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TAXC-EST V1.0 1992 Tax Estimator ┌────────────────────────────────────────────────────────────────────────────┐ └──────────────────────────────────(C) 1992, Gary L. Bockmon─────────────────┘ 512-569-6408 TABLE OF CONTENTS Page INTRODUCTION ............................... 1 GENERAL INFORMATION ........................ 3 Special Features........ 5 GETTING STARTED ............................ 5 QUICK START ................................ 6 ADDITIONAL INFORMATION ..................... 7 Windows................. 7 Report.................. 8 Worksheets.............. 11 LINE-BY-LINE INSTRUCTIONS................... 13 1040: SCREEN 1.................................. 13 Personal Information, Filing Status SCREEN 2.................................. 13 Exemptions, Dependents SCREEN 3.................................. 15 Income SCREEN 4.................................. 17 Income (continued), Adjustments SCREEN 5.................................. 19 Deductions, Other Taxes SCREEN 6.................................. 27 Additional Taxes, Credits SCREEN 7.................................. 29 Payments DISCLAIMER.................................. 31 COPYRIGHT,WARRANTY ......................... 31 REGISTERING TAXC-EST ....................... 31 LATEST ON NEW TAX BILL AFFECTING 1992 TAXES. 32 ABOUT THE AUTHOR............................ 33 page 1 INTRODUCTION TAXC-EST follows the format of the TAX-C 1040 program, but has no print options, and has been updated to the 1992 tax laws as available at time of release. Following is a brief explanation of how the program works, followed by line-by-line instructions with tax tips. To avoid penalties for underpayment of tax, pay in at least 100% or your 1991 tax liability or 90% of your estimated 1992 tax liability. No penalty is due for underpayments under $500. To calculate estimated taxes with TAXC-EST, simply fill out the information as you would if you were preparing a tax return, using estimated annual figures. Divide the tax liability result by 4 to arrive at a quarterly estimate of total tax due. Use TAXC-EST to check your withholding to see if you need to file a new W-4 with your employer, check estimated taxes due, or for general tax planning for 1992. Use the vouchers provided with IRS form 1040-ES if you need to make estimated payments. For estimated tax purposes, the year is divided into 4 payment periods. For the period: Tax due date: For the period: Tax due date: Jan 1 thru Mar 31 April 15 Jn 1 thru Aug 31 Sept 15 Ap 1 thru May 31 June 15 Sp 1 thru Dec 31 Jan 15 NOTE: Effective 2-1-92, by presidential direction to Treasury, the IRS is changing the withholding tables that your employer uses to calculate the amount of your withholding. The intent is to withhold less from your paycheck, putting more money in your pocket, which you will hopefully spend to help the consumer-driven economy in an election year. Unless you give your employer another W-4, you may receive a smaller refund than you were expecting for 1992 or have to pay more than you were expecting at the end of the tax year. Much of the following is from the TAX-C documentation files, with some changes. References made to TAX-C in this file also apply to TAXC-EST. This program has no print options, but you can use the Print Scrn key to print a copy of the F1 report at any time to summarize your estimations. page 2 The key to saving money on your tax bill is in understanding the effects various transactions have on your taxes. When you can see the big picture, you can more easily grasp the tax implications of your financial life, and to see the truth behind the rumor. TAX-C will provide that big picture for you with the F1 report screen. It provides you with an immediate summary of all entries any time you want to see them. A more detailed explanation of F1 report is included later in this file. Tax simplification is a worthy goal of the current IRS admin- istration and we applaud their efforts. But don't expect to see too much simplification without tax fairness being sacrificed. Our tax system will always be a compromise between fairness and simplification. You will always need complete and objective tax and financial information to structure your financial life to your advantage. This program is DESQview aware; it can be run within the DESQview environment. page 3 GENERAL INFORMATION TAX-C is a new 1040 program which allows you to calculate and print your 1040, Sch A & B, and other forms ,schedules , and worksheets are added as designed and tested. Currently included are worksheets to calculate the taxable amount of social security payments, the maximum amount of your IRA deduction, dependent's standard deduction, health insurance deduction allowed for self- employed individuals, maximum capital gains calculation, in addition to the normal math and tax calculations involved. An early release version of TAX-C is available in the fall containing the latest released information from IRS for planning purposes. It is distributed as shareware. Look for it at your vendor's in October or November every year. The official version is then available to registered users on or about January 15. TAXC-EST is derived from the TAX-C program and contains 1992 information necessary for estimating your taxes. It is also a shareware program. A fee of $15 is requested if you find this program useful and would like to see it continue. There are entry fields for all information required on the 1040 and the printed 1040 corresponds line-by-line to the IRS 1040 for ease of transfer. However, please note that the screen line numbers will not exactly match the 1040. That is because all line item totals have been placed behind the scene, to give you a quick-glance summary on the F1 report. For an immediate update on the status of your return, press F1 for the summary report screen. Press F1 from any screen and use it often to see how various entries affect your entire return. Becoming familiar with the tax effects of various financial transactions is the key to effective tax planning. page 4 All on-screen page number references are to the IRS instruc- tions that come with your 1040 from the IRS. Included with the registered version of TAX-C is a line-by-line instruction manual with helpful information and tax-saving hints. The income tax calculation provided with TAX-C should prove accurate up to 10,000,000 and accounts for the new special provisions, such as: 1. Maximum 28% rate on LONG TERM capital gains. 2. Phase-out of exemptions at high AGI. 3. Phase-out of itemized deductions at high AGI. If your situation calls for form 8814, "Parent's Election to Report Child's Interest and Dividends", or form 8615, "Computation of Tax for Children Under Age 14 Who Have Investment Income of More than $1,000", TAX-C will not calculate this for you. These forms will be included in future versions and may be available in the registered version this year. All dollar entries are automatically checked for validity and rounded to the nearest dollar. TAX-C does not add commas, and will not accept them. NOTE: TAXC-EST assumes no changes in the calculation for long term gains at the maximum 28% rate. This could easily change in 1992 as much debate is still surrounding this issue. The most likely outcome will be a lower rate or a different set of rules for calculating long term capital gains resulting in some advantages or no change at all. page 5 Special Features: Calculates the taxable amount of your social security benefits. Calculates the amount of any self-employed health insurance premiums allowed as an adjustment on the 1040, and applies the excess to SchA medical expenses. Calculates the standard deduction for an individual who can be claimed as a dependent by someone else. Calculates the earned income credit on Schedule EIC. Calculates the maximum deductible IRA contribution for you and your spouse and also calculates a spousal IRA if applicable. Other Features: Your standard deduction is automatically calculated and compared to your itemized deductions and the larger amount used. Error checking warns if you have checked inappropriate boxes, entered an invalid number, or entered a capital loss in excess of the amount allowed. Windows will pop up at the medical expenses field and the job expenses field to advise you of the allowable amount of your entry. Amounts are automatically totalled and brought from the SchA and SchB screens to the appropriate 1040 screen lines, and to the F1 report screen. F5 menu allows you to save and load .tax files. GETTING STARTED Hardware Required: PC,XT,AT IBM compatible Any monitor 256K memory 1 floppy disk drive DOS Dot matrix printer page 6 QUICK START Type TAXC-EST at the prompt. TAXC-EST immediately loads first screen of a 1040 look-alike. Special keys: F1 - Summary Report F2 - Enter Sch A or B,EIC, or IRA calculation as indicated on screen at appropriate lines. F5 - Menu: Save a file, load a file (load NEW.TAX to begin a new file). ESC - Exit from A or B to 1040; also from 1040 exits program There are seven screens that make up the 1040 portion of the program. Pressing PGDN will scroll you through these 7 screens and loop back to the first screen. PGUP will scroll back and stop you at the first screen. Page keys can quickly get you from one area to another without passing every field. The input fields work pretty much as you'd expect, with HOME, END,INSERT,BACKSPACE all operational here. The arrow down and return keys will move you to the next field. Arrow up will take you back to the previous fields. Arrow down or return at the last screen field will take you to the next screen; arrow up at the first screen field will take you back a screen. Entry fields correspond to the IRS 1040; however, if you are using the IRS instructions, you may become confused by the fact that some screen items do not match the 1040 line numbers. This is because some information has been moved behind the scene on TAX-C. You don't see totals until you press F1. See REPORT later in this file. The registered version of TAX-C comes with a full set of line-by- line instructions with helpful information and tax-saving hints. At screen 3, line8a, press F2 as indicated to enter Sch B interest income screen if your interest income is over $400. There is one screen here for entering your interest income. page 7 At screen 3, line9, press F2 to enter Sch B dividend income screen if your dividend income is over $400. There are two screens here. At screen 5, first field, press F2 to enter Sch A, itemized deductions. There are three screens for the Sch A. Press F2 at IRA deduction field to enter IRA worksheet. Press F2 at earned income credit field to enter Sch EIC. Using ESC from Sch A, B, EIC, and worksheets brings you back to the 1040 screen. If you press ESC from the 1040, you will be asked if it is ok to exit to DOS. ADDITIONAL INFORMATION In addition to the 1040, Sch A and B, TAX-C contains certain worksheets that may apply to you. TAX-C attempts to be intuitive by making prompts for specific information only if necessary for your situation. WINDOWS Various windows may pop up if certain conditions apply. Most have a bell attached to get your attention. If you enter an x in an inappropriate area, such as entering yes AND no, or entering TWO filing statuses, a window will alert you to this error. In calculating a capital loss, you are allowed a specified maximum amount as a deduction on the 1040. Any remaining loss must be carried over to next year. If you enter an amount that exceeds the maximum allowed, a window will alert you to adjust your entry. page 8 If you enter a capital gain, and you have income taxed in the 31% bracket, a window will prompt you with a question. If the gain you entered contains any long term capital gain (held over one year), you must enter the amount of your NET LONG TERM GAIN at this window prompt so we can calculate this at a maximum 28% rate, as allowed. If this condition applies to you, you must enter the amount from Sch D, line 16 each time you cross this field at the window prompt. Failing to do so will result in an inaccurate calculation of your tax. This also enables you to make changes in this amount. On Sch A, at the medical expense field, a window will appear to show you the amount of your medical expenses allowable after subtracting 7 1/2% of your AGI, as specified on Sch A. Also, if there are self-employed health insurance premiums to be added here, another window will prompt you to that fact. There is no bell on this window. Also on Sch A, at job expenses, there is a window to show you the amount of your allowable job expenses after deducting 2% of AGI. There is no bell here. REPORT The report is an integral part of TAX-C. All line item totals from the 1040, Sch A, Sch B and other totals appear in a one- screen summary report. The report is brought on screen by pressing F1. Use the F1 report often to get the big picture and see how various transactions affect your tax. Hopefully, preparing your income tax return this year will provide some insight into tax planning year-around. An explanation of each report line follows: page 9 1991 FEDERAL INCOME TAX REPORT NOTE: All line numbers refer to the 1991 forms. Total Income.............This is your total income taxable as reported on 1040, line 23. Total Adustments.........This is the total of all adjustments as reported on 1040, line 30. It will include the calculated amount of any self-employed health insurance premiums if entered on the TAX-C worksheet. Adjusted Gross Income....This is Total Income less Total Adjustments as reported on 1040, line 31. Deductions...............This will be the larger of your standard deduction or itemized (Sch A) deductions. It will include calculated amounts allowed for special conditions, such as you or your spouse being over 65 or blind, and any reductions due to the new regs. Reported on 1040, line 34. Exemption Amount.........This is the amount allowed as a deduction for exemption allowances and is $2150 x number of exemptions claimed, less any reductions due to the new regs. It is 1040, line 36. Taxable Income...........Income less adjustments less deductions less exemption allowance is always taxable income. 1040, line 37. Exempt Interest Income...Reported here as a diagnostic tool only. Not included in taxable income. It is included in determining the taxable portion of social security. 1040, line 8b. Taxable Amount of SS.....Reported separately for informational purposes, it is included in taxable income, and is 1040, line 21b. INCOME TAX...............Check this often as you prepare your return to see how various entries affect your tax. 1040, line 38. Total Tax Before Credits.This is income tax plus any tax reported from form 4970 or 4972. 1040, line 40. Nonrefundable Credits....A tax credit is much more valuable than a tax deduction, as a credit is a direct reduction of your tax bill; a deduction reduces taxable income. Tax credits come in two flavors. Nonrefundable credits can reduce your tax to 0. 1040, line45. TOTAL TAX................This is income tax plus 4970/4972 taxes less nonrefundable credits plus other taxes. This is essentially your tax bill as reported on 1040, line 53. page 10 SCHEDULE A DEDUCTIONS Allowable medical........Sch A, line 4. This is the amount that is allowable as a medical deduction, and is the amount you entered as your medical expense less 7 1/2% of AGI. It includes any excess self-employed health insurance premiums not allowed as a deduction on 1040, if applicable. Taxes paid...............Sch A, line 8, total taxes entered. Interest paid............Sch A, line 16, total interest. A note worth heeding: Personal interest is no longer deductible. Charitable cont..........Sch A, line 16, total contributions. TAX-C does not calculate the limits on charitable contributions. Be aware that, if your contributions exceed 20% of your AGI, your deduction may be limited. See IRS instructions if applicable. Casualty, theft .........Sch A, line 17. Moving expenses..........Sch A, line 18. Allowable job expenses...Sch A, line 24. Total amount you entered at employee expense and other misc expenses, less 2% of AGI. Misc itemized deduct.....Sch A, line 25. Gambling losses and some other miscellaneous items not subject to the 2% AGI reduction. Total Itemized Deduct....Sch A, line 26. If you happen to be in a high AGI category, this line may appear confusing. The total itemized deductions will not be the total of the deductions listed. This is due to the new reduction rules. This line total plus the next line will give the total of all itemized deductions listed. Deductions reduced by....If AGI is over $100,000 (50,000 if married filing separately), your itemized deductions are reduced due to new regs. TAX-C calculates this amount to arrive at the correct tax. This line reflects that reduction, if applicable. Your Standard Deduction..Listed here for comparison. The deduction allowed is the larger of your standard deduction or itemized deductions. Exemption reduced by.....If AGI is over: 150,000 for married filing jointly 125,000 for head of household 100,000 for single 75,000 for married filing separately the