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Show Page 6 Salina SunGunnison Valiev News Wednesday. March 18. 1998 (c (OJ 1 Home sellers may take advantage of tax relief in 1998 997 tax changes affect almost every taxpayer As tax season rolls around, the Internal Revenue Service wants to remind people about tax law changes that could affect their 1997 tax returns. Some are new, and some are tax laws Congress enacted a year ago that are just now taking effect. Heres a quick look at those that could change the bottom line of most peoples tax returns. For 1997, personal exemptions are worth $2,650. People who dont itemize deductions get an increased standard deduction of $4,150 for singles, $6,900 for married couples filing joint returns or qualifying widow(er)s, $6,050 for heads of households and $3, 450 formarried couples filingsepa-rat- e returns. The earned income tax credit is now as much as $3,656 for people with more than one qualifying child. For those with one qualifying child, its as much as $2,210. And its up to $332 forthose with no children. The amount people can earn and still be eligible for the credit increases to $29,290 for those with more than one qualifying child, $25,760 forthose with one child and $9,770 with no children. And for people thinking about filing for the EITC when they know they arent beware! False EITC claims eligible could bar people from the credit for up to 10 years. Selling a home? The exclusion of $ 25,000 of gain for people age 55 or older and the rollover of sales proceeds into a new home were replaced during 1997. People of 1 any age can now exclude up to $250,000 of gain ($500,000 for married couples filing a joint return) they get on the sale of their home after May 6, 1997. They must live in the home for at least two of the five years before the sale. Every two years, they can do it again. Also for 997, people who received accelerated death benefits under a life insurance contract because they were terminally or chronically ill can exclude those payments from their income. Formerly, the law excluded only life insurance payments made on ac1 count of the death of the insured. This exclusion also applies to amounts received from death benefits sold or assigned to a viatical settlement provider. Amounts people get from qualified care insurance contracts can long-terexcluded from income as be usually well. And insurance premiums are deductible as a medical expense up to m Farmers cultivates from Residential Sales Council certain limits, which depend on the taxpayers age. Some people can contribute to medical savings accounts. They can use the money tax free to pay medical exhealth penses that their insurance doesnt cover or reimburse. Also, the 10 percent early withdrawal penalty on individual retirement arrangements wont apply to amounts used to pay for unreimbursed medical expenses that are more than TA perAnd the exclusion for employer-provide- d cent of adjusted gross income. educational assistance which Keep in m ind that with each of these level to only applies undergraduate medical changes, some limits, excepfrom June was extended 1997 study tions or eligibility requirements may 2000. May through apply. Businesses that were to begin makAdopting a U.S. citizen or resident child? For 997, a person may be able ing tax deposits electronically after 1 to claim a tax credit for qualifying June 997 now have until July 998 to do But they shouldnt wait until so. adoption expenses. It can be as much the last minute to enroll in the Elecas $5,000 for each child, or $6,000 for Tax Payment System tronic Federal a child with special needs. The credit The enrollment (EFTPS). process norreduces tax liability. Or if an employer takes several weeks. Once busimally has an adoption assistance program have to nesses dont sign up, they and pays part of the qualifying exinstitufinancial to make their trips penses, the employee can exclude up FTD tions to their deposit coupons into this same amount from gross and checks. To use EFTPS, all it takes come. The health insurance deduction for is a telephone call or a personal coma few buttons, and its persons rose to 40 per- puter push cent in 1997, and increases to 45 per- done. Heres one last reminder for all taxcent for 1998. A revised Schedule D payers. People who owe should pay p will take taxpayers taxes in full to avoid penalty and their through the new, lower tax rates on interest charges. But those who cant capital gains. What should businesses look for in afford to pay all at once should at least 1997 changes? They can deduct the file their returns on time, and either costs of adoption assistance programs attach an installment payment request or Form 9465 may be used they provide for their employees and discuss IRS the contact to payment deduct contributions to employees medical savings accounts. Of course, options or offers to settle their tax accounts for less than the amount owed. certain limits or other requirements Want more information on tax may apply. and get Call changes? Businesses with group health plans Publication 1997 of 553, Highlights are subject to an excise tax if their Tax Changes. For online tax informaaccessibildo meet new the not plans tion, forms and publications, check ity, portability and renewability reout the IRS on the Internet at quirements. The tax is $100 a day for each beneficiary during the time in www.irs.ustreas.gov. Got a fax machine, but not a computer? Dial (703) which the plan does not meet the re4 from the fax machine to quirements. These requirements limit the most commonly used request the circumstances under which plans the instruction sheets of forms, many can deny coverage for the TeleTax topics. Details on and bar health from conditions, plans group this TaxFax service are in the tax using peoples health status to exclude using booklets. instruction them from coverage, and guarantee continued health coverage to an emplan. ployer under a The tax is effective for plan years beginning after June 30, 1997, and Johnny Anderson, some exceptions apply. TCA Consultant Certified 1997 The maximum amount of 528-716- 2 or 528-353- 9 wages subject to the Social Security tax was $65,400. There is no limit to New location: the amount of wages subject to the 470 North Main in Centerfield Medicare tax. The total cost of Section v 179 property that businesses can deSouth of Walkers duct increased to $18,000 for 1997. 