Despite being told scare stories about taxes and the Interna Revenue Service for years, the fact is that you should be able to do your own taxes if you want to.
That's not the same as saying taxes can be fun. It's tough enough giving your hard-earned money to Uncle Sam. It's even less pleasant filling out the tax forms. So, if you can afford to pay some competent tax professional to prepare your return, go ahead. You will be saving yourself some time and probably some aggravation.
But most people should be doing their own taxes. It's not that hard. And besides saving some money that would go to a tax preparer, you'll also emerge from the experience with a much better idea of your family's finances.
Today's Tax Guide is designed to put you in touch with the information you need to answer your tax questions; it will not directly answer all or even most of those questions. Nearly all of the information here comes from two basic sources -- the U.S. Internal Revenue Service and the Maryland Comptroller's office.
I also relied on two excellent presentations of IRS information -- the 1990 and 1991 editions of the "U.S. Master Tax Guide" produced by Commerce Clearing House in Chicago, and a computer tax software package called MacInTax produced by Softview Inc. in Oxnard, Calif.
Tax forms: (800) 829-3676 (800-TAX-FORM)
Tax questions from specific cities: Baltimore, 962-2590; Philadelphia, 574-9900; Pittsburgh, 281-0112; Richmond, 649-2361. Tax questions from Maryland, District of Columbia, Delaware, Pennsylvania, Virginia and West Virginia: (800) 829-1040.
Hearing-impaired callers with TDD equipment, call (800) 829-4059, 8 a.m. to 6:30 p.m.
General number (800) 638-2937 (800-MD TAXES).
For specific cities and towns, look under heading Maryland Tax Help.
What's new for '90?
Can you file Form 1040A? If you had to file Form 1040 last year because you received a pension or annuity, payments from your IRA or taxable Social Security benefits, you may be able to file Form 1040A this year instead of Form 1040.
Increased deduction for exemptions. The deduction for each exemption for you, your spouse, and dependents has increased to $2,050.
Should you itemize or take the standard deduction? The standard deduction has increased for most people. Because of this increase, it may be to your benefit to take the standard deduction this year even though you itemized deductions in the past. The standard deduction is $3,250 for single filers, $5,450 for joint returns ($2,725 if married and filing separately) and $4,750 for heads of households.
Increased earned income credit. You may be able to take this credit for 1990 if you earned less than $20,264 (up from $19,340 in 1989 earnings) and a child lived with you. The maximum amount of money due you is $953.
Personal interest. Deduction of personal interest in limited to 10 percent of this expense and is eliminated in 1991.
Mileage. The standard mileage rate is 26 cents a mile with no 15,000-mile annual limit.
Exclusion of interest from EE U.S. savings bonds. If you cash Series EE U.S. savings bonds in 1990 that were issued after 1989, you may be able to exclude from income part or all of the interest on those bonds. But you must have had higher education expenses in 1990 for you, your spouse, or your dependent.
Self-employment tax. The tax is 15.3 percent of the smaller of these amounts: 1) 92.35 percent of your net earnings from self-employment or 2) $51,300 minus your wages subject to Social Security or railroad retirement taxes. Also, if you have to pay the self-employment tax, you may deduct one-half of that tax figuring your adjusted gross income.
Additional information. If you want more information about tax-law changes for 1990, get IRS Publicatin 553, Highlights of 1990 Tax Changes.
Looking ahead to 1991
Tax rates for single taxpayers are 15 percent of the initial $20,350, 28 percent of earnings between $20,350 and $49,300 and 31 percent of the amount over $49,300.
Tax rates for married taxpayers filing jointly are 15 percent of the initial $34,000, 28 percent of earnings between $34,000 and $82,150 and 31 percent of the amount over $82,150.
Tax rates for married taxpayers filing separately are 15 percent of the initial $17,000, 28 percent of earnings between $17,000 and $41,075 and 31 percent of the amount over $41,075.
Tax rates for heads of households are 15 percent of the initial $27,300, 28 percent of the earnings between $27,300 and $70,450 and 31 percent of the amount over $70,450.
Capital gains. The top income tax rate on capital gains is 28 percent.
