US Tax Form PDF Files with Digital Embedded Data

Preparing an individual income tax return is simplified and streamlined when tax document issuers and tax software applications exchange hidden data.

Financial Data Exchange (FDX) is a standard-setting organization best known for its work to unify the financial industry around common standards for open finance.

FDX also defines standards for the annual delivery and consumption of US tax document data. When tax document (W-2, 1099, etc.) issuers and tax software applications adopt these standards, the process to prepare an individual income tax return is simplified and streamlined.

In this previous blog post we described the FDX standard for delivering and consuming tax data using QR codes. This post explains the standards for tax document PDF files with embedded data. In future posts we will explain tax data extract files and secure FDX data servers.
Portable Document Format (PDF) Technology
PDF is the most common file format for downloadable tax documents. Such tax documents can be viewed using any application that can display PDF files. Typically recipients already have PDF-reader software installed on their digital device.

Ordinary tax documents in PDF format are readable by humans, but to insert their data into tax software they require either (1) manual data entry or (2) complex, costly-to-develop parsing software.

Tax document PDF files with embedded data use a technology that is relatively simple to implement and highly reliable.

PDF files may contain internal information known as document properties. Document properties are text values. A unique name is associated with each value. The FDX standard for embedding data in PDF files has three custom document properties, namely:

  1. fdxVersion: The version number of the FDX data structure.
  2. fdxSoftwareId: A unique ID for the software used to produce this PDF.
  3. fdxJson: The tax document data in FDX standard data structure serialized to JSON

Here is an example showing how these document properties might appear in a mock IRS Form 1098:

Benefits to Taxpayers
This technology eliminates data entry errors in the income tax return preparation process and reduces time spent in tax preparation. Taxpayers simply upload their PDF tax forms to their tax return software.

Benefits to Tax Software Companies
For tax software companies the technology reduces programming costs associated with custom PDF file parsing. It also provides a mechanism for tax document issuers and tax software to integrate without having to build out full system-to-system connections.

For more information
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Posted on 4/15/2024