1 1 step-by-ste- 368-969- Anderson Tax Service multi-employ- er When Susan and Russ Anderson divorcees, empty nesters, retirees, property as a principal residence for I, relocated form Madison, Wisconsin to transferring employees or others who two years. San Diego, California in 1996, they have experienced rough times, people Toni Sherman, CRS, a broker man-agconverted their San Diego condo- who previously would not have conof Prudential Burnet Realty in minium, a vacation home they bought sidered selling their homes because of Lombard, Illinois has witnessed in 993, into a primary residence. Then the negative tax implications, may proper- - , ties taking advantage of the 1997 Tax- - ' they placed their Wisconsin home on the market. However, when their Wispayer Relief act. The new rules allow consin home was sold, the Andersons As homeowners homeowners to sell the first home, found themselves in a new dilemma: exclude the gain, convert the second .. become increasingly either move out of the condo, which property to their primary residence, ' the 1997 aware live in it for two years, sell it and they loved, and purchase another home to replace their Wisconsin residence, the gain again, she said. exclude Taxpayer or face a massive tax bite. Many baby boomers can now bey the Act, many will take What a difference a tax year can vacation home they would like to live make! If the Andersons had faced this in full-tiupon retirement without advantage or propsituation as of May 7, 1997, when the having to worry about the capital gains exclusions. sale erty 997 Taxpayer Relief Act took effect, tax when they sell theirprimary home. Homeowners have so many choices they would not have had to make such a decision. sellers do to so. not to the 1997 Taxpayer Relief do thanks begin Todays According to Mary Hurlburt, CRS, have to worry about the rollover rules Act, observed Hurlburt. Homeowners the 997 Taxpayer Relief Act will lead and can decide to purchase more mod- no longer feel forced to but a larger, many people to sell their homes in est homes. The extra revenue can be more expensive home when they sell. 1 998. This trend comes ashomeowners invested in retirement funds, used to Home ownership is still the American take advantage of a new law that alcover living expenses, take a vacation dream, and the tax benefits of owning lows married taxpayers filing a joint or spend however they like." a home, including deductions for state return to exclude up to $500,000 of The new tax exclusions will also and local property taxes, mortgage gain on the sale of their principal resi- influence many investors who like to interest and points, will continue to dence. Single taxpayers can exclude purchase homes, renovate them and entice buyers. The new law allows sell at a profit, said Ed Hatch, CRB, consumers to but a home to meet their up to $250,000 of gain. To qualify for the exclusion, CRS of Greenbelt, MD, president of lifestyle, rather than changing their b homeowners must have lived in and the Residential Sales Council. It is lifestyle to but their home. used the home as their primary resi- easier to build equity and get out of dence for two of the past five years, debt because the new tax code will not Watch for tax tips each said Hurlburt, with Mansell & Associforce people to but more expensive until Tax Deadline-Apr- il week ates in South Ogden and president of homes with each transaction. The only 15 the Utah chapter of the states leading requirement is that investors use the agents, those who have earned the CRS designation through training and demonstration of professional experience. Homeowners are allowed to take the exclusion once every two years, unlike the previous law, which $ 25,000 granted a No one knows tax better than the er 1 of Relief 1 1 1 j 1040 a to z exclusion on capital homeowners 55 or older. Many homeowners did not take the exclusions offered under the old provision because they were saving it for a time when they would reap the maximum benefit. As the law becomes more familiar to the public, we will begin to see its effect on the real estate market, said Doug Richards, CRS, financial vice president of the Residential Sales Council, the42, 000 member national residential real estate trade organization which awards the CRS designation. the code at professionals H&R Block gains to Our experienced preparers can help you pay less or get more back. Our rates are reasonable, we stand behind our work. Sound like someone you can use? H&R BLOCK Richfield Mt. 288 W. 200 S. Phone: Hours: 9 - 7 weekdays 9 - 2 Sat. or by appointment. 896-535- 2 250 N. Many people, including We Know the Nuts and Bolts of Taxes TRUST VS. WILLS earnings for retirement. WHICH IS RIGHT FOR YOU? A FREE Fublic Seminar with Featured Speaker Attorney Del B. Rowe Right-to-Di- At Farmers? we know that you need plans that grow to retirement. Thursday, March 19 at 2.00 p.m. Mt. Pleasant Senior Center 67 West Mam Mt. 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