exemption allowance is reduced. This line shows the amount of any reduction that occurred. SCHEDULE B REPORT Taxable Interest Income..Sch B, line 4. Total interest income less any excludable savings bond interest. Taxable Dividend Income..Sch B, line 10. Total dividend income less capital gain distributions included and less nontaxable distributions. page 11 WORKSHEETS. TAX-C contains three worksheets which will appear on screen to request additional information if certain conditions occur. The worksheets are self-explanatory, but if you want additional information, read the explanations that follow: 1. Taxable Amount of Social Security - line 21a. If you enter an amount at the social security benefits field, TAX-C will calculate the taxable amount using information from your return. To cover all possible situations, we request further information from you to make the calculation. Specifically, if married filing separately, whether you lived with your spouse during the year affects the way the calculation is made. Additionally, some types of income, which are ordinarily excluded from income tax, are included for purposes of making this calculation, and this information is requested. If this worksheet clearly does not apply to you, simply place an x in the indicated box, and the screen will not appear again. Details of the taxable social security calculation are printed in the diagnostics report if it applies. 2. Self-employed health insurance - line 12. Special rules allow you to deduct as an adjustment on the 1040 a specific amount of any health insurance premiums you paid as a self-employed individual. Any remaining amount is allowed as a medical deduction on Sch A. To assist you in making this calculation, and to assure that this deduction is not overlooked, a screen will appear to prompt you for this information. It will appear only if you enter self-employed earnings on the Sch C line, line 12. Enter the total amount of any self-employed health insurance premiums you paid here. If you had self-employed earnings and did not pay health insurance as a result, enter an x in the box indicated and the screen will not appear again. 3. Dependent's standard deduction - line 25b. If someone else qualifies to claim you as a dependent, you can't claim an exemption allowance for yourself. In addition, your standard deduction is limited to $500 or the amount of your earned income up to the amount of the standard deduction otherwise allowed. Since TAX-C calculates the standard deduction, we'll make this calculation for you. To do so, we need some additional information to calculate your earned income, since some items of income included in this calculation may not appear on the 1040. Some amounts received, such as disability income, are not taxed, but are included in earned income to calculate this standard deduction. If the worksheet clearly does not apply, put an x in the indicated box, and the screen will not reappear. Any amounts entered in this worksheet will be printed on the diagnostic report to document your earned income for your personal files. page 12 TAXC-EST TAX MANUAL This manual contains line-by-line instructions for the TAX-C income tax program, tax tips where appropriate (CAPITAL LETTERS ARE USED TO STRESS A POINT THROUGHOUT THIS MANUAL), and certain other information for the 1991 tax filing season you may find useful. It is not intended to be an instruction manual for the TAX-C program, but rather an extension of the TAX.DOC file which is included in the shareware version of this program and also included earlier in this file. This file can be printed by using your DOS print command. References are made throughout this manual to additional IRS forms and special publications that you may need if your situation calls for them. To obtain forms and/or publications free from IRS, call toll-free: 1-800-TAX-FORM. Abbreviations used in this manual: AGI - adjusted gross income, usually refers to line 32, form 1040. AMT - alternative minimum tax. Sch - Schedule. page 13 LINE-BY-LINE INSTRUCTIONS TAX-C 1040 SCREEN 1: (Top to bottom) Normally taxes are reported on a calendar year (Jan1 - Dec31). If you use a year other than a calendar year, it is referred to as a fiscal year, and you would enter that reporting period here. Otherwise, skip through this line by pressing Enter or down arrow. NAME, ADDRESS, AND SOCIAL SECURITY NUMBER. Pay special attention that your social security numbers are entered correctly. This is a particularly error-prone area. PRESIDENTIAL ELECTION CAMPAIGN. Check yes here for you and/or your spouse if you want $1 of your taxes to go into the fund to help pay for presidential election campaigns. FILING STATUS. Enter your filing status. TAX NOTE: If you are married, it is generally advantageous to file as "married filing jointly". However, if you and your spouse both work and one of you earns considerably less than the other, you may want to try filing "married filing separately". It could reduce your overall taxes. It's easy with TAX-C. Fill out your return both ways. Rather than printing the complete return for each category, use Print Scrn to print the F1 report and compare the tax amounts. File as "qualifying widow(er)" or head of household if you qualify to take advantage of special rates. File as single if you're unmarried and don't qualify as qualifying widow(er) or head of household. SCREEN 2: 6a,b. EXEMPTIONS. Always claim an exemption for yourself, unless someone else can claim you as a dependent. If someone else QUALIFIES to claim you, you CAN'T claim an exemption for yourself. Claim an exemption for your spouse if "married filing jointly". 6c. DEPENDENTS. You are allowed an exemption for each dependent. page 14 Generally, you may claim a dependent if that person meets all five dependency tests: 1. Member of Household OR Relationship Test. If the person lives with you for the enter year as a member of your household, he meets this test. That person will also meet this test if he/she is your: * child, grandchild, great grandchild (a legally adopted child is considered your child) * stepchild, brother, sister, half brother, half sister, stepbrother, stepsister * parent, grandparent, other direct ancestor (but not foster parent) * stepfather, stepmother, aunt, uncle, first cousin * father-in-law, mother-in-law, son-in-law,daughter-in-law, brother-in-law, sister-in-law. 2. Citizenship Test. The person must be a US citizen, resident, or national, OR a resident of Canada or Mexico. 3. Joint Return Test. You are not allowed an exemption for your dependent if that person is REQUIRED TO FILE a joint return. If the joint return is filed merely to get back taxes withheld, and otherwise the dependent is not required to file a return, you may be able to claim the exemption. 4. Gross Income Test. GENERALLY, you may not take an exemption for a dependent if that person had gross income of $2150 or more for the year. 5. Support Test. You must provide more than half of a person's total support during the year to meet the support test. List the name, Social Security Number, and number of months that person lived in your home for each dependent. Also at the screen field "<1": put an x here if the dependent is under age 1. You aren't required to provide a social security number for a dependent under age 1. After listing each dependent, enter the number of dependents in each category as indicated on screen: Number of CHILDREN who lived with you. Number of CHILDREN who didn't live with you. Number of OTHER DEPENDENTS. Ordinarily, if you are divorced, the custodial parent is the person entitled to an exemption for any children from the marriage. You could claim a child as your dependent if stipulated in a divorce decree executed prior to 1985, even if the child didn't live with you. If this applies to you, put an x in the pre-85 agreement checkbox. page 15 SCREEN 3. 7. Wages, Salaries, Tips, etc. Compensation earned as an employee, total of forms W-2. 