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Taxes Part 3

American Forces Press Service

WASHINGTON, March 3, 1998 – Choosing the right Form 1040 tax form to use when doing your federal taxes may save you time and money, said Internal Revenue Service officials.

For example, you may decide to use Form 1040A, but if you used the long Form 1040 and itemized deductions, you could cut your taxes. On the other hand, said IRS officials, don't use a form that takes longer to fill out but doesn't save you any money.

The key in filling out the Form 1040 is to use the form that allows you to correctly report all income and claim all deductions and credits to which you are entitled, said IRS officials.

Make sure you meet all the prerequisites for the tax form you use. If, for example, you have over $400 in taxable interest, you can't use Form 1040EZ. Or if your taxable income is over $50,000, said IRS officials, you can't use Form 1040A.

IRS officials said if you meet the prerequisites for a couple of the Form 1040s, you might want to spend a little extra time filling both out and comparing the bottom line. You may find that you save money when using one form over the other, tax officials added.

If you meet all of the following prerequisites, you may be able to use the short Form 1040EZ:

  • You are single, or married and filing jointly, and do not claim any dependents.
  • You are not 65 or older, and are not blind.
  • Your taxable income is less than $50,000, and is only from salaries, wages, tips, unemployment compensation and taxable scholarships and fellowships.
  • You do not have over $400 in taxable interest income.
  • You did not receive any advance earned income credit payments.
  • You are not itemizing deductions and have no tax credits other than the earned income credit.
  • You must file the Form 1040EZ on or before the April 15 tax deadline. No extensions are allowed for this form.

If you didn't meet all of the prerequisites for the

Form 1040EZ, you may want to consider the short Form 1040A.

Its prerequisites include:

  • Your taxable income is less than $50,000.
  • Your income is from salaries, wages, tips, dividends, interest income, taxable scholarships and fellowships, pensions, annuities, Individual Retirement Account distributions, unemployment compensation and taxable Social Security benefits.
  • You do not itemize deductions.
  • You made qualified contributions to an IRA.
  • You may claim the earned income credit, or credit for the elderly or disabled, or child and dependent care expenses.
  • You may take the education exclusion from the Series EE savings bond program.
  • In addition, you may have received advanced earned income credit payments or made estimated tax payments.
  • You may file for an extension for filing this tax form.

If you didn't meet all of the requirements for the Form

1040A, you must file the long Form 1040, said IRS officials.

Besides taxable income and itemizing deductions, a few

tax situations that require you to file Form 1040 include:

  • You received nontaxable dividends or capital gain distributions.
  • You need to make adjustments to income, including alimony and moving expenses.
  • You have income that is not allowed on the shorter forms, such as alimony.

Tax officials said you may have heard of Form 1040PC. This tax form is completed on your personal computer using IRS-approved tax preparation software. You complete the form on the computer just as you would if you were filling out a paper tax form. IRS officials said only the lines and spaces you fill in are printed, while the rest of the form is omitted.

Another option for taxpayers this year, said IRS officials, is TeleFile. About 26 million taxpayers may be able to file their taxes using this totally paperless and automated service. To file using TeleFile, you must receive a special package from the IRS, be single with no dependents, have a taxable income of less than $50,000, have not moved within the last year and have previously filed a tax return.

IRS officials stressed that you must receive the special tax package in order to use TeleFile and that any change in your status disqualifies you from using the program.

Filing this tax form is as simple as using a touch tone telephone. After you complete a worksheet that is included in the tax package, you call the IRS on a touch tone telephone. Following recorded instructions, you provide the information from the worksheet. When your telephone call is complete, TeleFile has computed and filed your tax return. If you have a refund coming, it should arrive in about a month; if you owe additional taxes, the tax package explains how to pay them.

If you have any questions on which form to use, check with the installation tax assistance office, local IRS office or call (800) 829-1040.

In addition, check out IRS Publication 17, "Your Federal Income Tax." This free brochure explains the 1040 forms and how to use them. For a copy of this and other IRS publications and forms, call (800) 829-3676 or write to:

IRS

Forms Distribution Center

PO Box 85627

Richmond, VA 23285.

*****

Check Out IRS Pub 3 for Military Members

American Forces Press Service

 

WASHINGTON -- The Internal Revenue Service realizes military members and their families face a somewhat different set of tax situations from the average taxpayer.

That's why the tax agency offers IRS Publication 3, "Armed Forces Tax Guide." Subjects covered in the free pamphlet include military and special pays, what to include in gross income, time extensions to file federal tax returns, dependency exemptions, sale of residence and deductions.

IRS officials said the guide also explains the combat zone exclusion and how it relates to federal taxes. Tax provisions for service members involved in the peacekeeping efforts in Bosnia, Herzegovina, Croatia and Macedonia, as well as the Persian Gulf area are explained.

Two other free pamphlets IRS officials recommend service members use in filling out their tax returns are IRS Publication 1, "Your Rights as a Taxpayer," and IRS Publication 17, "Your Federal Income Tax." The guide on rights tells you what rights you have as a taxpayer and exactly what you can and cannot do, while the guide on federal income tax takes you through the tax return, step-by-step.

