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Taxes Part 4

American Forces Press Service

WASHINGTON, March 19, 1998 – If you can't face doing your taxes, don't have the time or have a complicated return or tax situation, you may want to hire a professional tax preparer, said Internal Revenue Service officials.

Don't rush out and hire the first person who offers tax preparation service or open the telephone book, close your eyes and point to a tax preparer, the officials advised. When selecting a tax preparer, you need to do a little research to find the one best suited to you and your tax situation, they said. They recommended:

  • Get possible referrals by talking to friends, relatives and co-workers who have used tax preparers.
  • Check with the local chamber of commerce or Better Business Bureau. Make sure the individual or company has no complaints lodged against it.
  • Be sure to ask for references, and then check them out.

IRS officials said one important point to keep in mind is that the tax preparer needs to be around after the tax filing season. A fly-by-night agency that closes up shop after April 15 won't be around to help you answer questions the IRS may have about your return.  Ensure the preparer carries liability insurance in case there's a mistake on the tax return and you end up owing a lot of extra money, the officials added.

Some of the questions to ask a tax preparer are:

  • What tax services are offered?
  • Who will be preparing my tax return?
  • Do you offer additional services, like financial planning?
  • How many tax returns do you prepare each year?
  • Do you have references that I may see and follow up on?
  • What is your experience with audits? Will you still be around after the tax season? If I am audited, will the person who did my taxes handle it? What percentage of your clients have been audited?
  • Do you specialize in any tax areas?
  • How aggressive are you when it comes to finding ways to reduce my federal tax bill?
  • Have you ever been fined or penalized in regards to tax returns prepared and filed?
  • What is your educational background in taxes?
  • Do I pay you by the hour or flat fee?

To make sure your tax experience goes smoothly, have all the necessary financial paperwork ready for the tax preparer. IRS officials said this includes canceled checks, W-2 forms, and dividend and interest statements.

Don't do what so many comedy shows highlight at tax time -- dump a shoebox or grocery bag full of receipts and other records on the preparer's desk. It may garner a laugh or two, but if nothing else, the preparer's bill will be higher because of the time spent sorting your financial mess, the officials said.

And the last, most important point, they said: Whether you prepare your own tax return or hire someone else to, the IRS holds you responsible for its accuracy.

*****

Use Form 1040X to Amend Tax Returns

American Forces Press Service

 

WASHINGTON -- You blew it. You filed your federal tax return but forgot to include savings account interest from that bank back home.

Don't worry, Internal Revenue Service officials said. You can easily report updates and changes to your return by filing an IRS Form 1040X, "Amended U.S. Individual Income Tax Return."

The officials said the amendment form should be used when you did not report some income, claimed deductions or credits you were not entitled to, failed to claim deductions or credits you were entitled to, or should have used a different filing status, or you filed an incomplete return to beat the April 15 deadline. The 1040X corrects your Form 1040, 1040A, 1040EZ and even a previous 1040X, added tax officials.

If you have an additional refund due, wait until you receive the original refund before filing the amendment, IRS officials recommended. If you file the 1040X while your original tax return is being processed, you could confuse the system and delay your refund.

The three-column form is easy to complete, said IRS officials. Column A shows the figures you originally reported, Column C shows the correct figures, and Column B is the difference between columns A and C. General instructions and filing addresses are on the back of the form.

If the changes require another form or schedule, such as the one for earned income credit, it must be completed and attached to the Form 1040X.

IRS officials said you generally can claim a refund within three years of your original filing date or two years from the time you actually paid the tax you now claim wasn't owed. Don't forget to enter the tax year that you are amending on the form.

If you need to amend more than one return, use a separate envelope for each Form 1040X.

IRS officials said keep in mind an amended federal tax return may affect your state tax return. Be sure to check your state tax forms to see how to report changes.

Direct questions concerning your situation and amended returns, to a local IRS office or call (800)829-1040.

For free copies of IRS forms and publications, call (800) 829-3676 or write to:

IRS

Forms Distribution Center

PO Box 85627

Richmond, VA 23285.

*****

IRS Office Solves Problems

American Forces Press Service

 

WASHINGTON --If you run into problems with the Internal Revenue Service and can't seem to get them taken care of, call the IRS Problem Resolution Program office for help.

