Listed below are important reminders and other items that may help you file your 1998 tax return. Many of these items are explained in more detail later in this publication.

Taxpayer identification numbers. You must provide the taxpayer identification number for each person for whom you claim certain tax benefits. This applies even if the person was born in 1998. Generally, this number is the person's social security number (SSN). See chapter 1.

Individual taxpayer identification number (ITIN). A resident or nonresident alien who does not have and is not eligible to get an SSN can file Form W-7, Application for IRS Individual Taxpayer Identification Number, with the IRS to apply for an ITIN. An ITIN is for tax purposes only, but it cannot be used for purposes of the earned income credit.

Adoption taxpayer identification number (ATIN). If a child is placed in your home by an authorized adoption agency, you may be able to claim the child as your dependent and also claim certain tax credits. Generally, if you cannot get an SSN for the child until the adoption is final, use Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adoptions, to get an ATIN for the child. However, you cannot use an ATIN for purposes of the earned income credit.

Earned income credit not allowed. If the IRS determines that you should not have claimed the earned income credit for a tax year beginning after 1996, you may not be eligible to claim the credit for the next 2 years (10 years if you are denied the credit based on fraud). See chapter 37.

Advance earned income credit. If a qualifying child lives with you and you expect to qualify for the earned income credit in 1999, you may be able to get part of the credit paid to you in advance throughout the year (by your employer) instead of waiting until you file your tax return. See chapter 37.

Sale of your home. Generally, you will only need to report the sale of your home if your gain is more than $250,000 ($500,000 if married filing a joint return). Report the gain on Schedule D (Form 1040). Do not use Form 2119, which is obsolete. See chapter 16.

Adoption tax credit. You may be able to claim a tax credit for qualified adoption expenses paid in 1998. The credit can be as much as $5,000 for each child ($6,000 for a child with special needs). See chapter 38.

Adoption assistance. If your employer has an adoption assistance program and pays or incurs qualified expenses on your behalf, you may be able to exclude from your gross income up to $5,000 ($6,000 for a child with special needs) of these payments. See Publication 968, Tax Benefits for Adoption.

Medical savings accounts (MSAs). If you are covered only under a high deductible health plan, you may be able to participate in an MSA program. You can deduct contributions to your MSA even if you do not itemize your deductions. See chapter 23.

Long-term care expenses. You can include with your medical expenses your payments for qualified long-term care insurance premiums (up to certain limits) and unreimbursed costs for qualified long-term care of a chronically ill individual. See chapter 23.

Generally, benefits you receive under a long-term care insurance contract can be excluded from your income. See chapter 13.

Accelerated death benefits. Certain payments received under a life insurance contract on the life of a terminally or chronically ill individual before death can be excluded from income. This also applies to amounts received on the sale or assignment of the contract to a viatical settlement provider. See chapter 13.

Survivor benefits of public safety officers. Generally, survivor annuities paid to the spouse, former spouse, or child of a public safety officer killed in the line of duty can be excluded from income. This applies to officers dying after 1996. See chapter 13.

Qualified state tuition programs. For purposes of qualified state tuition programs, the term "qualified higher education expenses" now includes the reasonable costs for room and board if the student is carrying at least half of the normal full-time workload for his or her course of study. See chapter 13.

Individual retirement arrangement (IRA) for spouse. A married couple filing a joint return can contribute up to $2,000 each to their IRAs, even if one spouse had little or no income. See chapter 18.

Penalty-free IRA withdrawals to pay medical expenses and medical insurance. You generally pay a 10% additional tax if you withdraw funds from your IRA before age 59 1/2. However, you may not have to pay this additional tax if the withdrawals are not more than the amount you paid for unreimbursed medical expenses that are more than 7 1/2% of your adjusted gross income.

If you lose your job, you may not have to pay the additional tax if the withdrawals are not more than the amount paid for medical insurance for you and your family. See chapter 18.

Foreign source income. If you are a U.S. citizen with income from sources outside the United States (foreign income), you must report all such income on your tax return unless it is exempt by U.S. law. This is true whether you reside inside or outside the United States and whether or not you receive a Form W-2 or 1099 from the foreign payer. This applies to earned income (such as wages and tips) as well as unearned income (such as interest, dividends, capital gains, pensions, rents and royalties).

If you reside outside the United States, you may be able to exclude part or all of your foreign source earned income. For details, see Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad.

Faster ways to file your return. The IRS offers fast, accurate ways to file your tax return information. These include the following methods:

• IRS e-file (electronic filing),
• TeleFile, and
• Computerized returns. ~

For details on these fast filing methods, see chapter 1.

Private delivery services. You may be able to use a designated private delivery service to mail your tax returns and payments. See chapter 1 for more information.

Privacy Act and paperwork reduction information. The Privacy Act of 1974 and the Paperwork Reduction Act of 1980 say that when we ask you for information we must first tell you what our legal right is to ask for the information, why we are asking for it, how it will be used, what could happen if we do not receive it, and whether your response is voluntary, required to obtain a benefit, or mandatory under the law. A complete statement on this subject can be found in your tax form instruction booklet.

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