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Chapter 31. How to Figure Your Tax



In 1992, there are three tax rates (15%, 28%, and 31%). The 31% rate applies
to any taxable income you have over the following amount shown for your
filing status.

       Married filing jointly                           $86,500

       Qualifying widow(er)                             $86,500

       Head of household                                $74,150

       Single                                           $51,900

       Married filing separately                        $43,250

Maximum tax rate on capital gains. The new 31% tax rate for individuals does
not apply to net capital gains. The maximum income tax rate on net capital
gain income remains at 28%. Net capital gain is the excess of net long-term
capital gain for the year over the net short-term capital loss for the year.

Limit on exemption amount. If your adjusted gross income is more than a
specified amount based on your filing status, the amount of your deduction
for exemptions is reduced. These amounts are explained later in this chapter
under Exemptions.

Introduction

This chapter discusses the steps you need to take to figure your tax on:

∙  Form 1040EZ,

∙  Form 1040A, and

∙  Form 1040.

Also, the chapter will help you to determine if you should use the standard
deduction or itemize your deductions. In addition, it covers a portion of the
alternative minimum tax.

The IRS will figure your tax for you if certain requirements are met. These
requirements are discussed at the end of this chapter.

Form 1040EZ

If you file Form 1040EZ, you must figure your adjusted gross income and
taxable income before you can find your tax.

Adjusted gross income (line 3, Form 1040EZ). This is the total of your wages,
salaries, tips, taxable scholarships or fellowship grants, and taxable
interest income.

Taxable income (line 5, Form 1040EZ). Your taxable income is your adjusted
gross income (line 3), minus your standard deduction and the deduction for
your personal exemption (line 4). The amount of these deductions depends on
whether you can be claimed as a dependent on someone else's return, such as
your parents. The rules for determining whether you are a dependent are in
Chapter 3.

If you are not a dependent, the total of your standard deduction and your
personal exemption is $5,900. Check the No box and enter this amount on
line 4.

If you can be claimed as a dependent by another taxpayer, check the Yes box
on line 4 and complete the worksheet on the back of Form 1040EZ. Enter the
result from line E of the worksheet on line 4. You are not allowed a personal
exemption.

Tax withheld. After you have figured your taxable income, enter the total of
your federal income tax withheld on line 6. This amount is shown in Box 9 of
your Form(s) W─2. Form(s) W─2 must be attached to the return.

Also include on line 6 any excess social security or railroad retirement tax
withheld. You can use the worksheet in the instructions for Form 1040EZ to
figure your excess social security taxes. Show this amount to the left of
line 6 and write "Excess SST." See Chapter 36 for a discussion of excess
withholding.

Tax. To find your tax, use the Tax Table at the back of this publication or
in the instructions for Form 1040EZ. Find the income line that includes your
taxable income shown on line 5 of your Form 1040EZ. Next, find the column
heading for single (if using Publication 17) and read down the column. The
amount shown where the income line and filing status column (single) meet
is your tax. Enter it on line 7.

Refund or amount you owe. If line 6 is larger than line 7, subtract line 7
from line 6 and enter the result on line 8. This is the amount of your refund.
For information on refunds, see Refunds in Chapter 1.

If line 7 is larger than line 6, subtract line 6 from line 7 and enter the
result on line 9. This is the amount you owe. For information on how to pay,
see Amount You Owe in Chapter 1.

Form 1040A

If you file Form 1040A, you must find your adjusted gross income and your
taxable income before you can figure your tax.

Adjusted gross income (line 16, Form 1040A). This is your total income (line
14) minus your IRA deduction, and your spouse's IRA deduction if you file a
joint return. You can figure your IRA deduction by completing the worksheet
in the instructions for Form 1040A. Also see Chapter 18.

Taxable income (line 22). This is your adjusted gross income (line 16) minus
your standard deduction (line 19) and the deduction for your exemptions (line
21).

Standard deduction. Your standard deduction is based on your filing status,
whether you are 65 or older or blind, and whether you can be claimed as a
dependent on another person's return. For information, see Standard Deduction,
later, and Chapter 20.