The office was specifically set up to help taxpayers who have problems that other IRS personnel cannot or will not handle or correct, said IRS officials.

Normal IRS channels handle most problems. Use the problem resolution office when these channels have failed or you've gone as far as you can with them, they said. The program isn't for those situations when a formal appeal or administrative procedure is available, they added.

Tax specialists staff the Problem Resolution Program office. Used to complex tax issues, they are usually able to handle the problem or complaint in just a few days. Some of the areas they tackle include:

  • Incorrect IRS actions.
  • Receipt of a third notice from IRS after responding to earlier ones.
  • Suspension of agency actions under certain circumstances.
  • Problems that remain after discussion with an IRS employee's supervisor.
  • Overdue refunds -- you filed your tax return more than 90 days ago and have contacted IRS.
  • A delay of 45 days or more in getting an answer to a request for tax information or assistance.

The Problem Resolution Program tax assisters can't handle certain things. IRS officials said these include appeals of decisions made in tax examinations, Privacy Act inquiries, hiring practice complaints and Freedom of Information Act requests.

For help in resolving a problem, call the local IRS office or call (800) 829-1040. Hearing-impaired individuals who have a telecommunication device for the deaf may call (800) 829-4059.

IRS officials said you may write to the Problem Resolution Office at the service center which processed your federal tax return. Be sure to include your full name, Social Security number, complete return address, daytime telephone number and as much information on the problem and steps taken to solve it as you can. In addition, include copies of any paperwork you have on your problem that you sent or the IRS sent.

Individuals living overseas who need the Problem Resolution Program office may write to:

 Internal Revenue Service

 Assistant Commissioner (International)

 Problem Resolution Program Office

 950 L'Enfant Plaza SW

 Washington, DC 20024.

Specific information on the program can be found in IRS Publication 1546, "How to Use the Problem Resolution Program of the IRS." For a free copy, call (800) 829-3676 or write to:

IRS

Forms Distribution Center

PO Box 85627

Richmond, VA 23285.

 

*****

To Itemize or Not to Itemize

American Forces Press Service

 

WASHINGTON -- When doing your federal income taxes, think about the personal expenses you had that may lower your taxes, Internal Revenue Service officials said.

When it comes to claiming deductions, they said, you have only two options: Take the standard deduction, or itemize if you have more in allowable deductions. To decide which to claim, the officials suggested filling out one Form 1040 return using the standard deduction and another with itemized expenses. File whichever produces the lower tax.

If you itemize, you must use the long Form 1040, IRS officials added. Expenses that may be itemized include:

  • State and local taxes;
  • Medical and dental expenses;
  • Home mortgage and investment interest;
  • Casualty and theft losses;
  • Charitable contributions; and
  • Certain unreimbursed job-related and other miscellaneous expenses.

IRS officials said the standard deduction varies on your filing status, age and if you are blind. The standard deduction for this year's tax form is $4,150 if single; $6,050 for a head of household; $6,900 for marrieds filing jointly; $3,450 for a married filing separately; and $6,900 for a qualifying widow(er) with dependent child.

Additional amounts are allowed if you or your spouse is age 65 or older by Jan. 1, 1998, or blind.

IRS officials said married couples filing separately must keep one thing in mind: If one spouse itemizes, the other also must itemize.

For specific information on itemizing, check your Form 1040 and IRS Publication 17, "Your Federal Income Tax." For a free copy of IRS publications and forms, call (800) 829-3676 or write to:

IRS

Forms Distribution Center

PO Box 85627

Richmond, VA 23285.

*****

Everyone Wins With Electronically Filed Tax Returns

American Forces Press Service

 

WASHINGTON -- Whether you file your federal tax return by mail, or computer or other electronic means, the Internal Revenue Service is happy to take it.

But, IRS officials said, returns filed electronically or by computer-generated forms cut the agency's processing time. That, they said, sometimes means you get your refund in as little as two weeks instead of the normal two months.

They said electronic returns are processed faster because they tend to have fewer mistakes. Taxpayers' computer software, for instance, catches math and other common errors. Another point favoring electronic filing is that you can file early in the season, and if you owe additional taxes, you have until April 15 to pay them.

