Ever year, taxpayers are required to file their returns by completing and submitting a version of the Form 1040. A survey conducted by the IRS on the amount of time and money it takes to file this form revealed the following facts;
- Form 1040 – The Form 1040 is the most detailed of the tax return forms. 68% of taxpayers use the Form 1040 to file their returns. On average, taxpayers who file the Form 1040 take 22 hours to file it. Out of these 22 hours, taxpayers use up 10 hours keeping tax applicable records, 3 hours planning their taxes, 4 hours completing the actual form and 1 hour submitting the form. 3 hours are spent undertaking other miscellaneous tax related activities such as searching for information on the internet. The survey also revealed that the average cost incurred filing this form is $290.
- Form 1040A – According to the same IRS survey, 19% of taxpayers use Form 1040A to file their returns. These taxpayers who opt for the easier Form 1040A will take on average 10 hours to file the form. The time is broken down as follows; 4 hours for record keeping, 1 hour for tax planning, 3 hours for completing the form, 1 hour for submitting and 2 hours for miscellaneous related activity. It costs on average $120 to file Form 1040A.
- Form 1040EZ – The Form 1040EZ is the tax return form that requires least time and is used by taxpayers who have less tax details. Only 13% of the taxpayers opt for this tax return form. According to the IRS survey, it takes on average 7 hours to file this form. Out of this time, 2 hours is used up filing the tax related records, 1 hour tax planning, 2 hours filling out the form, 1 hour submitting and 1 hour handling other related activities. According to the survey, the taxpayer who files this Form 1040EZ will incur on average $50 for the filing course of action.
- Business and Non Business – The IRS survey also compares the time and costs spent on business and non business tax returns. In general, business tax returns are the 1040 tax return forms that include filing of any of the Sections C, E, F and C-EZ of the form. They also include the taxpayers who file Form 2106 and 2106-EZ. All other filers are considered non-business filers. According to the survey, business related filing takes on average 32 hours with 16 hours being spent filing records, 4 hours spent planning, 6 hours completing the form, 1 hour submitting and 4 hours handling other related responsibilities. On average, it cost $410 to file a business related return. however, a non-business return takes on average 12 hours to complete. Out of these 12 hours, 2 are spent planning, 5 keeping records, 3 completing the form, 1 submitting and 1 hour handling other related activities.