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Show Supplement to The Valley View News. Magna Times, and the Hunter Observer. Tax Tim e April Is Com ing -- Liberalized standard deduction, personal exemption credit, housing credit these are some of the 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 years return, taxpayers were limited to 15 percent of adjusted gross income to a maximum of $2,000. This year, the percentage has been increased to 16 percent with a maximum of married couple filing jointly, or $2,300 for a single person ($1,300 for a married person filing sep$2,600 for a arately). tax liability both by itemizing and by taking the standard deduction. While it may take a little longer to go through the process twice, it just may mean saving a considerable amount. Heres 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 medical costs, charitable contributions, interest payments, etc., totaling $2,350 on an adjusted gross income of $20,000. While 16 percent of their adjusted gross income is $3,200, or $10,000 or XnY less could use the tables. Because of the change in the low income allowance, the filing requirements for individuals 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 or not, however, if taxes were withheld, a return should be filed to claim any refund which may be due. more than the maximum deduction of still save would $2,600, they short the $250 by filing standard form and taking the standard deduction. And they might even save themselves the cost of a 1040A returns preparer. In addition to the increase in the standard deduction, another new 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. Its a good idea to work out the 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 Early filers get their refunds quickest. Tax- payers who file their re- turns 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 together early like now in order to get an start early 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. 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 fW 1AX RfcQfpS! 62T mix. enacted for this year only. Another credit which may benefit many low income families is the earned income credit. Spe- cifically, 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 workers 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. This is how it works. Mr. and Mrs. A. have adjusted gross income of Their earned income credit is $150, $6,500. computed by subtracting 10 percent of the amount of income over $4,000 from the maximum credit of $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 years rebate and the special $50 payment to social security recipients. Where do they fit on this years Federal return? The nowhere. answer is Neither of those checks are considered income by the one-tim- e are not taxable. Theres one more credit IRS and so 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 Jan. 1, 1977; the taxpayer must enter into a binding purchase contract before Jan 1, 1976; except in the case of the taxmust attach to their payers certification return, by the seller tjat the purchase price is the lowest price at which the residence was offered for sale since Feb. 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. This is a Presidential Election year and with elections coming up, taxpayers should be aware that the maximum tax credit for contributions to candidates for public office has been increased to $25 per taxpayer ($50 for a joint return). Also, the maximum deduction for contributions to candidates has been hiked to $100 $200 on a joint return'. |