IRS officials said these publications make the tax process easier to understand, so that you pay only what you should and no more.

For free copies of these and other IRS publications and forms, check with the installation tax office, local post office or library. In addition, they are available from the IRS by calling (800) 829-3676 or writing to:

IRS

Forms Distribution Center

PO Box 85627

Richmond, VA 23285.

*****

Try IRS Tele-Tax for Answers

American Forces Press Service

 

WASHINGTON -- If you have simple questions about a specific tax issue, you may want to try the Internal Revenue Service's Tele-Tax system.

A telephone pre-recorded system, it offers information on more than 140 different tax topics, said IRS officials. The subjects range from personal taxes and exemptions, deductions and credits to business practices.

To use Tele-Tax, you need a touch-tone telephone. Call the telephone number listed in your tax package for your area or call (800) 829-4477, any time day or night, any day of the week, said IRS officials. The service will let you choose up to three topics per phone call before it cuts you off. Topcis average a few minutes in length.

IRS officials recommend having a pen and paper handy to take down the topics' numbers or to take down other information provided.

If you have a fax machine, IRS officials said, you may want to use the Tele-Tax Fax program. To use this service, dial (703) 368-9694 from your fax machine. Follow the voice prompts and then switch to the fax session. IRS officials said this program will only allow you to choose up to three topics per call.

Some of the most requested tax subjects, with their topic numbers include:

  • 101, "IRS Services"
  • 102, "Tax Assistance for Individuals With Disabilities and the Hearing Impaired"
  • 104, "Problem Resolution Program -- Help for Problem Situations"
  • 151, "Your Appeal Rights"
  • 152, "Refunds -- How Long They Should Take"
  • 156, "Copy of Your Tax Return -- How to Get One"
  • 157, "Change of Address -- How to Notify the IRS"
  • 203, "Failure to Pay Child Support and Other Federal Obligations"
  • 252, "Electronic Filing"
  • 255, "TeleFile"
  • 301, "When, Where and How to File"
  • 302, "Highlights of Tax Changes"
  • 304, "Extensions of Time to File Your Tax Return"
  • 308, "Amended Returns"
  • 352, "Which Form -- 1040, 1040A or 1040EZ?"
  • 354, "Dependents"
  • 455, "Moving Expenses"
  • 501, "Should I Itemize?"
  • 502, "Medical and Dental Expenses"
  • 504, "Home Mortgage Points"
  • 505, "Interest Expense"
  • 509, "Business Use of Home"
  • 513, "Educational Expenses"
  • 551, "Standard Deduction"
  • 601, "Earned Income Credit"
  • 602, "Child and Dependent Care Credit"
  • 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"
  • 704, "Basis of Assets"
  • 705, "Depreciation."

IRS officials stressed that both the telephone and fax programs are very simple and easy to use -- as easy as picking up a telephone, dialing a number, listening to a few instructions and punching in a few number codes.

*****

Check With IRS for Past Tax Returns

American Forces Press Service

 

WASHINGTON -- If you need a copy of a past federal tax return you filed and can't find it, don't worry, said Internal Revenue Service officials.

All you need to do, said IRS officials, is to fill out IRS Form 4506, "Request for Copy or Transcript of Tax Form." Attach a check or money order for $23 for each tax period requested and send it to the IRS tax center where you filed the return. Allow about 60 days.

But before you request a copy of the entire return, check with the local IRS office or call (800) 829-1040, to determine if you need a complete copy of the return or just transcript or tax account data. For example, if you are trying to buy a house, you will need a complete copy of the federal tax return, but when applying for educational assistance, a tax transcript may suffice.

IRS officials said tax account data, which is free, includes the basic information from your tax return, such as marital status, taxable income and type of return filed. Also free is transcript data, which includes most lines from the tax return and accompanying forms and schedules.

However, it does not reflect any changes made to the original tax return by you or the IRS. Tax return transcripts for Forms 1040, 1040A and 1040EZ are available for tax years after 1991, said IRS officials.

To request a copy of the tax return transcript or tax account data, call or visit your local IRS office, or send a copy of Form 4506 to the tax center where you filed the return. Allow about 10 days, processing time.

If you find you do need a complete copy of the tax return, IRS officials said you can request up to four tax periods from the same service center on Form 4506. However, IRS officials cautioned, you must use a separate Form 4506 for each tax service center from which you are requesting tax returns. Be sure to include $23 for each tax period, tax officials added.

Installation tax assistance offices, local libraries and post offices, as well as local IRS offices, should have copies of IRS Form 4506. Or to request copies of this form and other free IRS publications, call (800) 829-3676 or write to:

IRS

Forms Distribution Center

PO Box 85627

Richmond, VA 23285.

If you have a computer, check the IRS web site at http://www.irs.ustreas.gov to download a copy of the form. Or if you have a fax machine, call (703) 368-9694 to request a copy of the form.

IRS officials said if you need last year's tax return in order to do your 1997 return, request it as soon as possible. If it looks like you won't get the past return in time, you may want to go ahead and file the 1997 return by the April 15 deadline and amend it later, or you may want to request an extension.

