Some Help in Getting Refunds Quicker,
With Less Hassle

Taxpayers are eager to get their refunds. Sometimes they are so eager, they concern themselves mostly with the bottom line -- finding their tax in the tax table. They speed through the information at the top of the return not realizing how important it is in determining their correct tax. Along the way, taxpayers sometimes make mistakes.

In fact, many of the most frequent mistakes taxpayers make have to do with information on these lines -- filing status, exemptions, standard deductions and the earned income credit.

The IRS can fix many errors without bothering the taxpayer, but not all. Sometimes there is not enough information on the return to know that the taxpayer has made a mistake. To correct some mistakes, IRS has to write to the taxpayer to get missing information. This costs time and money. The taxpayer is inconvenienced. and, of course, the refund is delayed until the mistake can be corrected.

What advice does the Internal Revenue Service have? Please slow down -- long enough to read the instructions for lines one through six very carefully before you begin to prepare your 1990 returns. These lines contain information about filing status and exemptions that establish who the taxpayer is and whether they have computed the correct tax.

The IRS has one convenient publication to answer questions about lines one through six -- Publication 501, Exemptions, Standard Deductions and Filing Information. It's available free from the IRS by calling toll-free 1-800-TAX-FORM (1-800-829-3676.)

FILING STATUS - Sometimes taxpayers fail to claim the most advantageous filing status -- the one that means the lowest tax bill. Or they fail to enter all the required information such as the name of the "Qualifying Person" for Head of Household filing status.

EXAMPLE: John and his wife divorced in 1987. His daughter lives with him and he has custody, but their divorce decree says his wife can claim the child as a dependent on her return. John assumed his filing status was single and that's how he filed. On his $38,000 of income, he paid $6,635 on his 1990 return - $1,278 more than the $5,357 he should have paid filing as head of household.. Sadly, John made a similar mistake on his 1988 and 1989 returns. There is no way IRS can tell that John is making this mistake. But John can -- by reading the instructions on filing status in his tax package.

DEPENDENCY EXEMPTIONS - The rules for claiming dependency exemptions can be complex, particularly for divorced or separated parents. When claiming a dependent it is important to enter all the required information regarding the dependent, particularly if the dependent child did not live with you.

EXAMPLE: Ed and his wife have been divorced since 1980. He doesn't have custody of their son, but there is an agreement that Ed will be able to claim the dependency exemption. Ed was expecting a refund of more than $2,000. Instead, he got a letter from the IRS, because Ed failed to check the box on line 6d of the form to show why he was claiming a deduction for a child that did not live with him.

EXAMPLE: Fred and Sue had plans for their $1,700 refund check. But instead of a check, they received a letter from IRS. Why? Because in her rush to finish the return, Sue listed only two of their three children as dependents on line 6c of the return by then wrote "3" in the box on the right. Without knowing whether there were two or three dependents, IRS couldn't process the return without writing to Fred and Sue. The good news was they got their full refund -- the bad news was an unnecessary delay in getting their check.

STANDARD DEDUCTION - Taxpayers sometimes do not claim the full standard deduction to which they're entitled. This can mean paying too much tax. Others fail to check and total the boxes to support their claim for the additional standard deduction amounts.

EXAMPLE: Tom and Sally both turned 65 in 1990. Tom thought this meant a new tax break, but he wasn't sure how to claim it. When he did his return, Tom didn't take the higher standard deduction he should have. Unfortunately, since he didn't check the boxes to show that he and Sally were 65, IRS couldn't discover and fix the mistake. This meant he paid tax on $1,300 of income he shouldn't have.

EARNED INCOME CREDIT - Taxpayers often claim the earned income credit when they do not qualify. Factors that determine whether a taxpayer qualifies include filing status, requirements regarding dependents and income restrictions. Some taxpayers who qualify may neglect to claim the credit because they are unaware of the tax benefits or they filed using the wrong filing status. A good source for more information about the earned income credit is IRS Publication 596, Earned Income Credit.

EXAMPLE: Beth and her husband separated in May of 1990. Beth assumed the cost of maintaining the home and support of their child. By the end of the year, the divorce was still not final, so Beth filed using the married filing separate status. On her $17,000 of wages, she paid 1990 taxes of $1,526. What Beth didn't know was that she qualified to file as head of household and pay only $1,26 in taxes. Beth also missed out on the earned income credit -- in her case $325. The total tax she paid in 1990 but did not owe was $625.

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