If you decide to use an electronic tax filer, check the local area for an IRS-accepted preparer or transmission service. Ask about filing costs and services.

IRS officials said to double-check your return before transmitting to the tax agency because you are ultimately responsible for everything in it whether you did the paperwork or hired or someone else.

An IRS-accepted electronic filer sends your return to the IRS. If the information is correct, the tax return is accepted and stored on tape. Then, the Treasury Department issues a refund check or directly deposits the refund into your account at a financial institution.

The electronic filing program began in 1986. IRS officials said about 25,000 people used the service that year -- more than 20 million took advantage of it during the filing season last year.

If you decide to use a tax preparer or filer, they said, keep a few things in mind:

  • Choose an individual or firm that will be around at the end of the tax season, not one that packs up and disappears on April 16.
  • If your tax situation is complex, think about hiring a certified public accountant to help you.
  • Don't use a tax preparer who claims he can get you a larger tax refund than others can or one who bases his fees on a percentage of your tax refund.
  • Make sure the preparer signs the tax return and all other necessary forms.
  • Make sure you get a complete copy of the entire tax return -- forms, schedules and all attachments.
  • Never -- never -- sign a blank form.
  • Again, make sure you are satisfied with the tax return before you file it because you are responsible for it.

Another way completing federal tax forms has gotten easier

is through the use of computer programs and the 1040PC form. IRS

officials said some programs print only a tax return answer sheet

-- the line numbers found on the tax form and your responses.

Other programs print filled-out replica forms.

 After completing and printing the return, you mail it to the

IRS. In some instances, you may be able to send the return by

computer modem to a central electronic mail facility that will

transmit your return to the IRS.

Some benefits of filing your tax form electronically include:

  • Computer programs may catch mistakes before they become problems.
  • Computers do the math.
  • When you change one number, the computer program automatically recalculates and edits all other affected entries.
  • You receive acknowledgment that the IRS received your return.
  • If you file early and owe additional taxes, you still have until April 15 to pay.
  • Refunds are usually issued faster.
  • Some states allow you to file electronically at the same time you transmit your federal forms.

Software and 1040PC forms are not available through the IRS, but can be found at most computer software stores.

Direct questions on computer or electronic filing to your local IRS office or call (800) 829-1040. The IRS Tele-Tax service also has several recorded tapes on these subjects: Call (800) 829-4477 and ask for Topic 251, "1040PC Tax Return"; Topic 252, "Electronic Filing"; Topic 253, "Substitute Tax Forms"; and Topic 255, "How to Choose a Tax Preparer."

Another IRS initiative to make filing easier and quicker is TeleFile. IRS officials said the tax agency notifies eligible previous users of the Form 1040EZ who may use TeleFile to phone in their tax information.

The process is simple, they explained. Affected taxpayers dial a toll-free number from a touch-tone phone and follow the instructions to enter their wages, interest and taxes withheld. Within 10 minutes, the IRS computes the refund or taxes due and provides a confirmation number. Taxpayers then sign a form and mail it to the appropriate IRS tax center.

IRS officials said that before calling TeleFile to file your taxes, make sure you have your W-2 form(s), interest statements and Social Security number handy.

For information on this program, call Tele-Tax at toll-free (800) 829-4477 and ask for Topic 255, "TeleFile."

*****

Tax Rules Vary for Senior Citizens

American Forces Press Service

 

WASHINGTON -- Senior citizens should check federal tax rules carefully because the government reserves a number of special tax breaks for them.

Internal Revenue Service officials said, for example, individuals age 65 or older may not have to file a federal return if their income is less than certain minimums. Single seniors with an income below $7,800 do not have to file; if married, the limit is $13,000 if filing jointly and one spouse is 65, or  $13,800 if both are 65; $9,700 for a senior head of household; and $10,350 for a qualifying widow(er) with dependent child.

Other breaks include a higher standard deduction, a credit for the elderly or the disabled, and a break on Social Security benefits depending on marital and filing status. The IRS and volunteer organizations provide free tax counseling and assistance to the elderly -- in this case, age 60 or older.

