WASHINGTON — The IRS is developing a new, easier-to-fill-out tax form that residents of four states will see in 1996 and the rest of the country in 1997.
Right now it's called 1040T, for test. It features bigger type, more space between the lines and a box for every numeral.
It will replace the 1040A form for individual taxpayers who don't itemize deductions. But many taxpayers who now use the long form, 1040, will be able to use the 1040T, the Internal Revenue Service said Friday.
The four-page form (two double-sided sheets) has space for the most popular itemized deductions, including state taxes, mortgage interest, charitable donations and medical expenses.
It also has space for three other functions that now require a separate attachment: claiming the credit for child and dependent care, filing for the earned income credit for low-income people and listing dividend and interest income.
"We believe the form is a much-improved design over the current 1040 and it will enhance the ability of taxpayers to complete the form correctly," said Sheldon D. Schwartz, IRS director of tax forms and publications.
The new form also should cut down on IRS errors. It will be readable by machines, eliminating the need to keypunch the information into the IRS computers.
"To the extent that we can process the form more accurately and more efficiently we expect it to have an impact on the timeliness of refunds," Schwartz said.
The 1040T will be tested in 1996 in Kansas, New Mexico, Oklahoma and Texas. If all goes well, it will be used nationwide in 1997.
Last year, the IRS received 60 million 1040 forms on paper and 19 million 1040As. After the switch, the IRS anticipates 45% of taxpayers will use the 1040T.
The simplest tax form, the 1040EZ, is already machine scannable and not involved in the redesign.