Important Reminders

The following reminders and other items may help you file your tax return.

Principal agricultural activity codes. You must enter on line B of Schedule F (Form 1040) a code that identifies your principal agricultural activity. It is important to use the correct code, since this information will identify market segments of the public for IRS Taxpayer Education programs. The U.S. Census Bureau also uses this information for its economic census. See the list of Principal Agricultural Activity Codes on page 2 of Schedule F.

Business use of your home. You may be able to deduct expenses for your home office even if it is not where you perform your most important business activities or spend most of your business time. See chapter 5.

Child tax credit. You may be able to claim a tax credit for each of your qualifying children under the age of 17. The credit can be as much as $500 for each qualifying child. See your income tax package for details.

Estimated tax. When you figure your estimated tax, you must include any alternative minimum tax you expect to owe. See chapter 14 and Publication 505.

Averaging of farm income. Individual farmers can choose to average all or part of their taxable farm income. See chapter 4.

Voluntary withholding. You can request income tax withholding from the following payments on Form W-4V, Voluntary Withholding Request.

1. Commodity Credit Corporation (CCC) loans.
2. Certain crop disaster payments received under the Agricultural Act of 1949 or title II of the Disaster Assistance Act of 1988.
3. Social security benefits.
4. Unemployment compensation.
5. Certain other government payments.

See chapter 4 for information on CCC loans and disaster relief payments.

Direct deposit of refund. If you are due a refund on your tax return, you can have it deposited directly into your account at a bank or other financial institution. See your income tax package for details.

Change of address. If you change your home or business address, you should use Form 8822, Change of Address, to notify the IRS. Be sure to include your suite, room, or other unit number.

Written tax questions. You can send written tax questions to the IRS. You should get an answer in about 30 days. Call 1-800-829- 1040 if you need the address.

IRS e-file (electronic filing). You can file your tax returns electronically using an IRS e-file option. The benefits of IRS e-file include faster refunds, increased accuracy, and acknowledgment of IRS receipt of your return. You can use one of the following IRS e-file options.

1. Use an authorized IRS e-file provider.
2. Use a personal computer.
3. Use a telephone if you receive a Telefile Tax Package.
4. Visit a VITA or TCE site.
5. Use an employer or financial institution.

For details on these fast filing methods, see your income tax package.

Overdue tax bill. If you receive a bill for overdue taxes, do not ignore the tax bill. If you owe the tax shown on the bill, you should make arrangements to pay it. If you believe it is incorrect, contact the IRS immediately to suspend action until the mistake is corrected. See Publication 594, The IRS Collection Process, for more information.

Comments on IRS enforcement actions. The Small Business and Agricultural Regulatory Enforcement Ombudsman and 10 Regional Fairness Boards were established to receive comments from small business about federal agency enforcement actions. The Ombudsman will annually evaluate the enforcement activities and rate each agency's responsiveness to small business. If you wish to comment on the enforcement actions of the IRS, call 1-888-734-3247.

Treasury Inspector General for Tax Administration. If you want to confidentially report misconduct, waste, fraud, or abuse by an IRS employee, you can call 1-800-366- 4484 (1-800-877-8339 for TTY/TDD users). You can remain anonymous.

Publication on employer identification numbers (EIN). Publication 1635, Understanding Your EIN, provides general information on employer identification numbers. Topics include how to apply for an EIN and how to complete Form SS-4.

Form W-4 for 2001. You should make new Forms W-4 available to your employees and encourage them to check their income tax withholding for 2001. Those employees who owed a large amount of tax or received a large refund for 2000 may need to file a new Form W-4. See chapter 16.

Earned income credit. You, as an employer, must notify employees who worked for you and from whom you did not withhold income tax about the earned income credit. See chapter 16.

Form 1099-MISC. File Form 1099-MISC if you pay at least $600 in rents, services, and other income payments in your farming business to an individual (for example, an accountant, an attorney, or a veterinarian) who is not your employee.

Children employed by parents. Wages you pay to your children age 18 and older for services in your trade or business are subject to social security and Medicare taxes. See chapter 16.

Farmers and crew leaders must withhold income tax. Farmers and crew leaders must withhold federal income tax from farm workers who are subject to social security and Medicare taxes. See chapter 16.

Social security tests for seasonal farm workers. If you pay seasonal farm workers less than $150 in annual cash wages, the wages are not subject to social security and Medicare taxes, even if you pay $2,500 or more to all your farm workers. The seasonal farm worker must meet certain tests. See chapter 16.

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 Publication 969, Medical Savings Accounts (MSAs).

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