Taxes for Dummies : 1998 Edition Book

	Introduction	1
Part I	Getting Ready to File	5
Chapter 1	The U.S. Tax System and Rates	7
	Understanding Our Tax System	7
	Understanding Your Tax Rates	11
Chapter 2	Tax Return Preparation Options and Tools	17
	Doing Your Own Return	17
	Using IRS Publications	18
	Perusing Tax-Preparation and Advice Guides	19
	Buying Software	19
	Accessing Internet Tax Resources	20
	Hiring Help	22
	Finding Tax Preparers and Advisors	26
Chapter 3	Getting and Staying Organized	27
	Keeping Good Records	28
	Reconstructing Missing Tax Records	30
	Requesting Copies of Lost Tax Returns	35
	Understanding the Cohan Rule	36
Chapter 4	No Form Fits All (Or, What Kind of Taxpayer Are You?)	39
	What Rendition of 1040 Shall We Play?	39
	Choosing a Filing Status	41
	Protecting Yourself with the Innocent Spouse Rule	49
	Figuring Personal and Dependent Exemptions	52
	Securing Social Security Numbers for Dependents	56
	Filing a Return for Deceased Taxpayer	57
	Must I File?	57
	A Final Bit of Advice	60
Part II	Tackling the Various Forms 1040	61
Chapter 5	Easy Filing: 1040EZ and 1040A	63
	Who Can File a 1040EZ?	63
	Filling Out a 1040EZ	64
	Who Can File a 1040A?	69
	Final Instructions	84
Chapter 6	Form 1040: Income Stuff	85
	Lines 6a-6d: Exemptions	85
	Lines 7-22: Income	86
Chapter 7	Form 1040, Part Deux: Adjustments to Income Stuff	113
	Adjusted Gross Income	113
Chapter 8	The Rest of the 1040 and Other Yucky Forms	135
	Tax Computation	135
	Credits	143
	Other Taxes	151
	Payments	152
	Refund or Amount You Owe	155
	Finishing Up	157
Part III	Filling Out Schedules and Other Forms	159
Chapter 9	Itemized Deductions: Schedule A	161
	The Standard Deduction	161
	Itemized Deductions	163
	Lines 1-4: Medical and Dental Costs	165
	Lines 5-9: Taxes You Paid	171
	Lines 10-14: Interest You Paid	174
	Lines 15-18: Gifts to Charity	177
	Line 19: Casualty and Theft Losses	181
	Lines 20-26: Job Expenses and Most Other Miscellaneous Deductions	183
	Line 27: Other Miscellaneous Deductions	193
	Line 28: Total Itemized Deductions	194
Chapter 10	Interest and Dividend Income: Schedule B	197
	Part I, Lines 1-4: Interest Income	198
	Part II, Lines 5 and 6: Dividend Income	204
	Part III, Lines 7-8: Foreign Accounts and Trusts	207
Chapter 11	Profit or Loss from Business: Schedule C	209
	Schedule C-EZ	209
	Schedule C	210
	Basic Information (A-E)	211
	Accounting Method Stuff (F-H)	211
	Part I, Lines 1-7: Income	212
	Part II, Lines 8-27: Expenses	214
	Operating Loss	229
Chapter 12	Capital Gains and Losses: Schedule D	231
	Tax Basis Background	232
	What Part of Schedule D?	234
	Schedule D: Columns	234
	Figuring Your Profit or Loss	236
	Part I, Lines 1--7: Short-Term Capital Gains and Losses--Assets Held One Year or Less	237
	Part II, Lines 8--16: Long-Term Capital Gains and Losses--Assets Held More than One Year	239
	Part III, Lines 17 and 18: Summary of Parts I and II	243
	Use Schedule D When You Sell Your Home	245
	Use Schedule D for Other Issues Involving Stocks (Worthless and Otherwise)	248
	Use Schedule D for Nonbusiness Bad Debts	251
Chapter 13	Supplemental Income and Loss: Schedule E	255
Part I	Income or Loss from Rental Real Estate and Royalties	255
Part II	Income or Loss from Partnerships and S Corporations	262
Part III	Income or Loss from Estates and Trusts	263
	Part IV: Lines 37-38: Income or Loss from Real Estate Mortgage Investment Conduits (REMIC)	264
Part V	Summary	264