*****

Choose Correct Filing Status for Tax Returns

American Forces Press Service

 

WASHINGTON -- The filing status you use for your federal tax return depends, for the most part, on your personal status, said Internal Revenue Service officials.

For example, if you are single and have no dependents, you have no choice but to use the "single" filing status, said IRS officials. If you are married, however, you may choose to file "married filing jointly" or "married filing separately." The choice may depend on whether the couple has varying income levels or deductions, or if the couple is separated.

There are five filing statuses to select from, said IRS officials. They are:

  • Single,
  • Married filing jointly,
  • Married filing separately,
  • Head of household and
  • Qualifying widow(er) with dependent child.

There are specific requirements that must be met for each filing status, said IRS officials.

Use "single" if you are unmarried and have no children. You may also file as "single" if you have children but are not married, said IRS officials, but it may be more beneficial to file as "head of household." In addition, you may be considered "single" if you are a widow or widower in any year after the year of death and have not remarried, or you are legally separated or divorced. Under certain circumstances, said IRS officials, some married individuals may qualify as "single."

IRS officials said when using the status "married filing jointly," the couple combines both of their incomes and deductions on the same tax return. One tax is then applied to the total. You may also file a joint tax return if your spouse died during the year.

If you choose to file "married filing separately," said IRS officials, you are responsible only for your own income, exemptions and deductible expenses. You must file as "married filing separately" if your spouse uses this filing status, your spouse is claimed for tax purposes as a dependent by someone else or both you and your spouse use different tax reporting years.

There are a number of conditions to be met if you wish to use the "head of household" filing status. Generally, these include, said IRS officials, if you are single or lived apart from your spouse for the last half of 1997 and your child lived with you, you may claim the child as a dependent, and you provided at least half of the costs of maintaining the home. Also, you must file a separate tax return from your spouse.

To file as a "qualifying widow or widower with dependent child," you must not have remarried in 1997, and have been widowed in 1995 or 1996. Also, you must have been eligible to file a joint return the year your spouse died, even if you did not do so, added IRS officials. Other requirements include you must have provided at least 50 percent of the cost of maintaining your household and had a dependent child who lived in your home for the entire year.

IRS officials said some things to keep in mind when determining your tax filing status are:

  • Your marital status on the last day of the year -- in this case, Dec. 31, 1997 -- determines your status for the entire 1997 year;
  • If you file a joint return, each of you is responsible for the entire tax on the return;
  • If you file "married filing separately," you are responsible only for the tax on your own return;
  • Up to three years after filing "married filing separately" returns, you may choose to change them to a "married filing jointly" return; however, you may not change a joint return to separate returns after the originial April 15 due date;
  • If you are separated and live in a community property state, your filing status may become even more complicated;
  • Filing status determines your tax rates; and
  • Various deductions, credits and exclusions are affected by the filing status you choose.

Use the filing status that is most favorable to your tax situation, said IRS officials. This is one case where you might want to spend a few extra minutes to determine which status will give you the best deal.

IRS officials said determining the correct filing status can be difficult, depending on your personal situation. For assistance, contact the local IRS office or call (800) 829-1040.

Free IRS brochures that explain each filing status in detail are IRS Publication 501, "Exemptions, Standard Deduction and Filing Information," and IRS Publication 555, "Community Property." To request free copies of these and other IRS publications, call (800) 829-3676 or write to:

IRS

Forms Distribution Center

PO Box 85627

Richmond, VA 23285.

*****

Use Correct W-4 Withholding

American Forces Press Service

 

WASHINGTON -- If your tax refund is too large when you file your federal tax return, or on the other hand, you owe too much federal tax, you may want to consider filing a new Form W-4.

Internal Revenue Service officials said, Form W-4, "Employee's Withholding Allowance Certificate," helps your employer determine how much to withhold in taxes from your paycheck. A correct W-4 form, said IRS officials, should help you pretty much break even at federal tax paying time -- you shouldn't have to pay too much, nor should you receive a large refund check.

A few of the changes in your personal life that may prompt you to change your withholding and file a new form, IRS officials said, are:

  • Marriage or divorce,
  • Additional dependents,
  • A large medical expense,
  • Increase or decrease in itemized deductions or tax credits,
  • Earned income increase or decrease and
  • Buying a home.

IRS officials said there is no limit to the number of legitimate exemptions you may claim on your W-4 form. However, tax officials stressed, the operative word here is legitimate. If the number of exemptions you claim exceeds 10, your employer must send the W-4 form to the IRS, which may then ask you to justify each exemption claimed.

In some cases, you may have no choice but to file a new Form W-4. There are a number of instances in which you have 10 days to file a new form; these include divorce, separation and when you stop supporting a dependent.

For information on withholding, you may want to read IRS Publications 505, "Tax Withholding and Estimated Tax," and 919, "Is My Withholding Correct for 1998?". In addition, the Form W-4 explains in detail how to determine the number of withholding allowances.

Free copies of these and other IRS publications and forms may be available at installation tax assistance offices and local libraries. Or you want to call the IRS (800) 829-3676, or write to:

IRS

Forms Distribution Center

PO Bx 85627

 Richmond, VA 23285.

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