Raoul The Taxman
Greetings, RAP'ers. Hola and Jo, Jo, Jo. A little late, but I hope you've all had a Merry Christmas, Happy Janukkah, and Healthy New Year.
Some of you may have noticed that you have not heard from me for a few months. So, tough! Raoul occasionally has some problems of his own, you know. In addition, I was recently called for an emergency tax consultation by my good amigo, General "Grapefruit Head" Noriega. You think you have problems? Try to find an electrical outlet for your calculator in a tropical rain forest! Incidentally, if any of you know of the General's whereabouts, please let me know by writing to R.A.P.. Raoul is starting to have some serious worries about getting his bill paid.
I thought that as a new tax preparation season approaches, this would be the most excellent time to tell you about some new developments and changes that will apply to 1989 tax returns; and since many of you veteran radio guys are well into a family as well as debt, I'll focus a little on the rug rats for you. Most of the changes for 1989 tax returns are actually a continuing phase-in of the 1986 Tax Reform Act (a.k.a. El Stinko Grande); however, there are a few new items which I think will be of interest, so I'll start with those.
Child Care Credit: You know that cute, pubescent high school cheerleader with the dynamite little bumps in her sweater that takes care of your kids after school? Get her social security number. No credit will be allowed by the IRS unless you have an ID number for the service provider. That not only means little Suzy up the street, but also Kick'em, Beat'em, and Starv'em Day Care Center, as well as Aunt Minnie. Check out the instructions for form 2441.
The Kiddie Tax: No joke! There really is a Kiddie Tax, since 1987. This provides for children under age 14 with passive income in excess of $1,000, paying tax at the same tax rate as their parents. Of course, the parents usually have a higher tax bracket. This was done on form 8615. Well this year, the IRS has given the parents the option to include the kiddies' income on their own return, provided it's less than $5,000 per child. Incidentally, if your kid earns $5,000 in interest and dividends, see if they would be interested in investing in a Panamanian health spa. I also have a few options remaining for condominiums on the moon.
The Fetus Tax: This is a joke. We don't have one yet, but Raoul will bet you his banana that it's possible. You heard it here first!
Here are some developments related to the continuation of prior 1986 law:
Standard Deductions: If you don't itemize deductions (Remember in the Aug. '89 issue: To qualify you usually have to have a mortgage, or cancer with no health insurance), the standard deductions have increased as follows:
Married filing joint $5,200
Married filing separate $2,600 (tough luck on the divorce, Paco)
Head of Household $4,550
Personal Exemptions: These have increased from $1,950 to $2,000...Ole'
Well, there you have it. I've done what I could, but as usual, you're basically on your own. Look forward to next month's R.A.P. with Raoul when I will give you my tax tip of the decade.