by Mary Deibel
Scripps Howard News Service
January 07, 2005
It would mark the first time that more than 50 percent of individual taxpayers filed taxes by computer or touch-tone phone, moving the IRS closer to Congress' mandate that 80 percent of U.S. taxpayers e-file returns by 2007 to save money. Some 47 percent e-filed last year.
The 29.5 million taxpayers who still use pen and paper will get tax packages by regular mail this week, and another 11 million households will get computer filing brochures in hopes they'll change how they file taxes. The mail-outs cost $15 million for printing and postage.
IRS Commissioner Mark Everson reports that e-filers on average get refunds in half the time of other filers. Use that time to put the money to work for you instead of giving Uncle Sam an interest-free loan.
Changes to look for this filing season include simpler forms for more taxpayers:
Tax-law changes include giving itemizers the choice of deducting state and local income taxes or sales taxes, an easy choice for residents of Florida, Nevada, South Dakota, Tennessee, Texas and Wyoming - states with no general income tax - but less clear-cut for people elsewhere.
The change was part of a law that President Bush signed in October. But figuring how it applies was an open question until last week, when the IRS issued Publication 600 to answer the tricky questions the option poses:
To figure which leaves you with the bigger tax break, pro-rate the number of days you spent in each place, divide the number of days by 366 - the number of days in 2004 - and apportion sales-tax vs. income-tax totals accordingly.
Taxpayers may be able to deduct donations to victims of the South Asian tsunami if contributions are made to tax-exempt U.S. charities. But these organizations must have "full control and discretion over the use of such funds," according to the IRS.
Donations to individual victims or foreign charities that do not qualify as tax-exempt under Section 501(c)(3) of the U.S. Internal Revenue Code cannot be claimed.
Taxpayers making donations through Jan. 31, 2005, to aid tsunami victims will be able to claim deductions on their 2004 tax returns under legislation the House and Senate cleared Thursday for President Bush's signature. Otherwise taxpayers would have to wait until 2006 to claim a tax deduction for tsunami contributions made this month.
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