8a Taxable Interest Income. (if over $400, press F2 and complete Sch B) Generally reported to you on 1099-INT or 1099-OID, taxable interest includes interest you receive from bank accounts, loans you make to others, and interest earned from most other sources. If the total is more than $400, you must complete Sch B and attach to your form 1040. TAX-C allows you to complete Sch B by pressing F2 at this line. See the TAX.DOC file if you need more information concerning Sch B to report interest or dividends. b Tax-exempt interest income If you received any tax-exempt interest (such as from municipal bonds), report it on this line. Include in this amount any exempt- interest dividends from a mutual fund or other regulated investment company. Do not report interest earned on your IRA here. 9. Dividend Income. (if over $400, press F2 and complete Sch B) Distributions of money, stock, or other property paid to you by a corportion, reported on 1099-DIV. TAX-C allows you to enter Sch B from this line also. 10. Taxable Refunds of State & Local Income Taxes. If you receive a 1099-G, you may need to include in income the amount of the state or local refund. The amount you include here is the smaller of the amount you deducted on 1040, Sch A last year or the amount of the refund. If you did not itemize deductions last year, you do not include any of the refund in income. 11. Alimony Received. If you received alimony, it's taxable. Alimony does not include child support, noncash property settlements, payments that are your spouse's part of community income, use of property, or payments to keep up the payer's property. Alimony also does not include payments not required by divorce or separation instrument. In other words, if you receive alimony that your spouse is allowed to deduct as alimony paid on his/her tax return, it is taxable to you as alimony received. 12. Business Income (or Loss). Enter your net income or loss from Sch C here. Enter losses as a negative number (-1000). If you enter income here (any positive amount), TAX-C will prompt you with a worksheet concerning self- employed health insurance. If you were self-employed, you can deduct up to 25% of the medical insurance premiums you paid on form 1040. Any remaining premium is allowed as a medical expense on Sch A. TAX-C will make these calculations for you. If you enter a loss here, no worksheet will appear, as the 25% deduction cannot exceed the net earnings from the business in which the insurance plan is established. If you have a business loss, enter your health insurance premiums on Sch A at medical expenses. NOTE: Possible changes to this deduction pending at date of this release. page 16 13. Capital Gain (or Loss). Enter your capital gain or loss from Sch D here. The most common example of capital gain distributions to report on Sch D are distributions or dividends paid to you by regulated investment companies, mutual funds, and real estate investment trusts. A form 1099-DIV or the mutual fund statement will tell you the amount you are to report as a capital gain distribution. Report capital gain distributions as long-term capital gains on your tax return regardless of how long you have owned the stock in the mutual fund.(See reference to long-term gains on line 15.) Those distributions that are not derived in the ordinary course of a trade or business are treated as portfolio income and are not considered as income from a passive activity. If you have a net gain and your taxable income places you in the 31% bracket, TAX-C will prompt you with a worksheet. You will be asked the amount of any of NET LONG TERM capital gain included in this total. (A long term gain occurs when you've sold assets that you've held over one year. Report all capital gain distributions from mutual funds, investment companies, & REIT's as long term.) If you enter an amount here, TAX-C will calculate the tax on the lesser of your net capital gains or your net long term capital gain at the maximum rate of 28% as allowed by current tax regulations. If you enter a loss here, TAX-C will check to see if this loss exceeds the maximum allowed as a deduction for your filing status. A window prompt will advise you if you enter a loss exceeding $3000 (1500 if married filing separately). Schedule D may be accessed from the DOS prompt by typing SCH-D. SCH-D.EXE includes Schedule D and D1. NOTE: Capital gains taxation is very much a political issue this year and new legislation could change these rules of taxation on long term capital gains. 14. Capital Gain Distribution Not Reported on Line 13. If you don't need Sch D to report your capital transactions, but you had one or more capital gain distributions (from 1099-DIV), you may enter the total amount of those distributions here. However, you won't get the benefit of the maximum rate of 28% on your gains for amounts entered here. 15. Other Gains (or Losses) (From Form 4797). Form 4797 is used to report gains and losses from sales and exchanges of assets used in a trade or business and involuntary conversions. Enter the amount calculated on form 4797 on this line. 16a. Total IRA distributions. If only part of your IRA distribution is taxable, enter the total amount on line 16a. 16b. Taxable Amount (IRA). Enter the amount of your IRA distribution that is taxable. IRS publication 590 contains the special rules for figuring the taxable and nontaxable parts of an IRA distribution and can be ordered from IRS. Look for a worksheet to calculate this for you in a future version of TAX-C. page 17 17a. Total Pensions and Annuities. Report the total amount received from pensions and annuities. 17b. Taxable Amount. Generally, if you did not pay any part of the cost of your employee pension or annuity, and your employer did not withhold part of the cost of the contract from your pay while you worked, the amounts you receive each year are fully taxable. If you pay part of the cost of your annuity, you are not taxed on the part of the annuity you receive that represents a return of your cost. The rest of the amount you receive is taxable. You use either the General Rule or the Simplified General Rule to figure the taxable and nontaxable parts of your pension or annuity. IRS publications 939 and 575 contain detailed information concerning these rules (free from IRS). Look for worksheets to calculate these methods in a future version of TAX-C. SCREEN 4: 18. Rents, royalties, partnerships, estates income. This is total income (or loss) from Sch E. Sch E will be included in a future version of TAX-C. 19. Farm income (or loss). This is total income (or loss) from Sch F. Sch F will be included in a future version of TAX-C. 20. Unemployment compensation. You must include in income all unemployment compensation you receive. 21a Social Security benefits. Add together the amounts from Box 5 of your forms SSA-1099 (if you received social security benefits), and forms RRB-1099 (if you received railroad retirement benefits). Enter the total here. TAX-C will use the information from your return to calculate the taxable portion of your benefits. If you enter an amount here, TAX-C will print the details of the calculation on the diagnostics report for you. 22. Other income. Type... Amount... Use line 22 to report any income you can't find a place for on your return or other schedules. List the type and amount of income. If necessary, show the required information on an attached statement. See IRS Pub 525 for more information. page 18 Examples of income to be reported on line 22: a. Prizes, awards, and gambling winnings. Proceeds from lotteries, raffles, etc., are gambling winnings. You must report the full amount of your winnings on this line. You cannot offset losses against winnings and report the difference. If you had any gambling losses, you may take them as an itemized deduction on Sch A. However, you cannot deduct more losses than the winnings you report. See also instructions for line 25, Sch A. b. Amounts you received for medical expenses or other items such as real estate taxes that you deducted in an earlier year if they reduced your tax. See IRS Pub 525 for more information. c. Amounts you recovered on bad debts that you deducted in an earlier year. d. Fees received for jury duty and precinct election board duty. You may be able to deduct part or all of your jury duty pay. If you report jury duty pay and were required to give your employer any part of that pay because your employer continued to pay your salary while you served on the jury, you would include the amount you gave your employer on IRS 1040 line 30, Total Adjustments and write "Jury pay" on the dotted line next to line 30. NOTE: If this situation applies to you, you will need to manually calculate your tax return. TAX-C does not offer you this option. e. Alaska Permanent Fund dividends. f. If you had a net operating loss in an earlier year to carry forward to 1991, enter it as a minus figure on line 22. Attach a statement showing how you figured the amount. NOTE: To this point, TAX-C screen numbers correspond to the 1991 IRS 1040 line numbers. From this point, references will be made to allow you to identify screen numbers with the appropriate IRS line number, which is how it will be printed. 