Exemptions. To figure the deduction for your exemptions, multiply $2,300 by
the number of exemptions claimed on line 6e. If you can be claimed as a
dependent on someone else's return, check the box on line 18b and do not
claim an exemption for yourself on line 6a.

Tax, credits, and payments. Next, you must figure your tax. Subtract from your
tax any credits or payments to determine whether you owe additional tax or are
due a refund.

Note. If this is the return of a child under age 14 on January 1, 1993, with
more than $1,200 of investment income, you cannot use the Tax Table. Instead,
you must check the box marked "Form 8615" on line 23. Use Form 8615, Tax for
Children Under Age 14 Who Have Investment Income of More Than $1,200, to
compute your tax. This computation is explained in Chapter 32.

Tax. To find your tax, use the Tax Table at the back of this publication or in
the instructions for Form 1040A. In the Tax Table, find the income line that
includes your taxable income shown on line 22. Next, find the column heading
that describes your filing status and read down the column. The amount shown
where the income line and filing status column meet is your tax. Enter it on
line 23 and check the box marked "Tax Table."

Credits. There are three credits that can be claimed on Form 1040A. Credits,
unlike deductions, are subtracted after you find your tax from the tax table
and, therefore, reduce your tax dollar for dollar. These credits are:

1)  Credit for child and dependent care expenses,

2)  Credit for the elderly or the disabled, and

3)  Earned income credit.

The earned income credit is explained later under Payments.

If you claim the credit for child and dependent care expenses, you must
complete all applicable parts of Schedule 2 (Form 1040A) and attach it to your
return. For information on the credit for child and dependent care expenses,
see Chapter 33.

If you claim the credit for the elderly or the disabled, you must complete
Schedule 3 (Form 1040A) and attach it to your return. For information on
credit for the elderly or the disabled, see Chapter 34. Add lines 24a and 24b
and enter the result on line 24c. Subtract your total credits (line 24c) from
your tax (line 23) and enter the result on line 25.

If you received advance earned income credit payments, the amount will be
shown on your Form(s) W─2, Box 8. Enter the amount of these payments on line
26. For more information, see Advance Earned Income Credit Payments in Chapter
35.

Payments. The next step is to figure your total payments. On line 28a, enter
the total Federal income tax withheld from your pay. This amount is shown in
Box 9 of your Form(s) W─2. If you have more than one employer, carefully add
the amounts from these boxes and enter the total on line 28a.

If you received a Form 1099 showing income tax withheld on dividends,
interest, IRA distributions, or pensions, check the box on line 28a and
include the amount withheld in the total on line 28a. It is important to
check all of your Form 1099 statements to see whether any income tax was
withheld. A table showing the proper boxes that record withholding is
included later under Payments under Form 1040.

On line 28b, enter your 1992 estimated tax payments and any overpayment
applied from your 1991 Federal income tax return.

On line 28c, enter your earned income credit. You may be able to take this
credit if you earned less than $22,370 and a child who meets certain age and
other requirements lived with you. Figure the amount of your earned income
credit by completing Schedule EIC. For information on the earned income
credit, see Chapter 35.

On line 28d, include any excess social security or railroad retirement tax
withheld. Write "Excess SST" and the amount in the space to the left of line
28d. See Chapter 36 for a discussion on this.

Add the amounts on lines 28a, 28b, and 28c and enter this total on line 28d.
This sum is your total payments.

Refund or Amount You Owe

After you have your total tax (line 27) and your total payments (line 28d),
you can determine if you are due a tax refund or if you owe additional tax.

Refund

If line 28d is more than line 27, subtract line 27 from line 28d and enter the
result on line 29. This is the amount of your refund. For information on
refunds, see Refunds in Chapter 1.

If you want the entire amount on line 29 refunded, enter that amount on line
30. Enter on line 30 the exact amount you want refunded. However, if you want
all or part of your refund applied to your 1993 estimated tax, you must enter
the appropriate amount on line 31. The amount on line 31 will be credited to
your 1993 estimated taxes unless you request us to apply it to your spouse's
account. This request should include your spouse's social security number. The
amount on line 31 generally cannot be refunded to you until you file a tax
return for 1993.

