| How to claim the rate reduction credit |
|
|
|
A caution here: If you were claimed as a dependent
on someone else's 2000 or 2001 return, you're not eligible for the
credit. Instead, the IRS says these filers should complete the "Tax
Computation Worksheet for Certain Dependents" that came with
the tax return instructions to get the benefit of the lower tax
rate. Taxpayers who were dependents in 2000 but not last year, should
file for the rate reduction credit.
EZ filers will find the credit on line 7. The form
refers you to the worksheet on page 14 of its instructions.
This five-line worksheet helps you determine whether you can claim
the credit and if so, walks you through the computation process.
A couple of addition and subtraction moves later, you'll see if
your wallet's a bit fatter this tax time.
The process is the same for filers of the other two
forms, only the credit's line location changes and the worksheet
is, not surprisingly, a bit longer. This is because some other tax
breaks (for example, child care or education credits) you may claim
on these longer forms could reduce the amount of your rate reduction
credit and so they must be tallied here.
1040A filers will find the credit on line 30. The
form's nine-line worksheet is on page 36 of its instructions.
Again, simply follow the instructions using the tax information
you've already gathered to file your return.
If you file the long Form 1040, the worksheet (nine
lines, too) can be found on instructions
page 36. Any additional credit amount should be entered on line
47 of your return
If you've already filed and messed up this credit,
you can correct it by submitting an amended
return. Wait, however, until the IRS processes your original
return. The agency is checking all paper returns to make sure the
rate reduction credit line is handled properly. In many cases, the
IRS will make the correction and notify taxpayers of any change
it makes to returns.
And what happens if you're one of the lucky few who
finds you actually got too much of a rebate last year? Well, in
this instance your Uncle Sam is feeling generous. Each worksheet
notes that if your figures reveal such an error in your favor, you
do not have to pay back the difference.
|