23a. Your IRA deduction b. Spouse IRA deduction Press F2 to calculate your maximum IRA deductions. (IRS 1040 line 24a.,b.) See IRS instructions to see if you can take an IRA deduction. 24. Keogh plan and self-employed SEP deduction. (IRS 1040 line 27) If you are self-employed or a partner, deduct payments to your Keogh (HR10) plan or SEP on this line. Deduct payments for your employees on Sch C or F. 25. Penalty on early withdrawal of savings. (IRS 1040 line 28) The form 1099-INT or, if applicable, form 1099-OID given to you by your bank or savings and loan association will show the amount of any penalty you were charged because you withdrew funds from your time savings deposit before its maturity. Enter this amount here. page 19 26. Alimony paid. Recipient's SSN. (IRS 1040 line 29) You can deduct periodic payments of alimony or separate maintenance made under a written separation agreement or a decree for suppport. Do not deduct lump-sum cash or property settlements, voluntary payments not made under a court order or a written separation agreement, or amounts specified as child support. See IRS Pub 504 for more information. SCREEN 5: DEDUCTIONS. (Press F2 to calculate itemized deductions on Sch A). If you normally itemize deductions, or want to see if itemizing will benefit you, press F2 and enter the information requested for Sch A. TAX-C will automatically calculate your itemized deductions and use the larger of your itemized or standard deduction to calculate your return. Pressing F2 will take you to Sch A which consists of 3 screens: Screen A1: Medical and dental expenses. (IRS Sch A, line 1) Enter your total medical expenses here for you, your spouse, and your dependents. When leaving this field, TAX-C will pop up a window to inform you of the deductible amount of your medical expenses, using the AGI from your 1040 information. Medical and Dental Expenses Checklist You can include: * Prescription medicines and insulin * Medical services fees (from doctors, dentists, surgeons, specialists, and other medical practitioners) * Special items (artificial limbs, false teeth, eyeglasses, contact lenses, hearing aids, crutches, wheelchair, etc) * Hospital services fees (lab work, therapy, nursing services, surgery, etc) * Meals and lodging provided by a hospital during medical treatment * Psychiatric care at a specially equipped medical center (includes meals and lodging) * Treatment at a drug or alcohol center (includes meals and lodging provided by the center) * Special school or home for mentally or physically handicapped persons) * Birth control pills prescribed by your doctor * Legal abortion * Legal operation to prevent having children * Expenses of an organ donor * Oxygen equipment and oxygen * Cost and care of guide dogs or other animals aiding the blind, deaf, and disabled * Part of life-care fee paid to retirement home designated for medical care * Medical and hospital insurance premiums * Transportation for needed medical care * Capital expenses for equipment or improvements to your home needed for medical care * Cost of lead-based paint removal * Wages for nursing services * Social Security tax for worker providing medical care page 20 You CANNOT include: * Medicine you buy without a prescription * Toothpaste, toiletries, cosmetics, etc. * Illegal operation or treatment * Maternity clothes * Diaper service * Nursing care for a healthy baby * Medical insurance included in a car insurance policy covering all persons injured in or by your car * Life insurance or income protection policies, or policies providing payment for loss of life, limb, sight, etc. * Surgery for purely cosmetic reasons * Expenses for your general health(even if following your doctor's advice), such as - - Trip for general health improvement - Weight loss program - Program to stop smoking - Household help (even if you are physically unable to do housework) - Health club dues - Social activities, such as dancing or swimming lessons - Funeral, burial or cremation expenses For more information on medical expenses, see IRS Pub 502. State and local income taxes. (IRS Sch A, line 5) Include on this line state and local income taxes that were withheld from your salary and any estimated payments made in 1991, including payments for a prior year. Also include any part of a prior year refund of state or local income taxes that you chose to have credited to your 1991 estimated state or local income taxes. Real estate taxes. (IRS Sch A, line 6) Include here taxes that you paid on property you own that was not used for business. Pub 530 explains the deductions homeowners may take. Deductible real estate taxes are any state, local, or foreign taxes on real property levied for the general public welfare. They must be charged at the same rate against all property under the jurisdiction of the taxing authority. They generally do not include taxes charged for local benefits and improvements that increase the value of the property. If your mortgage payments include your real estate taxes, do not take a deduction for those taxes until the year the mortgage company actually pays them to the taxing authority. Other taxes (list). (IRS Sch A, line 7) Examples of taxes to list here: a. Personal property tax - must be based on value alone. For example, if part of the fee you paid for the registration of your car was based on the car's value and part was based on its weight, you may deduct only the part based on the car's value. b. Generation-skipping transfer tax on income distributions. c. Foreign income tax. page 21 DO NOT DEDUCT: a. Federal income and excise taxes. b. Social security and railroad retirement taxes. c. Customs duties. d. Federal estate and gift taxes. e. Certain state and local taxes, including: general sales tax, tax on gasoline, car inspection fees, assessments for improvements to your property, license fees. Screen A2: Mortgage interest (from 1098). Other deductible home mortgage interest. (IRS Sch A, lines 9a,9b) In most cases, you will be able to deduct all of your home mortgage interest. The following rules apply to any loans secured by your main home, including first and second mortgages, home equity loans, and refinanced mortgages. Whether your home mortgage interest is deductible depends on the date you took out the mortgage, the amount of the mortgage, and your use of its proceeds. If all of your mortgages fit into one or more categories a.,b., and c. below, you can deduct all of the interest on those mortgages. If one or more of your mortgages does not fit into any of the categories below, get IRS Pub 936 to figure the amount of interest you can deduct. a. Mortgages you took out on your main home on or before October 13, 1987. b. Mortgages you took out on your main home after October 13, 1987 TO BUY, BUILD, OR IMPROVE your home, but only if these mortgages plus any mortgages in a. above totaled $1,000,000 or less throughout 1991 ($500,000 if married filing separately). c. Mortgages you took out after October 13, 1987 on your main home, OTHER THAN to buy, build, or improve your home, but only if these mortgages totalled $100,000 or less throughout 1991 ($50,000 if married filing separately). For purposes of the deduction, a home may be a house, condominium, cooperative, mobile home, boat, or similar property. It must provide basic living accommodations, including sleeping space and toilet and cooking facilities. If you had a main home and a second home, the dollar limits explained in b. and c. above apply to the total mortgages on both homes. Deductible points. (IRS Sch A, line 10) Generally, points (including loan origination fees) charged only for the use of money are deductible OVER THE LIFE OF YOUR MORTGAGE. Points may be deducted IN THE YEAR PAID if the loan was used to buy or improve your main home, the loan was secured by that home, the points were paid with funds other than those obtained from the lender, it is customary to charge points in the area where the loan was made, and the points paid did not exceed the points usually charged in that area. For more details, get IRS Pub 545. page 22 Deductible investment interest (attach 4952 if required) (IRS Sch A, line 11) Investment interest is interest paid on money you borrowed that is allocable to property held for investment. It does not include any interest allocable to a passive activity. (A passive activity is one that involves the conduct of any trade or business in which the taxpayer does not materially participate). Complete and attach Form 4952 to figure your deduction. 