WASHINGTON -- The Internal Revenue Service has announced that millions of older Americans will now be able to switch to a simpler income tax form.
The IRS said Monday that income earned from pensions, annuities, individual retirement accounts and taxable Social Security benefits may now be declared on the relatively short and simple 1040A tax form. Previously, such income had to be reported on the longer, more complex 1040 form.
Arthur Altman, director of the tax forms and publications division of the IRS, said that as many as 4.5 million Americans, most of them retired, would be able to file the shorter form. He noted that not only was the form simpler, but also that it was printed in larger type and, therefore, easier to read.
This year, packages containing the tax forms and instructions from the IRS will begin to appear in mailboxes by Friday.
The service expects that about 113 million tax returns will be filed for 1990.
Altman of the IRS noted that reporting requirements were virtually unchanged for 1990 from 1989. Most of the changes Congress made in the tax code in 1990 will take effect with 1991 earnings and will affect returns filed starting in 1992.
One of the few changes for 1990 filings is that the personal deductions for taxpayers and their dependents will rise to $2,050, from $2,000, as an adjustment for inflation.
Another change will reduce the amount that may be deducted for interest from personal loans, like car loans and credit card accounts. Last year 20 percent of such interest could be deducted from tax payments, but this year only 10 percent may be deducted.
As for the new tax year, beginning on Jan. 1, employers must resume deductions for Social Security taxes for workers who had paid the maximum tax before the end of the year.