IRS officials said taxpayers 55 or older who sold a house between May 6 and Aug. 6, 1997, must decide how to report gains on their tax returns. Under the Taxpayer Relief Act signed into law last August, couples may exclude up to $500,000 (singles, $250,000) every two years as many times as they qualify. The previous law allowed a one-time $125,000 exclusion only to persons 55 or older. Specific rules and information on home sales are available from the local IRS office.

Tax officials stressed that seniors and caregivers check the tax rules carefully. Many tax benefits and breaks apply, but only under certain circumstances. If you have questions, check with the local IRS office or call (800) 829-1040. Individuals with a hearing impairment and access to a telecommunications device for the deaf may call the IRS at (800) 829-4059 during normal business hours.

Some publications of possible interest to seniors and caregivers include:

  • Publication 1, "Your Rights as a Taxpayer";
  • Publication 17, "Your Federal Income Tax";
  • Publication 502, "Medical and Dental Expenses";
  • Publication 505, "Tax Withholding and Estimated Tax";
  • Publication 523, "Selling Your Home";
  • Publication 524, "Credit for the Elderly or the Disabled";
  • Publication 554, "Tax Information for Older Americans";
  • Publication 575, "Pension and Annuity Income";
  • Publication 910, "Guide to Free Tax Services";
  • Publication 915, "Social Security Benefits and Equivalent Railroad Retirement Benefits";
  • Publication 1798, "Retiring Qs&As."

Check with your installation tax assistance office or local library for copies of these and other tax forms and publications. Or call IRS at (800) 829-3676 or write to:

IRS

Forms Distribution Center

PO Box 85627

Richmond, VA 23285.

If you have questions, you may want to use the IRS Tele-Tax system, said tax officials. The simple-to-use, round-the-clock, touch-tone phone system offers brief looks at more than 140 different tax topics. Call the number listed in your tax booklet or (800) 829-4477. Or order topics by dialing 703-368-9694 from your fax machine, follow the instructions and then hang up to allow return transmission.

Some topics of possible interest to seniors include:

  • 101, "IRS Services."
  • 102, "Tax Assistance for Individuals with Disabilities and the Hearing Impaired."
  • 302, "Highlights of Tax Changes."
  • 551, "Standard Deduction."
  • 603, "Credit for the Elderly or the Disabled."
  • 701, "Sale of Your Home -- General."
  • 702, "Sale of Your Home -- How to Report Gain."
  • 703, "Sale of Your Home -- Exclusion of Gain, Age 55 and Over."

*****

Taxpayers Do Have Rights

American Forces Information Service

WASHINGTON -- Thanks to two congressional acts, the Internal Revenue Service has to tell you in plain, easy-to-understand language what action it may be taking against you.

IRS officials said a 1988 bill, known as the Taxpayer Bill of Rights, generally protects you during tax agency examinations and tax collection procedures. In addition, Taxpayer Bill of Rights 2 was signed into law in 1996 and ensures additional rights and protections.

The officials said the IRS is charged to collect the correct amount of taxes in the fairest, least costly manner possible. The two bills guarantee that taxpayers will pay no more than their fair share and will not be mistreated.

Some of the basic taxpayer rights addressed in the two laws are:

  • Be informed of your rights.
  • Protection from relying on erroneous IRS information.
  • Property exempt from IRS seizure.
  • Raises the amount of property exempt from levy.
  • Record your tax examination.
  • Notification by the IRS at least 30 days in advance of changing an installment agreement.
  • Have a representative, such as a lawyer, certified public accountant or other professional, represent you at an IRS examination.
  • Delivery of tax-related documents through use of an IRS-designated private service rather than the U.S. Postal Service.

In addition, the laws discuss your rights to privacy and confidentiality, your right to appeal an examiner's audit findings, audit location rules, possible court action against the U.S. government, your right to interest from the IRS on any refund it delays in paying you, and your right to fair, courteous and considerate treatment.

For more details on taxpayer rights and the IRS, read IRS Publication 1, "Your Rights as a Taxpayer." Check with local libraries, installation tax assistance office or post office for a copy. If you live overseas, the nearest U.S. embassy or

consulate may have a copy.

You also can request a free copy of this and other IRS publications by calling (800) 829-3676. Or write to:

IRS

Forms Distribution Center

PO Box 85627

Richmond, VA 23285.

