January 2005 is gone. February is here, and next month is March. After that, we can look forward to spring. No matter how quickly I'd like to see trees bud and flowers bloom, I always slam on the brakes on when I realize that April 15 signals the IRS tax deadline. About now (the same time every year - like clockwork), I also remember that I need to catch up on any and all IRS changes for the year before I file my tax return. Hopefully, you'll benefit from the information I learned from the IRS below:

1. Although April 15 is the annual deadline to file our federal taxes for 2004, the IRS beckons us to file early. Income tax season is open. If you file now, you may receive your refund (if you have one coming) faster.
   
   
2. The IRS mailed over twenty-nine million tax packages in January, and over sixty-two million taxpayers are expected to file taxes this year. The discrepancy in numbers between sent packages and expected income-tax filers is due to the increasing number of online files. The IRS expects that over 50% of the 2004 tax files made by April 15th will be electronic files. If you file online, you can expect your refund to arrive faster than if you snail-mail the file. Go to Free File to learn more about how to e-file your taxes.
   
   
3. While you're surfing through the IRS website, don't forget to look for new information that might affect your federal file. For instance, a new law allows taxpayers who itemize to deduct certain contributions to charities to aid the victims of the tsunami on the 2004 form, even if the contribution was made during January 2005. For more information, see the IRS press release.
   
   
4. There are new provisions for those who serve in the Armed Forces. Additionally, there are new caveats for those groups who normally don't receive these benefits, like the Red Cross and U. S. Merchant Marines. If you know of someone who currently serves in the latter groups in a combat zone, you might alert them to these changes, if possible. You'll also find information relating to changes in tax procedures for military personnel families here, too.
   
   
5. Check out the IRS disaster relief and tax provision programs designed to help those who survived tornados, hurricanes, floods, etc. Some of you already know about the requirements for these programs, as the deadlines have already passed for many 2004 disasters. However, if you want to learn more about what the IRS requires from disaster victims, then you might want to browse through various state pages. While Hawaii, Idaho, Maine, Nevada, New Hampshire, New Mexico, North Dakota, Oregon, or South Dakota are not linked on this page (What? You guys don't experience disasters? Send some Chamber of Commerce information!), you still may find the information useful for future reference. Another section to ponder is located at the Tax Relief in Disaster Situations page. The IRS offers a "disaster kit" for businesses, and also informs and helps individuals who suffer from theft and casualty losses.
   
   
6. Go to the IRS Highlights on 2004 tax law changes and browse through all the information on this page. Keep in mind that each item listed here provides limited information, and we need to look further to discover if any changes affect our returns. For instance, the "Additional Child Tax Credit" is now refundable up to 15%, rather than the previous 10% of the amount by which earned income exceeds $10,750. Additionally, taxpayers with more than two qualifying children may be eligible for a larger credit, and nontaxable combat pay now counts as earned income when figuring this credit. In the latter situation, you might refer to #4 above to discover if you qualify for nontaxable combat pay. If you don't have children, you can chalk this change up to one that you don't have to deal with this year.

Each year we need to adjust to new regulations from the IRS, and the examples above are just a sampling of what we need to learn before we file our taxes. We may need to adjust to sweeping changes during the years ahead, if Congress agrees to make major overhauls in Social Security and income tax. A combination of both SS and income tax reform might irritate many folks, but when we live in America we must abide by legal changes made by our elected officials. After all, we aren't tax paying volunteers. We are required by law to file taxes if we make a "statutorily determined amount of income." In other words, if we make enough money to be taxed, then we need to pay up or collect. We can discover if we make enough money to file taxes when we fill out a tax return. If our income is sufficient, then the job is done.

If we feel that the IRS doesn't give us enough information on tax benefit possibilities, we might look beyond this organization to learn how we can save or receive more money through our tax returns. There are many scams and legal income-tax loopholes that await our notice. How do we tell the difference between an illegal operation and a legal and genuine tax benefit? Next week we'll take a look at some answers to this question.

Until Then,
Linda Goin