of the Tax Policy Center, who based his figures mainly on estimates from the IRS. Toder's data is contained in a presentation prepared in December 2009 for a task force of the President's Economic Recovery Advisory Board. Figuring a person's time is worth, say, $25 per hour, that's a cost of $535. But that's not all. People on average will spend an additional $280 for services, supplies, software or something having to do with taxes. So, the bill will come to $815, and that does not include the taxes themselves.
Individuals who fill out the shorter EZ form really do save time and money. Still, on average an EZ form filer spends eight hours and an additional $96 for a total (at a rate of $25 per hour for time) of $296.
Cost of Compliance Falling
It seems like time and money being spent is going up and up. But that's actually not the case. Back in 2000, individuals spent on average 33.8 hours to complete form 1040. They spent somewhat less in additional costs ($262 in 2009 dollars). But total cost for compliance—including cost of time—was $1107 per individual, nearly $300 more than today.
EZ filers back then also spent more time than their counterparts today. They put in 9.7 hours to complete their taxes. But they spent only $55 out of pocket. So, their total costs came to $298, just about what their costs are now.
Use of Software, Tax Preparers Up
Most people have abandoned the quaint practice of doing it all by paper, pencil and handy calculator. Data from 2005 showed that just 11.2% of filers that year did it themselves without software. That was down from 41.3% in 1993. Software use has increased significantly, from 7.8% in 1993 to 26.7% in 2005. Despite the availability of software, the use of tax preparers has also been on the rise, climbing from 50.9% in 1993 to 62.0% in 2005.
Brian Deming - Brian Deming has a master’s degree in American history from Northwestern University. He has taught U.S. history and media history at ...
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