*****

Don't Forget Those State Taxes!

American Forces Press Service

 

WASHINGTON -- The federal taxes are finished and on their way to the Internal Revenue Service. Time to kick back and take it easy?

Not so fast, IRS officials said. Most taxpayers still have state tax forms to file.

They said each state's tax rules are different. For example, several have no income tax. Others allow you to deduct your federal tax from state taxable income. Some states require service members to file and pay state taxes. Some just require them to file a tax form, and others don't require even that.

The officials said state tax rates vary. Some tax singles and married couples at the same rate; others use different rates, like the federal tax system.

If you are in the military and don't know your state tax situation, check with your installation finance officer or state tax agency as soon as possible, said IRS officials. The IRS and state tax agencies work in close concert, they said, so you stand little chance of avoiding taxes in your state of record, especially if you intend to go back when you finish your military duty. If you haven't been filing and paying all along, you could find yourself with a whopping tax bill, interest and penalties.

Income from service members' part-time jobs and spouses' full- and part-time jobs is subject to the tax rules of the duty locale. Texas has no income tax, for instance, but California does. You also may need to file a state return for your home of record even though you aren't stationed there or don't owe tax.

IRS officials said state tax situations can be extremely complicated and advise you direct questions to your installation tax assistance office or the tax agency for your state.

Department of Revenue

Income Tax Forms

PO Box 327410

Montgomery, AL 36132

(334) 242-1000

Department of Revenue

State Office Building

PO Box 110420

Juneau, AK 99811

(907) 465-2320

www.revenue.state.ak.us

Department of Finance and Administration

Revenue Division

PO Box 8055

Little Rock, AR 72203

(501) 682-1100

Franchise Tax Board

Tax Forms Request

PO Box 942840

Sacramento, CA 94140

(800) 852-5711

www.ftb.ca.gov

Department of Revenue

1375 Sherman St.

Denver, CO 80261

(303) 232-2416

www.state.co.us

Department of Revenue Services

State Tax Department

25 Sigourney St.

Hartford, CT

(203) 297-4753

Department of Finance

Division of Revenue

Delaware State Building

820 N. French St.

Wilmington, DE 19801

(302) 577-3300

www.state.de.us/govern/agencies/revenue/revenue.htm

Department of Finance and Revenue

Room 1046

300 Indiana Ave. N.W.

Washington, DC 20001

(202) 727-6170

Department of Revenue

Supply Department

168A Blounstown Highway

Tallahassee, FL 32304

(904) 922-9645

Department of Revenue

Income Tax Unit

PO Box 38007

Atlanta, GA 30334

(404) 656-4293

First Taxation District

830 Punchbowl St.

PO Box 259

Honolulu, HI 96809

(800) 222-3229

www.hawaii.gov/icsd/tax/tax.htm

State Tax Commission

PO Box 36

Boise, ID 83722

(208) 334-7789

Department of Revenue

101 W. Jefferson

Springfield, IL 62719

(800) 356-6302

www.revenue.state.il.us

Department of Revenue

100 North Senate Ave.

Room N105

Indianapolis, IN 46204

(317) 232-2240

Department of Revenue and Finance

Taxpayer Services Section

PO Box 10457

Des Moines, IA 50306

(515) 281-3114

www.state.ia.us/government/drf/index.htm

Department of Revenue

Division of Taxation

Taxpayer Assistance Bureau

PO Box 12001

Topeka, KS 66612

(913) 296-4937

www.ink.org/public/kdor

Revenue Cabinet

Property and Mail Service

200 Fair Oaks Lane

Bldg. 2

Frankfort, KY 40602

(502) 564-3658

Revweb@mail.state.ky.us

Department of Revenue

PO Box 201

Baton Rouge, LA 70821

(504) 925-7532

www.rev.state.la.us

Bureau of Taxation

Income Tax Section

State Office Bldg.

