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Show m 4 assist) Resident or Nonresident: Which One Are You? A .ens living in the United States may owe taxes. Your tax status can affect the .imount you owe. Resident aliens generally are taxed on worldwide income. Nonresident aliens are taxed only on their U.S. sources of income. If you meet the criteria of either the "green card test" or the "substantial presence test" for tax purposes, you are considered a resident alien. Green Card Test The green card test is based on your visa and legal entrance into the United States. 1 . If you are a lawful permanent resident resi-dent of the United States at any time during the calendar year (you have a green card) and 2. Your green card has not been abandoned aban-doned or taken away by Immigration and Naturalization Service (INS). You are a resident alien. To find out your tax responsibilities as on 1-800-829-3676 and ask for English - Guide for Aliens. Keep that Check From Going Astray! Thousands of checks are sent to IRS without proper identification and cannot be applied to taxpayers' accounts. ac-counts. Prevent your tax payment from going astray. Properly identify and complete the check with the following: follow-ing: v- (1) your taxpayer identification number num-ber (social security number) and your spouse's number, if it is a joint return, or employer's identification number, if applicable, (2) the tax period (i.e.. 1990. 0990) and type of tax form associated with Medical Expenses May Prescription drugs or the annual dental check-up may be included in a medical expense deduction. To deduct qualified medical expenses, ex-penses, taxpayers: 1. must itemize their deductions, 2. have unreimbursed medical costs that exceed 7.3 percent of their adjusted ad-justed gross income, and 3. have paid for the allowable medical services. The costs of most visits to the doctor doc-tor and dentist qualify as allowable medical expenses. Medical insurance, special care equipment and cost of transportation to obtain medical care may be considered medical expenses. Also, all medical payments for dependents depen-dents and spouse may be included. Substantial Presence Test The substantial presence test is based on your presence in the United States over the last three years. 1 . During the current year, you lived in the U.S. 31 days and 2. During the last three years, you must have lived in the U.S. 183 days including: at least 13 of the days in the year before the current tax year and at least 16 of the days you were present in the second year before the current year. You are a resident alien for tax purposes. a non-U. S. citizen, call IRS toll-free language Publication 519, U.S. Tax the payment (i.e.. 1040, 941), (3) current mailing address and daytime phone number, and (4) name and taxpayer identification numbcron the tax account if paying on behalf of someone else (i.e.. your child). Be sure to attach your payment to the front of the tax return. If the check is separated from the tax return or correspondence before the payment is recorded, the data included on the check will identify the payment. Be Deductible A record of all medical expenses should be kept so that you can decide whether there are enough expenses to itemize or to support the deduction on the tax return. Some pharmacies will provide monthly and year-end statements state-ments for charge customers that distinguish dis-tinguish between medical and nonmedical non-medical expenses. For tax purposes, receipts, cancelled checks or a log are acceptable forms of recordkeeping. For the specifics on medical expenses, ex-penses, order free IRS Publication 502, Medical and Dental Expenses. An order form is included in the tax package. Qualifying for The Earned Income Credit You may be able to reduce your taxes if you have a child and your earned income is less that $20,264. The credit may be as much as $953, depending on your earned income. You must file a tax return on Form 1040 or Form I040A to receive the credit, and if you don't owe any tax, you probably will be sent a refund. The qualifications to claim the earned income credit are: You must have a "qualifying" child living with you for more than 6 months of the year or full year for a foster child or dependent of a qualifying widow(er). Your filing status on your federal tax return must be one of the following: fol-lowing: married filing jointly, qualifying qual-ifying widow(er) with dependent child or head of household. There are specific requirements for each filing status. You must live in the United States. You must have earned income during dur-ing the year. Earned income includes wages, salaries, sal-aries, tips, other employee compensa-tion. compensa-tion. net earnings from self-employment, self-employment, and union strike benefits. bene-fits. It also includes anything of value money, goods or services that you get from your employer for services you performed, whether or not it is taxable. Examples include quarters and subsistance allowances received by military personnel or the rental value of a parsonage provided to a member of the clergy. Earned income does not include interest, dividends, welfare benefits, veterans' benefits, pensions or annuities, annu-ities, alimony, social security payments, pay-ments, workers' compensation, unemployment un-employment benefits, taxable scholarhips or fellowships. Both your earned income and your adjusted gross income must be below be-low $20,264. You may not take the foreign income in-come credit. Your return must be for a 12-month period. If you think you will be eligible for the earned income credit in 1991. you may choose to get the credit in advance. ad-vance. The credit will be added regularly regu-larly to your pav. Mortgage Interest HOME FINANCING RE-FINANCING FHA - VA CONVENTIONAL CONSTRUCTION Breakup May Taxes A divorce or separation changes many aspects of your life, including your taxes. Filing status, exemptions for dependents, alimony and child support payments are a few of the issues to consider. Marital Status Your marital status affects your filing fil-ing status and influences the deductions deduc-tions and credits which you may claim. On the last day of the tax year, you are generally considered unmarried un-married if you have a legal separation under: a decree of divorce or a decree of separate maintenance. Claiming Dependents Generally, you may claim an exemption ex-emption for persons, such as children or relatives, who meet the dependency tests. If you're divorced or legally separated, a dependent child may be claimed by only one parent. You may claim your children if: you are the custodial parent and the dependency requirements are met or if you are the noncustodial parent and the custodial parent has signed Form 8332, "Release of Claim to Exemption for Child of Divorced or Separated Parents," or similar statement. Decrees or written agreements before be-fore 1985 have special provisions. Income and Deductions Payments Alimony and separate maintenance payments must be included in the re- New Tax Package For Seniors The Internal Revenue Service has developed a separate I040A package for older taxpayers. The package will include the following forms: Form I040A, Schedule I, for reporting over $400 of interest or dividends and a new Schedule 3, developed especially for computing the Credit for the Elderly El-derly or the Disabled. Lines for IRA distributions, pensions and annuities, social security benefits, estimated tax payments and estimated tax penalties will also be added. The new I040A package for the elderly will be available for filing 1990 tax returns. is Still TAX DEDUCTIBLE - See Us At MultiSERVE FREE PRE-QUALIFICATION 754 S. 400 E SUITE 200 OREM EQUAL HOUSING - LENDER 222-9393 FRIENDLY, PERSONALIZED SERVICE Impact on cipient's income and may be deducted from the payor's income on his or her tax return. Child support payments are not considered income to the recipient nor are they a deduction for the payor. Legal fees and court costs for getting get-ting a divorce are not deductible. However, if the legal fees included tax advice relating to your divorce, that portion may be an itemized deduction . Withholding Changes in filing status, exemptions exemp-tions and deductions impact the amount of tax that should be withheld from your pay. Review your Form W-4 W-4 to increase or decrease your withholding. with-holding. For a detailed discussion on tax topics top-ics relating to divorced or separated taxpayers, order Publication 504, Tax Information for Divorced or Separated Sepa-rated Individuals, by calling the IRS toll-free number, l-800-TAX-FORM (1-800-829-3676). Almost All Income Taxed All income, whether received in cash, property or services, is taxable, unless specifically exempt. Everyone knows that salaries and wages are taxed because the tax withheld with-held is listed on your pay stub. But reimbursed moving expenses, bonuses bo-nuses and achievement awards may be included in taxable income. Even certain cer-tain fringe benefits such as the value of the personal use of a company car should be included. Alimony, cancelled debts, bartering bar-tering and other types of taxable income in-come are covered in Publication 525, Taxable and Nontaxable Income. For free copies of IRS publications, call toll-free l-800-TAX-FORM (I-800-829-3676). t-r |