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Page 8A - THE CHARLOTTE POST - Thuraday, March 3. 1988 For Your Tax Information Take Tax Burdens To An Expert By RubmB Clark Poat Staff Writer It's that time of year again. Yes. Spring Is Just around the comer but It's also time to file your 1987 Income taxes. If you're like many who are getting headaches by looking at the new changes, you should take your forms to the Mel Jackson In come Tax Service at 201 South Kings Drive. Ek]ulppcd with more than 20 years tax preparation experi ence. Mike Maddox and his stalT have all the right answers to re lieve you tax woes. When asked why are most peo ple having trouble with the new laws, lie says," "Basically It's the complexity of the new rules." Some of those rules surface around what Is called the Kiddy Tax Law and qualified ptenslon plans. Maddox explains the sig nificance of the changes. "People must be careful that they understand the new early withdrawal law changes on their pension plans." he alerts. "For example. If a person with an IRA account tries to with draw from their account before they reach age 59-and-a-half, the government penalizes them 10 percent. Tliat law covers all qualified plans except for cer tain Employee Stock Option Plans (ESOIM). Another change to look for Is In how children are dealt with on the forms as dependents. "A parent who claims a child as a dependent can no longer claim themselves." Maddox cautions about the new Kiddy Tax Law. "People should also be careful when put ting away money In their chil drens' names. If the child Is un der 14 years of age. the parents can now be taxed at the adult rate If It Is a certain amount of money." Mike Maddox Pfco4oarcjvinF-*u«- If these new laws sound com plex don't get upset and worry yourself gray, cil Mel Jackson to relieve your Income tax blues. Tax Law Changes May Mean Fewer People Will Itemize Their Deductions A> the result of recent tax law changes, many taxpayers who itemized their deductions in the past may find it no longer necessary to do so. In deciding whether to itemize or not, taxpayers should compare their total Itemized deductions with their allowable standard deduction. Taxpayers may itemize only if the total of their itemized deductions exceeds the standard deduc tion to which they are entitled. The table below can be used to determine an individual's standard deduction for 1987. 1987 standard Deduction Table Caution: This table does not apply to taxpayers who can be claimed as dependents. See IRS Publication 501, Exemptions and Standard Deduction, for more information on a dependent’s standard deduction. -Step I. Check the correct boxes below for yourself. CD 65 or older CD Blind Check the correct boxes below that apply to your spouse if you arc claiming your spouse’s exemption. CD 65 or older CD Blind Total number of boxes you checked Slep 2, Find your siandard deduclion. and number of boxes you checked in Slep your siandard If your filing siaius is: I above is: deduclion is: Single 0 $2,540 1 3,750 2 4,500 Married filing juinlly 0 $3,760 1 5,600 2 6,200 3 6,800 4 7,400 Married filing separalely^^ 0 $1,880 1 3,100 2 3,700 3 4,.300 4 4,900 Head of household 0 $2,540 1 5,150 2 5,900 (Qualifying widow(er) 0 $3,760 1 5,600 2 6,200 ••If your spouse itemizes deductions on a separate return, your standard deduc tion is zero. for more information, get free IRS Publication 920, Explanation of the Tax Reform Act of !9S6 for Individuals, by using the order blank in the tax return package or calling toll-free 1-800-424-3676. Decide On New Investments By Donald Lewis By now, many of you have pulled your hair out trying to figure out how to complete your 1987 tax forms. For all of you who have been successful In doing so, congratu lation. If you’re gettln a tax re fund then It’s hip-hip and hoo ray! So now. If you haven’t already committed that refund to anything, you should consid er some form of Investment. The IRA Is still a good vehicle In which to save and Invest; but one should do so only If It's suit able for your tax situation. Mutual funds and CD's are good Investments but 1 prefer government securities over CD's. (There are also some quality "defensive" stocks you should consider purchasing). It Is also a good time to review your life Insurance portfolio and take advantage of the tax- advantaged growth aspects of many of the Interest-sensitive contracts. Yes. your tax refund Is your hard earned money but don't spend It on some foolish materi al item before considering your alternatives. For some people the refund Is their only form of savings. The writer is a Jinancial plan ning consultant