4952 is not required if ALL the following apply: * Your only investment income was from interest or dividends. * You have no other deductible expenses connected with the production of the interest or dividends. * Your investment interest expense is not more than your investment income. * You have no carryovers of investment interest expense from 1990, and * You have no passive activity losses. For more details, get IRS Pub 550. Contributions by cash or check. (IRS Sch A, line 13) You may deduct contributions or gifts you gave that are religious, charitable, educational, scientific, or literary in purpose. You may also deduct what you gave to organizations that work to prevent cruelty to children or animals. Any organization can tell you if it is a qualified organization. A quick check of kinds of deductions you may or may not deduct: You May Deduct Contributions of Money or Property to: * Churches, Salvation Army, Red Cross, CARE, Goodwill Industries, United Way, Boy Scouts, Girl Scouts, Boys and Girls Clubs of America, etc. * Veterans groups * Nonprofit schools and hospitals * Federal, state, and local governments, if the gifts are solely for public purposes * Civil defense organizations * Public parks and recreation facilities You May NOT Deduct as Contributions: * Dues, fees, or bills paid to country clubs, fraternity orders, or similar groups * Cost of raffle, bingo, or lottery tickets * Tuition * Value of your time or services * Value of blood given to a blood bank * Donations to homeowners associations * Gifts to: Individuals, Foreign organizations, Groups run for personal profit, Groups whose purpose is to lobby for changes in the laws, Civic leagues, Social and sports clubs, Labor unions and chambers of commerce. * Political contributions If you contribute to a charitable organization and also receive a benefit from it, you may deduct only the amount that is more than the value of the benefit you receive. Your deduction for charitable contributions is generally limited to 50% of your AGI, but in some cases 20% and 30% limits may apply. Get IRS Pub 526 if this limit may apply to your situation. page 23 Other than cash/check (8283 if $500 +) (IRS Sch A, line 14) If you contribute property other than cash, you should keep a receipt or written statement from the organization that shows the organization's name and address, the date and location of the gift, and a description of the property. Other records to keep should reflect how you figured the property's value, cost or basis of the property, any conditions attached to the gift. If your total deduction for gifts of property is over $500, get IRS Pub 526. Carryover from prior year (IRS Sch A, line 15) Contributions disallowed in prior years due to the 20%, 30%, or 50% of AGI limitations may be carried forward and deducted this year. See IRS Pub 526 for details. Screen A3: Casualty or theft losses (attach 4684) (IRS Sch A, line 17) Use this line to report casualty or theft losses of property that is not trade or business, income-producing, or rental or royalty property. Complete and attach form 4684 to figure your loss. You may deduct nonbusiness casualty or theft losses only to the extent that - a. the amount of EACH separate casualty or theft loss is more than $100, and b. the total amount of ALL losses during the year is more than 10% of your AGI. Get IRS form 4684 and Pub 547 for more details. Moving expenses (attach 3903 or 3903F) (IRS Sch A, line 18) Employees and self-employed persons (including partners) can deduct certain moving expenses. You can take this deduction if you moved in connection with your job or business and your new workplace is at least 35 miles farther from your old home than your old home was from your workplace. Complete and attach form 3903 to figure the amount of moving expenses to enter here. If you began work at a new workplace outside the U.S. or its possessions, get form 3903F. Get IRS Pub 521 for more information. Unreimbursed employee exp from 2106. (IRS Sch A, line 19) Use this line to report job expenses you paid for which you were not reimbursed. Fill out form 2106 if: * You claim any travel, transportation, meal, or entertainment expenses for your job, OR * Your employer paid you for any of your job expenses reportable here. If you don't have to fill out form 2106, you may list the amount of your expenses here, and attach a statement showing the type and amount of each expense. page 24 Other misc expenses subject to 2% AGI limit List type and amount: (IRS Sch A, line 20) Use this line for amounts you paid to produce or collect taxable income, manage or protect property held for earning income, and for tax preparation fees. (NOTE: list the price you paid for TAX-C here.) If you need more space to list the type and amount of each expense, attach a statement showing this list. Enter one total in the amount space for this line. Examples of these expenses are: * Tax return preparation fees * Safe deposit box rental * Certain legal and accounting fees * Clerical help and office rent * Custodial (e.g., trust account) fees * Your share of the investment expenses of a regulated investment company * Certain losses on nonfederally insured deposit in an insolvent or bankrupt financial institution. For more information, get IRS Pub 529. On leaving this field, TAX-C will pop up a window showing the deductible amount of your job and other expenses after applying the 2% AGI limit. OTHER MISC DEDUCTIONS Gambling losses Other. List type & amount. (IRS Sch A, line 25) Normally combined in "other misc deductions, expenses not subject to the 2% AGI limit", gambling losses are separated due to special TAX-C calculations which use the amount for gambling loss. Enter any gambling losses you have separately, as indicated. Only the expenses listed below are allowed to be deducted in the "other misc deduction" category: * Gambling losses to the extent of gambling winnings * Federal estate tax on income in respect of a decedent * Amortizable bond premium on bonds acquired before Oct 23, 1986 * Deduction for repayment of amounts under a claim of right if more than $3000 (See IRS Pub 525) * Unrecovered investment in a pension * Impairment-related work expenses of a disabled person If more space is required to separately list your misc deductions, attach a statement to your return listing type and amount of each item. Press ESC to return to the 1040 at any point from Sch A. Amounts are auto- matically calculated and compared to your standard deduction and the larger amount used in the tax calculations. page 25 BACK TO THE 1040: SCREEN 5: (continued) 27. Check if: You are 65+ > You are blind > Spouse is 65+ > Spouse is blind > (IRS 1040, line 33a) Put an x for each condition that applies to you and/or your spouse. TAX-C will add the additional amounts as allowed to your standard deduction according to the number of items you x here. b. If someone can claim you as a dependent, check here.. (IRS 1040, line 33b) If you check this box, TAX-C will check to see if you've claimed an exemption for yourself. If so, it will prompt you to the fact that you are not allowed to claim an exemption for yourself if someone else can claim you. TAX-C will also prompt you for additional information to calculate the standard deduction for a dependent. c. If married filing separately, and spouse itemizes, or you are a dual status alien, check here.. (IRS 1040, line 33c) Check this box if your spouse itemizes deductions on a separate return or if you are a dual-status alien. If you were a dual-status alien and you file a joint return with your spouse who was a U.S. citizen or resident at the end of 1991 and you and your spouse agree to be taxed on your combined worldwide income, do not check the box. If you check this box, you cannot take the standard deduction and TAX-C will take this into account. If you must check this box, itemize ANY deductions you're allowed on Sch A. OTHER TAXES 28. Self-employment tax (IRS 1040, line 47) If you had self-employment income in 1991, you may have to pay self- employment tax. See Sch SE and its instructions, and enter the amount from Sch SE here. Look for Sch SE in a future version of TAX-C. 29. Alternative minimum tax from form 6251. (IRS 1040, line 48) The tax law gives special treatment to some kinds of income and allows special deductions and credits for some kinds of expenses. If you benefit from these provisions you may have to pay at least a minimum amount of tax through the alternative minimum tax. This tax is figured on form 6251 and entered on this line. page 26 You need to fill out form 6251 if the following items apply and the total as indicated is more than: 40,000 if married filing jointly or qualifying widow(er) 30,000 if single or head of household 20,000 if married filing separately Total these items if applicable: 1. AGI + 2. accelerated depreciation + 3. amortization of certified pollution-control facilities + 4. income from the exercise of incentive stock options figured under IRC section 83 in excess of the amount actually reported on your return + 5. tax-exempt interest from private activity bonds (including exempt- interest dividends from a regulated investment company to the extent derived from private activity bonds) + 6. intangible drilling costs + 7. depletion + 8. circulation and research and experimental expenditures + 9. mining exploration and development costs + 10 tax shelter farm losses + 11 passive activity losses + 12 income income from long-term contracts figured under the percentage - of - completion method in excess of the amount actually reported on your return + 13 installment sales of certain property. NOTE: A child under age 14 may owe the AMT if the total of the child's AGI plus the above items is more than the sum of $1,000 plus the child's earned income. 