Woman; 418; Women and Taxes

Hey woman. And good evening and welcome to woman. Tonight's topic taxes yours mine and how some of us are discriminated against. With me to tell all is Martha Gates. Martha is the author of coping a survival manual for women alone. She is a freelance writer and lecturer and an occasional employee of the Internal Revenue Service. Martha welcome. Thank you. Martha is it important to keep records. Yes it's every little thing I know so many people who keep every little slip of paper. It isn't necessary to keep every little thing but a canceled check will not do it. As far as record keeping is concerned you do need receipts now for instance on mileage. It's good to keep along the mileage when you leave home the mileage when you get back so

forth on a business trip. Receipts restaurant receipts receipts for gifts receipts for entertainment and so forth. Some things you must keep but not everything. I've been studying forms in preparation for your visit. They're intimidating at the incredibly intimidating and it seems to me it's time for another Boston Tea Party. All right you say you know all of the changes in this year's films. Am I crazy or is it getting incredibly complicated. It's a little more complicated because this year everybody will have to do some computation of taxes for instance on the new 10:40 commonly known as the short form on the back of it. Line 13. First of all you have to be very careful about your filing status and that's explained on the front of the form. Single married filing jointly return married filing separately unmarried head of pastoral qualifying widow or widower and then you have to be very careful about that because when you go to the back of the form you have to

go to a certain lawn depending on which filing status block you chick and then you have to do some arithmetic. Take a percentage of the law and so forth and work it on. Multiply the number of exemptions by seven hundred fifty for instance. You remember last year we had the 30 per exemption right. This year it's been raised to $35 or 2 percent of another line so there's a great deal of arithmetic involved it isn't a simple as it used to be. I can see everyone with their pocket computers rattling credit on the other hand for it and I hope everybody get one for Christmas. Does everyone have to file. No not everyone has to file anyone. Let's start at the bottom with earned income interest income. Young people who have savings accounts and so forth if they have interest earned income of seven hundred fifty they would have to file. The right's different for different categories of course.

A single person under 65 who has a gross income of two thousand four hundred fifty would have to file and it goes on through the various categories head of household so forth married filing jointly if both are over 65 for instance gross income of fifty one hundred dollars. And you have to really look and see in which category you fall. But when you consider two thousand four hundred fifty as the lowest in these categories practically everybody does have to file. And even if they don't have to file a return they may want to file to get a refund if they're entitled to a refund don't have to pay taxes. So practically everybody in the country does file are there. I know it's easy for you to know all the forms necessary but for the average person is it hard to know which form to you. Yes it is the simplest of course is the ten forty A The short form then the common form is the ten forty used when you're sober.

Then for the itemized deductions and interest you'd use the A B schedule a B. Those of the commonest most people know those but it can go on into such things as and retirement income which has another name this year. If someone is getting royalties and slime from a book I'd need to schedule B their forms for moving expenses childcare their forms for just about everything and effort has been made in excuse me to cut down on the forms but it's almost impossible. Well you must have several forms. How many for maybe you know for night filing season 1977. Don't need the ten forty because itemizing need a B because of the item ask. Interest income because of my royalties Schedule E. I'm going to income average schedule G. Made some gifts that Schedule 7 0 9 if I remember correctly Schedule C for my business expenses. It's very complicated it can

be I mean I'm going to have a sheaf of things like that and this and then they're going to have to take a week go up with a liberal. Is it important to budget. I know the thing that happens to almost everyone if you're caught and you realize that you have a big amount of money to put in the Internal Revenue Service Yeah. Well excuse me the audio of course is to have had enough taxes withheld from a salary or to have paid estimated taxes during the year so that you will not have to pay a large sum come April 15th. But it doesn't always happen people's income can change they can earn royalties or get a pension or a number of things so that their income increases and they have to file an estimated tax and hopefully to make up for the tax they haven't paid. But not everybody gets a refund. Of course most people do have to pay taxes that they will use to be able to. Breakeven and budgeting is the hardest thing in the world to do I think it's hard in

