European Stars And Stripes (Newspaper) - February 17, 1987, Darmstadt, Hesse                                Fiatoa of tax returns stretch on and on at irs Center. Income tax comparison App Tow current Law is. New tax Law Curnc 14 lax Rales ranging froml1%tosq% a Tow for 1987, five riles of 11%, 15%, 28%. 35%. 38.5% thereafter two rotes of 15% and 28% personal a emotion currant $1.060 m t9bfl nor tart 1,900 in 1967, $1,950 in 1968, s2.000 in 1989 reduced for upper income Bracken Standard deduction current $3,670 for joint returns $2.480 Lor Tingle and Heads Ornu Servatt now Hue in 1987, $3,760 Lor married couples Ting Lei try $1,680 Lor couples Hing singly jz.540 for sind a or hoods of households in 1968. $5.000 Lor married couples of sep jowly $2.500 Tor couples i Fig san of j4.000 tar two of House holds. $3,000 for singes stale and local taxes current full deductible new ukr property and income taxes deductible sales taxes not deduct interest Dodo Cofoni currant Foy deductible now Low mortgage interest deductible Tor primary and secondary residences other personal tit Etest costs not deductible after four year phase out charitable contribution m currant deductible cur wit 2,000 tax deferred contribution each year new Taw restricted for upper income individuals earnings on Iha can acc Mulla tax free 401 Al savings plan cur wit annual empty a contribution of up to $30,000 to company sponsored tax deterred savings plan hew Low annual employee contribution up to $7,000 is tax deferred medical expends current deductible h Over 5% of adjusted Gross income new Law deductible it Over 7.5% of adjusted Gross income two Mew comm current deductions up to $3,000 new Law repealed or 1887 income capital gains current 60% of Long term Gaft excluded from taxation results in top Rale for individuals of 20% he Law gains to be taxed at maximum of 28% in 1987. At individual lop marginal rate it 1988 but we Auer tvs i current deductible. I new Law 80% deductible.  compensation now Law deductible Only for it Mizera cur wit taxed if adjusted Gross income in higher than $12,000 l$1b.ooo Lor couples How Low taxed Chaga them Tom graphic Sott Fca Chicago Tri Buntt of Twat Riporti for the military 87 changes mean fewer deductions by Paul Cozby Kaiserslautern bureaus Hile most of us arc still of bustling to Best the april 15 deadline Tor filing 1986 tax returns military members living overseas already need to be planning for j9b7 when the recent overhaul of i he income tax system goes into effect. For 1986, the rules Are essentially the same said Jerry Shiles an attorney with the zest support come Legal office and an expert on tax Law. The major changes Are the ones for the coming  those changes Range from a different method of calculating moving expense deductions to tighter controls on income from collage industries such As Home Day care. And most of the changes important to military members will mean fewer deductions. A key change Lor the military overseas is the deduction or moving expenses. About 25 percent of army members move every year Shiles said. Those who keep records always spend More than they Are reimbursed for moving he said. In prior years those expenses that the Soldier or airman had to pay simply were deducted from the total amount of earned income. That meant less income to to taxed therefore a smaller lax Bill or larger refund. But starting in 1987, to claim moving expenses a taxpayer must itemize deductions. The tax code already Grants a deduction of about $1,600 per person within certain guidelines. But those who itemize lose that Standard deduction. Itemizing Only makes sense when the a person s expenses Are greater than he Standard deduction. The military member who has moved is caught in the Middle to keep the Standard deduction Means losing the deduction for moving expenses. The same is True Lor the employee business expense deduction that will affect those who drive their personal cars on government business. To be claimed those expenses also will be itemized and must exceed 2 percent of income. The majority of taxpayers overseas Are going to lose the ability to take the moving expense and employee business expense deduction Shiles Sard. There Are some benefits to the taxpayer in the new system and a special advantage for military members Shiles said. When a place of residence is sold. The owner formerly had two years to reinvest the Money in another residence Belore the profit from the Sale could be taxed. Military members already had an advantage with four years to reinvest. But he new tax code allows uni Hilary members up to eight years under certain circumstances before the profit from the Sale of a Home is taxable Shiles said. There Are criteria to be met to qualify for he eight years but the option is Only available to Active duly military members he said. Those who deferred income with an individual retirement account will find the rules changed Shiles said some members of the military have been confused about How the changes Afleck them. But since the internal Revenue service determined thai military members Are actively participating in a retirement program the changes which May limit or eliminate the amount that can be deducted for an Ira contribution apply to hem for a single person earning less than $25,000, the Lull Ira deduction is allowed. The deductible amount is scaled Down for higher incomes up to $35,000. Those earning $35,000 or More per year cannot deduct any portion of an Ira contribution. For married taxpayers Ming jointly an income of $40,000 Saliji allows the full Ira deduction. More than s50.000 Means no Ira deduction is allowed. For More information on the Ira changes see Story focus on old Law when  several rules changes will to of special note to Young people who earn Money in 1987 children under 14 years will be taxed Al their Parent s tax Rale Tor ail Money they earn exceeding $1,000. And children who have earned income can Only be claimed As a deduction on one tax return in years past dependent children could be claimed on their Parent s and their own lax returns now. He dependent child must be claimed on the Parent s return and once claimed he child cannot ado Rhc same a Duclion on his or her tax form the rules on children have changed substantially for 1987," Shiles said. It s going to ailed almost All of our summer Hiros parents planning to claim dependent children As a deduction must also have a social Sec unit number Lor All children aged five and Over to receive Iho deduction. The irs will to cracking Down on americans living overseas Wilh earned income from businesses based in the Home Shiles said. It the business is set up properly the income normally is exempt from taxation in the United states up to a Given amount but to receive the exemption he business owner must we a form stating the income and requesting the exemption within one year. For example someone earning Money by providing child care in his or her Home normally is exempt from . Taxes on that income up to a certain amount Bui under the new rules the Day care provider might be liable for taxes and penalties it the income has not been properly reported during the past few years. For a divorced Parent paying child support the 1967 lax code might mean the loss of an exemption Shiles said. Formerly in you paid child support you could claim the children As dependents. Now the children will be claimed As dependents by the Parent who has them most of the year. The claim can be waived but Only by following a specific Legal procedure each year. Many military members overseas retain stateside interest bearing savings and checking accounts Shiles said. The income from Hose accounts is often omitted from lax returns Lor a variety of reasons the account is forgotten the financial institution did not have a new address for the service member or someone might be Rye Reg to hide the income. But a new Law requires All i Nanlal institutions to provide to the irs a computerized list of people who received interest. The irs will then compare each individual tax return Wilh the list. The Bottom Tine said Shiles is if you have interest income the irs will know about in. We need to be telling people Don i to in a real Rush to file that tax  he said get a your income Lorms  the rules also have changed drastically far deductions available irom losses from real Clale investments Shiles said. Consumer interest interest on credit card charges in personal Loans Tor example will not be deductible. Mortgage interest can be deducted Only for two Homes. And the deduction lot a married couple when to in Are working has been eliminated even those who Are due a refund will have to pay close attention to the new lax code in to past. Those expecting a tax refund did not have to file now. Those who do no1 Filo in a timely manner whether they owe taxes or no might owe a penalty of up to $500 Jay february 17.1987 the stars and stripes Page 15