Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, March 11, 1991 TAG: 9103110375
SECTION: BUSINESS PAGE: A7 EDITION: METRO
SOURCE: MAG POFF BUSINESS WRITER
DATELINE: LENGTH: Medium
Unlike the recently publicized change in benefits for low-income, elderly taxpayers, there are a series of other changes affecting a wide group of citizens. Also, the following changes were implemented in time so instructions and forms taxpayers have now reflect them:
Self-employment tax add-back, which is new this year.
Federal law allows self-employed individuals an income tax deduction of one-half of the Social Security taxes that self-employed people paid.
But for the years 1990 and 1991, Virginia will require its taxpayers to add this amount back when they compute their federal adjusted gross income for reporting on state returns.
Ann Meyers, spokeswoman for the state Department of Taxation, said Virginia's tax laws and forms will conform to the federal deduction beginning in 1992. That means taxpayers will be able to recover in their returns for 1992 the amounts they added back for 1990 and 1991.
Virginia's top income tax bracket has changed. That means less individual income is subject to the highest percentage of tax bite.
Starting for the year 1990, the income level for the top 5.75 percent has increased from $16,000 to $17,000.
The state tax brackets are 2 percent for up to $3,000; 3 percent for $3,001 to $5,000; 5 percent for $5,001 to $17,000; and 5.75 percent for all income over $17,000.
The change means that income between $16,000 and $17,000 will be taxed at 5 percent instead of 5.75 percent this year.
A new schedule, Schedule CR, must be used by taxpayers who qualify to take tax credits under the Neighborhood Assistance Act, the Enterprise Zone Act and for conservation tillage equipment or under the new fertilizer and pesticide application equipment rules. The first two apply to businesses or individuals who engage in approved projects for assistance to low income persons. The last two apply to businesses or individuals engaged in agriculture.
Forst said the state expects to process more than 2.6 million returns by the May 1 filing deadline.
The most common error on state returns, according to Forst, is by taxpayers who give incorrect Social Security numbers. Because this is the code used in processing returns, an incorrect number will delay processing an issuance of refunds.
\ Clarification
Anne Meyers, spokeswoman for the state Department of Taxation, has clarified her answer to a reader question published on the March 4 Money Page. The question was whether Virginia levies a tax on U.S. Treasury investments. She said correctly that the state does not tax those earnings. But the proper procedure is to report the income and then subtract it.
Meyers said the interest should be included in the taxpayer's adjusted gross income on Virginia basic Form 760. Then it should be subtracted on Line 42, which appears in Part 3 on the back of the tax form.
by CNB