Chapter 14	Profit or Loss from Farming: Schedule F	265
	Basic Information (Lines A-Eb): Accounting Method Stuff	265
	Part I, Lines 1-11: Income	267
	Part II, Lines 12-34: Expenses	271
	Tax Issues Specific to Farmers	284
Chapter 15	Other Schedules and Forms to File	287
	Form 1040-ES, the Estimated Tax Form	287
	Form 2441, Child and Dependent Care Expenses	290
	Form 3903, Moving Expenses	292
	Form 8606, for Nondeductible IRAs and Eduction IRA's (Coverdell ESAs)	293
	Forms 8615 and 8814, the Kiddie Tax	296
	Form 8829, Expenses for Business Use of Your Home	297
	Form W-4, Employee Withholding	300
	Schedule H: Nanny Tax	302
	Schedule SE: Self-Employment Tax Form	303
	Schedule R: Credit for the Elderly or the Disabled	305
Part IV	Audits and Errors: Dealing with the IRS	307
Chapter 16	The Dreaded Envelope I: IRS Notices	309
	Finding Strength in Numbers	309
	Understanding the IRS Notice Process	310
	Assessing Assessment Notices	312
	Handling Nonassessment Notices	317
Chapter 17	The Dreaded Envelope II: Audits	323
	What You Should Know about Audits	323
	Surviving the Three Types of Audits	324
	Questioning Repetitive Audits	327
	Getting Ready for an Audit	327
	Winning Your Audit	328
	Understanding the Statute of Limitations on Audits	329
Chapter 18	Fixing Mistakes the IRS Makes	331
	Pointing the Finger: Common IRS Flubs	331
	Fixing IRS Mistakes: Fight Fire with Fire	332
	Sending a Simple Response to a Balance Due Notice	334
	Sending Generic Responses to Generic Notices	334
	Getting Attention When the IRS Ignores You	340
	Finding Your Refund When It Doesn't Find You	342
Chapter 19	Fixing Your Own Mistakes	347
	Amending a Return	347
	When You Can't Pay Your Taxes	349
	Abating a Penalty	353
	Abating Interest	359
	The Taxpayer Bill of Rights	361
	The Taxpayer Bill of Rights--Parts 2 and 3	362
Part V	Year-Round Tax Planning	365
Chapter 20	Tax-Wise Personal Finance Decisions	367
	Fitting Taxes into Your Financial Puzzle	367
	Taxing Mistakes	368
	The Causes of Bad Tax Decisions	372
Chapter 21	Retirement (Tax-Reduction) Accounts	375
	Retirement Account Benefits	375
	Types of Retirement Accounts	378
	Taxing Retirement Account Decisions	389
Chapter 22	Small Businesses and Tax Planning	397
	Organizing Your Business Accounting	397
	Minimizing Your Small-Business Taxes	400
	To Incorporate or Not to Incorporate	405
	Investing in Someone Else's Business	409
	Buying or Selling a Business	410
Chapter 23	Your Investments and Taxes	411
	Tax-Reducing Investment Techniques	411
	Tax-Favored Investments to Avoid	417
	Selling Decisions	420
Chapter 24	Real Estate and Taxes	425
	Real Estate Tax Breaks	425
	Purchasing Your Own Palace	428
	Making Tax-Wise Mortgage Decisions	432
	Selling Your House	435
	Investing in Real Estate	437
Chapter 25	Kids and Taxes	441
	Bringing Up Baby	441
	Education Tax Breaks and Pitfalls	445
	Taxes on Your Kiddies' Investments	451
Chapter 26	Estate Planning	455
	Will I Owe Estate Taxes?	455
	How High Are Estate Taxes?	457
	Reducing Expected Estate Taxes if You're Rich	458
Part VI	The Part of Tens	467
Chapter 27	Ten Important Tax Law Changes	469
Chapter 28	Ten Important Tax Questions	475
Chapter 29	Ten Proven Ways to Avoid Audits	479
Chapter 30	Ten Often-Overlooked Tax-Reduction Opportunities	483
Chapter 31	Ten Interview Questions for Tax Advisors	487
Appendix A	Reaching OUt to the IRS	491
Appendix B	Glossary	499
Appendix C	Tax Forms	511
	Index	583