Amount You Owe

If line 27 is more than line 28d, subtract line 28d from line 27 and enter the
result on line 32. This is the amount you owe. For information on how to pay,
see Amount You Owe in Chapter 1.

Form 1040

If you file Form 1040, you must compute your adjusted gross income and taxable
income before you can figure your tax.

Adjusted Gross Income

Adjusted gross income (line 31, Form 1040) is your total income (line 23)
minus any adjustments for the following:

1)  IRA deduction for you (line 24a), and for your spouse (line 24b). See
    Chapter 18.

2)  Deduction for one-half of your self-employment tax (line 25). See
    Publication 533, Self-Employment Tax.

3)  Self-employed health insurance deduction (line 26). See Chapter 22.

4)  Keogh retirement plan and self-employed SEP deduction (line 27). See
    Publication 560, Retirement Plans for the Self-Employed.

5)  Penalty on early withdrawal of savings (line 28). See Chapter 8.

6)  Alimony paid. You must show the recipient's social security number in the
    space provided on line 29. See Chapter 19.

7)  Other adjustments. Write in the following adjustments in the space to the
    left of line 30 and include them in the total on line 30.

    a)   Certain expenses of qualified performing artists. See Chapter 30.

    b)   Jury duty pay given to your employer. See Chapter 13.

    c)   Amortization of the costs of forestation or reforestation if you do
         not have to file Schedule C or Schedule F. See Publication 535,
         Business Expenses.

    d)   Certain required repayments of supplemental unemployment benefits.
         See Chapter 6.

Taxable Income

There are two ways to figure the amount of your taxable income (line 37, Form
1040). You can itemize your deductions on Schedule A (Form 1040) or take the
standard deduction.

Itemizing Your Deductions

You generally can choose to either itemize your deductions (such as medical
expenses, taxes, mortgage interest, and casualty losses) on Schedule A
(Form 1040) or take a standard deduction, whichever is greater.

You may benefit from itemizing your deductions on Schedule A if you:

1)  Do not qualify for the standard deduction, or the amount you can claim
    is limited,

2)  Had large uninsured medical and dental expenses during the year,

3)  Paid interest and taxes on your home,

4)  Had large unreimbursed employee business expenses or other miscellaneous
    deductions,

5)  Had large casualty or theft losses not covered by insurance,

6)  Had large unreimbursed moving expenses,

7)  Made large contributions to qualified charities, or

8)  Have total itemized deductions that are more than the highest standard
    deduction amount to which you otherwise are entitled.

Some taxpayers itemize deductions because they do not qualify for the standard
deduction or the amount they qualify for is limited (see Chapter 20).

If you decide to itemize your deductions, complete and attach Schedule A to
your return. Enter the amount from line 26 of Schedule A on line 34 of Form
1040.

If you and your spouse file separate returns, you can use the method that
gives you the lowest total tax, even though one of you may pay more than
the other. You both must use the same method of claiming deductions. If one
itemizes deductions, the other should itemize also since he or she will not
qualify for the standard deduction.

Changing your mind. If you do not itemize your deductions and later find
you should have itemized - or if you itemize and later find you should not
have - you may change your return by filing Form 1040X, Amended U.S. Individual
Income Tax Return.

If you are married and filed separate returns, you may change methods of
taking deductions only if you and your spouse make the same changes. Both
of you must consent in writing to the assessment for any additional tax
either one may owe as a result of the change.

If you itemize your deductions, your taxable income (line 37) is your adjusted
gross income (line 32) minus your itemized deductions (line 34) and your
exemptions (line 36).

Standard Deduction

The standard deduction reduces the amount of your income that is taxed and
thus reduces the amount of tax you will pay. The standard deduction is based
on your filing status and whether you are 65 or older or blind.

65 or older or blind. If you are 65 or older or blind in 1992, you are
entitled to a higher standard deduction than taxpayers under 65 and not blind.
For information on who qualifies for the higher standard deduction for age
and blindness, see Chapter 20. The standard deduction amounts are given in
the standard deduction charts and worksheet in Chapter 20.

