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Tax time brings changes

(Published January 27, 2003)

 

By LaSHELL STRATTON

Staff Writer

D.C. residents can expect a few changes for the 2003 tax season that should make the tax-paying process easier, according to local and federal officials. The Internal Revenue Service and the D.C. government are offering new tax deductions and promoting online filing.

For the first time, the D.C. government will allow deductions up to $3,000 for individual contributions to the D.C. College Savings Plan and up to $6,000 in deductions for married couples who file jointly but have separate accounts.

Basic changes have also been made.

Tax forms have been streamlined so that they are easier to use, said Virginia Daisley, communications director for the D.C. Office of Tax and Revenue.

And those who wish to forgo using paper have plenty of options. In 2002, nearly 45,000 D.C. residents filed their taxes electronically, Daisley said. Officials expect that number to increase this year.

The electronic filing program that includes several software providers allows taxpayers with online access to file their D.C. and federal tax returns for a fee. The Quicken Tax Freedom Project offers free e-filing to taxpayers with annual incomes of less than $20,000. Also, D.C. residents can file by phone through Telefile if they are single, have no dependents and an income of less than $100,000.

Daniel Black, deputy chief financial officer and acting director of the Office of Tax and Revenue, encourages residents to use the D.C. Electronic Taxpayer Service Center (eTSC) at www.cfo.dc.gov.

“We’re encouraging all District taxpayers to file electronically. It’s fast, it’s free and it’s friendly,” Black said.

The eTSC service, which began in February 2001, allows taxpayers to file free without the third party vendors that are found in traditional e-filing.

With the help of a new feature added to eTSC for this tax season, taxpayers also can track the status of refunds online.  Rather than calling the government office, residents can obtain the status by typing in their Social Security numbers and the dollar amounts of the refunds claimed on their 2001 tax returns.

Daisley said residents must have filed taxes last year in order to qualify for the service. After using eTSC, they can expect their return to be processed within five days.

The federal government also has its own changes for this tax season, with at least 10 new tax deductions and credits for 2002.

Interest paid on student loans in 2002, regardless of the age of the loan, can be deducted this year. Last year, only payments made in the first 60 months of the student loan qualified for deduction. Business owners can deduct 36.5 cents per mile for all business miles driven. The figure is two cents higher than last year, when tax deductions for business mileage were at 34.5 cents a mile. Also, teachers can now deduct up to $250 in expenses for classroom supplies if they worked at least 900 hours in 2002.

The new federal tax break, Retirement Savings Contributions Credit, is geared toward lower-income persons. Taxpayers who make up to $25,000 individually or $50,000 jointly qualify for the retirement savings credit.

Along with deductions, the IRS also offers, for those who qualify, a new free online alternative to traditional mail-in filing and e-filing at www.irs.gov and www.firstgov.gov.

“No one likes paying taxes – it’s too confusing and time consuming,” said Acting Treasury Secretary Kenneth W. Dam in a news release. “The launch of this new web site is great news for millions of Americans.  Free File makes it easy.  Now they can save time, money and get their refunds in half the time by filing their taxes online for free.”

IRS spokesman Sam Serio said online filing has even more benefits.

“It’s accurate.  There’s virtually no errors when you e-file,” Serio said. “You can receive verification of receipt of your tax return in 24 hours.”

The new service is a partnership between the federal government and the Free File Alliance. The alliance’s members include tax consultants like H&R Block and vendors like Intuit Inc., which manufactures the popular software package TurboTax. 

Taxpayer eligibility for the online service varies according to alliance members, but it generally depends upon age, adjusted gross income, state residency, military status or eligibility to file a Form 1040EZ or Earned Income Tax Credit.

The new service allows for nearly 60 percent of the American population to file for free, Serio said.

“That’s roughly 78 million taxpayers out of 131 million,” he said.

 

Copyright 2003, The Common Denominator