European Stars and Stripes (Newspaper) - January 22, 1990, Darmstadt, Hesse                                New rules old headaches child dependent care credits pose potential trouble spots tax preparer c. C. Mcdonald warns wage earners about the new child care tax credit rules by Randy Mcclain financial writer Congress kept income tax changes to minimum this year but Here Are a number of new rules thai could cause headaches for .  overseas. In some cases  May run headlong into tax Law revisions from the far reaching tax Reform act of 1986. Those rules have been around for the last few years but som families might be affected by something for the first Lime this april 16th. New rules for claiming child and dependent care credits and a relatively recent dictate fro the internal Revenue service requiring children As Young As 2-Ycars-old to get social Security numbers will be among the most troublesome requirements for americans overseas. Of her families will find themselves grappling with the rules for opening individual retirement accounts which you might remember place limits on How much of the contributions arc deductible. Still other Scricc members will learn the hard Way thai not All moving expense associated with a change of station arc easily written off. Prior to 1986. Scricc members who had not been reimbursed for All their moving expenses by the government could write off Many of the excess costs As a direct adjustment to income. Today moving expenses can be deducted Only by those  who itemize their returns. If moving costs Don l surpass the Standard deduction allowed by the  who moved in 1989 arc out of Luck. Jerry shills. Legal adviser with the 21 St theater army area come in . West Germany said military families often arc caught by Surprise on this item. We have a lot of people who last moved in 1985 or 86. And they remember the old rules he said. Now that Benefit is out the  perhaps an even bigger problem arc the Tough new rules for child and dependent care credits. Some people arc going to find the child car rules overwhelming said . Mcdonald a private tax preparer who caters to military clients in Wiesbaden West Germany. People claiming the credit on their 1989 returns Are required for the first time to list the name address and taxpayer identification number usually the social Security number of their baby Sitler or risk having their claim disallowed. The irs is getting Picky because too Many people have been claiming child care costs Hal Don t exist and child care providers particularly those in the United states arc not reporting All i hair income Federal Officina say. Problems could crop up for  if i hair baby Sitters arc t . Citizens or if military family was transferred to Europe during the year and the pertinent information on former child care providers was left behind. No Mailer the excuse the irs wants taxpayers to make a Yeoman Effort to get the data. If a baby Siller is a foreign National. Uncle Sam still wants that person s name and address. Taxpayers might also have to produce receipts to prove they re claiming the Correct child care costs. If a child care provider is in the United states inc irs cup cols overseas taxpayers to solicit name address and lamp Ayr id numbers by mail. Barbara Mchrmann. An official Wilh the irs in Bonn West Germany said no special allowances will be made because of the difficulty of data gathering. And Mcdonald and other tax advisers say that taxpayers who Don t cooperate Wilh the irs on its Mission might find their child care claims challenged and their tax refunds delayed because of non compliance. There arc other revisions to the tax code of which  should be aware. Here arc some of inc highlights with advice from tax experts where it s applicable personal and dependent exemptions this has increased to $2,000 for 1989 returns up $50 from the previous year. A taxpayer is allowed one exemption for himself one for a spouse and one for each dependent who was alive for at least one Day last year and meets a few other tests. Parents can no longer claim a full time student 24 years of age or older if that person had income of $2,000 or More. Standard deductions a single person who does not itemize deductions can claim a Standard deduction of $3,100, up $100 from last year. The increase was made to compensate for inflation. For a couple filing a joint return the deduction will be $5.200 this tax season for a married person filing separately. $2,600 a qualified head of household. $4,550. A single taxpayer or head of household is allowed another $750, if at least 65 years old or Blind or $ 1,500 if both a couple gets another $600 for each spouse who is Blind or at least 65. Or $2,400 if both arc Blind and at least 65. Tax brackets there have been some . The brackets have been widened by about 4 percent so that More income is taxed at a lower Rale. The idea is to compensate for inflation. Social Security numbers you must list on your return inc social so curly number of any dependent child 2-Ycars-old and up. This requirement which previously applied Only to children 5 and older is aimed at preventing parents who arc legally separated fro both claiming exemptions for the same child. Taxpayers must apply Foi a social Security card on behalf of each of their children but if it has t arrived by tax time simply list the child name and the words social so curly number applied for on your  Mann san chief Legal adviser with v corps in Frankfurt West Germany said some of his clients have wailed six months or More forthe numbers. Social Security is breaking at the scams trying to process All the applications he said. The irs is aware of the problem. Deducting consumer interest this year Only 20 percent of the interest on consumer debt credit cards automobile Loans education Loans and inc like can be deducted. Last year. 40 percent of the interest could be deducted. Tax adviser shills said this Rule still comes As a Shock twosome people even though it has been phased in Over the last several years. A lol of people Are still carrying a lot of consumer debt even though they be lost the  he said. Child care credits Here s an important change on child and dependent care credits thai was t mentioned earlier. This year parents can claim credits Only for children under age 13.dependents under 15 years of age previously qualified. Words to file by irs officials and military Legal advisers say a problem arises every Yea when Scricc members try to file their lax returns without enclosing All that s necessary. The biggest problem occurs when  attach their leave and earnings statement to their return instead of inc w-2 form. Soldiers who think icy re getting the jump on i hair buddies this Way arc making a big Misiac. Leave and earnings statements Aren t acceptable to inc irs. Trying to file in such a Way just delays whale Var refund you have coming. Tax obligations for the military because certain military payments Are not taxable service members Are sometimes confused As to what is and in t taxed. Taxable income d Active duty pay d Reserve training pay o re enlistment bonuses d service Academy pay d amounts received by retired personnel serving As instructors in Junior Roth programs o Lump sum payments upon separation or release to inactive duty o military retirement pay based on age or length of service for More information obtain internal Revenue service pub. 3, tax information Lor military personnel. Non taxable items o Basic quarters allowance o variable housing allowance o Basic subsistence allowance d uniform allowance o family separation pay o other quarters Cost of living allowances d moving and storage expenses provided in kind or reimbursements for actual expenses for permanent change of station moves d benefits under servicemen s group life insurance d death gratuity pay not More than $3,000 q forfeited pay but not fines d certain disability retirement pensions department of veterans affairs benefits including a insurance dividends. January 22,1990 is financial planning guide