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Show Citizen, Press, Review - Wed., March 22, 1989 - Page 13 Good Records Could Make Your Taxes Less Taxing Good tax records can save taxpayers substantial time and money when pre-paring income tax returns, the Internal Revenue Service said. Taxpayers can save themselves hours of searching for earning statements or lost receipts and cancelled checks, if their financial records are in order. receipts for cash payments will serve as substantiation of the amount paid. These records will enable taxpayers to accurately compute the child and de-pendent care credit, which can be claimed on either Form 1040A or the longer Form 1040. Taxpayers who itemize deductions should keep receipts, cancelled checks, etc., for such things as medical and dental payments, contributions to churches and charities, and statements to substantiate mortgage interest. Rec-ords of the real estate taxes and per-sonal property taxes paid during the tax year should also be kept. Other miscellaneous items to keep might in-clude records of payment of union dues, unreimbursed employee business expenses, investment expenses, and tax return preparation fees these can be deducted only to the extent that the total amount exceeds two percent of the taxpayer's adjusted gross income. Taxpayers must have statements, worksheets, and receipts that docu-ment and support the income, deduc-tions, and credits claimed on their tax returns, should IRS need to examine them. These tax records should be kept at least until the period of limitation expires for the return. Usually this is three years from the date the return was due or filed, or two years from the date the tax was paid, whichever is later. Sometimes records must be kept longer than the period of limitation even though the tax return is correct and complete. Records of property transactions (including real estate, stock, machinery, etc.) should be kept for future reference. In addition, copies of old tax returns may be help-ful in preparing future returns, so tax-payers may want to keep them with their other records. The IRS publishes a free publication on recordkeeping for tax purposes. To obtain a copy of Publication 552, "Recordkeeping for Individuals and a List of Tax Publications," use the order blank in the tax return package or call These records are not only necessary to prepare a complete and accurate return, but can save taxpayers money by making them aware of deductions they might have otherwise overlooked. The types of records to save include income statements, such as Forms W-- 2 and W-2- showing income from wages and from pensions and an-nuities, and Forms 1099-IN- T and 1099-DI- showing income from in-terest and dividends. Parents who pay for the care of their children or dependents while they work or look for work should keep careful records of these payments if they want to claim a credit for the amount they pay. These records should consist of a week-by-wee- k log of the name, address and, if required, social security number of the care provider, as well as the amount paid. Cancelled checks or rfax Preparation Advice 5 ::i in cooperation with the . Internal . Revenue Service - IRA deductions must meet requirements ' IRA as a tax deduction, ioim an Ta: mee. .he eligibility s, internal Revenue Serv- - 5iCerid'eligibili'y requirements for dieting Individual Ret.rement "pnts (IRAs) on tax returns are e size of the taxpayer's ad- - on (AG1) and whether listed gross income is an active participant in lhet ,L of employer-maintaine- d any w . i'Cayers'an claim the maximum for 1RA contributions tKTor 100 of compensation, tiKer is M only if they meet one r following criteria: of the individual is not an active par-- 3 the (or in the case of a married dpant 5 ouple, neither spouse is an active 5 in an employer-gaine- d retirement plan during regardless of the amount of he year, the taxpayer's AGI, ir the individual (or in the case of a married couple, either spouse) is an active participant in an employer-maintaine- d retirement plan, and the taxpayer's AGI is less than $40,000 for a married couple or $25,000 for a single individual. If an individual (or, in the case of a married couple, either spouse) is an ac-tive participant in an employer-maintaine- d retirement plan, the max-imum allowable deduction for con-tributions to an IRA will begin to "phase out" when AGI reaches $25,000 ($40,000 for a married couple). When AGI reaches $35,000 ($50,000 for a married couple), no deductions are allowed for IRA contributions. While many taxpayers may have their deductible IRA contributions reduced or eliminated due to the eligibility requirements, they will be able to continue making nondeductible contributions to a new or an existing IRA. As with the