any circumstances the government has set Gad lines they recommend that a fourth of your budget be allocated for taxes. A fourth food for us for housing or for insurance miscellaneous and so forth. I think realistically when you consider a federal state local sales taxes gasoline taxes you're probably paying more than a fourth. But you can be pretty safe to work with a fourth even a fourth seems like a lot. No it is a lot when you think about it a fourth of everything that you're in that's 25 cents of every dollar is going. Taxes I think it's more than that really. Is there any rule of thumb so that you know how much to withhold to help withheld the best thing you can do is look at a 10. For a person who's working residence. And I told you it's new this year. On the back of it it isn't a simple as it used to be nothing is simple anymore you have allowances extra allowances for credits allowances

for itemizing so forth. There are a lot of allowances and I know that people are not aware. For instance a single person with one employer can take an extra allowance can take an extra allowance for dependents and so forth. A lot of people like to have as a little withheld as possible but I think you have to be realistic about it too and probably lives two years and counting last years taxes would be the best guideline to go on unless the income does change drastically during the year. So that's one thing you know is getting caught up in April and they're not Lorad us for a lot of people filled out the W-4 and I suppose zero exemptions. What's the difference. Maybe some people won't know what a W-4 is. We all know what a W-2 is maybe should tell us about both of them. Oh right the W-4 is the form you fill out when you're employed and on it you have your name your Social Security number and then a list of allowances now

these have nothing to do with a number of existing exemptions of dependents that you will have when you file your return. But it tells the employer how much to withhold. From your paycheck and there are allowances for instance people over 65 have an allowance. There's an allowance for blindness and so forth and these other allowances that I mentioned it can add up to a great many. So that very little is withheld. But then again you have to be realistic and see what might happen during the year that may work out perfectly well and you may still get a refund if you have a lot of itemized deductions a lot of exemptions would be would work out well and to the W2 is the little form that we're supposed to get from how employee is by January the thirty first of every year and frequently some employers have been very lax about that for instance. I'm not pointing any fingers or anything but I'm just naming this as an example. Some fast food chain and

chain store restaurants that highest seasonal help students during the summer. They probably have a large turnover during the year. Sometimes they have very very slow about sending out the W to see if they do a lot of times the student doesn't employ you have any recourse. Yes now they do. It has been the law all before now that the employer was required now there's a $25 penalty. If they do not furnish the W2. So I think that would be strictly enforced from here on at let's talk. Little bit about married women and taxes. Is it true that most couples filed jointly. Yes there's a tax advantage there's a very real tax break when you look at your tax tables you see the different columns. Single people are taxed more heavily than anybody else and you've got the married filing separately. The best excuse me best category is married filing jointly the taxes are lower. So it's advantageous but I think every woman should be aware of the fact that when she signs that

return whether she has earned income at all she's responsible for every item on that return even if she's never read it. And I'm afraid there are some wives whose husbands just put the wife's son. I have no idea what it's about. Fact it appalls me that some women seem to be proud of the fact that they don't know anything about income tax returns don't know what the husband's made a list year. I don't know what the taxes were. I don't know anything about it. But they're responsible if their name is say on what you said an interesting thing to me earlier and that is that women can be discriminated against simply because they aren't well informed and they don't inform themselves that they certainly should know about that. For instance we were discussing divorced women if they have been filing jointly with their husbands they should certainly be aware of the fact that they are still responsible for those returns for instance if the return is audited. They're still responsible if their names are on it.

