Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, December 29, 1994 TAG: 9412290109
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
While talk of a middle-class tax cut is sweeping Washington, none of that will be reflected in the new forms, which will be virtually identical to last year's.
The good news in that, the IRS said Wednesday, is that taxpayers will be able to use their old returns as a guide in filling out the new forms, as long as they are careful to note the few areas where changes have been made.
Mail carriers were directed to begin stuffing the tax packages into mailboxes starting Tuesday. But as in past years, some eager postmasters have jumped the gun and already sent out the forms.
Regardless of when they are received, the completed returns are due back April 17, two days later than normal because April 15 falls on a Saturday this year.
IRS Commissioner Margaret Milner Richardson said her agency will be pushing to get more people to take advantage of the expanded availability of such high-tech options as using their Touch-Tone telephones to file returns or filing by personal computer.
``While the IRS cannot make the law simpler, we have done a lot to take the hassle out of filing,'' she said at a news conference Wednesday. ``Many more people will be able to enjoy the benefits of electronic filing, and it won't cost them a dime.''
This year, the IRS will offer free electronic filing services at 126 of its offices, up from 40 last year. The agency estimates that 15.5 million taxpayers will file electronically. In addition, the IRS is pushing the use of personal computer programs to aid filing and expanding the availability of its TeleFile system to 10 states, allowing an expected 700,000 taxpayers to use their Touch-Tone phones to file returns.
Last year, the touch-tone filing option was offered in Florida, Kentucky, Indiana, Ohio, Michigan, West Virginia and South Carolina. The service will be expanded this year to Colorado and south Texas and northern California.
However, Richardson warned that the IRS will exert greater efforts to crack down on fraud following a critical congressional study that said the government was being bilked out of between $1 billion and $5 billion annually by fraudulent schemes to collect refunds.
To halt these abuses, she said, the IRS will check Social Security numbers more carefully this year, both for the taxpayers and their dependents. Inaccurate numbers will result in delays in receiving refunds.
``Our message to all taxpayers - take the time now to check your Social Security number so you can avoid a delay later,'' Richardson said.
The tax law change with the biggest impact this year is an expansion of the earned-income tax credit designed to aid the working poor. For the first time, an estimated 4 million to 5 million workers without children will be able to qualify for the credit, which previously had gone only to families with children.
The IRS estimated that up to 20 million low-income workers will qualify for the tax credit, which provides benefits ranging from a maximum of $306 for taxpayers with no children to a maximum of $2,528 for taxpayers with two or more children.
Other changes for the 1994 returns:
RATES AND EXEMPTIONS: While the top tax rates affecting the richest Americans were increased last year as part of the deficit reduction package, all rates will remain unchanged this year at 15 percent, 28 percent, 31 percent, 36 percent and 39.6 percent. But taxpayers will get a $100 increase in their personal exemptions to $2,450. This amount multiplied by the taxpayer, spouse and dependents is exempted from taxation.
STANDARD DEDUCTION: For those who do not itemize, the standard deduction has been increased to $3,800 for singles and $6,350 for couples filing jointly.
SOCIAL SECURITY: Higher-income Social Security recipients may have to pay taxes on up to 85 percent of their benefits, an increase from 50 percent. Single persons with incomes over $34,000 or couples with incomes over $44,000 may be subject to the increased tax. Single persons with incomes below $25,000 or couples with incomes under $32,000 will continue to escape any taxation of their Social Security benefits.
CHARITABLE CONTRIBUTIONS. To deduct a charitable contribution of $250 or more, taxpayers must have a written acknowledgement from the charity. A canceled check no longer will be enough.
INSTALLMENT FEE. The IRS is proposing to charge a $43 fee to taxpayers who pay their tax bills in installments. The new user fee, which would be in addition to interest and penalties for delinquency, is scheduled to go into effect in March after a public hearing.
by CNB