earnings on deducti ble IRA contributions, any earnings realized on nondeductible IRA con-tributions are not taxed until distributed to the taxpayers, generally at retirement when the individual may have a lower taxable income. Tax law changes on IRAs, through the Tax Reform Act of 1986, include changes in the rules concerning spousal IRA deductions, qualified voluntary employee contributions, and the pur-chase of gold and silver coins for an IRA. The spousal IRA provisions have been changed to eliminate the require-ment that the spouse have no compen-sation in the year in order to be eligible for the spousal IRA contribution. The law repealed the IRA deduction previously allowed for voluntary employee deductible contributions (DECs) to a qualified plan. Also, beginning in 1987, taxpayers are allow-ed to establish an IRA by investing in certain gold and silver coins issued by the United States. Other basic tax rules concerning IRAs were not affected by the law. Taxpayers may continue to establish or contribute funds to an IRA at any time during the tax year and the following year, up to the due date for filing their tax return, without extensions, prior to the year they reach 70Vz. Taxpayers who withdraw funds from an IRA before age 59'A are re-quired to pay an additional 10 percent tax unless the withdrawal was due to the death or permanent disability of the taxpayer or was due to a return of nondeductible contributions. Tax-payers may also continue to make tax-fre- e rollovers, either from one IRA to another or from an employer-maintaine- d retirement plan to an IRA. Additional information concerning the rules affecting IRAs is contained in IRS Publication 590, "Individual Re-tirement Arrangements (IRAs)." Tax-payers can obtain a copy of the publication by writing their IRS office or by calling IRS advises to keep W-4-'s up to date IF YOU WANT LESS TAX WITH-HELD, you should claim all the allowances you are entitled to. However, if you work for more than one employer, you may not claim the same allowances more than once. If both you and your spouse are employed, you can divide the allowances between you, but both can-not claim the same allowances. You can estimate your taxes for the year by using the worksheet in Publica-tion 919, "Is My Withholding Correct for 1989?" Then you can decide whether to change the number of withholding allowances you are claim-ing by filing a new Form W--4 so you can have less tax or more withheld. Publication 919 is available by calling the IRS at the previously mentioned toll-fre- e number. pendent. Your eligibility for the "special withholding allowance" changes. Your eligibility for additional withholding allowances for credits or deductions changes. The Tax Reform Act of 1986 changed many parts of the law that af-fect withholding, including some changes that take effect in 1989. If you are in any of the following groups, review your withholding early in the year to see if you should file a 1989 Form W-- e You can claim "Head of Household" r filing status on your 1989 tax return. A recent provision allows you to e claim one additional withholding 1 allowance on the "Personal Allowances Worksheet" on the W-- ' You are married and your spouse works or you have two or more jobs at the same time. You should com- - a plete the 3 Worksheet" on the W-- r You itemize deductions or have non- - v wage income. You should complete j the "Deductions and Adjustments Worksheet" on the W-- For 1989, the standard deduction is $5,000 for married filing joint return or quali-fying widow(er) with dependent child; $4,400 for head of household; $3,000 for single; and $2,500 for married filing separate return filing status. As a result, some employees may no longer have itemized deduc-tions in excess of the standard deduction. If the number of allowances you are ntitled to claim INCREASES, you nay file a new Form W-- 4 at any time. If the number of allowances you are ntitled to claim DECREASES to less nan the number you are now claiming, ou must file a new Form W-- 4 within 0 days of the change. IF YOU WANT MORE TAX VITHHELD, you can claim fewer llowances than you are entitled to or sk your employer to withhold more ax, or both. If you are married, you nay also check the box "Married, but withhold at higher Single rate" on 7orm W-- i The Internal Revenue Service asks, "Will you be up to date on your federal withholding allowances for b 1989?" Every payday your employer uses the information and the number of Withholding allowances from your . Form W-- "Employee's Withholding 'Allowance Certificate," to determine jhow much Federal income tax to h withhold from your pay. So, it is im- - "Lrtant to keep your Form W--4 to reflect any changes in ''withholding allowances, the IRS says. The instructions and