and represents State Mutual Assurance and Us subsidiaries. ,iol) lluiiling lApeiises •Nii'oums ia\pa\crs spend lor ivping and pininni! a icsiiinc and posiagc lor inailinc copies o! il lo prospeelise einplovers mas be elanned as iniseella- neons iienn/ed dednelions when ihev aie lookine loi a new iob in their eiir- leni oeenpaiion. Miseellaneon- dedue- lioiis aie dednelible onis to the esleni Ihe loud esesvds iwo pereeni vd ad- iiisiesl cross ineoine. See the tree IRS I’lihlieal ion 529. "Miseellaneous Deshielions." .isailahle bs ssiiiini! or e.ilhiiL’ I he IKS, Good Records Make Tax Preparation Easy Good lax records can save lavpa>crs subslanlial lime and money when preparing income lax reiurns, ihc In- lernal Revenue Service said. Taxpayers can save ihemsebes hours of searching for earnings sialcmenis or losi receipis and cancelled checks, if Iheir financial records are in order. These records a e noi only necessary lo prepare a compleie and accuraic reiurn bui can save people money by making them aware of deduciions ihey niighi have otherwise overlooked. The types of records lo save by ihosi- filing Form 1040, the shorter Form 1040A or the 11-line Form 1040fcZ in clude income siaiemenis, such as Forms W-2 and W-2P, showing in come from wages and from pensions and annuities, and Forms 1099-lNl and 1099-DlV, showing income from imeresi 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 ot a week-by-week log of the name, address and. if required, social security number of the care (irovider, as well as Ihe amount paid. Cancelled checks or receipis for cash payments will serve as substantiation of the amount paid. These records will enable taxpayers lo accurately compute the child and dependent care credit, which can be claimed on either Form 104(iA or the longer Form 1040. Taxpayers who itemize deduciions should keep receipis. cancelled checks, etc., for such things as medical and dental paynienis,' contributions to churches and charities, and siaienieiiis to subslanliaie mortgage interest. Records of the real estate taxes and personal property taxes paid during the lax year should also be kept. Other miscellaneous items to kc-ep might in clude records of payment of union dues, unreinibursed employee business expenses, investment expenses, and lax reiurn 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 siaicnienis, worksheets, and receipis that dcvcu- incni and support the income, deduc tions, and credits claimed on their la.x reiurns, should IRS need to examine them. Tax records which support itenu* claimed on a return should be kept at least until the period of limitation ex pires foi that reiurn. Usually this is three years tiom 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 reiurn is correct and complete. Records ot properly transactions (including real estate. Slock, machinery, etc.) should be kept for future reference. In addition, copies of old lax returns may be helpful in preparing luiure returns, so taxpayers mav want to keep them wnh their other records. Ihe IRS publishes a tree publication on recordkeeping tor tax purpevses. 1 o obtain a copy of Publication 552. Recordkeepme for Indnidiials and a List of Tav Publications, use the ouicr blank 111 the lax return package or call 1-800-424-3676. TaxpayersAskJRS These are typical of questions asked by taxpayers and are presented as a public service of this publication and the IRS. Q. Is there anything 1 can read on special tax situations for the handi capped and their families? A. Yes, you can request free Publica tion 907, “Tax Information for Han dicapped and Disabled Individuals,” by calling Ihe IRS at 1-800-424-3676, or by using the order form in your lax package. Q. Are there taxpayers who must itemize deductions? A. Yes. Some taxpayers must itemize deductions. For example, when mar ried taxpayers file separate returns and one spouse itemizes deductions, then the other spouse also must itemize. Q. 1 gave $500 to my church. Even though 1 did not itemize when 1 filed Tax Planning: How Will the New Tax Law Affect You? To save on taxes this year and in years ahead, taxpayers should begin planning now, advises the Internal Revenue Service. Taxpayers need to learn how the Tax Reform Act of 1986 affects them, and they may need to adjust their tax withholding. Free IRS Publication 919, “Is My Withholding Correct?” can help do this. The changes made by the Tax Reform Act of 1986 have been many. These changes include: • Lower tax rates. For 1986, the tax rates ranged from 11 percent to 50 per cent. For 1987, there are five tax rates, from II percent to 38.5 percent; in 1988, there will be only two rates, 