IRS Releases Advance 1994 Tax Forms

WASHINGTON - The Internal Revenue Service today released advance proof copies of the most widely-used 1994 tax forms for individuals. For the most part of the forms resemble those form last year, but there are a few changes. The changes are the result of new tax laws and IRS' efforts to simplify the forms.

The newest addition to this year's family of forms if Form 2106-EZ, Unreimbursed Employee Business Expenses. Simpler and shorter than the standard Form 2106, the new 12-line form should reduce burden for an estimated 3 million taxpayers.

The most substantial changes involve the earned income credit (EIC). A series of "yes" or "no" questions in the instructions help taxpayers determine if they can take the credit. Those who can claim the credit can use a worksheet, also in the instructions, to actually figure the amount of the credit which finally goes on the returns. For 1994 taxpayers would use Schedule EIC only to report information about qualifying children.

Because the EIC has been expanded to cover certain taxpayers without children, the 1040EZ form has new lines to let eligible 1040EZ filers claim the credit. Approximately 2,6 million taxpayers can not claim the EIC on the EZ form.

Some earned income is not subject to tax but is significant in figuring EIC correctly. To assure taxpayers get the proper amount of EIC available to them, all returns have entry spaces for reporting nontaxable earned income. Nontaxable earned income includes items like military and clergy housing allowances and voluntary salary deferrals, such as those to a 401(k) plan.

Recent tax law changes have modified the moving expense deduction. In past years only taxpayers who itemized their deductions could claim moving expenses. For 1994 taxpayers who incurred moving expenses after 1993 can claim them as an adjustment to income on Form 1040. Expenses incurred before 1994 go on Schedule A as an itemized deduction. The new law also limits the types of moving expenses taxpayers can deduct. Form 3903, Moving Expenses, and Form 4782, Employee Moving Expense Information, reflect these new rules.

Schedule A has a new line for personal property taxes and another for tax preparation fees. One-third of all Schedule A filers--about 10 million taxpayers--use each of these lines.

A revision of the charitable contribution Schedule A alerts taxpayers to the new substantiation requirement for donations for $250 or more. Recent legislation requires taxpayers to get written acknowledgement from the charitable organizations for each donation of $250 or more. This rule applies to both cash and non-cash gifts.

For several year IRS has issued advance proofs of the most common forms for individuals to give the tax community and the public opportunity for comments or suggestions on how to improve or simplify the forms. IRS gives each comment and suggestion careful consideration before issuing the final version later on.

For copies of the forms package, Publication 1407, write to IRS, P.O. Box 25866, Richmond, VA, 23289-5866.

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