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Quick Quotes

Tip Toppers

Some Big Pluses and Minuses

Sunday, March 7, 2004; Page F08

Check It Out

• 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.

Did You Have a Baby?

• 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.

_____  Tax Center _____

Tax Changes Guarantee Surprises
Experts say those most likely to face an unpleasant shock are people in the income range of roughly $75,000 to $400,000.

Filed Your 1099 Form?
If you are a mutual fund investor, you may want to wait until the end of the month before filing your tax return.

Falling Into AMT Trouble
The AMT is expected to loom far larger this year, especially in the Washington region than in lower-tax, lower-cost areas of the country.

_____  Live Discussion _____

Transcript: Michelle Singletary and Sam Serio of the IRS

Special Report:
Find articles about the latest changes; advise about filing your taxes; and online forms and resources.

Latest Business News
Check Your Portfolio

• The child tax credit available to many parents is now as much as $1,000. It starts phasing out for couples with income $110,000 and over and for singles with $75,000 or more.

A Word to Fund Investors

• 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.

Home, Sweet Shelter

• 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.)

• Speaking of which, points for a refinance must be amortized over the life of the loan. But homeowners who retired that mortgage to refinance yet again may now deduct any points paid to obtain the first refinance.

• This is counterintuitive, but points paid by the seller are deductible by you, the buyer.

On the Home Front

• 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.

• Late fees added to your mortgage bill are already included in the amount the lender reports that you paid during the year. Don't add them on top of the number on the 1099.

• FHA mortgage insurance premiums and private mortgage insurance (the dreaded PMI) are not deductible.

• When going through receipts from past years, collect and save those that represent major additions and improvements to your house. The expenses are not tax-deductible per se, but you can add them to your cost "basis" when you sell. That means your capital gain will be smaller, which could keep you below the tax-free maximums of $250,000 for an individual and $500,000 for a married couple filing jointly.

A Word From the State

• 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.

Your Good Name

• 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.

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