Do not expect postcard-sized tax return from Republican
plan: experts
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[December 14, 2017]
By Makini Brice
WASHINGTON (Reuters) - Since mid-2016, U.S.
House Speaker Paul Ryan has carried around a "postcard" that he has said
shows how easy it will be for Americans to file their taxes once
Republicans are finished their tax overhaul.
And as recently as Thursday President Donald Trump touted Americans
being able to "file their taxes on a single, little beautiful sheet of
paper."
With lawmakers finalizing the biggest tax reform in 30 years and the
president ready to sign it into law before the end of the year, the
moment should be near when Ryan's postcard stops being a rhetorical prop
and becomes a reality. Right?
"It's kind of crazy to say you can file on a postcard when, first, no
one is going to put their Social Security number on a postcard. And
second, you already have a giant postcard in the form of the 1040EZ,"
Mark Mazur, a director of the nonpartisan Tax Policy Center, said,
citing a 14-line Internal Revenue Service (IRS) tax form.
Representatives from the $11 billion U.S. tax preparation industry said
that the legislation so far seemed unlikely to render their services
unnecessary.
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"I don't think you're going to have millions of people filing their
taxes on a cell phone," said Mark Steber, chief tax officer at Jackson
Hewitt Tax Service Inc [JAKHT.UL].
"I think the demise of the tax business is a bit premature."
The IRS would not discuss changes that might come from the proposed tax
overhaul.
However, the IRS estimates that, despite its efforts to make filing
taxes easier, 90 percent of Americans use tax preparation services such
as Jackson Hewitt, H&R Block Inc and Liberty Tax Inc or tax software
such as TurboTax from Intuit Inc.
If Congress enacts the Republican plan into law, it would not affect
2017 tax-year returns filed in 2018. But in 2019, millions of
middle-class Americans would no longer gain from a wide range of
deductions, credits and other tax breaks.
A key driver of this, according to independent analyses, would be a
proposed doubling of the standard deduction and a curtailment of the
deduction for state and local tax payments.
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![](../images/121417pics/busine90.jpg)
U.S. House Speaker Paul
Ryan (R-WI) speaks during a news conference with other House
Republican leaders following a closed conference meeting on Capitol
Hill in Washington, DC, U.S. on December 12, 2017. REUTERS/Yuri
Gripas/File Photo
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In combination, these two changes would mean that about 29 million
people would no longer benefit from itemizing. So they would stop
writing off their charitable donations, mortgage interest and state and
local tax payments, according to the Institute on Taxation and Economic
Policy, a think tank.
Itemized deductions for medical expenses, investment interest,
unreimbursed employee expenses and tax preparation fees could also be
dropped by many.
Personal exemptions for individual taxpayers, which now take up a lot of
space on tax forms, would also be eliminated.
Such changes would mean simpler taxes and possibly allow a number of
taxpayers to use shorter forms. The IRS expects 24 million people in
2018 to file the longest and most widely used IRS form today, the Form
1040, which is 79 lines long. About 4.6 million people will use the
14-line 1040EZ.
Wealthy Americans likely would still itemize under the Republican plan.
Owning businesses, homes and other factors could also lead to taxes
being more complicated than what filers could describe on a postcard.
"Even though we're talking about simplification for a large number of
taxpayers, there's still many taxpayers who will have complicated tax
situations and we'll be there to help them as well," said David
Williams, chief tax officer for TurboTax.
(Adds first name, title in 4th paragraph)
(Editing by Kevin Drawbaugh and Lisa Shumaker)
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