IRS offers savings for 1999 tax season

Exemptions accompany tax code changes

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As residents get settled into the new year, parts of the past year cannot be forgotten one of the most important, and most hated, is paying taxes.

Citizens have 74 days until the April 17 deadline to get their 1999 paperwork in order, forms prepared and the package mailed.

There are not as many changes to the tax code this year as there were for the 1998 filing season, but there are two important changes which benefit the individual taxpayer. Local accountants advise that anyone filing their own tax return brush up on the changes.

"We need to all look for the new credits," Craig Certified Professional Accountant Archie Albaugh said.

There is an increase in the exemption amount for single and married filers, but that change occurs yearly to reflect inflation.

The federal government also allowed for an increase in the child tax credit from $400 to $500.

"It's very important people know they can take that credit," public accountant Cory Leiker said.

Anyone with a dependent child, stepchild or foster child for whom they can claim an exemption qualifies for the credit. The credit can be claimed by using the worksheet in the 1040 or 1040A form instruction booklet.

Two credits which Leiker is excited about and says people should be able to take advantage of are credits for higher education.

The HOPE credit for undergraduates allows an exemption up to $1,500 per student, per year. It applies to the first two years of post-secondary education college or vocational school. A person is allowed to claim 100 percent of the first $1,000 and 50 percent of the second $1,000 for a maximum credit of $1,500. The credit can only be applied to tuition and related fees. Books and living costs are not included, Leiker said.

The second education credit is the Lifetime Learning Credit. The Lifetime Learning Credit applies to graduate level and professional degree courses as well as undergraduate courses including instruction to acquire or improve skills. Anyone, any age, who is taking college or vocational courses can qualify for this credit which amounts to 20 percent of all tuition and fees paid to a maximum of $1,000. A person who pays $35 to take a course at Colorado Northwestern Community College could be eligible for a $7 tax credit.

People can qualify for this credit each year they are taking classes. There is no limit to the number of years it is taken.

"It can go on forever," Leiker said. "You don't have to be a full-time student or in a degree program. It's a great credit and it's about time. It's time they gave an incentive for learning."

This year is a special year for Colorado residents. For the second time, the state has amassed a revenue surplus that must be returned to taxpayers. Because the surplus has increased, so has the amount that must be refunded. Residents can earn between $159 and $502, depending on income. To receive this refund, people must file a state income tax form and return it to the IRS. The refund is automatic to all Colorado residents.

Though tax season seems far away, local accountants are preparing for an influx of business as tax laws become more complicated.

There are several mistakes individuals can make. Leiker urges those claiming Earned Income Credit to be careful and make sure to research the requirements.

"The IRS is really taking a close look these days," she said. "The rules are very strict and people need to be sure they are reading them."

Another common mistake is people file under a different name than what is on their Social Security card; marriage and divorce tend to confuse filers, as well as stepchildren taking a different name than the one on their Social Security card. Leiker urges people to be very sure the two names match.

"Tax returns can be delayed or even denied if the Social Security number and the child's name don't match," she said.

Certified Professional Accountant Greg Hamilton urges residents to make an appointment with a professional tax preparer as soon as a person has all tax documents in order. He doesn't advise making an appointment just to beat the rush because a person might not have all the information necessary to complete a return.

"The best advice is that it does not behoove a taxpayer to come in until they have it all together," Hamilton said. "Gather all the papers and then make an appointment."

The rush will begin this month, he said, after people begin to get their paperwork in order. Tax forms such as a W-2 or a 1099 were due back to residents Jan. 31. If anyone has not received the paperwork by then, they should contact the IRS.

Hamilton estimates he prepares about 400 returns between January and April with February and March being the busiest times. Though the individual filing deadline isn't until April 15, farmers must have their returns in by March 1 and corporate returns are due March 15, Hamilton said.

Basic forms are available at Craig-Moffat County Library. The library also has a notebook of specialized forms for people to copy. Residents can also access the IRS Web site at the library and print forms from there.

There is no charge for basic forms or instruction booklets, but customers will have to pay for copies.

Forms are also available on the Internet. Log on to www.irs.ustreas.gov/prod/forms_pubs/forms.html for federal forms and helpful information or dial up www.staste.co.us/gov_dir/rev_dir/stateforms.html for state forms and information. Anyone who would like forms mailed to them may call 1-800-TAX-FORM.

For tax help, residents can log on to the IRS Web site at www.irs.gov or call 1-800-829-4477.

There are several ways to file this year. The IRS offers netfile, e-file and tele-file options. The booklet accompanying the form you choose to file has details on all these options.

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