Some Big Pluses and Minuses
Sunday, March 7, 2004; Page F08
Your last paycheck stub of the year may include useful tax information not included on your W-2. Two possibilities are union dues and charitable contributions you made through an automatic payroll deduction.
First, add Baby to your exemptions -- but make sure you've gotten Baby a Social Security number. That's required for all dependents. If you haven't already, apply to the Social Security Administration right away. The process usually takes about two weeks. If you don't have the number by the April 15 tax deadline, you can obtain an extension by filing Form 4868 with the IRS.
Check the 1099 from your mutual fund carefully (for that matter, any 1099 from an individual stock) and be sure you differentiate ordinary dividends from qualified dividends on your Form 1040. The qualified dividends, if you have some, will qualify for the new 15 percent tax rate.
Points, the upfront amount you may have paid to obtain the mortgage on your principal residence, are deductible. Points masquerading as loan origination fees, maximum loan charges, loan discount and discount points are also deductible. (Points paid on a loan secured by a second residence cannot be deducted in the year of purchase but must be deducted over the life of the loan.)
Property taxes are deductible for filers who itemize. But municipal and county fees for trash collection and sewer service are not deductible -- even though many times they are added to your real estate tax bill. Homeowner association dues aren't deductible either.
You must report your state or local tax refund from 2002 as income in 2003 -- but only if you itemized deductions in 2002. If you simply took the standard deduction that year, do not report the refund.
If a newlywed takes her husband's name and doesn't tell the Social Security Administration, IRS computers will not be able to match the new name on the tax return with the Social Security numbers. Getting divorced and discarding the name? You could run into the same problem.