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Show Mew Tax Legislation Means Less Taxes for Most Liberalized standard deduction, deduc-tion, personal exemption credit, cre-dit, housing credit these are some of i he changes on the 1975 tax return that will mean less taxes for the majority of taxpayers. Take the change in the standard deduction. On last year's return, taxpayers were limited to 15 of adjusted gross income to a maximum of $2,000. This year, the percentage percent-age has been increased to 16 with a maximum of 52,600 for . a married couple filing jointly, or $2,300 for a single person ($1,300 for a married person filing separately). Many taxpayers who have always itemized and filed the 1040 form may find it to their advantage to use the simpler Form 1040A this year and take .the standard deduction. It's a good idea to work out the tax liability both by'fitemizing and by taking the standard deduction. deduct-ion. While it may take a little longer to go through the process twice, it just may mean saving a considerable amount. Here's an example which shows how it can be to the taxpayers' advantage to use the standard deduction. Mr. and Mrs. T. have itemized deductions for medi-' cal costs, charitable contributions, contribu-tions, interest payments, etc., totaling $2,350 on an adjusted gross income of $20,000. While 16 of their adjusted gross income is $3,200, or more than the maximum standard deduction of $2,600, . they would still save $250 by filing the short 1040A form and taking the standard deduction. And they might even save themselves the cost of a returns preparer. In addition to the increase in the standard deduction, another an-other new change for 1975 is the low income allowance which has been raised. This increase is reflected in revised tax tables which now have a ceiling of $15,000. Last year only taxpayers who earned $10,000 or less could use the tables. Because of the change in the low income allowance, the filing requirments for individuals individ-uals have also been revised. For example, last year a single taxpayer was required to file a return if earnings were $2,050 or higher; now the filing requirement for a single individual is $2,350. Whether a person is required to file 01 not, however, if taxes were withheld, a return should be filed to claim any refund which may be due. Speaking about refunds, keep in mind that early filers get their refunds quickest. Taxpayers who file their returns in January can expect a refund, if one is due, in four to five weeks, while the late, close to the April 15th deadline, filers may have to wait as long as eight weeks for a refund check. So it makes good sense to get started gathering records and documents docu-ments together early--like now-in order to get an early start filing your return. Another change for filers is that each taxpayer with a tax liability can claim a $30 credit for each dependent and personal exemption. Keep in mind, though, that this credit does not apply to the exemptions for age or blindness. blind-ness. Therefore, for a married couple with two children, a credit of $120 could be claimed on a joint return. This provision, as most of the others, has been enacted for this year only. Another credit which may benefit many low income families is the earned income credit. Specifically, it applies to taxpayers with dependents and adjusted gross income (or earned income, if greater) under $8,000. The maximum credit is 10 percent of a worker's first $4,000 of earned income. Above $4,000 the credit is reduced by an amount equal to 10 percent of the taxpayers adjusted gross income. in-come. This is how it works. Mr. and Mrs. A. have adjusted gross income of $6,500. Their earned income credit is $150, computed by subtracting 10 percent of the amount of income over $4,000 from the maximum credit ol $400. Even if Mr. and Mrs. A. had no tax liability, they would receive a check for the $150.,, The earned income credit may be claimed by those who have no tax liability if the other conditions are met. So people who may not otherwise be required to file a return should do so to get a check for the earned income credit, even if no income tax had been withheld. Mention of checks may bring to mind last year's rebate re-bate and the one-time special $50 payment to social security recipients. Where do they fit on this year's Federal return? The answer is "nowhere." ' Neither of those checks are considered income by the IRS and so are not taxable. There's one more credit to consider: the housing credit. This credit applies only to those taxpayers who bought certain newly constructed homes last year. A home built before March 26, 1975, which had never been occupied, is eligible .for the credit. The other conditions which must be met are: --the house must be a principal residence; --the residence must be. acquired and occupied as a principal residence after March 12, 1975, and before . January 1, 1977; -the taxpayer must enter into a binding purchase contract before January 1, 1976; --except in the case of self-construction, the taxpayers taxpay-ers must attach to their return, certification by the seller that the purchase price is the lowest price at which the residence was offered for sale since February 28. 1975. An individual who meets all the tests may claim a credit of 5 percent of the purchase price, up to a maximum of $2,000. Another tax break dealing with homeowners is the provision that the seller of an old principal residence now has 18 rather than 12 months, as in the past, to purchase a new principal residence, to defer recognition of a tax gain. This is a Presidential Election Elect-ion year and with election coming up, taxpayers should be aware that the maximum tax credit for contributions to candidates for public office ha 5 been increase to $25 pe.-taxpayer pe.-taxpayer ($50 for a join return). Also, the maximum deduction for contributions to candidates has been hiked to $100 ($200 on a joint return). The IRS is making it easier for taxpayers to file the shorter Form 1040A by automatically sending the 1040A package, complete with instructions, to those taxpayers who took the standard deduction last year but did not use the short form. Taxpayers will receive a tax package through the mail during the first week in , Jaunuary. In the package, taxpayers usually will find everything they need to complete the 1975 return. : x 3ji ji ji jr a jt jr ji ixjI ji jU |