Withholding. Changes in tax rates for income earned during 1991, plus new limits on personal exemptions, will require many people to change the amount of money withheld from their paychecks. Check with your employer to make sure your withholding is being done properly. Details can be found in IRS Publication 919, (Is My Withholding Correct for 1991?)
Personal exemptions will rise to $2,150. Also, the deduction for personal exemptions is reduced for higher-income taxpayers. The deduction will be cut by 2 percent for each $2,500 ($1,250 for married taxpayers filing separately) by which adjusted gross incomes exceed $100,000 for single filers, $150,000 for joint returns ($75,000 if filing separately) and $125,000 for heads of household.
Standard deductions will rise to $3,400 for single filers, $5,700 for joint returns ($2,850 if married and filing separately) and $5,000 for heads of households.
Personal interest. The itemized deduction for personal interest is no longer available. Mortgage interest remains deductible.
Earned Income Credit. To claim the credit, your earned income and your adjusted gross income must be less than $21,250. The maximum credit is $1,192 with one qualifying child and $1,235 with two or more qualifying children. An additional credit of up to $357 may be claimed in one of the children was less than a year old, and a further credit of up to $428 may be claimed for children's health-insurance premiums.
Social Security withholding is broken into a Social Security component (6.2 percent for wage-earners or 12.4 percent for self-employed individuals, up to $53,400 in earnings) and a Medicare component (1.45 percent for employees and 2.9 percent for the self-employed, up to $125,000 in earnings).
Alternative minimum tax is uncreased to 24 percent of qualifying income in 1991.
Children's income now carries a $550 standard deduction, up from $500.
Mileage rates for business auto use rise to 27.5 cents a mile in 1991. The rate for charitable use remains 12 cents a mile, and the rate for medical and moving expenses remains 9 cents a mile.
What's new in Md. taxes
Exemptions. The personal exemption has been raised to $1,200, $100 more than on 1989 returns.
Pensions. The maximum amount of pension income that can be excluded from taxable income has been raised to $10,800, $700 more than on 1989 returns.
Electronic filing. Maryland income tax returns may be electronically filed this year by tax preparers who are approved for electronic filing by the Internal Revenue Service.
Child's income. Parents who reported up to $5,000 in unearned income (dividends and interest income) for a child on their federal return may now subtract that income on their Maryland return, thus avoiding the need to file a separate Maryland return for the child. (Because income up to $5,300 is not subject to Maryland state taxes, the child would owe no Maryland income tax but would have to file a return to document this fact were it not for the new provision.) Taxpayers wanting to use this provision will enter the subtraction on line 31 of Maryland tax form 502. The code letter describing this subtraction from income is "t," and it is described on Page 6 of the 1990 Maryland income tax booklet.
Form 123 (I'm sure we'll hear the marketing campaign "Easy as 123"some year) has been introduced for single individuals or dependents with less than $5,300 in gross income who are due a refund of state taxes. You must have had Maryland tax withheld from these wages or other earnings and have been a resident of Maryland for the entire year of 1990. This form, also called the Special Refund Request, is in the back of the 1990 Maryland income tax booklet but can also be ordered by calling (800) MD-TAXES.
Federal. Military personnel involved in Operation Desert Storm won't have to file tax returns until at least 180 days after they leave the combat zone.
All pay of enlisted personnel in a combat zone is excluded from gross income; up to $500 a month of commissioned officers' pay is also excluded.
Maryland. Military personnel involved in Operation Desert Storm will receive an automatic 60-day extension for filing 1990 Maryland tax returns. No forms must be filed to obtain this extension, and no tax payments are due by April 15.
Military personnel on active duty in the Persian Gulf or elsewhere overseas during 1990 may exclude up to $15,000 of their active duty overseas pay from Maryland state taxes. You need to have less than $30,000 of total military pay to enjoy the deduction. Total pay of $15,000 or less entitles you to deduct the entire amount if it was earned overseas. The amount of the deduction is reduced on a dollar for dollar basis as total pay increases beyond $15,000 and is eliminated when total pay reaches $30,000. Details may be found on Page 6 of the 1990 Maryland income tax booklet.
