Residents advised to consider tax rule changes before filing returns
|A Carbon County resident figures his taxes on a financial calculator. Many U.S. residents will receive an economic stimulus package this year for simply filing a tax return. The funds will be sent out automatically by the IRS.|
With the promise of an economic stimulus payment from the federal government and changes to the Utah tax system as well, Carbon County residents have the opportunity to make use of the vast amount of information available before the April 15 tax filing deadline.
One change taking effect for 2007 is local residents may elect to pay individual income taxes under a flat calculation or under the traditional multi-rate method.
On the state's 2007 Utah individual income returns, filers calculate the tax using both methods and pays the lesser of the two, according to the Utah Tax Commission.
The commission reports that taxpayers should know that the flat-tax option calculated on the 2007 return is not the same single rate system in effect beginning in 2008.
For local residents, changes of federal returns include claiming the child and dependent care credit.
"If you paid someone to care for a child under age 13 or a qualifying spouse or dependent so you could work or look for work, you may be able to reduce your tax by claiming the credit on your federal income tax return," explained the Internal Revenue Service.
To qualify for the federal credit, a taxpayer's spouse, children age 13 or older and dependents must be physically or mentally incapable of self-care.
The IRS also indicated that, to claim the credit, a taxpayer must meet certain conditions including:
Income, residents must have earned income from wages, salaries or tips.
The payments for care cannot be paid to an individual being claimed as a dependent on the same return.
The filing status must be single, married filing jointly, head of household or filing widower with a dependent.
The care must have been provided for one or more qualifying persons.
The qualifying person must have lived with the filer for more than half of 2007.
Following tax season and starting in May, the treasury will begin sending economic stimulus payments to more than 130 million individuals.
The stimulus payments will go on through the spring and summer, according to the IRS.
The service reports that the vast majority of Americans who qualify for an economic stimulus payment will not have to do anything other than file their 2007 individual income tax return to receive their payment this year.
Taxpayers will not have to complete applications, file any extra forms or call the IRS to request the payment, which is automatic.
The IRS will determine eligibility, figure the amount and issue the payment.
The IRS will use the 2007 tax return to determine eligibility and calculate the basic amount of the payment.
In most cases, the payment will equal the amount of tax liability on the return with a maximum amount of $600 for individuals, $1,200 for couples filing jointly and a minimum of $300 for individuals.
"Even those who have little or no tax liability may qualify for a minimum payment of $300 if their tax return reflects $3,000 or more," indicates the IRS website. "However, supplemental security income (SSI) does not count as qualifying income for the stimulus package."
Additionally, low income workers who have earned income above $3,000 but do not have a regular filing requirement must file a 2007 tax return to receive the minimum stimulus payment.
Similarly, Social Security recipients, certain railroad retirees and those who receive some types of veteran's benefits must also file a return to receive the package.
The IRS has placed several limitations on who may be eligible for the stimulus.
Residents must have valid Social Security numbers, including people who file using an individual taxpayer identification numbers, adoption identification numbers or any other identification numbers issued by the IRSt.
Both individuals listed on the married joint federal income tax return must have valid Social Security numbers to qualify for the payment.
Eligibility for the stimulus is subject to a maximum income limits, according to federal officials.
The payment including the basic amount and the amount for qualifying children, will be reduced by five percent of the amount of income in excess of $75,000 for individuals and $150,000 for those with a married filling jointly status.
Individuals who pay no tax and who have less than $3,000 of qualifying income will not be eligible for the package either.
A full list of the eligibility and limitation statutes is available at www.irs.com. The full scope of state filing information is available from the Utah Tax Commission.