ROANOKE TIMES 
                      Copyright (c) 1996, Roanoke Times

DATE: Monday, April 8, 1996                  TAG: 9604090044
SECTION: MONEY                    PAGE: 6    EDITION: METRO 
SOURCE: MAG POFF STAFF WRITER 

LAST-MINUTE TAX TIPS

You've got a whole week to complete and mail your federal income tax return - assuming you plan to meet the deadline - but certified public accountants are urging taxpayers to fill out the forms as early as possible.

The 18 CPAs who this year answered queries from readers for The Roanoke Times Tax Questions feature agreed that waiting until the final weekend can lead to making careless mistakes such as errors in math, writing down incorrect Social Security numbers and forgetting to sign the forms in all the right places.

It is especially important to double-check all Social Security numbers for the entire family, they said. Every family member, including infants at least 2 months old, must have numbers.

But the most common mistakes are simple mathematics.

If you get hung up in the forms, however, you have a right to an automatic four-month filing extension until August, the accountants said. You merely have to file Form 4868 with the Internal Revenue Service and Form 760E for Virginia taxes.

The catch is, the CPAs said, that you must send a check to pay your taxes along with the form to delay filing your returns. That check must cover at least 90 percent of the amount that's due when you finally file the return.

Also, don't forget that your first installment on taxes due for 1996 must also be filed and paid by April 15. The CPAs said that anyone with $500 or more in taxes due must make this filing. The threshold in Virginia is $150.

People who must file quarterly include those receiving Social Security benefits, the self-employed and those with income outside their regular jobs. Starting next year, the CPAs said, Social Security recipients will have the option of tax withholding instead of quarterly payments.

The accountants warned against pushing your deductions by claiming expenses which cannot be deducted. In trying to save $20, they said, you will be inviting years of trouble with the IRS in addition to penalties.

What if you don't have the money to pay your taxes?

File anyway, the CPAs said, and pay as much as you can. You should be able to work out installment payments for the balance, but you will avoid penalties if you file. You can file Form 9465, Installment Agreement Request, to indicate the amount you propose to pay each month. The IRS will notify you whether it has approved or rejected your request.

Unpaid tax bills accrue both penalties and interest, however, so you should consider all of your personal sources of financing before running up a debt with the IRS. Check all of your investments, along with their rates of return, to identify those that could readily be turned into cash. Even a bank loan or a home equity loan may be a less costly alternative.

Your filing status dictates the tax rate used to calculate your tax liability and determines your eligibility to claim certain exemptions, deductions and credits. Consider whether changes in your life, such as marriage or divorce, will affect your filing status. If you are single and have a dependent, check to see if you qualify for the lower tax rates available to a head of household or surviving spouse with dependent child.

The earned income credit, which can directly reduce taxes, is frequently overlooked by those who qualify for the credit.

You may be able to claim the credit if your earned income (or adjusted gross income if that is greater) last year was less than $24,396 if you have one child or $26,673 if you have more than one child. You also may be able to claim the credit if you have no children and earn less than $9,230. The maximum credit available is $3,110.

To figure out the amount of your credit, you must use the EIC (Earned Income Credit) work sheet. If you find the calculations too confusing, you can have the IRS do it for you.

LENGTH: Medium:   76 lines
ILLUSTRATION: PHOTO:  ROGER HART/Staff. CPAs who answered queries from readers
          for The Roanoke Times Tax Questions included (front row, from left):
          Reid Ammen, Harry Schwarz, Valerie Kowalski, Mary Ann McElmurray, 
          C.J. King, Jim Taney, Stan Boatwright; (second row, from left): 
          Richard Beason, Charles Equi, Bill Brumfield, Mark Coles, Wendy 
          Funderburk, Terry Clem, Fulton Galer, Timothy Boitnott, Clark Cole. 
          color.