Baxter Bulletin from Mountain Home, Arkansas • 8

Page 8A THE BAXTER BULLETIN, Mountain Home, Ark. Thursday, January 29, 2004 Tax Information Many can expect bigger refunds or smaller tax bills On the Net: Internal Revenue Service http:www.irs.gov IRS Withholding Calculator http:www.irs.g-ovindividualsarticle0id srssia rates. The lower dividend rates, however, are for the entire year. Taxpayers who routinely get large refunds may want to con- sider adjusting the amount withheld from their paychecks, converting the end-of-year refund into more take-home pay all year long. Taxpayers can request a W-4 form from their employers to make that change.

Taxpayers who might have changed their withholding in the middle of 2003 to adjust for the changed tax rates may have to readjust that withholding to avoid owing taxes at the end of 2004. "Those people should consider filing a new W-4 in January to have their withholding increased and put on track," said Bob Scharin, a senior tax analyst at RIA, a New York tax information provider. Employees who experienced a major change that might affect their taxes those who got married or divorced, bought a home or had a child also might want to consider adjusting the amount automatically withheld from their By MARY DALRYMPLE The Associated Press WASHINGTON Tax rates dropped last January, but most taxpayers have received only half of the cuts coming to them. That means many of them can expect a bigger refund or a smaller tax bill when they figure their 2003 tax return this year. The tax law enacted last May dropped tax rates across the board and removed some of the "marriage penalty" built into the structure of rnarginal tax rates, which can cause married couples to pay more tax than they would as two singles.

Nearly everyone benefited from an expansion of the lowest, 10 percent bracket to $7,000 for single people and $14,000 for married couples. The law also expanded the 15 percent bracket for married couples to twice that of singles. Married couples now pay the same amount of tax on income within the bottom two rates as two singles. The law also lowered the higher marginal rates ahead of schedule and made the change effective Jan. 1, 2003.

The higher rates are now 25 family with one child who qualified for the entire $1,000 child tax credit probably received $400 last summer and can claim the remaining $600 when filing a 2003 tax retura Married couples this year can claim a $9,500 standard deduction. Couples whose itemized deductions total less than that might be better off not itemizing them. Investors may be able to take advantage of lower rates on dividends and capital gains but will spend more time on tax paperwork. Because the new capital gains rates took effect May 6, multiple rates apply, depending on when an asset was sold. Some dividends previously taxed at an investor's normal income tax rate also qualify for the same lower capital gains percent, 28 percent, 33 percent and 35 percent.

All of these changes were reflected in taxpayers' paychecks beginning in July, when employers were instructed to change their withholding tables to reflect the new rates. Because the change started midyear, most taxpayers paid too much tax during the first half of 2003 and can expect to recoup that money through a bigger refund or a smaller tax bill. Tax advisers at Petz Enterprises which runs the online tax preparation service TaxBrain, said they expect 10 million households run by married couples whose incomes range from $47,000 to $65,000 to be among the biggest winners. The combination of new tax rates and tax cuts targeted at married couples will move many of those households from the 27 percent bracket down to the 15 percent bracket. "Because the tax law changes took effect midyear, many of these households will find they have been overwith- held, and tax refunds will be much higher than expected," said Eric Hayes, a senior tax analyst at TaxBrain.

IRS officials say tax refunds have been steadily rising, on average, for about 20 years. This year's jump may be higher due to lower tax rates, an increased child tax credit and other tax cuts. If your family was among those who got an advance child tax credit payment last summer, you will need to reduce the credit you claim on your return by an equal amount. A Higher standard deductions may cause itemizing to be left behind On the Net: Internal Revenue Service http:www.irs.gov Publication 17 Your Federal Income Tax http:www.irs.govpubirs the taxpayer's adjusted gross income. That total cannot include any costs covered by an insurance plan.

It can include copayments, insurance deductibles, prescription medications, eyeglasses and other expenses. Often overlooked are dental and orthodontic costs, which count as medical expenditures. Certain state and local taxes, such as income, real estate and personal property taxes but not sales taxes can be deducted. Donations to charity, whether money or property, can be deducted if the taxpayer has a receipt for the donation. Losses due to theft, fire, hurricanes and other disasters can be partially recouped if not covered by insurance.

Feeling Take a break. The HOME PRIDE CAFE Tax Time Special By MARY DALRYMPLE The Associated Press WASHINGTON Married couples accustomed to itemizing their tax deductions every year might want to take a second look at their 2003 tax returns. A higher standard deduction may mean it's more beneficial to leave tedious itemizing behind. Tax laws allow taxpayers to lower their taxable income by taking a deduction, either a standard amount or the sum of an itemized list. Deductible items like mortgage interest, real estate taxes, state or local income taxes and charitable contributions can quickly add up to more than the standard deduction.

Lawmakers acted last year to increase the standard deduction for married couples to twice the amount for single individuals. In 2003, married couples can claim a $9,500 standard deduction. The change was meant to eliminate one aspect of the "marriage penalty," which can cause married couples to pay more tax than they would if they were two single people. standard amount. Those couples might "take the trouble to fill out the form and then find they didn't need it," said Bob Scharin, a senior tax analyst at RIA, a New York tax information and software company.