There's something new this year that married women will be particularly interested in that's the child care credit. Can you explain that so it makes some sense. It is no longer an itemized deduction. You remember on the back of the B where you had itemized deductions there was a line for childcare. Now it's a credit against the tax. There's a new form to be filled out and this year something of importance is that the wife does not have to be working. She can be a student. As far as that's concerned the husband can be a student they could both be students. And there is a formula worked out they can and they have to follow the form very closely. And there again this tax computation. But there is an allowance if a person is a student so much per week as income. She can have that credit if she's not working though or not a student. Right right. Yeah that would have to be so in other words if she's a woman staying at home full time obviously there's not going to be a childcare credit because

she can take care of the child. Right. Also there's something about domestic help that you think with married women I don't know that certainly if a woman has domestic help she certainly is responsible for filing a quarterly return 940. If the if she's paying wages of fifty dollars and fifty dollars and more a quarter a quarter but go back to the childcare a second is this better this credit. Is this better than having it be a deduction. Well one big advantage now one change that was made is that there is no income limitation. Previously people made over a certain amount they weren't entitled to it at all or wouldn't wouldn't be able to claim it. I think that the changes that have been made for instance it says before it said gainfully employed net cest seeking employment also. Or the student thing I think is very good. Someone would just have to sit down and work it out there are still

limitations to it. There are still. You have to take the lists of certain amounts and so forth but if they can take anything at all as a credit that's to the good. Are there other exemptions for married women who work other than the childcare credit that are different this year or is everything pretty much the same. Everything is pretty much the same the W-4 and the childcare are the two most important things that have been changed. What about single women single piano in general are very discriminating when I say oh they we can't say just single women except for the fact that there are more of us than there are of them. More single women than men. But there is an organization a nonprofit organization in Washington that has been lobbying for tax equity and if anyone questions the fact that this is needed they should look at the tax tables and the to single people are always taxed more heavily than the married people married filing jointly especially. And the organization is called

cost committee of single taxpayers. They're at 16 28 21st Street Washington zip is 2 0 0 0 9. If someone wants to write them and get some information they have had effect in the past and trying to equalize the taxes. And I hope they will have more in the future because it's very very difficult for a single person who probably doesn't have exemptions and dependents who may or may not itemize who's probably renting and not taking the advantage of mortgage interest tax deductions. Very difficult for them because they are in this high tax bracket. And I think it's unfair that the single head of household unmarried had passed you know this is a category in which a lot of widows and divorced women fall. Now the widows are a special case because during the year and the year in which her husband had say a woman's husband in 76 when she filed her return

in 77 she if she filed jointly with him she can file a joint return and for the next two years if she meets certain standards that's qualified to file jointly if she has a dependent child for whom she maintains the house so if she remains unmarried during the tax year she can still file in what is in a fit married filing jointly. And then after that she and the divorced woman would file as unmarried head of household and that's in the column too. It is the tax advantage their taxes not as high as those of single women without children. Have there been changes in the estate tax. Yes and it's all to the good. As you know until this year there was a $60000 exclusion from anyone's estate. In other words only the amount over 60000 was taxed. That's been raised for seventy seven to one hundred twenty thousand six six six. And by 1981 I think it will be up to one hundred seventy

five thousand if I'm not mistaken. It's a great increase Yes and it will help. I think this was primarily Sandy due to the fact that attention was brought to the plight of farm wives who work alongside of their husbands even more. For instance another married woman whose husband goes up and works and the married woman stays at home. Can it be said to have a particular interest in his talking about a financial interest in his business a profession where as a farm wife does because her labor there with her husband is vital to the operation of the film. So because of this the estate taxes have been changed and it will help them greatly. What about buying you know going back to married women. What about buying savings bonds for your children. What do you do about those when it is that good interest. It's a good investment and it's a question a lot of parents raise. Do I report the interest does my child report with interest what do we do. What is the answer. Alright well first of all

we go back to that seven hundred fifty dollar earned income when a parent buys a bond for a child the parent should be named as a beneficiary not co-owner which goes against everything I've always preached about co-ownership in order to avoid the state taxes but this is a different case. In this way the parent is not responsible for the payment of taxes on the interest. During the first year in which the bonds are bought they should file a return in the child's name stating the intent of filing annually if they interest it is about $750 and that's all or as to that. That's very interesting because I know that's a frequently unless you know what. What about self-employed women self-employed women do have a special problem. They're not having taxes withheld from a salary obviously since the self-employed so they go and they're going to have to pay not only their own taxes but