Station 24

Augusta, ME 04332

(207) 624-7894

www.state.me.us/taxation

Comptroller of the Treasury

Revenue Administration

110 Carroll St.

Annapolis, MD 21411

(410) 974-3951

www.comp.state.md.us

Department of Revenue

Customer Service Bureau

PO Box 7010

Boston, MA 02204

(617) 887-6367

www.magnet.state.ma.us/dor/dorpg.htm

Department of the Treasury

Revenue Administrative Services

The Treasury Building

430 W. Allegan St.

Lansing, MI 48922

(800) 367-6263

Department of Revenue

Mail Station 4450

St. Paul, MN 55146

(800) 652-9094

www.taxes.state.mn.us

State Tax Commission

750 South Galatin

Jackson, MS 39204

(601) 354-6247

Department of Revenue

PO Box 3022

Jefferson City, MO 65105

(800) 877-6881

www.state.mo.us/dor/tax

Department of Revenue

Income Tax Division

PO Box 5805

Helena, MT 59604

(406) 444-2837

www.mt.gov/revenue/rev.htm

Department of Revenue

PO Box 94818

Lincoln, NE 68509

(800) 747-8177

www.nol.org/revenue

Department of Taxation

Capitol Complex

Carson City, NV 89710

(702) 687-4892

Department of Revenue Administration

State of New Hampshire

61 S. Spring St.

Concord, NH 03301

(603) 271-2191

www.state.nh.us/

Division of Taxation

CN 269

Trenton, NJ 08646

(609) 292-7613

www.state.nj.us/treasury/taxation/

Taxation and Revenue Department

PO Box 630

Santa Fe, NM 87504

(505) 827-0700

www.state.nm.us/tax

Department of Taxation and Finance

Taxpayer Service Bureau

W. Averell Harriman Campus

Albany, NY 12227

(800) 462-8100

New York City

Department of Finance

Bureau of Tax Collection

25 Elm Place

Brooklyn, NY 11201

(718) 935-6729

Department of Revenue

PO Box 25000

Raleigh, NC 27640

(919) 715-0397

Office of State Tax Commissioner

State Capitol

600 E. Boulevard Ave.

Bismarck, ND 58505

(701) 328-3017

Department of Taxation

Income Tax Division

PO Box 2476

Columbus, OH 43266

(614) 433-7750

Tax Commission

Income Tax Division

2501 Lincoln Blvd.

Oklahoma City, OK 73194

(405) 521-3108

Department of Revenue

955 Center St. NE

Salem, OR 97310

(503) 378-4988

www.dor.state.or.us

Department of Revenue

Strawberry Square

Harrisburg, PA 17128

(717) 787-8201

www.revenue.state.pa.us

Division of Taxation

One Capitol Hill

Providence, RI 02908

(401) 277-3934

www.tax.state.ri.us

Tax Commission

Individual Income Tax Division

PO Box 125

Columbia, SC 29214

(803) 737-5000

www.state.sc.us/dor/dor.html

Department of Revenue

700 Governors Dr.

Pierre, SD 57501

(605) 773-3311

www.state.sd.us/state/executive/revenue/revenue.html

Department of Revenue

Andrew Jackson State Office Bldg.

500 Deaderick St.

4th Floor

Nashville, TN 37242

(615) 741-4465

www.state.tn.us/revenue

Comptroller of Public Accounts

State of Texas

111 West 6th

Starr Building

Austin, TX 78701

(512) 463-4600

www.window.state.tx.us

State Tax Commission

210 North 1950 West

Salt Lake City, UT 84134

(801) 297-2200

www.tax.ex.state.ut.us

Department of Taxes

109 State St.

Montpelier, VT 05609

(802) 828-2515

Department of Taxation

Taxpayers Assistance

Attn: Forms Division

PO Box 1880

Richmond, VA 23282

(804) 367-8031

www.state.va.us/tax/tax.html

Department of Revenue

General Administration Bldg.

PO Box 47478

Olympia, WA 98504

(360) 786-6100

www.ga.gov/dor/wador.htm

State Tax Department

Taxpayer Service Division

PO Box 3784

Charleston, WV 25337

(304) 558-3333

Department of Revenue

Shipping and Mailing Section

PO Box 8903

Madison, WI 53708

(608) 266-1961

www.dor.state.wi.us

The State of Wyoming

Revenue Department

Herschler Building

122 W. 25th

Cheyenne, WY 82002

(307) 777-7378

www.state.wy.us

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