IRS ADVISES:
USE CARE WITH NEW LINE ON TAX FORMS

As the 2002 tax filing deadline approaches, there are resources every taxpayer should access to make this year's preparation process easier.

Last month I posted information detailing tax scams that have cost taxpayers thousands of dollars. The IRS website continues to provide the latest information on these and other topics.

The latest update clarifies a new line on the federal tax forms. Many early filers have made an error related to a new section on the federal tax form, specifically line 47 on Form 1040; line 30 on Form 1040A; line 7 on Form 1040EZ.

In 2001, President Bush and Congress approved a sweeping tax relief bill. For those who received an advance payment tax rebate check last year, there is no need to fill out the Rate Reduction Credit line on your tax form. If you did not receive a rebate check, complete this new section.

The maximum amounts are:

• $300 for a single person or a married person filing separately;
• $500 for a head of household;
• $600 for a married couple filing jointly or a qualifying widow(er).

Some taxpayers, who should claim a credit amount, are leaving the line blank. These people received less than their filing status maximum and their 2001 income - generally higher than it was in 2000 -- entitles them to claim the credit on their return.

The credit and the rebate are how the new law gives one of its main benefits for 2001 - a 10 percent tax rate. Instead of having people wait until they file their 2001 tax returns to get a larger refund, the law provided for an advance tax rebate payment be made last year, based on the returns for 2000. If the 2001 income and filing status would give a larger benefit than the advance payment, the taxpayer may claim the difference as a Rate Reduction Credit on the 2001 return.

Dependents were not eligible for advance payments or the Rate Reduction Credit, but they may get the benefit of the lower tax rate by completing the "Tax Computation Worksheet for Certain Dependents" in the tax instructions.

Taxpayers who made an error related to this credit on their returns should wait to see if the IRS catches it during processing. If the IRS does not contact them by the time they receive their refund, they may file an amended return to correct the error.

For more, see: http://www.irs.gov/irs/news/0,,i1%3D42%26articleId%3D78976,00.html