The Salina Journal from Salina, Kansas on January 16, 1986 · Page 30
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The Salina Journal from Salina, Kansas · Page 30

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Salina, Kansas
Issue Date:
Thursday, January 16, 1986
Page:
Page 30
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The Salina Journal Thursday, January 16,1986 PageTIO Picking the ri xform Form 1040EZ Form 1040A Form 1040 Form 1040EZ for single filers Filing status exemptions Taxable income Only income from Single only Only one personal Only taxable income • \Vages.salaries.t ips exemptionfor (line 71 of less than • Interest of $400 or yourself - $50,000 less • Single All exemptions that Only taxable income • Wages, salaries, lips • Married filing joint you an' entitled !o (line 191 of less than 'Interest • Married filing claim $50,000 • Dividends separate • Unemployment • Head of household compensation •Single All exemptions that Any amount of • Wages, salaries, tips • Married filing joint you are entitled to taxable income (line • Interest • Married Tiling claim 37) . Dividends separate • Taxable social • Head of household security and tier 1 • Qualifying railroad retirement widow(er)with . benefits (see page 13) dependent child " Unemployment compensation • Self-employment • Rents and royalties (Schedule El" • Pensions and annuities • Taxable stale and local income tax refunds • Capital gains (Schedule D) • Gain from the sale of your home (Form 2119) • Alimony received • All other sources Form 1040EZ can be used only by single filers who— claim only one personal exemption, and claim no dependents, and have income only from wages, salaries, and tips, and have interest income of $400 or less, and have taxable income of less than $50,000, and have no dividend income, and have no unemployment compensation. If you use Form 1040EZ, the step-by-step instructions on the back of the form are the only ones you will need for completing most of the items. However, you will have to use the 1040A tax table on pages 31-36 to complete line 9 of Form 1040EZ. Adjustments to income No adjustments to income Only adjust ments to income for: • The deduction fora married rnuule when both work (Schedule 1, 1'art I) • The deduct ion for certain cunt rihut ions to an IRA All adjustments to income: • Alimony paid • Penally for early withdrawal of savings • Deduct ion for contributions loan IRA or Keoghplan • Moving expenses (Form 39IW or Form 3903FI • Employee business expenses (Form 2106) • Deduction for a married couple when both work (Schedule W) • Other adjustments Can you itemize deductions? Itemized deductions Other taxes Tax credits No itemized deductions No other taxes No tax credits (However, you may deduct one-half of certain cash amounts you gave to ' charitable organizations) No itemized deductions Only advance earned Only tax credits for: ( However, vou may deduct income credit (EIC) . Partial political one-hall of the amount payments contributions credit you gave to charitable • Credit for child and organizations) dependent care expenses I Schedule!, Part II) • Earned income credit All itemized deductions All other taxes: All tax credits: (Use Schedule A): • Advance earned income • Partial political • State and local income credit (EIC) payments contributionstredit taxes . Self-emplovment tax • Earned income credit Real estate taxes (Schedule SE) • Credit for child and Sales tuxes • Tax on an IRA dependent care expenses Interest paid (Form5329) (Form2441) Charitable contributions • Alternative minimum tax • Investment credit Medical and dental < Form 6251 ) (Form 3468) expenses • Social security tax on tips • Jobs credit (Form 5884) Casualty and theft losses not reported to your • Foreign tax crediKFonn Miscellaneous deductions employer (Form 4137) 1116) • Uncollected social security • Credit for the elderly and tax on tips shown on your the permanently and totally FormW-2 disabled (Schedule R) • All other income taxes • Residential energy credit (Form 5695) • Qualified diesel-powered highway vehicles credit (Form 4136) • Mortgage interest credit (Form 8396) • All other credits Many people choose to file Form 1040 so they can itemize deductions. Itemizing often benefits you when you have large deductions for items such as real estate taxes, state and local income taxes, mortgage interest, or medical expenses. It would generally benefit you to itemize deductions if— Your filing status is: And your itemized deductions are: Single or Head of household • More