There was great hope that tax reform and simplification would win a round when the Revenue Act of 1978 was before Congress.
The bill was enacted but it provided little of either.
However, the provisions of the 1978 act were effective Jan. 1, 1979, so they do have a bearing on how you fill out your returns for last year.
We'll take a look at some of these changes and how they may affect you in this first column after reviewing some of the general rules.
Your federal income tax return must be postmarked no later than midnight on Tuesday, April 15, 1980. (If you can't make the deadline, don't ignore it. You can get an automatic extension to June 16 by filing IRS Form 4868 by April 15. But you must estimate your tax on that form, and pay any estimated deficiency when you file the request for extension.)
Any payment due should be attached to the return (unless you have asked the IRS to figure your tax). Make your check or money order payable to "Internal Revenue Service," and enter your Social Security number on the payment.
If you live in the District or Maryland, send your federal return to the Internal Revenue Service Center, Philadephia, Pa., 19255. Virginia residents' federal returns go to the Internal Revenue Service Center in Memphis, Tenn., 37501.
If you received an instruction booklet from the IRS, use the peel-off label from the booklet on your return. Make any necessary corrections to your name, address or Social Security number.
Contrary to popular belief, the label does not contain any special coding to identify a potentially troublesome return. It does not permit optimal use by the IRS of its expensive computer equipment, saving employe man-hours and taxpayer money.
On a joint return, if the order of the Social Security numbers on the label doesn't match the order of the first names, correct it.
If you don't have a Social Security number, apply for one on Form SS-5, available at any IRS or Social Security Administration office and at many post offices. But file your tax return on time even if you don't have the number yet; simply write "Applied for" in the SSN block.
Our tax laws are complex. If you decide to fill out your own return, be prepared to spend some time working on it. Don't wait until the last minute.
If you need more detailed instructions than are given in the information booklet that accompanies the tax forms, pick up a copy of IRS Publication 17, "Your Federal Income Tax," at the local IRS office.
And if you want information on a special situation, the accompanying table lists some of the more popular -- and free -- IRS pamplets available.
The IRS also publishes a Spanish-language tax guide (IRS Publication 579-S) for taxpayers who are more fluent in Spanish than in English.
If you need personalized help, you can get it at any local IRS office. IRS tax assistance people will not complete your return for you (unless you are handicapped), but they will answer your questions.
The IRS also will respond to telephone requests for information over special lines set up for this purpose, but you may encounter delays in getting through, particularly as the filling deadline approaches.
If you live in the District or in Montgomery or Prince Georges counties, the IRS number to call for help is 488-3100. Residents of Northern Virginia are served by the Baileys Crossroads office; the number there for taxpayer assistance is 557-9230.
You generally will get good information from the people at the local IRS offices. But you must accept the fact that the government is not bound by the advice you receive. If your return is audited, citing advice from an IRS employe will not get you off the hook if it turns out that the advice was wrong.
If you decide to use a professional tax preparer, you have a wide choice. Qualifications of the preparers may range from someone who has read a tax book or taken a short course in tax preparation to a highly skilled accountant who works for the government or private industry and "moonlights" for a few months to supplement his or her regular income.
The large chain operations generally can give satisfactory service at reasonable cost if you have a fairly routine tax situation.
If your return is highly complex or involves an unusual situation, you may need the services of a public accounting firm or a tax attorney. As you might expect, their fees are higher than the fees of either the chains or the local tax preparers.
One small consolation is that the cost of tax assistance books and fees paid in 1979 for preparation of your tax return (or in connections with a tax audit) are deductible in Schedule A.
There are no federal or state licensing proceudres which might eliminate the incompetent or unscrupulous tax preparer.
If the person who prepares your return cannot or will not answer your questions or explain his or her entries, go elsewhere. Do not sign a blank tax return or a return that has been filled out in pencil.
You have full and final responsibility for the accuracy and legality of the return regardless of the qualifications of the preparer, and you should understand and agree with every word and number on it.
Anyone who prepares the tax return of another for pay must sign the return and enter his or her identification or Social Security number. In addition, the preparer must furnish you with a copy of the return at the same time he or she presents the original.
Now here are some of the important changes from the previous years:
Exclusion of 60 percent of net long-term capital gains (instead of the earlier 50 percent) went into effect on Nov. 1, 1978. The 60 percent exclusion therefore applies to the entire 1979 tax year. This 60-40 is only for gains; you continue to use 50 percent of net long-term capital losses to reduce other income.
The personal exemption for each taxpayer (including the additional exemption for age or blindness) and for each dependent is not $1,000, up from $750.
The ceiling on income for dependents is raised correspondingly, from $750 to $1,00. (This ceiling continues to be waived for a dependent child who was under the age of 19 or was a full-time student during at least five months of the year.)
Tax-rate brackets have been widened slightly, and small reductions have been made in the tax rates.
The zero bracket amount (what used to be known as the standard deduction) has been increased for all classes of taxpayers: to $2,300 for a single taxpayer, $3,400 on a joint return, and $1,700 for a married person filing separately.
Because of the higher personal exemption and zero-bracket amounts, the gross-income minimums at which returns must be filed go up for all categories. (See Monday's column for details.)
The general tax credit expired at the end of 1978, and may not be claimed for 1979.
Earned income credit calculations have been simplified and the maximum credit increased. A taxpayer who elected to receive periodic advance payments from his employer must account payments received.
Unemployment compensation payments may be taxable income depending on the amount of total income for the year.
The itemized deduction for political contributions no longer is available. But the tax credit for such contributions continues, and the ceiling has been doubled to $50 on a single return and $100 on a joint return.
The Schedule A deduction for state and local gasoline and diesel fuel taxes has been eliminated.
Finally, for those who underpaid their tax during the year, the interest rate for both underpayments and overpayments was raised on Feb. 1, 1980, to 12 percent from the 6 percent rate charged last year.