For 1991, any overseas income earned after Jan. 21 and related to Operation Desert Storm is exempt from Maryland taxes if the income is earned by enlisted grade, regular warrant and commissioned warrant personnel. The first $500 of monthly income earned by commissioned officers is also exempt.
Further, military taxpayers will likely receive a 180-day extension, beginning after they leave a combat zone, for filing state tax returns, refunds and appeals. The state has proposed emergency legislation for this extension, which has already been adopted for federal tax returns and other filings.
Retired military personnel residing in Maryland may also exclude up to $2,500 of their military retirement income.
They must be at least 55 years old and must have been an enlisted member of the military at the time of their retirement.
Only people with federal adjusted gross incomes of less than $17,500 may take the full $2,500 exclusion, which is reduced as income rises and eliminated when adjusted gross income reaches $22,500.
Instructions and a work sheet to determine this exclusion are on Page 6 of the 1990 Maryland state tax booklet.
Common taxpayer errors
Wrong Taxpayer Identification Number entered.
Did not enter standard deduction.
Did not claim earned income credit when entitled.
Incorrect name line entered.
Name line not updated when required.
Wrong entry for estimated payments.
Did not enter total tax.
Math error in computing refund.
Did not check dependency status indicator box.
Duplicate return filed, not required.
Child and dependent care
Do you pay someone to take care of your child or dependent? If so, you may qualify for the Child and Dependent Care Credit or the exclusion for employer-provided dependent care assistance.
The credit could be 20 percent to 30 percent of eligible expenses, depending on your adjusted gross income. Your credit could be as much as $720 if you have one qualifying person or as much as $1,440 if you have two or more qualifying persons.
To qualify for this credit you must file a Form 1040 or Form 1040A.
To qualify for this credit you must file a Form 1040 or Form 1040A.
Your child and dependent care expenses must be incurred to allow you (and your spouse if you were married) to work or look for work (there is an exception if your spouse was a student or disabled).
You must have income from work during the year.
You (and your spouse, if you were married) must keep up the home that you lived in with one or more qualifying people.
You must file a joint return if you are married, or you must meet special requirements to file a separate return.
You must have made payments for child and dependent care to someone you or your spouse could not claim as a dependent or, if the person you made payments to was your child, he or she must have been 19 or older by the end of the tax year.
If you receive a reimbursement under your employer's dependent-care assistance program, the dollar limit on expenses eligible for the child and dependent care credit is reduced.
You may receive up to $5,000 pretax from an employer account " or a tax credit on up to $4,800 in other expenses ($2,400 if only one dependent) or some combination of the two, so long as the total expense stays under these ceilings. You are required to report the name, address and Taxpayer Identification Number (usually the Social Security number) of your provider on your 1989 return. You should have your provider fill out Form W-10, (Dependent Care Provider's Identification and Certification) and transfer that information to Form 2441 (Child and Dependent Care Expenses) if a Form 1040 is filed, or Schedule 2 if a Form 1040A is filed.
If you do not obtain this information, the credit may be disallowed. Only the name and address are required if the provider is one of certain tax-exempt organizations, such as a church.
Finally, dependent care services provided by your employer may be excluded from income within certain limits. For more information, see IRS Publication 503 (Child and Dependent Care Expenses).
If you have an IRA, take maximum advantage of it. It can allow you to deduct your contributions from taxes, under some circumstances, and shield any investment earnings from taxation until you retire, at which time you'll likely have a lower income and will be taxed at a lower rate than you are today.
To avoid giving away too many tax goodies to middle-income families, Congress reduced the appeal of IRAs and created a confusing set of rules. Basically, if you have no retirement plan at work (most permanent employees have some type of plan), you can still invest up to $2,000 a year in an IRA and deduct the entire amount of this investment from your taxable income.
If you're married and the only wage earner, you can contribute up to $2,250 a year for IRAs for you and your spouse, and you
can split your contribution however you like between these two plans. If your spouse has a job, he or she can contribute up to $2,000 separate from your plan. Again, taking a full deduction on this contribution assumes that your spouse has no other retirement program at work.
