New Tax Bill Gives Immediate
Refunds to Some Taxpayers

WASHINGTON - Recently signed legislation has three retroactive provisions which may result in refunds for many taxpayers. The new law reinstates for all of last year some tax benefits which had expired on June 30, 1992.

About 3 million self-employed persons may be able to claim a larger 1992 deduction for health insurance premiums. To qualify, they must have a net profit from self-employment or receive wages from an S corporation in which they were a two percent or more shareholder. They also must not have been eligible for coverage by health plans sponsored by their employers or, if filing jointly, their spouses' employers.

To claim this deduction for the second half of 1992, qualified taxpayers can use the worksheet on page 21 of the 1992 Form 1040 instructions. They should substitute their full-year payment total for the half-year figure on the first line and use 100 percent instead of 50 percent on line 5 of the worksheet. They should then refigure their tax and claim any refund by filing Form 1040X, Amended U.S. Individual Income Tax Return.

Taxpayers who received financial educational assistance from their employers in 1992 may also be entitled to refunds of income and social security taxes paid. The exclusion from income of up to $5,250 of such benefits applies retroactively to July 1, 1992. The IRS expects to issue guidance soon on how employers and employees can receive reimbursement for social security and income taxes paid on these benefits.

The new legislation also repeals the treatment of charitable contributions of appreciated property as a tax-preference item for determining the alternative minimum tax (AMT). This means that for AMT purposes, taxpayers will not be limited to deducting the property's cost rather than its current value.

For tangible personal property, this repeal is retroactive to July 1, 1992, and could result in refunds for 1992. For intangibles and real property, the change is retroactive to January 1, 1993. Taxpayers who included this tax-preference item in computing their 1992 AMT should refigure their tax and claim any resulting refund by filing Form 1040X.

Taxpayers can get Form 1040X at local IRS offices or by calling 1-800-TAX-FORM (1-800-829-3676).

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