The higher standard deduction also may help higher income couples who lose a portion of their itemized deductions. In 2003, married couples with more than $139,500 of income lose a portion of some itemized deductions. Certain itemized deductions are reduced by three percent of the amount above that thresh- old. Tax experts at Pricewater-houseCoopers estimate that the rule can cause some to lose as much as 80 percent of affected deductions. Deductions for medical expenses, investment interest and casualty losses aren't affected.

The overall limitation on itemized deductions is scheduled to shrink beginning in 2006 and disappear completely by 2010, only to reappear the next year. Limitations on personal exemptions claimed by high income taxpayers are scheduled for the same phase-out and return. Once taxpayers choose to itemize their deductions, tax professionals recommend they minimize their taxes by using every deduction they can legally claim. Somewhat sizable deductions can be taken for mortgage interest, taxes and some legal fees. Tax laws also permit a miscellaneous deduction for a variety of smaller expenses to the extent the total exceeds 2 percent of the taxpayer's adjusted gross income.

Often the largest deduction in this category is unreimbursed employee business expenses, but medical weight loss programs, professional journals and magazines, union dues and hearing aids also can qualify. Tax advisers urge taxpayers expecting to itemize their deductions to familiarize themselves with the list and save any record or receipt that might document a qualified deduction. Medical expenses can be deducted to the extent they total more than 7.5 percent of A hearty plate of Ham Beans 425-5300 Harp's Plaza 6am -2pm with $2nevery Tuesday! Naw thru Feb. BUILD IMOIAI "The big news this year is the whopping standard deduction for married, filing jointly, people," said Jackie Perlman, senior tax research analyst at Block. Perlman said the change particularly helps couples whose itemized deductions total between about $8,000 and $9,500.

In the past, those taxpayers got the biggest advantage from itemizing their deductions. Now, they can take an even larger deduction by using the new standard deduction. Couples who aren't sure whether they will benefit most by itemizing or using the standard deduction will have to tally their itemized deductions and see how it compares to the (TTTTtf Custom Made: Garage 4 Shop Hay Bam, Farm Commercial Offices Utility Our steel is a grand ribbed steel. 30 year warranty. 16 colors to choose from.

Serving the Twin Lakes area since 1957. Call BILT-RITE now! (870) 297-3724 "Get More For Your Money" Can't pay your taxes? Don't panic, there are options Computerized Bookkeeping and Tax Preparation Copy Fax Notary Service Typing Resume" Service Electronic Tax Filing CCfr Refund Anticipation Loans 5 On the Net: IRS Electronic Payment Options http:www.ir-s.govefilearticle0id9740 O.OO.html LINK2GOV Corp. http:www.PAY1040.com Official Payments Corp. By MARY DALRYMPLE The Associated Press WASHINGTON Is your tax bill more than you can handle right now? The IRS offers a broad array of options for those who can't immediately pay the balance of taxes owed. Electronic Withdrawal.

Taxpayers who complete their tax returns early but need a little time to amass the money to pay their taxes can file the return electronically and arrange for an electronic withdrawal later. Taxpayers can specify the date of the funds transfer, which means they can file their tax return and wait until as late as April 15 to pay the bill. Credit Card. Taxpayers can pay taxes due by credit card for a small fee charged by the credit card payment service provider. The payment would appear on your credit card professional tax services or by calling one of the credit card payment service providers: LINK2GOV Corp.

at 1 (888) PAY1040 or Official Payments Corp. at 1 (800) 2PAY-TAX. The payment would be subject to the same interest rates and fees as generally apply to purchases on your credit card. Tax experts suggest you compare the total cost of paying by credit card, including interest rates, with the current interest rates and penalties charged by the IRS for installment agreements. Installment Agreement.

Installment agreements allow taxpayers to pay their taxes in monthly amounts that fit their budgets. The IRS will charge interest and penalties, as well as a one-time $43 fee to set up the installment account Form 9465 is used to request an installment payment plan. For most taxpayers who owe $25,000 or less in tax, an installment agreement is automatic. Offer in Compromise. Taxpayers with large unpaid tax bills and no means to pay the full amount can make an offer in compromise, in which they ask the IRS to accept an offer to pay a lesser amount.

Form 656 is used to make such an offer and requires a $150 application fee. If a taxpayer defaults on a negotiated payment plan for an offer in compromise, the entire original tax liability will be reinstated, plus interest and penalties. Important: Taxpayers who can't pay are nevertheless urged to file their returns by the April 15 deadline. They can face steep fines for failing to file, on top of the penalties and interest charged for late payment Klemm's Income Tax and Accounting (870) 425-5454 "37 7feztb SxfwUettce statement as, "United States Treasury Tax Payment." The convenience fee is billed separately. Your credit card statement, along with a confirmation number, provides proof of payment Taxpayers who want to pay by credit card should visit the Electronic Payment Options section of the IRS Web site.

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