IRA contributions must be invested with some sort of sponsor, such as a mutual fund, bank or other savings institution. Your employer can also set up such an account, which usually will be linked with investment options provided by outside professional investment services. You can't just take the $2,000 and bet it at the track or play the market (although you probably can set up a qualified plan through your stockbroker).
Besides the deductibility of the IRA contribution, IRA earnings are deferred from taxation until at least age 59 1/2 and as late as age 70, when you must begin drawing funds that have accumulated in your account.
If, like most people, you do have some other retirement program at work (or your spouse is covered at work), the deductibility of your IRA contribution is sharply reduced, and it is eliminated for any individual making more than $35,000 a year and any married couple making more than $50,000 a year.
Even if you lose the deductibility of your IRA contributions, you can still contribute to an IRA account and shield its earnings from taxes. This arrangement would certainly be more appealing than making many forms of taxable investments and is worth exploring.
If any of the following are applicable, you may benefit by itemizing your deductions:
* You have had large uninsured medical or dental expenses.
L * You own a home on which you are paying interest and taxes.
* You have had large casualty or theft losses not covered by insurance.
* You have made large contributions to charitable organizations.
* You do not qualify for the standard deduction.
You should consider filing separate returns whenever the itemized deductions of either spouse substantially exceed those the other spouse.
Here are hints for taxpayers who itemize using form 1040, provided in the MacInTax tax software produced by Softview Inc., include:
Medical. Be sure to include fees for medical care included in the tuition fee of a college or private school if a breakdown of the charges is included in the bill or given by the school.
Prepaid medical expenses are generally not deductible until the year of treatment. However, medical expenses charged to a credit card are deductible in the year the charge is incurred, irrespective of the date you pay the credit card company.
Make sure to reduce your total medical expenses for the year by the total repayments received from insurance or other sources. Reimbursements received for prior year medical expenses are can be included in income only to the extent that a tax benefit was derived in the prior year.
Medical costs paid by a divorced parent for a child not claimed as a dependent are deductible.
The following are not deductible.
Baby-sitting fees to enable you to make doctor visits.
Domestic help (except part of cost attributable to nursing
Health club fees.
Toothpaste, toiletries and cosmetics.
Transportation costs of a disabled person to and from work.
As you probably know, sales taxes may not be deducted as an itemized deduction on Schedule A. They should, however be added to the basis of the item purchased for use in a trade or business.
State income tax may be deducted on the 1990 return even though it may relate to a different tax year as long as it is paid in 1990. Examples would include balance due on 1989 state tax return paid in 1990 or additional tax paid in 1990 resulting for amending a previous year's state tax return. In addition, making your last quarterly estimated state income tax payment in December 1990, will accelerate the deduction a full year, even though the actual payment was moved forward by only a few weeks.
Real estate taxes generally may be deducted only if you are the property owner. If real estate taxes are paid by a spouse who owns a home, they are deductible on your spouse's separate or on your joint return. To deduct property taxes, you must pay the tax during the tax year.
Note that you may not deduct real estate taxes placed in escrow until they are paid.
For example, if part of your monthly mortgage payment is placed in an escrow account for real estate taxes, you may not deduct the total of the escrow payments. Only what has actually been paid to the taxing authority may be deducted.
If you have bought or sold a home during the year, be sure to carefully review your closing statement for additional taxes you may have paid (or credits you may have received) through escrow.
Interest payments that are still fully deductible:
Lost interest on savings. If you make a premature withdrawal from a CD or bank savings account, and forfeit any accrued interest or pay an interest penalty, you may take a deduction on line 28 of Form 1040 to the extent that you have reported allinterest credited to your account.
Prepayment penalties. If you have paid a penalty because you have paid off a mortgage before the scheduled payment date, you may deduct the prepayment penalty as interest expense.
Mortgage interest. Make sure that you have deducted all of your mortgage interest:
Banks and other institutions send out statements indicating the amount of interest you have paid on Form 1098. Often, interest reportedon this form does not take into account interest payments which you may have made late in December.
When you sell or buy a house, additional interest you may have paid during the escrow period is often omitted from form 1098.