30a Recapture tax from form 4255 (Recapture investment credit) (IRS 1040, line 49a) You may owe the tax computed on form 4255 if you disposed of investment credit property or changed its use before the end of its useful life or recovery period. See form 4255 for details. b Recapture tax from form 8611 (IRS 1040, line 49b) If you disposed of property (or there was a reduction in the qualified basis of the property) on which you took the low-income housing credit, you may owe the tax computed on form 8611. See form 8611 for more information. c Recapture tax from form 8828 (IRS 1040, line 49c) If you sold your home in 1991 and it was financed in whole or in part with the proceeds of a tax-exempt qualified mortgage bond, you may owe the tax computed on form 8828. See form 8828 for details. page 27 31. SS tax on tip income not reported to employer (form 4137) (IRS 1040, line 50) If you received tips of $20 or more in any month and you did not report the full amount to your employer, or your W-2 form(s) shows allocated tips that you must report in income, you must pay the social security or railroad retirement tax on the unreported tips. To figure the amount of social security tax, complete form 4137. See form 4137 for details. To determine the amount of railroad retirement tax, contact your nearest Railroad Retirement Board office. 32. Tax on IRA or qualified retirement plan (from form 5329) (IRS 1040, line 51) You may owe this tax if any of the following applies: 1. You received any early distributions from a qualified pension plan (such as your IRA), qualified annuity plan, or tax-sheltered annuity plan. 2. You received any excess distributions from a plan mentioned in 1. above. 3. You made excess contributions to your IRA. 4. You had excess accumulations in a qualified pension plan (including an IRA). 5. You received any amount under a modified endowment contract entered into after June 20, 1988. If any of the above applies, get form 5329 and its instructions to see if you owe this tax. 33. Advance earned income credit payments, from W-2. (IRS 1040, line 52) Enter the total amount of advance earned income credit payments you received. These payments should be shown in Box 8 of your form(s) W-2. SCREEN 6: ADDITIONAL TAXES 34. Amount of tax from form 4970 (Trust accumulations) (IRS 1040, line 39a) You must complete form 4970 if you received a distribution from a trust of income that the trust earned in a prior year. 35. Amount of tax from form 4972 (Lump sum distributions) (IRS 1040, line 39b) If you received a lump-sum distribution from a qualified retirement plan, see instructions for form 4972. page 28 CREDITS 36. Child and dependent care credit (IRS 1040, line 41) You may be able to take a credit for payments you made for child and disabled dependent care expenses while you (and your spouse if you were married) worked or looked for work. But you must have had income from a job or through self-employment to do so. The credit is allowed if you kept up a home that included a child under age 13 or your dependent or spouse who could not care for himself or herself. See IRS Pub 503 for more information concerning this credit. Use form 2441 to figure the credit. NOTE: If someone cared for your child or disabled dependent in your home, both you and the employee may have to pay a share of the social security tax on the employee's wages. You may also have to pay Federal unemployment tax, which is for your employee's unemployment insurance. For more details, get IRS Pub 926. Look for form 2441 in a future version of TAX-C. 37. Credit for elderly or disabled. (IRS 1040, line 42) You may be able to take this credit if you were 65 or older or retired due to permanent and total disability. But you cannot claim the credit if you are: * single, and your AGI is $17,500 or more or you received $5,000 or more of nontaxable social security or other nontaxable pensions; * married filing a joint return, only one spouse is eligible for the credit, and your AGI is $20,000 or more or you received $5,000 or more of nontaxable social security or other nontaxable pensions; * married filing a joint return, both spouses are eligible for the credit, and you AGI is $25,000 or more or you received $7,500 or more of nontaxable social security or other nontaxable pensions; * married filing a separate return, you did not live with your spouse all year, and your AGI is $12,500 or more or you received $3,750 or more of nontaxable social security or other nontaxable pensions; You figure the credit on Sch R. See Sch R and its instructions for more information. Look for Sch R in a future version of TAX-C. 38. Foreign tax credit (IRS 1040, line 43) If you paid income taxes to a foreign country or to a U.S. possession, you may be entitled to the foreign credit. Foreign tax payments may be taken as an itemized deduction rather than a credit against the tax, but it is USUALLY TO YOUR ADVANTAGE TO TAKE THE CREDIT. The foreign tax credit is figured on form 1116. See form 1116 for more information. Look for form 1116 in a future version of TAX-C. 39. Form 3800 credit (General business credit) (IRS 1040, line 44a) The general business credit consists of the: a. Investment credit (form 3468) b. Jobs credit (form 5884) c. Alcohol fuel credit (form 6478) d. Credit for increasing research activities (form 6765) e. Low-income housing credit (form 8586) f. Disabled access credit (form 8826) g. Enhanced oil recovery credit (form 8830) page 29 If you have two or more of these credits, a general business credit carryforward, or a general business credit from a passive activity, you must complete Form 3800 to figure the total general business credit. Enter that total on this line. If you only have one credit, complete the form as indicated above, and enter your credit below on line 42 (other credit) and indicate the form number you used to calculate the credit. 40. Form 8396 credit (Mortgage interest credit) (IRS 1040, line 44b) You may be able to take a credit for part of the interest you paid on your home mortgage if you were issued a mortgage credit certificate by a state or local government under a qualified mortgage credit certificate program to buy, rehabilitate, or make improvements to your main home. You must complete form 8396, Mortgage Interest Credit. Enter the amount of the credit from form 8396 here. 41. Form 8801 credit (Prior year minimum tax credit) (IRS 1040, line 44c) You may be able to take this credit if you paid alternative minimum tax in 1988, 1989, or 1990. Get form 8801, Credit for Prior Year Minimum Tax to see if you qualify for the credit. For more information, order IRS Pub 909. 42. Other credit (from form ) (IRS 1040, line 44d) See instructions for line 39 above for any amount to enter here. SCREEN 7: PAYMENTS 43. Federal income tax withheld (If any is from form 1099, check here) (IRS 1040, line 54) Add the amounts shown as Federal income tax withheld on your Forms W-2, W-2G, W-2P, and 1099-R. Enter the total here. The amount of Federal income tax withheld should be shown in Box 9 of W-2G, box 11 of form W-2P, and box 4 of form 1099-R. If this total includes amounts withheld as shown on form 1099-R, put an x in the box as indicated. 44. 