Special rules. Your standard deduction is zero if:

1)  Your spouse itemizes deductions on a separate return,

2)  You are a dual-status or nonresident alien, or

3)  You have a short tax year.

If you can be claimed as a dependent on another person's return, your standard
deduction may be limited. See Standard Deduction for Dependents in Chapter
20.

Amount of the standard deduction. If you decide to take the standard
deduction, show the amount on line 34 of Form 1040.

The amount of the standard deduction for most people is shown on Form 1040
to the left of line 34. Others must use the standard deduction charts and
worksheet in Chapter 20 or in the Form 1040 instructions to find their
standard deduction.

If you take the standard deduction, your taxable income (line 37) is your
adjusted gross income (line 32) minus your standard deduction (line 34) and
your exemptions (line 36).

Exemptions

Whether you itemize your deductions or use the standard deduction, you can
generally deduct $2,300 for each exemption you can claim. However, if your
adjusted gross income (AGI) is more than the dollar amount for your filing
status as shown in the following table, the amount of your deduction is less.


     Filing Status                                  AGI more than:

     Single ........................................   $105,250
     Married filing jointly ........................    157,900
     Married filing separately .....................     78,950
     Head of household .............................    131,550
     Qualifying widow(er) ..........................    157,900

See Chapter 3 for an explanation of this reduction and a worksheet to figure
the amount of your deduction.

Tax, Credits, and Payments

After finding your taxable income, the next step is to figure your tax
liability. This tax amount is then reduced by any credits you may have.
Finally, you apply any payments or other credits against your liability
to determine whether you owe additional tax or are entitled to a refund.

Tax

Most people use the Tax Table to figure their tax. However, you must use the
Tax Rate Schedules to figure your tax if your taxable income is $100,000 or
more.

If you have a net capital gain, your tax may be less if you figure it on
Schedule D. Form 8615 may have to be used to figure the tax for a child
with more than $1,200 of investment income.

Tax Table. The Tax Table is shown in the back of this publication and in
the instructions for Form 1040.

To find your tax, read down the income column to the line that includes your
taxable income as shown on line 37. Then read across the line to the column
heading that describes your filing status. The amount shown where the income
line and filing status column meet is your tax. Enter it on line 38 and check
the box marked Tax Table.

Tax Rate Schedules. If your taxable income (line 37) is $100,000 or more, you
must figure your tax by using Tax Rate Schedules X, Y─1, Y─2, or Z unless you
can use Schedule D or are required to use Form 8615.

The Tax Rate Schedules are shown at the back of this publication and in the
Form 1040 instructions. Enter your tax on line 38, and check the box marked
Tax Rate Schedules.

Maximum tax rate on capital gains (Schedule D). In 1992, the highest tax
rate on taxable income is 31%. However, the highest tax rate on a net
capital gain is 28%. A net capital gain is the excess of your net long-term
capital gains over your net short-term capital losses. Therefore, the maximum
28% rate applies if you have a long-term capital gain shown on line 16,
Schedule D (Form 1040), and a net gain shown on line 17, Schedule D (Form
1040).

You should complete Part IV of Schedule D (Form 1040) to figure your tax only
if your taxable income (line 37, Form 1040) is more than the amount shown for
your filing status in the following table.

     Filing Status                                       Amount

     Married filing jointly ........................    $86,500
     Qualifying widow(er) ..........................     86,500
     Head of household .............................     74,150
     Single ........................................     51,900
     Married filing separately .....................     43,250

If you use Part IV of Schedule D, enter your tax from line 27, Schedule D, on
line 38, Form 1040, and check the box marked Schedule D.

Investment income of certain minor children (Form 8615). If a child under age
14 at the end of the year has more than $1,200 of interest, dividends, and
other investment income, part of that income may be taxed at the parent's
rate. The tax is figured using Form 8615, Tax for Children Under Age 14 Who
Have Investment Income of More Than $1,200.