Points paid to purchase a home are deductible. However, to deduct all points in the current year, payment of the points must not have been made from proceeds of the loan. In other words, you should have written a separate check to your lender for the points attributable to borrowings secured by your home. If you have "funded" the points with your loan, they must be deducted ratably over the life of the loan. At any rate, points are usually not reported by banks on Form 1098.
If you have joint liability on a mortgage (other than your spouse) and have made interest payments but another individual has received Form 1098, attach a statement to your Schedule A showing the name and address of the person who received the form.
Charitable giving. If you are planning on donating investment property that has declined in value, you should consider disposing of the property first and then donating the proceeds. By doing this you will be able to claim a capital loss on the
disposal of the investment as well as a contribution deduction in the amount of the proceeds donated. This strategy does not apply to personal assets.
In determining the fair market value of donated clothing, the IRS maintains that the fair market value of used clothing is the amount that people would pay for these items in thrift shops.
A receipt is not required if you deposit property at a charitable organization's unattended drop site. You must, however, maintain a written record of the the contribution including the items and the date and location of the contribution.
By donating a benefit ticket back to the organization for resale or to another charitable group, you may make the cost fully deductible.
Theft losses may not be deducted unless you can prove that a theft has occurred. Make sure you file a police report and attach a copy of the report to your return. Try to include evidence of breaking and entering and witnesses if possible. Note that it is not necessary for the police to investigate the incident.
The cost of appraisals, pictures, and other costs of substantiation may deducted as a miscellaneous itemized deduction subject to the 2 percent limit.
Casualty losses sustained in an area that the president of the United States declares a designated disaster area (the San Francisco earthquake, for example) may be deducted in the year of the disaster or the immediately preceding year.
Employment agency and headhunter fees are deductible to the extent that they help you find a new job in the same occupation, but not if it is your first job in the occupation. Resume expenses are deductible to the extent you are looking for a position in your current field.
Military uniforms are not deductible if you are on active duty, but people in the reserves may deduct the cost of uniforms if military regulations prohibit you from wearing the uniform while not on duty.
Telephone expenses are deductible to the extent they relate to your business, except for the standard monthly base charge for the first line installed in your home. Any business-related, long-distance, answering and beeper service may be deducted.
Cellular phones are "listed property" subject to strict IRS record-keeping requirements. The phone must be purchased for the convenience of the employer and required as a condition of employment. See instructions for Form 4562, Depreciation and Amortization, for information as to how to depreciate a cellular phone.
Protective clothing worn for work such as steel-tipped shoes may be deducted.
Other expenses may be deductible. Get IRS Publication 529, Miscellaneous Deductions for more information on how to deduct miscellaneous expenses.
Schedule B: Compare interest income reported on your tax return with your investment portfolio to be sure you have accounted for everything. Penalties and interest can be substantial if you have overlooked an item which should have been reported.
Be sure to properly categorize income received as dividend or interest income. Form 1099-DIV transactions should be shown in the dividend section, whereas Form 1099-INT transactions should be shown in the interest section. The IRS uses a computer matching program to determine if the income from a 1099 is included on your tax form. Carefully checking the form for income type may help you avoid an IRS inquiry into your return.
Corporations and financial institutions only use one Social Security number in reporting interest or dividend income. The IRS document matching program may issue deficiency notices when the income is split between two or more returns. If you
receive a Form 1099 for interest or dividend income that is not fully taxable to you, report the full amount paid (as indicated on Form 1099-INT or Form 1099-DIV) on Schedule B in the proper section, and then show the amount paid to others as a subtraction, labeling it as "amount attributable to others."
When purchasing CDs and similar instruments, determine when the financial institution credits the interest income to your account. Even though you may have a CD with a maturity date after the year end, interest may be reportable if the bank credits your account with interest earned before year end.
Foreign governments may withhold tax on dividend income. Although you must report the full amount of the dividend, the amount of tax withheld may be claimed as a foreign tax credit using Form 1116 or as an itemized deduction on Schedule A. Try both ways to see which yields the greatest tax break.
Schedule D: You should take a deduction for a security when it becomes worthless. A security is worthless when it has no recognizable value (i.e., totally worthless). You must be able to establish that the worthless security had value in the year preceding the year that you take the deduction. A drop in the value of the stock does not constitute worthlessness. An identifiable event should have taken place in the year the stock becomes worthless.