than $2,390 Married filing joint or • More than $3,540 Qualifying widow(er) with dependent child Married filing separate • More than $1,770 Even if it does not benefit you to itemize deductions, you are still allowed to claim adjustments to income for such items as moving expenses or alimony paid. However, you must use Form 1040. Read IRA statements before investing An Individual Retirement Arrangement should be chosen carefully and all financial aspects of it checked thoroughly, the Internal Revenue Service advises. IRAs may be bought from different sources such as banks, insurance companies, and mutual funds and savers should compare IRAs from these different sources to choose the one that is best for his or her situation. Some things to look for when shopping for an IRA are: How much are the fees? What is the interest rate and how is it figured? How much will you have in your account when you are ready to retire? The Internal Revenue Service cautions taxpayers about misleading or incomplete disclosure statements related to Individual Retirement Arrangements. Even though the federal tax law on IRAs in general requires complete and accurate disclosure by financial institutions, important details are sometimes omitted, the IRS notes. For example, two investments may advertise the same interest rate but, because the interest rates are figured differently, a saver may earn more with one investment than with another. A prospective IRA purchaser should ask questions and try to obtain as much information as possible before signing on the dot- ted line, the IRS says. One good way to determine which financial instrument is the best overall investment is to examine the part of the institution's disclosure statement that gives a projection of the value of the investment at the end of the first five years and also at ages 60, 65 and 70. Withdrawal penalties for money that is taken out prematurely are also supposed to be reflected in these projections, the IRS adds. * * * The IRS notes that as a result of the Tax Reform Act of 1984, taxpayers must contribute to their IRAs by April 15, 1986, for the contribution to apply to the 1985 tax year. Extensions to file a federal tax return no longer extend the deadline for contributing to the IRA. More information on IRAs is available in IRS Publication 590, "Individual Retirement Arrangements (IRAs)." To obtain it, use the order form in the tax package or call the IRS. Deduction for moving A worker who changed jobs last year or started a new job may be able to deduct moving expenses, even if he or she does not itemize deductions. H&R Block Found Don & Flo Brown $939 ' "Couldn't have done it without you!" This year we're pledged to finding more Americans the biggest tax refund they have coming. What can we find for you? H&R BLOCK Sunset Plaza 827-5817 WHERE MORE AMERICANS FIND A BIGGER REFUND. 254 S. Santa Fe — Downtown 827-4253 Also In SEARS at 510 S. Santa F< IDS Managed Retirement Fund As "the markets" change, so will your IRA... automatically! Introducing IDS Managed Retirement Fund offered by ros... for investors who want their IRA (or any other retirement savings?) to earn a high total rate-of-retum without having to make repeated investment decisions. • High total return: The fund's goal is to maximize total investment return through a combination of capital appreciation and current income. • Changes with "the markets" for you: Because this Fund isn't limited to just one kind of investment, it can adjust its "mix" of stocks, bonds and other investments as often as necessary.. .to pursue the highest available return for you. • Full-time, professional management: Our trained experts continuously monitor and adapt the portfolio to changing financial conditions ... and their full-time attention is designed to moximiieyouc IRA's growth. • Ready affordability: Open your IRA with just $50.. .add $50 (or more!) whenever you wish. • Reduced initial sales charges.. .Several withdrawal options at retire- ment. . .Balance from diversification... much, much more. For more complete information, send fora free Kit including a Prospectus outlining all fees and expenses. Read it carefully before you invest or send money. There is no cost or obligation of any kind. Mail Coupon Today orCallto-8766 I D YES, I would like I more information about IDS Managed Retirement Fund. Zip Mull to: IDS Financial St-rvicvs Inc. 240 N. 7th Salina, Kansas 67401 IDS Fmanciul Service Inc.. 1985 An American Express company

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