Form 8615 should not be filed if neither parent is alive at the end of the
year or if a parent chooses to include the child's interest and dividend
income on his or her return. For more information, see Chapter 32.

Additional taxes. If you owe either of the taxes shown on line 39 (Form 1040),
attach Form 4970, Tax on Accumulation Distribution of Trusts, or Form 4972,
Tax on Lump-Sum Distributions. On line 39, check the box that applies to you
and enter the amount of additional taxes.

Credits

After you have figured your tax and entered the total of lines 38 and 39 on
line 40, figure your credits and enter them on lines 41 through 45. Enter the
total credits on line 45. Subtract line 45 from line 40. Enter the result on
line 46.

Credit for child and dependent care expenses. Enter on line 41 (Form 1040) the
amount of this credit, which you figure on Form 2441, Child and Dependent Care
Expenses. See Chapter 33 for information on this credit.

Credit for the elderly or the disabled. Enter on line 42 (Form 1040) the
amount of this credit, which you figure on Schedule R. See Chapter 34 for
more information.

Foreign tax credit. Enter on line 43 (Form 1040) the amount of foreign tax
credit, which you figure on Form 1116. Foreign tax credit is discussed in
Publication 514, Foreign Tax Credit for Individuals.

Other credits. Enter other credits on line 44 and check the appropriate box
to identify which form you are attaching.

General business credit. The general business credit is made up of 7 separate
business-related credits. If you have 2 or more of the separate credits, use
Form 3800, General Business Credit, and check Box a on line 44. If you have
only one of these credits, check Box d and enter the number of the appropriate
form. See Form 3800 for more information.

Mortgage interest credit. Use Form 8396, Mortgage Interest Credit, to figure
the amount of this credit and check Box b. See Mortgage interest credit under
Interest in Publication 530, Tax Information for Homeowners.

Credit for prior year minimum tax. Complete Form 8801, Credit For Prior Year
Minimum Tax - Individuals and Fiduciaries, if you paid alternative minimum tax
in 1991 on deferred preference items or have a carryforward of the minimum tax
credit. Attach this form to your tax return and check Box c on line 44. For
information on this credit, see Publication 909, Alternative Minimum Tax for
Individuals.

Credit for fuel from a nonconventional source. Include the credit in the
total for line 45. Write the amount and "FNS" on the dotted line next to
line 45. Also attach a separate schedule showing how you figured the credit.
See Internal Revenue Code section 29, for further information.

Total tax. Add lines 46 through 52. Put the total on line 53. Line 53 is your
total tax.

Other Taxes

If you owe any other taxes or if you received advance earned income payments,
complete any of lines 47 through 52 that apply to you and enter the total on
line 53.

Self-employment tax. If you (or your spouse if you file a joint return) have
net earnings of $400 or more from self-employment, complete Schedule SE (Form
1040) and show any tax you owe on line 47 (Form 1040). See Publication 533,
Self-Employment Tax, for more information.

Alternative minimum tax. Use Form 6251 to see if you owe any alternative
minimum tax. Enter the result on line 48 (Form 1040). This tax is discussed
later in this chapter and in Publication 909.

Recapture taxes. If you are required to recapture investment tax credit
on Form 4255, low-income housing credit on Form 8611, or Federal mortgage
subsidy on Form 8828, enter the amount on line 49 (Form 1040) and check the
appropriate box.

Social security and Medicare tax on tip income not reported to employer.
Attach Form 4137, Social Security and Medicare Tax on Unreported Tip Income,
and show on line 50 (Form 1040) the tax due on tip income you did not report
to your employer. See Chapter 7 for more information.

Tax on an IRA or other qualified retirement plan. You may owe additional taxes
on your IRA or other qualified retirement plan if you:

        Made excess contributions to your IRA,

        Received early distributions,

        Did not receive a minimum required distribution, or

        Received excess distributions.

You must complete Form 5329, Return for Additional Taxes Attributable to
Qualified Retirement Plans (Including IRAs), Annuities, and Modified Endowment
Contracts, and attach it to your return. Enter the tax on line 51 (Form 1040).
See Chapter 18 for more information.