Although capital losses are generally limited to a $3,000 deduction, there may be instances where loss on small business stock is deductible as an ordinary loss, and therefore not subject to the $3,000 limit. To qualify for this treatment, the stock must be Section 1244 stock (small-business stock). This is stock that was issued for money or property (other than stock or securities), in a domestic small business. The ordinary loss that you can deduct on this stock is $50,000 ($100,000 if married filing jointly). Get Publication 550 (Investment Income and Expenses) for more information.
Federal tax help
Free Social Security personal earnings and benefit estimate statement. The Social Security Administration can mail you a statement of your earnings covered by Social Security and your estimated future benefits. To get this statement, complete a simple form and return it to SSA. You may get a request form by writing to Consumer Information Center, Department 72, Pueblo, Colo. 81009.
Privacy Act and Paperwork Reduction Act notice. The Privacy Act of 1974 and Paperwork Reduction Act of 1980 say that when the IRS asks you for information, it must first tell you several things: the IRS' legal right to ask for the information, why it is asking for it, and how it will be used.
You must also be informed about what could happen if you do not provide the information and whether your response is voluntary, required to obtain a benefit, or mandatory under the law.
Fast Refund. Last year, more than 4 million people filed their tax returns electronically by computer. If you expect a refund for 1990, you may want to file electronically instead of mailing your return to the IRS. Once IRS has accepted your return, your refund will be issued within three weeks.
If you elect to have your refund deposited directly into your savings or checking account, you could receive your money even faster. For a charge, many professional tax prepares offer electronic filing in addition to their preparation services.
Use numbers when ordering tax forms and other publications. Order by writing to IRS Forms Distribution Center, P.O. Box 25866, Richmond, Va. 23289; or by calling (800) 829-3676 (800-TAX-FORM.)
1 Your Rights as a Taxpayer
225 Farmer's Tax Guide
334 Tax Guide for Small Business
509 Tax Calendar for 1991
553 Highlights of 1990 Tax Changes
595 Tax Guide for Commercial Fishermen
910 Guide to Free Tax Services
3 Tax Information for Military Personnel
4 Student's Guide to Federal Income Tax
15 Employer's Tax Guide (Circular E)
54 Tax Guide for U.S. Citizens and Resident Aliens Abroad
378 Fuel Tax Credits and Refunds
448 Federal Estate and Gift Taxes
463 Travel, Entertainment, and Gift Expenses
501 Exemptions, Standard Deduction and Filing Information
502 Medical and Dental Expenses
503 Child and Dependent Care Expenses
504 Tax Information for Divorced or Separated Individuals
505 Tax Withholding and Estimated Tax
508 Educational Expenses
510 Excise Taxes for 1991
513 Tax Information for Visitors to the United States
514 Foreign Tax Credit for Individuals
516 Tax Information for U.S. Government Civilian Employees Stationed Abroad
517 Social Security for Members of the Clergy and Religious Workers
519 U.S. Tax Guide for Aliens
520 Scholarships, fellowships
521 Moving expenses
523 Tax Information on Selling Your Home
524 Credit for the Elderly or the Disabled
525 Taxable and Nontaxable Income
526 Charitable Contributions
527 Residential Rental Property
529 Miscellaneous Deductions
530 Tax Information for Homeowners
531 Reporting Income FromTips
533 Self-Employment Tax
535 Business Expenses
536 Net Operating Losses
537 Installment Sales
538 Accounting Periods and Methods
541 Tax Information on Partnerships
542 Tax Information on Corporations
544 Sales and Other Dispositions of Assets
545 Interest Expense
547 Nonbusiness Disasters, Casualties and Thefts
550 Investment Income and Expenses
551 Basis of Assets
552 Recordkeeping for Individuals
554 Tax Information for Older Americans
555 Federal Tax Information on Community Property
556 Examination of Returns, Appeal Rights, and Claims for Refund
557 Tax-Exempt Status for Your Organization
559 Tax Information for Survivors, Executors, and Administrators