1991 estimated tax payments + amount from 1990 return (IRS 1040, line 55) Enter here any payments you made on your estimated Federal income tax (form 1040-ES) for 1991. Include any overpayment from your 1990 return that you applied to your 1991 estimated tax. Get IRS Pub 505 for more information concerning withholding and estimated tax. 45. Earned income credit NOTE: 1992 figures not yet available. Press F2 to calculate earned income credit on Schedule EIC (IRS 1040, line 56) Beginning in 1991, the earned income credit consists of three parts: * the basic credit of up to $1192 ($1235 for two or more qualifying children; * the health insurance credit of up to $428, for people who paid for health insurance that covered a qualifying child; * the credit for child born in 1991 of up to $357. page 30 To qualify for the credit(for 1991 - 1992 figures will change): 1. Your AGI must be less than $21,250; 2. Your taxable and nontaxable earned income is at least $1 and less than $21,250; 3. Your filing status is not married filing separate; 4. You have a qualifying child; 5. You do not file form 2555, Foreign Earned Income; 6. You are not the qualifying child of another person. If you meet these conditions, use Sch EIC to figure the credit. Look for Sch EIC in a future version of TAX-C. 46. Amount paid with form 4868 (extension request) (IRS 1040, line 57) If you filed form 4868 to get an automatic extension of time to file form 1040, enter the amount you paid with that form. Also include any amounts paid with form 2688 or form 2350. 47. Excess SS tax and RRTA tax withheld. (IRS 1040, line 58) Enter here the amount of any excess social security, Medicare, or railroad retirement taxes withheld. You can claim this credit only if the excess arose because you worked for more than one employer during the year. If you received total wages over $53,400 from more than one employer in 1991, you are entitled to claim the excess of social security tax withheld over $3,310.80 as a credit against your income tax. If the total wages are over $125,000, you can also claim a credit for the excess of Medicare tax withheld over $1,812.50. There is a worksheet on page 27 of the form 1040 instructions to help you calculate these amounts. If you worked for more than one railroad employer, you may have paid too much tier 1 tax if your total wages are over $53,400. If the total is over $39,600 you may have paid too much tier 2 tax. Get IRS Pub 505 to calculate the amount. 48. Other payments From form (2439,4136) (IRS 1040, lines 59a, 59b) Use this line to enter the regulated investment company credit and the credit for federal tax on fuels. The regulated investment company should have sent you form 2439, "Notice to Shareholder of Undistributed Long-Term Capital Gains" if you qualify for this. Form 4136 is used to calculate credits for: 1. Certain fuel uses by farmers, commercial fishermen, or a nonhighway user of gasoline; 2. Buying a diesel powered highway vehicle in 1991 may qualify you to claim $102 for an auto, $198 for a light duty truck or van, calculated on form 4136. page 31 COPYRIGHT NOTICE TAXC-EST is not a public domain program. It is Copyright, 1991, by Gary L. Bockmon. You are granted the right to copy and distribute this shareware version of TAXC-EST, but users are expected to register their copy if they use the software. WARRANTY INFORMATION ================================================================================ DISCLAIMER ================================================================================ This application is designed to provide accurate and authoritative information with regard to the subject matter covered. It is sold with the understanding that the rendering of legal, accounting or other professional service is not the intent or purpose of this application. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. It is the user's responsibility to make an informed decision as to the applicability of this program to his purposes. No warranties are expressed or implied with this program. The author makes no representations or warranties with respect to the fitness of this program for any particular purpose and specifically disclaims any liability for financial or other losses suffered through the use of this program. The user assumes the responsibility of verifying the accuracy generated by this program. ================================================================================ REGISTERING To register your copy of TAXC-EST send $15 to: BOCKMON TAX & FINANCIAL 201 Water Street Pleasanton, Tx 78064 Or,use your text editor to load the file "register" and fill in the information requested for registering. You will be placed on our mailing list and receive notices of the most recent developments in TAX-C and other programs being developed by BOCKMON TAX & FINANCIAL as well as being eligible for annual discounts on the TAX-C program. page 32 Tax Fairness and Economic Growth Act of 1992 (HR 4287) The following provisions have not as yet been enacted into law and are not provided for in this version of TAXC-EST. However, some version of this bill will most likely be passed into law and may affect your situtation. New legislation being enacting in March of this year may affect your income tax liability for 1992. Many provisions of the bill, if enacted, will be retroactive to the beginning of 1992. Some of the tax changes that may affect you: * New 35% tax bracket for taxable incomes above: $ 85,000 if filing single $125,000 if filing as head of household $145,000 if married filing jointly $ 72,500 if married filing separately * A surtax for taxable incomes over $1,000,000 ($500,000 if married filing separately). * Increase in the alternative minimum tax rate. * Allowance for withdrawal from IRA account for medical and educational expenses and for first-time home buyers without having to pay the 10% penalty. * A $200 or $400 credit for part of social security tax for employees and self-employed individuals. * Changes in the estimated tax requirements. * Changes in the rules for residence sales. * Moving expense deduction distance requirement is increased to 75 miles from 35 miles. * Provision for indexing the basis of certain assets to allow for inflation, effectively reducing taxable capital gains. * A 15% additional depreciation deduction for business equipment purchased in 1992. * Increase in the Code Sect 179 expense election to $25,000. * Passive loss rules modified for rental real estate. These are just mentions of some of the provisions contained in the bill that is currently being considered in the Senate. Latest word at the time of this writing is that the bill faces a presidential veto, and will probably not make it into law. However, it is likely that some form of legislation containing modified versions of these provisions will pass into law this year and may affect your financial decisions. Look for more information in the early-release version of TAX-C this fall. ABOUT THE AUTHOR Gary Bockmon has been registered with the United States Securities & Exchange Commission (SEC) as a Registered Investment Advisor since 1991. He provides objective financial & investment advice and assistance by offering services on a fee-only basis, and does not represent the interests of any extraneous firm. Gary is currently enrolled to practice before the IRS, and passed the NASD General Securities exam (Series 7) and the Texas State Life Insurance exam. What is an Enrolled Agent? (The following is from a brochure published by the National Association of Enrolled Agents, 6000 Executive Blvd, Suite 205, Rockville, MD 20852) Enrolled Agents are individuals who have demonstrated technical competence and professional ethics to the Treasury Department and have been granted enrollment to practice before the Internal Revenue Service. An Enrolled Agent is an individual who has been granted enrollment by the Treasury Department to represent all classes of taxpayers in any matters connected with presentations to the Internal Revenue Service relating to the client's rights, privileges and liabilities under laws and regulations coming under the jurisdiction of the Internal Revenue Service............ An Enrolled Agent may represent any taxpayer at any administrative level of IRS, regardless of who prepared the return(s) in question, and at any IRS office without regard to the state of residency of the taxpayer. Enrolled Agents are recognized as tax professionals with technical competency in federal and state tax matters. The Department of the Treasury and Internal Revenue Service recognize only three categories of tax practitioners who may represent all taxpayers through all of the levels, including District Director and Appeals levels. In addition to Enrolled Agents, whose authority is derived from Federal sources, state licensed certified public accountants and attorneys are recognized.