Never write a check to the IRS again!

Q. Tax time is almost upon us. Can you alert us to what's new for 2000?

--Marty S., via e-mail

Bob: Well, Marty, there are a number of new twists from the IRS for tax year 2000, and some of them seem to be designed just to keep taxpayers on their toes! For example, the IRS no longer wants checks for taxes owed made out to it. Instead, the proper payee now is the "U.S. Treasury." We guess this was done to improve the image of the IRS.

Brad: Something else that you will find new on your year 2000 Form 1040 is a little checkbox near the line where you sign your return. If you use a professional preparer, you can check this box and give the IRS permission to directly contact your preparer regarding your return. This is a novel twist. On one hand, it seems to speed things up. On the other hand, it could mean your preparer might provide the IRS with information you don't want it to have. We recommend that you discuss this with your preparer before you decide to check the box. You should make sure that your preparer clears any responses to IRS inquiries with you first.

Bob: As to new tax breaks, educators with children fare even better on their 2000 tax returns. First, the Child Tax Credit is raised to $500. Don't confuse this with the Child Care Tax Credit, which is for children under age 14 only. The Child Tax Credit is extended to all your dependent children who were under age 17 for all of year 2000. Best of all, you can claim both for the same children. Second, the amount of interest on college student loans that is deductible is increased to $2,000. That will take some of the sting out of those tuition loan payments.

Brad: There are a number of changes in the tax tables that are a result of the annual inflation adjustments. For example the standard deductions have risen. These are the deductions you receive depending on your filing status. So, if you are single, your standard deduction is $4,400; if you are married, filing jointly, it is $7,350; if you are married, filing separately, it is $3,675, and if you are head of household, it is $6,450.

Bob: The dependency exemption that you may claim for each of your qualifying dependents is $2,800. Remember: Dependents do not have to be children. If you are the major source of support for an elderly parent or disabled person, you may claim a dependency exemption for that individual as well.

Brad: Those who deducted professional (business) mileage in 1999 probably remember that the IRS made you use one rate for January to April and another rate after that. Well, for 2000, we are back to one flat rate of 32.5 cents per mile. How quickly the IRS lowered it when gas prices were low, and how little it raised it when gas prices are high is a good reminder that its goal is to raise as much money for the treasury as it legally can.

Bob: So we will close out with this reminder. You are obligated to pay only the minimum amount of income taxes required under the law. And, all taxpayers have the right to arrange their financial affairs to make that tax as low as it legally can be.

American Federation of Teachers, AFL•CIO - 555 New Jersey Avenue, NW - Washington, DC 20001