560 Self-Employed Retirement Plans
561 Determining the Value of Donated Property
564 Mutual Fund Distributions
570 Tax Guide for Individuals in U.S. Possessions
571 Tax-Sheltered Annuity Programs for Employees of Public Schools and Certain Tax-Exempt Organizations
575 Pension and Annuity Income (Including Simplified General Rule)
583 Taxpayers Starting a Business
584 Nonbusiness Disaster, Casualty and Theft Loss Workbook
586A The Collection Process (Income Tax Accounts)
587 Business Use of Your Home
589 Tax Information on S Corporations (Under Subchapter S of the tax laws, owners of small corporations with fewer than 35 shareholders may reflect corporate operations on their personal
590 Individual Retirement Arrangements (IRAs)
593 Tax Highlights for U.S. Citizens and Residents Going Abroad
596 Earned Income Credit
597 Information on the United States-Canada income Tax Treaty
721 Tax Guide to U.S. Civil Service Retirement Benefits
L 907 Tax Information for Handicapped and Disabled Individuals
908 Bankruptcy and Other Debt Cancellation
909 Alternative Minimum Tax for Individuals
911 Tax Information for Direct Sellers
915 Social Security benefits and Equivalent Railroad Retirement Benefits
917 Business Use of a Car
919 Is My Withholding Correct for 1991?
924 Reporting of Real Estate Transactions to IRS
925 Passive Activity and At-Risk Rules
926 Employment Taxes for Household Employers
929 Tax Rules for Children and Dependents
936 Limits on Home Mortgage Interest Deduction
937 Business Reporting
939 Pension General Rule (Nonsimplified Method)
1167 Substitute Printed, Computer-prepared and Computer-generated Tax Forms and Schedules
1212 List of Original Issue Discount Instruments
1244 Employee's Daily Record of Tips (Form 4070-A) and Employee's Report of Tips to Employer (Form 4070)
Tele-Tax, the IRS recorded tax-information service, provides about 140 sets of recorded instructions and can be used at any hour with a push-button telephone and during weekday office hours with rotary phones.
After calling the main number (see listings below), you can select the number of the topic you want to hear. For a directory of topics, select No. 323.
These phone numbers may also be used to receive information about the status of your refund, with push-button service available on weekdays from 7 a.m. to 11:30 p.m and rotary-dial assistance available during weekday office hours. You must know your Social Security number, filing status and the exact amount of your expected refund. The IRS updates this information every seven days, and suggests you wait that long between calls if you do not receive a refund mailing date the first time you call.
Delaware: (800) 829-4477
District of Columbia: 882-1040
Maryland: (800) 829-4477
Pennsylvania: (800) 829-4477
Virginia: (800) 829-4477
West Virginia: (800) 829-4477
Tele-Tax topic numbers and subjects:
151-Who must file?
152-Which form, 1040, 1040A or 1040EZ?
153-When, where and how to file
154-What is your filing status?
Types of Income
201-Wages and salaries
205-Refund of state and local taxes
209-Capital gains and losses
210-Pensions and annuities
211-Pensions, the general rule and the simplified general rule
213-Rental income and expenses
214-Renting vacation property, renting to relatives
216-Farming and fishing income
217-Earnings for clergy
219-Gambling income and expense
221-Scholarships, fellowships and grants
223-Social security and equivalent railroad retirement benefits
225-Passive activities, losses and credits
226-Tax statements from the Railroad Retirement Board
Adjustments to Income
251-Individual Retirement Accounts (IRAs)
253-Bad debt reduction
301-Should I itemize?
302-Medical and dental expenses
309-Business use of home
310-Business use of car
311-Business travel expense
312-Business entertainment expense
314-Employee business expenses
351-Tax and credits figured by the IRS
353-Five-year averaging for lump-sum distributions
354-Alternative minimum tax
358-Tax on a child's investment income
401-Child care credit
402-Earned income credit
403-Credit for the elderly or disabled
451-Substitute tax forms
452-Highlights of 1990 tax changes
453-Refunds: How long should they take?
