1997 Tax Help Archives  

Tax Computations

This is archived information that pertains only to the 1997 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

What is the standard deduction for last year?

The standard deduction is a dollar amount that reduces the amount of income on which you are taxed. The amount of the basic standard deduction depends on your filing status. If you are single, your basic standard deduction for last year is $4,150; head of household - $6,050; married filing jointly or qualifying widow or widower - $6,900; or married filing separately - $3,450. Refer to Tax Topic 551, Standard Deduction, for additional information, or Publication 501, Exemptions, Standard Deduction, and Filing information.

Will IRS figure the amount of tax and credits for taxpayers?

If you choose, the IRS will figure your tax on Form 1040EZ, Form 1040A, or Form 1040. Refer to Tax Topic 552, Tax and Credits Figured by IRS, for more information. However, there are several requirements you must meet. Refer to Publication 967, The IRS Will Figure Your Tax, to see if you qualify and for details on what information you must provide us, such as which lines you must fill in and which forms you must complete and attach to your return.

My daughter is my dependent and receives dividend income. Does she need to file a federal income tax return?

A federal income tax return usually must be filed for a child whose income included investment income, such as interest and dividends, and totals more than $650. There are special rules that affect the tax on certain investment income of a child under age 14. For more information, refer to Tax Topic 553, Tax On A Child's Investment Income, or Publication 929, Tax Rules for Children and Dependents.

In addition to my regular job, I had a part-time business fixing cars. Do I have to report the money I made fixing cars?

Yes. This is self-employment income. You must report it on Schedule C or C-EZ Form 1040. You may also have to file Schedule SE and pay self-employment tax. For more information, refer to Tax Topic 554, or Publication 533, Self-Employment Tax.

What are the tax options for lump-sum distributions from retirement plans?

Special tax computations are allowed for qualifying recipients of certain lump-sum distributions from retirement plans. Refer to Topic 412 which discusses Lump-Sum Distributions, or Publication 575, Pension and Annuity Income (Including Simplified General Rule).

What is alternative minimum tax?

The tax laws give preferential treatment to certain kinds of income and allow special deductions and credits for some kinds of expenses. The alternative minimum tax attempts to ensure that all individuals who benefit from these tax advantages will pay at least a minimum amount of tax. The alternative minimum tax is a separate tax computation that, in effect, reduces the benefit of certain deductions and credits, thus creating a tax liability for an individual who would otherwise pay little or no tax. You may have to pay the alternative minimum tax if your taxable income for regular tax purposes, plus any of the adjustments and preference items that apply to you, is more than a specified exemption amount. To determine if you may be subject to the alternative minimum tax, see the Form 1040 instructions for line 48, or refer to Form 6251, Alternative Minimum Tax - Individuals.

How do I deduct the administration expenses of my parent's estate?

Expenses of administering an estate can be deducted either from the gross estate in figuring the federal estate tax on Form 706 or from the estate's gross income in figuring the estate's income tax on Form 1041. However, these expenses cannot be claimed for both estate tax and income tax purposes. In most cases, this rule also applies to expenses incurred in the sale of property by an estate (not as a dealer).

For more information, see Publication 559, Survivors, Executors, and Administrators, designed to help those in charge of the property (estate) of an individual who has died. Also, see Publication 950, Introduction to Estate and Gift Taxes.

Tax Topics & FAQs | Tax Help Archives | Home