Advance earned income credit. Include on line 52 any advance earned income
credit payments you received in 1992. Your W─2 form(s) will show these
payments in Box 8.

Section 72(m)(5) excess benefits. If you are or were a 5% owner of a business
and you received a distribution of excess benefits from a qualified pension or
annuity plan, you may have to pay a penalty tax of 10% of the excess benefits
distribution. Include the amount of the penalty in your total for line 53.
Also write the amount and "Section 72(m)(5)" on the dotted line next to line
53. See Publication 560, Retirement Plans for the Self-Employed, for more
information.

Uncollected employee social security and Medicare or RRTA tax on tips (or
group-term life insurance). If you did not have enough wages to cover the
social security tax and Medicare tax or railroad retirement (RRTA) tax due on
tips you reported to your employer (or on group-term life insurance), include
the amount in the total for line 53. The amount of tax due will be shown on
your Form W─2. Also write the amount and "Uncollected Tax" on the dotted
line next to line 53. See Chapter 7 for more information.

Golden parachute payments. If you received an excess parachute payment (EPP),
you must pay a tax equal to 20% of this excess payment. Include the amount
of this tax in your total for line 53. Also write the amount and "EPP" on the
dotted line next to line 53. See Form 1040 Instructions for Line 53 for more
information.

Payments

Once you have figured your total tax on line 53, figure your total payments.

On line 54, enter your federal income tax withheld. This includes amounts from
Forms W─2, W─2G, 1099─R, and any other Form 1099. It is important to check all
of your statements to see whether any tax was withheld and to carefully add
the amounts before making an entry on line 54. The following table shows the
proper boxes that record withholding.

       FORM NUMBER                                       LOCATION

        W-2 ........................................      Box 9
        W-2G .......................................      Box 2
        1099-B .....................................      Box 4
        1099-DIV ...................................      Box 2
        1099-G .....................................      Box 4
        1099-INT ...................................      Box 4
        1099-MISC ..................................      Box 4
        1099-OID ...................................      Box 4
        1099-PATR ..................................      Box 4
        1099-R .....................................      Box 4

If you made estimated tax payments for 1992, enter the total of these payments
on line 55. Also enter on line 55 any overpayment from your 1991 return that
you applied to your 1992 estimated tax.

Enter your earned income credit on line 56. You may be able to take this
credit if you earned less than $22,370 and a child who meets certain age and
other requirements lived with you. Figure the amount of your earned income
credit on Schedule EIC. The earned income credit is explained in Chapter 35.

If you paid any tax with Forms 4868, 2688, or 2350 (extensions of time to
file), enter this amount on line 57.

If you worked for more than one employer and had too much social security tax,
Medicare tax, or railroad retirement tax withheld, enter the excess amount on
line 58. This is explained in Chapter 36.

If you can take a credit for tax on gasoline, diesel fuel, and other fuels
used in your business, or for certain diesel-powered cars, vans, and light
trucks, attach Form 4136. Include the amount of the credit on line 59 and
check Box b.

If you can take a regulated investment company credit, attach Copy B of Form
2439, Notice to Shareholder of Undistributed Long-Term Capital Gains. Include
the amount of the credit on line 59 and check Box a.

Add lines 54 through 59 and enter this total on line 60. This sum is your
total payments.

Refund or Amount You Owe

After you have your total tax (line 53) and your total payments (line 60),
you must determine if you are due a tax refund or if you owe additional tax.

Refund

If the amount on line 60 is more than the amount on line 53, subtract line 53
from line 60 and enter the result on line 61. This is the amount of tax you
have overpaid. If you want the entire amount refunded to you, enter the amount
from line 61 on line 62. If you want all of your overpayment applied to your
1993 estimated tax, enter the amount on line 63. If you want part of your
overpayment applied to your 1993 estimated tax, you must complete both lines
62 and 63. For information on refunds, see Refunds in Chapter 1.

Amount You Owe

If the amount on line 53 is more than the amount on line 60, subtract line 60
from line 53 and enter the result on line 64. This is the amount you owe. For
information on how to pay, see Amount You Owe in Chapter 1.

