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Automated Tax Filing: Simulating a Prepopulated Form 1040

Author

Listed:
  • Lucas Goodman
  • Katherine Lim
  • Bruce Sacerdote
  • Andrew Whitten

Abstract

Each year, Americans spend more than 1.7 billion hours and $33 billion preparing individual tax returns, and these filing costs are regressive. To lower and redistribute the filing burden, researchers and policy makers have proposed having the Internal Revenue Service prepopulate tax returns for individuals. We evaluate this hypothetical policy using a large, nationally representative sample of returns filed for tax year 2019. Our baseline results indicate that between 66 and 75 million returns (42–48 percent of all returns) could be accurately prepopulated using only current-year information returns and the prior-year return. Accuracy rates decline with income and are higher for taxpayers who have fewer dependents or are unmarried. We also examine 2019 nonfilers, finding that prepopulated returns tentatively indicate $8.2 billion in refunds due to 11 million (20 percent) of them.

Suggested Citation

  • Lucas Goodman & Katherine Lim & Bruce Sacerdote & Andrew Whitten, 2023. "Automated Tax Filing: Simulating a Prepopulated Form 1040," National Tax Journal, University of Chicago Press, vol. 76(4), pages 805-838.
    • Handle: RePEc:ucp:nattax:doi:10.1086/726592
    DOI: 10.1086/726592
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    JEL classification:

    • H0 - Public Economics - - General
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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