454-How to get a copy of your tax return
455-How to order tax forms and publications
456-Tax shelter registration
457-Extensions for time to file your tax return
458-What do do if you don't receive Form W-2
459-Penalty for underpayment of estimated tax
461-How to choose a tax preparer
462-Failure to pay child/spousal support and other federal obligations
463-Withholding on interest and dividends
464-Highway use tax
465-Checklist of common errors when preparing your return
466-Withholding on pensions and annuities
467-Foreign currency transactions
IRS Notices and Letters
501-Notices: What to do
502-Notice of underreported income, CP2000
503-IRS notices and bills, penalties and interest charges
Basis of Assets, Depreciation, Sale of Assets
551-Sale of your home, general
552-Sale of your home, how to report gain
553-Sale of your home, exclusion of gain, age 55 and over
554-Basis of assets
Maryland tax help
Maryland Income Tax Division offices are open Monday through Friday from 8:30 a.m. to 5 p.m.
Extended telephone hours from 5 p.m. to 7 p.m will be offered April 1 and April 8.
Extended office hours from 9 a.m. to 1 p.m will be offered on April 6 and April 13.
Offices will remain open until 7 p.m April 15.
Here's a list of Maryland state income tax offices and phone numbers, arranged by city:
ANNAPOLIS: State Income Tax Building. Forms: 974-3951; information: 974-3981; southern Anne Arundel County residents: 280-3010, Ext. 3981. TTY for deaf: 974-3157 (Baltimore HTC metropolitan area); 565-0450 (Washington metropolitan area).
BALTIMORE: State Office Building, 301 W. Preston St., Room 903. Forms: 225-1985; information: 225-1995.
BEL AIR: State Multiservice Center, 2 South Bond, 4th floor; 838-4890.
CENTREVILLE: State Multiservice Center, 120 Broadway, Room 205; 758-2910.
CUMBERLAND: 9 Market St.; 777-2165. Garrett County residents: 334-8880.
DENTON: State Multiservice Center, 207 South 3rd St., Room 68; 479-4634.
DUNDALK: Dundalk Professional Center, Suite 500, 40 S. Dundalk Ave.; 248-8400.
ELKTON: State Multiservice Center, 170 East Main St.; 398-2487.
ELLICOTT CITY: State Multiservice Center, 3451 Court House Drive; 461-0170.
FREDERICK: Courthouse/Multiservice Center, 100 W. Patrick St., Room 2110; 694-1982. Carroll County residents: 635-6168.
HAGERSTOWN: Professional Arts Building, 5 Public Square; 791-4776.
LANDOVER: Metro Plex-1, Suite 450, 8401 Corporate Drive; 459-2710.
LEONARDTOWN: Carter Building, Room 1012, 180 Washington Street; 475-4850. Charles County and Calvert County residents: (800) 628-5488.
SALISBURY: State Multiservice Center, 2nd floor, 201 E. Baptist St.; 543-6800.
WHEATON: Wheaton Plaza North Office Building., Suite LL6, 2730 University Blvd. West; 949-6030. TTY for deaf: 949- 6032.
What records to save:
Everyone has his own style of keeping records, and the only rule that really matters is to do what works and to be consistent in your habits.
I set up a file at the beginning of each year to receive tax-related documents that I may need when I file taxes the following year.
Here is a list of records that the IRS says you should keep and for how long:
For three years: Basic 1040, 1040A, 1040EZ and attached schedules, W-2s, W-2Ps, 1099-INT, 1099-DIV, 1099-MISC, other proofs of income; canceled checks, receipts, bills, anything backing up entries on tax return, such as payments to day-care providers.
Cost or other proof of what portion of an asset's value is a cost to you, such as stock: as long as you own the asset, plus three years.
Cost or other proof of how much of the current value of your home is due to your efforts -- what you spent to buy it plus permanent improvements you've made (e.g.: receipts from remodeling; Form 2119 [Sale of Your Home] and closing statements from buying or selling your home): As long as you own a home, or one in which you have reinvested the gain from a previous home, plus three years.
The IRS usually audits a return within three years of the due date of that return, plus any extensions granted. However, where no return was filed or in the case of fraud, there is no cutoff date.
For more information, order Publication 552 (Recordkeeping for Individuals) by calling (800) 829-3676.