Alternative Minimum Tax

The tax laws give special treatment to some kinds of income and allow special
deductions and credits for some kinds of expenses. Taxpayers who benefit from
these laws have to pay at least a minimum amount of tax through an additional
tax. This additional tax is called the alternative minimum tax (AMT).

You may have to pay the alternative minimum tax if your taxable income for
regular tax purposes, combined with any of the adjustments and preference
items that apply to you, is more than:

    $40,000 if your filing status is married filing a joint return (or a
    qualifying widow(er) with dependent child),

    $30,000 if your filing status is single or head of household, or

    $20,000 if your filing status is married filing a separate return.

    Adjustments to taxable income include:

∙   Addition of personal exemptions,

∙   Addition of the standard deduction (if claimed),

∙   Addition of itemized deductions claimed for state and local taxes,
    certain interest, most miscellaneous deductions, and part of medical
    expenses,

∙   Subtraction of any refund of state and local taxes included in gross
    income,

∙   Change in amount of depreciation claimed on certain property,

∙   Change in method of determining income from long-term contracts entered
    into on or after March 1, 1986,

∙   Change in method of determining income from certain installment sales,
    and

∙   Change in method of determining passive activity loss deduction.

    Tax preference items include:

∙   That part of any deduction for depletion that is more than the adjusted
    basis of the property,

∙   Part of any deduction for intangible drilling costs if the deduction
    (minus the amount that could have been deducted if the cost were
    amortized over 120 months) is more than 65% of the net income from
    oil, gas, and geothermal properties,

∙   Tax-exempt interest on certain private activity bonds,

∙   Unrealized appreciation on donations of certain long-term capital
    gain property donated after June 30, 1992, and

∙   Accelerated depreciation on certain property placed in service before
    1987.

For more information about the alternative minimum tax and how to figure it,
see Publication 909, Alternative Minimum Tax for Individuals, and Form 6251,
Alternative Minimum Tax - Individuals.

Tax Figured by IRS

The IRS will figure your tax on Form 1040EZ, Form 1040A, or Form 1040.

If the IRS figures your tax and you paid too much, you will receive a refund.
If you did not pay enough, you will receive a bill for the balance. You may
avoid interest or the penalty for late payment if you pay the bill within 30
days of the date of the bill or by the due date for your return, whichever is
later.

Note. If you did not pay enough tax, you may be charged a penalty for
underpayment of estimated tax. See Underpayment Penalty in Chapter 5.

Changing your mind. If you choose to have the IRS figure your tax, you may
later change your mind by filing an amended return.

Form 1040EZ

If you file Form 1040EZ by April 15, 1993, you may choose to have the IRS
figure your tax. Put your name and address label on your return. If you do
not have a label, print (do not type) your name, address, and social security
number in the spaces provided.

What to complete. Read lines 1 through 6 and fill in the lines that apply to
you. Sign and date your return. Attach Copy B or the first copy of your Form
W─2 to your return. Mail the return to the Internal Revenue Service Center
for the area where you live.

Form 1040A

If you file Form 1040A by April 15, 1993, you may choose to have the IRS
figure your tax. Place your name and address label on your return or, if you
do not have a label, fill in (print or type) your name, address, and social
security number. If you are married, give the social security numbers of both
spouses even if you file separately.

If you are required to use Form 8615, Tax for Children Under Age 14 Who Have
Investment Income of More Than $1,200, or if you want any of your refund
applied to your 1993 estimated tax, IRS cannot figure your tax for you.

What to complete. Read lines 1 through 22 and fill in the lines that apply
to you. If you file a joint return, use the space to the left of line 22 to
separately show your own and your spouse's taxable income.

Credit for child and dependent care expenses. If you can take this credit,
complete Schedule 2 and attach it to your return. You must show on Schedule
2 the name, address, and identifying number of the person or organization who
provided the care. Enter the amount of the credit on line 24a (Form 1040A).

