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Show Tax Preparative AdMce 18)84 in cooperation with the Internal Revenue Service To itemize or Citizen, Review, Press, Wed-- , Mar. 7, 1984 - Page 13 Child Care Credit Working is the question Helps Parents not-th- at Taxpayers who pay others to care While the IRS encourages as many taxpayers as possible to use the simpler 1040A and 1040EZ forms, there will be millions of taxpayers who will find it to their advantage to itemize deductions on the 1040 form. Generally, you will benefit from itemizing deductions if you paid interest and taxes on a home you own, had unusually large uninsured medical and dental expenses during the year, made large contributions to qualified charitable organizations, or had major uninsured casualty losses. What this means is that you will probably have itemized deductions totalling more than the zero bracket amount appropriate to your filing status. Taxpayers who itemize deductions reduce their adjusted gross income by their excess itemized deductions. Excess itemized deductions are the Omission in tax instructions causing taxpayer errors Officials at the Internal Revenue Service Center in Ogden warn that an oversight in the new tax instruction booklet is causing some taxpayers to make an error in filing their 1983 federal income tax return. "Taxpayers claiming state tax refunds as income are instructed to complete a worksheet to compute the portion of the refund that is taxable," ules. Itemized deductions are nonbusiness deductions. If you itemize your deductions, you must file Form 1040 and fill in Schedule A (Form 1040). Schedule A provides space for listing deductible medical and dental expenses, charitable contributions, taxes, interest paid, casualty or theft losses, and miscellaneous items such as union dues. If you itemize, you should keep a record of your deductible items, including cancelled checks and receipts. This will verify your expenses should the Internal Revenue Service examine your return. It will also help you determine whether your itemized deductions are greater than your zero bracket amount. Taxpayers who itemize can take advantage of many deductible expenses. Here's a brief explanation from the IRS of some types of deductions available: "...However printed instructions do not tell the taxpayer that the resulting figure taken from the worksheet, found on page 10 of the instruction booklet, cannot be less than zero." "If taxpayers, using the worksheet to determine the taxable portion of their refunds, compute a negative amount, this amount must be entered as 'zero' on line 10 of their Fprml.040," officials said. IRS, " computers are pr Ogrammfea to reject returns indicating negative amounts on line 10. These returns then must be manually processed which could result in a delay of any refund due the taxpayer. "While the IRS is taking steps to correct the situation, taxpayers should be warned not to enter these negative amount," officials said. Filers Make More Errors Medical Expenses You may deduct the medical expenses you paid during 1983 to the extent that they exceed five percent of your adjusted gross income. If you were reimbursed by insurance or otherwise, that amount must be subtracted from your medical expenses. Payments for the diagnosis, cure, prevention, or treatment of a physical or mental illness are deductible as are payments for the purpose of affecting any structure or function of the body. In general, deductible medical expenses include your payments to doctors, dentists, psychiatrists, etc.; payments to hospitals for service, etc., and paylaboratory fees, ments for eyeglasses, hearing aids and parts, dentures, crutches, etc. What are not allowed are things such as a trip taken to "get away from it all," even if advised by a doctor, health club dues, maternity clothes, or diaper service. Expenses for transportation that are essential to medical care such as getting to and from a doctor's office may be included in medical expenses. These include taxi, bus, train, or plane fares. If you use your car, you may deexduct the actual nine as and or such oil, gas penses, cents for each mile you use your car for this purpose. You may deduct parking fees and tolls in addition to your actual operating expenses or deducting nine cents a mile. You must, of course, keep track of your expenses and mileage. Beginning in 1983 the separate deduction for half of medical insurance is eliminated. Therefore, the total of your health insurance premiums, and your payments for medicines and drugs that are more than Charitable Contributions said. officials If you donate property other than money, you must base your deduction on the fair market value of the property; that is, the amount you could reasonably charge if your were selling the property. Bear in mind that a contribution is only a contribution at the time of its delivery. Pledges are not contributions until you make payment. Also, if a contribution results in a personal benefit, all or part of it may not be deductible. For example, if you buy a $50 ticket for a church benefit and receive a meal at the function worth $15, you can only claim $35 as a charitable contribution. amount by which total itemized deductions exceed the zero bracket amount. For example, a married couple filing jointly, with itemized deductions of $5,500, would subtract their zero bracket amount of $3,400 from the $5,500 in order to determine their excess itemized deductions of $2,100. Although adjusted gross income is reduced by only the excess itemized deductions, all deductions are allowed. This is because the zero bracket amount is incorporated into the tax tables and the tax rate sched- -- Generally, you may deduct contributions you paid to any qualified organization established and operated exclusively for charitable, religious, educational, scientific, or literary purposes, or for the prevention of cruelty to children or animals; to certain organizations that foster national or international amateur sports competition; to fraternal organizations if the contributions are used for charitable purposes; to veterans organizations; or to governmental agencies that will use the gifts exclusively for public purposes. This means that you may deduct your contributions to most religious organizations, a community fund, Boy Scouts, the YMCA, the Red Cross, the American Cancer Society, CARE, Veterans of Foreign Wars, etc. You may not deduct contributions to civic leagues or chambers of commerce. et Last-Minu- te