15 percent and 28 percent. • Medical expenses. Only the amount that is more than 7.5 percent of ad justed gross income is deductible. • State and local sales taxes. No longer deductible. • Personal interest. Only 65 percent of personal interest (such as interest on car loans, credit card balances, etc.) is deductible. For 1988, only 40 percent of personal interest will be deductible, for 1989, 20 percent; for 1990, 10 per cent; and for 1991, no deduction will be allowed. • Miscellaneous deductions. General ly, only the amount that is more then two percent of adjusted gross income is deductible. • Dividend exclusion. The dividend exclusion of $UX) ($200 on a joint reiurn) is no longer available. • Married couple deduction. The deduction for a married couple when both work is repealed. • Income averaging. Repealed. • Political contributions. Deduction repealed. • IRA deduction. The IRA deduction of a taxpayer already covered under a retirement plan may be reduced or eliminated depending on the amount of adjusted gross income. For a single person, for example, the deduction begins to phase out when adjusted gross income is $25,000 and is eliminated when it is $35,0(X). • Charitable deduction for nonilemizers. No longer available. • Unemployment compensation. Fully includible in income. • Capital gains. Taxed as ordinary in come at a maximum rale of 28 percent. Along with these changes, Ihe following should also be considered: • Personal exemption. The personal exemption amount for 1987 is $1,900 for each individual, spouse, and dependent; in 1988, the personal ex emption increases lo $1,950. Here’s a tip ... a tax tip. Many of the answers to questions about fillinj; out tax forms are in the package of instructions sent to yon hy the IKS. Don't let It slide, check it out' I Publi€ of th^ my return last year, 1 was able to claim this contribution on my reiurn. Is this still allowed? A. No. Beginning in 1987, the provi sion that allowed non-itemizers to deduct a portion of their charitable contributions has been eliminated. Q. I bought a new car this year. 1 paid over $700 in stale sales tax. Can 1 claim a deduction for the sales lax? A. No. Beginning in 1987, state and local sales taxes are no longer deducti ble. However, if you itemize, you may be able to deduct certain other state and local taxes such as real estate and personal property taxes. Q. Are there limitations on deducting employee business expenses? A. Yes. Except for reimbursed ex penses, business expenses generally will be deductible as miscellaneous item ized deductions and only to the extent that they exceed two percent of ad justed gross income. Q. Where can I order IRS forms and publications? .A. The easiest way is to use the order form on the next to last page of your tax package. You also may write to the IRS Forms Distribution Center nearest you. Q. How long will it take to receive forms 1 order? A. You can expect to receive your order within seven to ten working days. Q. Can I deduct travel expenses for educational purposes? A. Beginning in tax year 1987, generally, no deduction will be allowed for costs of travel that would be deductible only on the grounds that the travel itself constitutes a form of education. Spend your Tax Dollars Wise Come See Duck Roberts Phone:335^1 Beeper:378-9535 Duck's Automotive 2308 N. Tryon St. Charlotte N.C. 28206 Behind Parker Davis 18 years of Exp. Quality at A Good Price 1988 BERETTA Today’s Chevrolet EXTENDED REBATES & PRICE REDUCTIONS On BERETTA'S & CORSICA'S See Me For Great Savings!! CATL: 536-1410 5101E, Indepedence Blvd, Need Assistance In Filing Your 1987 Tax Refund? Call Me Donald Lewis, FLMI * ■ Home: 545-5219 Office: 377-6730 MEL JACKSON TAX SERVICE Competitive Rates on BOOKKEEPiNG SERVICES for Small and Large Businesses FREE PARKING Complete Income Tax Preparation for both Individuals & Businesses Serving Charlotte Since 1949 377-5209 201 S KINGS DR. ACROSS FROM CINEMA THEATER BETWEEN 3RD ST. & INDEPENDENCE INCOME TflK TIME nRE VOU GOING TO USE VOUR TRH RETURN FOR R USED RUTOMOBILE? THEN SRUE RT CENTRRL RUE. RUTO SRLES $500 DOIUN. $35 per meeic 1977 DELTA 88 ROYALE: Pw. Windows,dooriocks and pw seals, tilt.cnjise and stereo 1982 AMC CONCORD DL: Auto,A/C. PB-PS.AM/FM Cassette $600 DOIUN, $35 per week (§74 PLVMOUTH DUSTER: Auto,-V-8 one owner 2dr, Collectors Hem 70.00 miles 1981 FORD ESCORT GL 5spdA/C,AM/FM Cassette,red finish runs good (CENTRAL RQBRUTO SALES iment. * a% interest ■ ‘ ■ JZ5-»1 II
The Charlotte Post (Charlotte, N.C.)
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March 3, 1988, edition 1
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