If you're a resident of the District of Columbia, you're into a whole new tax world for 1982. Tax conformity means a tax return that is simpler than the returns of past years, and one that follows more closely the data you have already entered on your federal return.
Start by clearing your mind of any D.C. peculiarities still bouncing around from earlier years. Although the new look is simpler, it is also different--so look through the forms and the instruction booklet carefully before you start. Filing status
You have a choice of five different filing categories. The first four are essentially the same as their counterparts on the federal return: single, head of a household, married filing jointly and married filing separately.
The fifth filing category permits a married couple to file separate returns on the same tax form. This category should be used if each spouse had gross taxable income of more than $1,250 in 1982.
If you file using this status, enter the data pertaining to the husband in Column A and the wife in Column B. All other filers should use Column B only. Exemptions
Personal exemptions are almost the same as on the federal return: one per taxpayer (and spouse on a joint return) plus one for age 65 or older and one for legal blindness.
Only difference: If you file as head of household you get an extra personal exemption not available on the federal return.
One exemption is allowed for each dependent claimed on your federal return. On a combined separate return you may allocate the dependents to husband or wife as you wish.
The District allowance remains at $750 for each personal and dependent exemption for a full year, or $62.50 per month on a part-year return. Income
In Part I of page 2 of the D.C. return, enter the amounts for the various types of income, line by line, as they appear on your federal return.
If you filed a joint federal return and are filing combined separate on a single D.C. return, enter income and adjustments as if you had filed separate federal returns. Each line-item total of Column A (husband) and Column B (wife) must equal the joint figure on the federal return.
Change from last year: An employe who is contributing to a tax-sheltered annuity by payroll deductions, which are excluded from W-2 income reported by the employer, is no longer required to add the amounts withheld. D.C. now accepts the net pay figure reported on the federal return.
Similarly, the federal $100 dividend exclusion ($200 on a joint return) is now permitted on the D.C. return; transfer net dividend income from line 9c of the federal return to line 30 on the D.C. return.
Carry over the figure for taxable pensions and annuities unchanged from the federal return. If you have been reporting pension income under the old D.C. rules, you may have to do some arithmetic. But it doesn't show up here; save the calculating for the "Subtractions" section. Adjustments
On line 41 of the D.C. return you may claim the total of all adjustments to income taken on the federal return. Employe business expenses, alimony payments and disability income have all been acceptable deductions in the past.
This year you may also reduce your income by the amount of all IRA, Keogh and other individual retirement contributions that meet the federal tax shelter rules. And the same adjustment for moving expenses is allowed as you claim on the federal return. Additions
You must add to your federal adjusted gross income the marital two-earner deduction if taken on the federal return. Filing a combined separate return for D.C. effectively neutralizes the marriage tax penalty inherent in federal joint return rules.
There are other additions applicable to a limited number of D.C. taxpayers. These are explained on page 5 of the instruction booklet. Subtractions
Interest and dividend income received on any obligations of the U.S. or government agencies is not taxable by any state. If you reported such income on your federal return, it gets subtracted in this section.
If you reported a state tax refund as a part of your federal income, enter the same amount here as a subtraction. Do the same for any money you won in the D.C. lottery, which is taxable on the federal return but not in D.C.
And this is the place for taxpayers who do not itemize deductions to claim the same limited charitable deduction as taken on the federal return.
If you were a resident of the District for only a part of the year, you may include as a subtraction from gross income all income received during the period you were not a resident, to the extent it appears above in the "Income" section.
In this situation, a compensating addition is required to add back any adjustment to income (such as an IRA contribution) carried over from the federal return that is attributable to the nonresident earnings being excluded.
The last major subtraction, "Income Previously Taxed by District," may require some worksheet calculations. For example, if you received distributions in 1982 from an IRA, the entire amount was taxable income on your federal return because the earlier IRA contributions enjoyed tax-deferred status as deductions from income.
But you were not permitted to exclude IRA contributions from D.C. income in those earlier years. Paying D.C. tax on the full amount of IRA distributions now would result in double taxation on the same dollars.
So you now subtract from total 1982 distributions total IRA contributions made while you were a D.C. resident on which you had already paid D.C. income tax. If previously taxed contributions are larger than 1982 distributions, carry the balance forward to be applied against 1983 or future distributions until used up.
