With the most dramatic tax law revisions in more than a decade, American taxpayers face major anxiety this year. Changes in health-care deductions, capital gains taxes, and retirement savings rules, among others make filing taxes under the Taxpayer Relief Act of 1997 particularly daunting. In fact, almost one in four taxpayers (24%) believe such changes will make the tax preparation process more time consuming, according to a survey conducted by TurboTax, America's best-selling tax software.
Although consumers stand to benefit from an estimated $150 billion in tax reductions, many have little faith in receiving any tax "breaks" this year. According to the TurboTax survey, three in 10 people expect to pay more (30%) rather than less (11%) in taxes compared to last year.
Surprisingly, only 44% of those polled by TurboTax were familiar with the latest changes in Federal tax laws, proving Americans have a lot of learning to do between now and April 15.
Among the informed adults, the benefits that affect them most include:
- Medical expense deduction (34%)
- IRA for children's education (28%)
- Lower capital gains tax on investments held longer than one year (21%)
- Home office deduction (9%)
"Your best bet for 1997 is to use tax preparation software to explain how the new tax bill affects you and to help trim your liability," says Larry Wolfe, senior vice president of Intuit's tax division. "Software like TurboTax performs the necessary calculations for you, finds your eligible deductions, flags inconsistencies that might trigger an audit, and provides all the updated forms -- all from the convenience of home."
According to former IRS commissioner Bob Carver, "Not only does tax software make filing a return easier and faster, but it is endorsed by the IRS. IRS studies show that returns generated by tax software contain significantly fewer errors than those done by hand, and speed processing by eliminating the need to re-key data once forms arrive at the IRS."
This year, the average American expects to spend 6.7 hours preparing a tax return, according to TurboTax. This comes as no surprise when you consider that more than 800 changes and nearly 300 new provisions have been made to the IRS code. Nearly eight out of 10 Americans (79%) complain that Congress makes their taxes more confusing each year that it amends the Federal tax laws. Factor in the complex calculations, plus the abundance of required paperwork, and you have a process known to strike fear and anxiety among Americans.
Whether or not they are aware of the latest Federal tax laws, fully half of those polled (48%) agree that they could have saved more money on Federal taxes in 1997 if they had done more careful tax planning and record keeping throughout the year. And, with nearly half of U.S. households owning at least one PC (Wall Street Journal, 1/6/97), tax preparation tools such as TurboTax are a convenient way to get you through this historic tax season with ease.
The TurboTax survey was conducted by Roper Starch Worldwide, which surveyed 1,002 American adults, ages 18 and older, between December 19-21, 1997.
