AUTOMATED TAX FILING: SIMULATING A PREPOPULATED FORM 1040

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 bur-den, 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 accu-rately 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 tenta-tively indicate $8.2 billion in refunds due to 11 million (20 percent) of them.