Check fore the deadline. According to the Internal Revenue Service, many of those last minute filers are due refunds they would receive sooner if they filed earlier. Filing before the last minute can also have an extra benefit. Returns filed late in the season are often completed hastily and under pressure; the chance of errors increases dramatically in such a situation. But the taxpayer who starts earlier can work at a leisurely pace and still have time the return before to double-chec- k sessed by some states, especially on cars, may be deductible if they are based on the value of the personal property and are imposed annually. The 1983 Optional State Sales Tax Tables are a convenient reference for determining the amount you may be able to deduct for those taxes. Generally, no federal taxes are deductible on your federal income tax return. Interest These deductions include such disabled. The credit also applies to a diitems as union dues, the cost of safety equipment, tools, and supplies used vorced or separated parent who has in your job including professional custody of a child under 15, even and trade journals, and expenses though the parent may not be entiincurred in seeking new employment tled to a dependency exemption for in the same trade or business. Job the child. The parent claiming the hunting expenses are not deductible credit must, however, have custody if you're seeking employment in a for a longer period during the year than the other parent. A spouse who new field of work. Under the category of miscellaqualifies may take the credit if the other spouse is absent for the last six neous deductions you can also deduct the rent on your safety deposit months of the taxable year. g box if you keep The credit is from 20 to 30 percent items in it, such as stocks and bonds. of eligible expenses depending on the Taxpayers who hire someone to pre- taxpayer's adjusted gross income. pare their tax returns can also ded net The maximum credit that may be the fee paid to the preparer. taken is limited to $720 for one qualiIf you legally adopt a child with fying person and to $1,440 for two or special needs, you may be able to more qualifying persons. To qualify for the child and disdeduct up to $1,500 of qualified miscellaabled as a dependent care tax credit, a adoption expenses neous deduction. A child with spe- taxpayer ( I ) must have income from cial needs is one who the state deter- work; (2) must have incurred the mines is described in the Social expense in order to work or look for Security Act adoption assistance work; and (3) must have maintained program. This is a child who the state a household that included one or determines cannot or should not be more qualifying individuals. Qualireturned to his or her parental home, fying individuals are dependent chilwho has a specific factor or condition dren under 15 years of age, a disabled that makes the child difficult to spouse or a disabled dependent of place, and who has been the subject any age. Additional information is availof an unsuccessful placement effort. in the free IRS Publication 503, able inQualified adoption expenses clude reasonable and necessary Child and Disabled Dependent Care. which may be ordered by filling out adoption fees, court costs, attorney the order blank in the tax package or are and that other fees, expenses the FormsTax Informadirectly related to the adoption of the by calling child. These adoption expenses do tion number listed in the telephone not include any expenses for which directory. a creditor that you you TELE-TA- X may otherwise deduct. In addition, for deduct not expenses may any you Utah which you received payments from a Salt Lake City federal, state, or local program. Miscellaneous Deductions The interest you paid during the year on a debt for which you are legally responsible is deductible. This includes such debts as a car loan, a bank loan, an educational loan, or a mortgage of your home. However, if in 1983, you prepaid interest allocable to any period after 1983, you can only deduct the amount of interest allocable to 1983 on your 1983 return. If you buy such things as clothing, a radio or TV set, furniture, or household appliances on an installment C redit applies not full-tim- income-producin- plan or a budget charge account or credit card that lists a finance charge, you may treat the finance charge payment as interest. In general, the IRS says that interest deductions must meet the following tests: the interest from an actual debtor-credit- This Child ( are only to bdbv sitters and day care centers that watch your child or disabled dependent while you work, but also to relatives and certain household workers you pay for this service. This credit is available to married couples who file jointly, including those in which one spouse works and e the other is a student or must result rela- tionship; the interest must be based on a valid obligation to pay a sum of money, and the debt must be one for which you are legally liable. Taxes The following state or local taxes that you paid during the year are deductible: income tax (including tax withheld or paid as estimated tax during the year), real property tax, personal property tax, general sales tax and contributions to certain state disability benefit funds. Remember, the tax on certain maa car, motorcycle, jor purchases motor home, truck, boat, plane, -- .home (including mobile or prefabricated), materials purchased to build a new home can be deducted in addition to the sales tax table amount. Personal property taxes as may-recei- v Free Publications Answer Questions Some of the more often requested free IRS publications include the Credit for the Elderly Charitable Contributions Miscellaneous Deductions Tax Information for Home- 524 526 529 530 following (the number denotes the publication number): 225 Farmer's Tax Guide 334 Tax Guide for Small Business owners 545 Interest Expense Taxpayers with tax questions can Tele-Ta- x and listen to recorded tax information provided by the Internal Revenue Service. If a taxpayer calls from outside the local dialing area of any Tele-Ta- x number there w ill be a charge. call long-distan- with State Farm Competitive Rates. Guaranteed Lifetime Income. Waiver of Premium for Disability Option. Good Neighbor ' ' Service. Call Your Good Neighbor State Farm Agent ' Calvin Blohm 63 East State Pleasant Grove Utah 785-426- last-minu- te 6 ARM SI ATI I INSUH ANCf Like a good neighbor. 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