If you received pension or annuity payments in earlier years, the old D.C. method of reporting those payments was substantially different from the federal method.
It isn't possible to examine all the possible situations here. The basic rule to remember is that the District does not expect you to pay tax a second time on the same money.
If your entire pension payment was already fully taxable under the old 3 percent reporting rule, then it continues fully taxable under the new system.
But if you had not yet recovered tax-free an amount equal to your cost, then for 1982 (and future years if necessary) exclude from income the balance of your unrecovered contributions. Deductions
The new D.C. tax method allows substantially the same itemized deductions as you took on the federal return. For most people there are only two exceptions: state and local income taxes claimed, and--for part-year residents--any deductions for the nonresident period.
D.C. has gone to a zero bracket amount for taxpayers who do not itemize deductions. The ZBA is only $1,000 ($500 each for couples filing either separate or combined separate returns).
Since the D.C. ZBA is so much lower than the federal ZBA, you may find it advantageous to itemize for D.C. even if you didn't itemize for federal. The District provides its own Schedule A in the instruction booklet for this purpose. Except for the two items mentioned above, the qualifying rules for deductions are the federal rules.
If a married couple files either separate or combined separate returns, they must file the same way--either both itemize or both take the ZBA. If they itemize, deductions may be split between them any way they wish. Tax credits
The District tax credit for child or dependent care follows the same rules as the federal credit down to the bottom line. Only exception: A married couple may file a joint separate return instead of a joint return and still qualify.
However, D.C. has not modified its prior rule allowing only 6 percent of qualifying expenses rather than the federal 20 percent. In the case of a return filed for a full year, you may carry over to the D.C. return 30 percent of the credit claimed on the federal return--30 percent of 20 percent equals 6 percent of total expenses. If you are filing a part-year return, the credit will not exceed 6 percent of the employment-related expenses that were incurred during the period you were a resident of the District.
If you're a resident of the District and were required to pay tax to another state on income earned in that state while a D.C. resident, you may claim a credit for all or part of the tax paid against your D.C. tax. The formula for computing the amount of the credit is on page 3 of the instruction booklet.
There is also a tax credit for 50 percent of campaign contributions to specified District of Columbia political candidates. The list of authorized offices is on page 4 of the instruction booklet. Maximum credit is $100 on a joint return, $50 per taxpayer on all others--double last year's $50/25 limit. Federal employes
Because of the special nature of the relationship between the District of Columbia and the federal government, D.C. tax laws contain special provisions not found in the 50 states.
These special provisions exempt people in these four categories from District income tax:
* An elected officer of the U.S. government, unless actually domiciled in the District.
* An officer of the Executive Branch of the U.S. government who was appointed to office by the president subject to confirmation by the Senate and whose appointment may be terminated at the pleasure of the president, unless domiciled in the District at any time during 1982.
* A person on the personal staff (not a committee staff) of an elected member of the Legislative Branch if a bona fide resident of the same state as that elected member.
* A Justice of the Supreme Court not domiciled within the District at any time in 1982. Nonresident refunds
If you were not a resident of the District or are not required to file a D.C. tax return for any other reason, but some D.C. tax was withheld from your pay, file form D-40B to claim a refund of the amount withheld. Property tax credit
Residents of the District with household gross income of $20,000 or less during 1982 may be eligible for a property tax credit. The requirements to qualify are on page 5 of the instruction booklet.
Use Schedule H to claim the credit. If you file a D.C. income tax return, take the credit on line 20 of Form D-40 and attach Schedule H to the return.
You can claim the property tax credit even if you have no income tax liability and do not file a D.C. return. File Schedule H by itself; if you qualify, you will receive a cash payment for the amount of the credit. Reminder
You are required to list the names and Social Security numbers of all members of the household on page 2 of Schedule H. Dollar-saver
If you customarily have your tax return prepared by a professional who doesn't use your instruction booklet, you can check a block just above the signature space.
Then next year instead of getting a complete booklet and set of forms in the mail, you will receive only a postcard with the mailing label to be used on the return.
This system was initiated last year; but the D.C. tax people decided to send everyone a complete booklet because of the major changes brought about by the tax conformity legislation. If the system works it will save taxpayer money on both printing and postage.