Credit for the elderly or the disabled. If you can take this credit, attach
Schedule 3 to your return and write "CFE" in the space to the left of line 24b
(Form 1040A). Check the box on Schedule 3 for your filing status and age, and
fill in lines 11 and 13 of Part III if applicable. Also complete Part II if
applicable.

Advance earned income credit payment. If you received any advance earned
income credit payment during 1992, enter the amount on line 26. Your Form(s)
W─2 will show these payments in Box 8.

Payments. Place any income tax withheld that is shown in Box 9 of Form W─2,
or the appropriate box of Form 1099, on line 28a. Place any estimated tax
payments you made on line 28b.

Earned income credit. If you can take the earned income credit, as discussed
in Chapter 35, the IRS will figure the credit for you. Write "EIC" in the
space to the left of line 28c. Fill in Parts II and III of Schedule EIC and
attach it to your Form 1040A.

Form W─2. Attach Copy B or the first copy of your Form W─2 to your return.
Also attach any Form 1099─R you received that has withholding tax in Box 4.

Filing the return. Sign and date your return. Also fill in your occupation.
If you are filing a joint return, both you and your spouse must sign it. Show
both of your occupations on a joint return. Mail the return to the Internal
Revenue Service Center for the area where you live.

Form 1040

If you file Form 1040 by April 15, 1993, you may choose to have the IRS figure
your tax if you meet all of the conditions described below:

1)  All of your income for 1992 was from wages, salaries, tips, interest,
    dividends, taxable social security benefits, unemployment compensation,
    IRA distributions, pensions, or annuities,

2)  Your taxable income on line 37 is not more than $50,000,

3)  You do not itemize deductions,

4)  You do not file any of the following forms:

    a)   Schedule D, Capital Gains and Losses.

    b)   Form 2555, Foreign Earned Income.

    c)   Form 4137, Social Security and Medicare Tax on Unreported Tip
         Income.

    d)   Form 4970, Tax on Accumulation Distribution of Trusts.

    e)   Form 4972, Tax on Lump-Sum Distributions.

    f)   Form 6198, At-Risk Limitations.

    g)   Form 6251, Alternative Minimum Tax - individuals.

    h)   Form 8615, Tax for Children Under Age 14 Who Have Investment Income
         of More Than $1,200.

    i)   Form 8814, Parent's Election To Report Child's Interest and
         Dividends.

5)  You do not want any of your refund applied to your 1993 estimated tax.

Name, address, and social security number. Put your name and address label
on your return. If you do not have a label, fill in (print or type) your
name, address, and social security number. If you are married, give the
social security numbers of both spouses even if you file separately.

What to complete. Read lines 1 through 37 and fill in the lines that apply
to you.

If you are filing a joint return, use the space under the words Adjustments
to Income on the front of your return to show your taxable income and your
spouse's taxable income separately.

Read lines 39 through 59. Fill in the lines that apply to you, but do not fill
in the Total lines. Please be sure to fill in line 54 for Federal income tax
withheld.

Fill in any forms or schedules asked for on the lines you completed, and
attach them to your return when you file it.

Credit for the elderly or the disabled. If you can take the credit for the
elderly or the disabled, as discussed in Chapter 34, attach Schedule R. Write
"CFE" on the dotted line next to line 42 of Form 1040. On Schedule R, check
the box for your filing status and age, and fill in lines 11 and 13 of Part
III if applicable. Also complete Part II of Schedule R if applicable.

Earned income credit. If you can take the earned income credit, as discussed
in Chapter 35, fill in Parts II and III of Schedule EIC and attach it to your
return. Write "EIC" on the dotted line next to line 56 of Form 1040.

Payments. Place any income tax withheld that is shown in Box 9 of Form W─2,
or the appropriate box of Form 1099, on line 54. Attach Copy B or the first copy
of your Form(s) W─2 to your return. Also attach any Form 1099─R you received
that has withholding tax in Box 4.

Place any estimated tax payments you made on line 55.

Filing the return. Be sure to sign and date your return and show your
occupation. If you are filing a joint return, both you and your spouse must
sign it. Mail your return to the Internal Revenue Service Center for the
area where you live.