worksheets on W 1989 Form W-- 4 help you figure the S!f number of withholding allowances you are entitled to claim. File a new Form with your employer if necessary. You can get Form W-- 4 from your employer or by calling the IRS toll-fre- e Inumber, 1 You should check the number of Jlallowances if: Your marital status changes. :(" Your dependent is born or dies. You begin or stop supporting a dea-l!! For more information, call the IRS at 1, LZ, Li iD r- - y Confused about what an Individual Retirement Account can do for you? NOW would be a good time to visit with your Farm Bureau insurance agent. r""irmmi FBI INSURANCE CO. i3 P3Tl 1 1 SLJTGcD LJ 5400 UNIVERSITY AVENUE WEST DES MOINES. IOWA 50265 FAMILY OF FINANCIAL PLANNING SERVICES C 81 No. Center fV'VL. 1" American Fork ifx'Xi t"'L I 756-586- 2 IMO Jim Ferguson Blaine Thomas r ,; , 1 Xvxn the cards for you "CAN DO" banking service and convenience Not one, but three banking cards to choose from, any one of which makes for a winning hand. It's another example of what people have come to expect from the "Can Doers" at Wasatch Bank. Look: Quick Draw VISA Banking Card gives you access to any Plus System ATM in America. It's also a Check Guarantee Card, assuring merchants that your account is protected against overdrafts to certain amount. Finally, your Quick Draw card is a VISA Debit Card. Use it wherever VISA is accepted, in person or for phone orders. The amount of your purchase is debited to your checking account and is listed on your monthly statement (faster, easier that writing a check). Cost per year? Only $6! Wasatch Key Card gives you access to all the services of Wasatch Bank's ATM's as well as any Plus System in the country. With this card you can withdraw from your checkingsavings account, make deposits and loan payments, check account balances, and transfer funds from one account to another. Cost per year? Nothing! Wasatch Check Guarantee Card gives you checking account overdraft protection and authoritative, credible identification. It is also your access to our's or other banks' automatic teller machines and there is never a service charge for making a transaction. Cost per year? Nothing! If your present bank charges a fee for making transactions on any ATM outlet, it's time to pick-a-car- the one that fits your needs the best from Wasatch Bank. Begin to enjoy the convenience and free service of 24-ho- banking. CAN DO Headquarters MEMBER DOBWASATCH BANK OREM PLEASANT GROVE LEHI SANTAQUIN tJ 0THW 7r IMEMMI Wmmmmmmam Through Federal Tax Credit Investments, - paying individuals and corporations, Call: 379-280- 2 ! f , Ject to certain limitations, may reduce I 0r Write: shc.rM-- L.w.n Mutton i.u I ji? eaeral income taxes on a dollar-for-doll- ar I 215 I 100 North I basis- Return this ad or call to receive your ! IW' u,"h uu , i, I i Send me my free booklet that describes how federal tax Sl4l?Aro""""" free booklet that describes I credits may help to reduce my federal income taxes. TJCAkSON how federal tax credits , r" LEHMAN may help you reduce HJYrM your federal income taxes. u")K'bS I Xi This material does not constitute an offer Uli ,cress company t0 sell or a solicitation of an of an offer to himm bh moM iuMliTk)i ; I Please check you area Shearson Lehman Hurton client I buy any security ' 1Wo' Ut',h Scott H. Oarbutt, CFP tiV1,NDS UVER MONEY. ouocatIo- n- financial cmim I tN"l',W'nlrhmanHuM.,nlnl f mmm m tmm mmm J : Off,. ... fcpayers man file for emore time itsf Taxpayers who file Form 1040 or 1040A can request an automatic four-mont- h extension of time to file their federal income tax returns, according jo the Internal Revenue Service. To obtain the four-mont- h extension beyond April 17, 1989 (this year, get a two-da- y break because April 15 falls on a Saturday), taxpayers M complete Form 4868, "Applica-tion for Automatic Extension of Time J File U.S. Individual Income Tax "turn," and forward it by April 17, W989 to the Internal Revenue service ttnter processing returns for their eI'lrea. Service center addresses are listed sj the instructions to Form 1040 and MjWOA. lsIiThelRS stresses, however, that the Worm 4868 does not extend the time to fy the income tax. 3 On Form 4868, taxpayers should an estimate of the year's taxes submit any balance due with the )rm' If the unpaid tax is more than 10 "ant of the total tax due, a penalty He assessed for the underpayment "ess the taxpayer can show reason-- e cause for not paying the tax when r' is also assessed aid on any un- - TaPayers filing Form 1040EZ, or se requesting the IRS to compute "ax, are not eligible for automatic JJons. Also, taxpayers under a to file tax returns by the ls d3leare not eligible for ex-ited14! 68 may be oblained by using Ln m in lhe lax Package or by ip76 1RS t0"-fre- e at |