Boogie-Boarding Tax Info on the Internet
Using the Internet to do your 1996 taxes has a long way to go. In the time it takes you to track down the Web sites that are most helpful, wade through all the crazed anti-IRS postings, and then download the material you need, you probably could get in the car and drive to your nearest post office or bookstore and pick up more traditional tax packets.Using the Internet to research and then pay your taxes is still a hassle. But like so many other types of business transactions, it is clearer than ever that the Internet is where we will live, die and pay taxes in the years to come.Like all Internet searches, the biggest problem with getting tax help on the Net is wading through all the extraneous material. When I entered "Internal Revenue Service" on AOL's Webcrawler software, I was told there were more than 200,000 possible locations on the Internet that contained those famous three words.When I finally reached the IRS's home page one weekend night it was inaccessible, this after more than an hour of boogie-boarding through the Net. The next night I had more luck.The shortest way to the IRS homepage is first to get onto the U.S. government's Web location that contains home pages for many U.S. government offices. The IRS Internet site is located inside the U.S. Treasury's home page, and its official Internet address is www.irs.ustreas.gov.The IRS location is clunky and ponderous. While every conceivable IRS tax form is available here, downloading them is a hassle involving technowizardry. You first must download the proper software that then allows you to download the forms. Nothing convenient about that. It seemed easier to go to the Post Office.There was much useful information at the IRS Web site, but I couldn't help but feel much of the information was useless for my personal problem: how to figure out exactly how much I am going to pay this year after the usual deductions.Here are some of the most useful nuggets gleaned from the IRS Internet site:*Electronic Filing: If you are due a refund, the best thing the IRS has done in years is to provide electronic filing of your tax return. This method speeds your refund and allows it to be deposited directly into your bank account. Many accountants and tax preparers will electronically file your prepared forms for a small fee.*Telefile: Even better, the IRS now allows those who are filing short forms, the 1040EZ, to file over the telephone. This interactive system automatically calculates your taxes and returns your refund within three weeks. The downside is that you can't Telefile unless you receive a Telefile booklet from the IRS, and you can't request a Telefile booklet--they are automatically sent to single taxpayers and married individuals filing jointly who last year filed 1040EZ forms.*Forms and Returns: To have forms faxed to you directly, call the IRS's FAX-ON-DEMAND service. It can be reached at (703) 487-4160.*CD-ROM Tax Info: The IRS has produced a CD-ROM with all relevant forms and instructions. It runs on Windows 3.1 and Macintosh 7.5 systems. It costs $46 and can be ordered from the Government Printing Office, which has a Web site at www.access.gpo.gov.If you don't trust the IRS for all your tax help, there are plenty of places to go on the Internet for advice. But, like the rest of the vast World Wide Web, the quality of the information found in the zillions of chat rooms, forums, and self-described "tax expert" Web pages leaves taxpayers totally on their own. I'm not sure I trust somebody named Zonpower who has a number of tax-type sites on the Web, including "Zonpower Chapter 10: Who Is Wasting Your Brief Life?"America Online has set up its own tax help area run by the National Association of Enrolled Agents, the folks who are legally allowed to appear before the IRS on taxpayers' behalf. They will be running forums for taxpayers from now until tax day.There are other sites containing all kinds of nuggets. In searching the Web, use keywords "Tax Sites" to stumble into a thicket of tax-related files and forums.This may or may not be the year you dive into the Internet to do your taxes. But the writing is on the wall. The IRS wants to get out of the paper-shuffling business and has already dangled a huge carrot in front of the majority of taxpayers who receive refunds. If only they offered a tax cut to get us there.SIDEBAR ONETax Guides: Read 'Em and WeepGeorge ThurlowIf you're like 80 percent of America, the Internet isn't a daily part of you life, and you need some help on your taxes. Have no fear: There are still lots of trees dying to help you discover one more deduction. According to one bookstore manager, sales of traditional tax help books have declined in recent years. Take a look at one of the standard tax guides issued for 1996 taxes and you'll know why.J.K. Lasser's Your Income Tax '97 is now 700 -pages long. The H&R Block 1997 Income Tax Guide contains 100 pages of just forms. Kiplinger's Cut Your Taxes spends more than 50 pages describing how to handle itemized deductions.If you still have the spirit of the West and consider din your own taxes one of the last true challenges (now that guys in smocks change your oil), I recommend Consumer Reports Books' Guide to Income Tax 1997 as the best tax guide out there this year. I started perusing this 633-page tome not wanting to like it -- not just that smarmy CR attitude, but all those examples. But I was soon sucked in, or sucked in as much as one can be by sections on how the marriage penalty socks it to traditional families. The book's format is intimidating, but once you get into it, it's pretty simple. One of the best parts is the table that shows who is most likely to face an IRS audit. As explained by Consumer Reports, recent IRS policy changes have targeted those who earn less than $25,000 (because there has been a high incidence of these lower-income workers not filing tax returns in previous years) and those who claim business income of more than $100,000 (they are more likely to cheat the government, and the government is more likely to find more taxes). Those least likely to be audited, based on a survey of 1994 returns: taxpayers who earn between $25,000 and $50,000.All the guides boast special savings, from the $10 off an electronic filing fee when you buy the H&R Block book to the $2 rebate from J.K. Lasser.And best of all, these books are tax-deductible.SIDEBAR TWO:Deductions: Every Little Bit CountsJan CampbellMortgage interest and state and property taxes are generally the most significant deductions claimed by individual taxpayers. Since every little bit counts, especially in the higher tax brackets, here are some frequently missed tax-deductible items:Business and travel expenses: Generally, expenses incurred as an employee are deductible. Education, union dues, chamber of commerce dues, and the cost of job-related books, journals, and newspapers can all be written off. Transportation expenses (exclusive of "to and from" work) and employer-required uniforms are all valid expenses. Expenses related to looking for a new job in the same trade of business are deductible, even if you did not land a job.charitable donations of personal items: Didn't sell everything at the garage sale? Taxpayers can deduct the value of clothing, furniture, and other personal items donated to charity. It is wise to keep those receipts from Goodwill -- any donation of $250 or more must be acknowledged by a written receipt.Investment and tax advice: Fees paid to stockbrokers, CPAs, or financial planners for tax, investment, and estate planning advice can be claimed as miscellaneous deductions. Even the fees you pay for safe deposit boxes are deductible if used to store investments or investment-related items.Limited partnership and other investments sold during 1996: If an investment was a "passive activity" for tax purposes and is sold during 1996, previously nondeductible losses from the investment may be deductible.All sound like gobbledygook? Don't pay more tax than you are legally required to. Seek the counsel of a competent tax professional -- it's tax deductible.