April 17, 1989
New Tax Provisions in Effect
Before you forget about taxes for another year, the IRS says
you should know about some law changes now in effect. Start
planning now for these provisions which will affect many taxpayers
filing their 1989 income tax return next filing season.
On 1989 returns taxpayers claiming a dependency exemption for a
child who will be two years old by the end of 1989 will need a
social security number for the child. Previously this requirement
applied to children age five or older. Taxpayers should apply for
their child's social security number by filing Form SS-5 with the
Social Security Administration.
The IRS also noted there is another important change in the
rules for claiming dependency exemptions -- this one concerning a
child who is a full time student. Beginning in 1989 you may not
claim a dependency exemption for a child that is 24 years old by the
end of 1989 and had income over $2,000, even though the child was a
full time student. Previously, there was no age or income limit if
the child was a full time student. The IRS said that taxpayers
affected by this change may want to consider adjusting their
withholding by filing a new Form W-4 with their employer.
New rules now apply for working people who claim the child and
dependent care tax credit or exclusion for employer provided
dependent care assistance as well as for the child and dependent
care providers. Beginning in 1989 care providers are required to
give their taxpayer identification number (TIN) to any client who
wishes to claim a tax credit or exclusion. Also, taxpayers claiming
the tax credit or exclusion must put the correct name, address and
TIN of the care provider on their 1989 income tax return. The IRS
has developed Form W-10, Dependent Care Provider's Identification
and Certification, for taxpayers to use when securing this
information from care providers. This form is available at IRS
offices or by calling 1-800-424-3676.
The IRS also reminded taxpayers who are eligible for Medicare
Part A, that a supplemental Medicare premium must be computed and
paid with their 1989 federal tax return. According to the IRS,
these taxpayers should consider either increasing their federal
estimated tax payments or their withholding to cover the premium.
However, the IRS noted that for 1989, no estimated tax penalty will
be charged based on underpayments of the supplemental premium.
Additional information is contained in Publication 934, Supplemental
Medicare Premium, available at many IRS offices or by calling
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