their Social Security taxes so they have to fill out some forms and yes and then a c. If a woman who has her own business has employees excuse me then she'll have to file quarterly returns for the employees and 941 an annual 940 if she's for unemployment taxes. It's pretty complicated but the IRS does help in all cases let's not paint a black picture they will help anyone from a 10 40 on to the more complicated situations. And a woman who's opening a business of her own should certainly get publication 3 3 4 which is included in the small business in the business kit. And would you get that by sending to the IRS. You usually have to go in and pick it up sometimes they'll mail and pens on law office. But it has all of the information excuse me that she would need about filing and keeping records and why they were you on top of the you know the

bills before Congress to provide Social Security for homemaker. Yes I was very interested in that. Did it dad in committee as you know. Yeah. Is there any chance do you think I don't know if it would have to be reintroduced. There is a lot of controversy bad of course. I think one of the things that killed it was the fact that no one really knew how to implement it should be voluntary should it be involuntary. Who pays into it. There's the husband. Is it matched. There are a lot of and answered questions I think it's valid though because I was full time homemakers and 57 percent of the married women in America still are full time homemaker is not employed outside the home. They have no disability insurance they have no social security Cowbridge they're really very protected. They're entirely dependent on whatever their husbands can do for them in the way of insurance and so forth. So I hope it will be reintroduced. I hope that will be worked at so that it is

viable and will be passed. What about the displaced homo. I went to her that that was killed in committee and nearly cried as you know the California displaced homemakers act was the prototype for that. Maybe we should explain to people exactly what it is. It's a beautiful thing it really is. It's an act way about women who through death or divorce for instance are thrust into a life alone are counseled for that traumatic period immediately after death or divorce are helped to use their life skills there again. The homemaker who says I can't do anything and she's been doing something all of her life. These women to help to utilize those in order to earn a living. There's training available. The act is wonderful I think it's excellent and I think it's needed nationally. And Barbara Jordan and Yvonne Burke introduced the bill. And it went to

committee and it was killed. And I hope they will reintroduce it and I'm going to do everything in my power to help its passage because I think it's vitally needed. Someone asked me one time well why just for women why not for men. The only answer I can say is that a woman who spent her whole life as a homemaker is not prepared to go out and earn a living whereas a man who has been divorced whose wife has done has been working but he still has some lines of income that he probably will have the emotional problems that the woman has. And why not open the centers to them to them and if needed. Speaking of committees Let's talk for a minute about the Ways and Means Committee. They are are they not responsible for all of the decisions about our time. That's right and if you have any problems if you have any complaints I would urge anybody to write to them. Do you really think that that's some good right coming in your own congressman. Yeah and right to the Ways and Means Committee. Why not.

I think most people think that the policy is made at the Internal Revenue Service. And no really no no no no. No. Far from it the tax laws are made in the Ways and Means Committee and they give in to the Internal Revenue Service to enforce and also to help the public with you know we forget sometimes we think of the Internal Revenue Service as a collective service. There are tax payers service branches and they are the ones who help. Let's talk for a second about newly divorced women. Lots of women don't realize that alimony is to be counted as in go right. They certainly don't live there they're so pleased when they were awarded a large amount of alimony but it is taxable to them tax deductible for the hospital not childcare is not taxable. Child support child support I'm sorry. Child support is not taxable so I would urge a woman if she has a choice and has children by all means take child support instead of it is also some time some confusion as to

which parent can claim the child as a dependent. What are the guidelines for that. The Gad have not been changed this year especially except in one sense and it's a very important since he had a 4. If the decree did not state which parent could take the child as a as an exemption as a dependent. Usually the cussed total parent. I was able to claim him or her. However if the non-custodial parent contributed so much per year per child and the decree stated that then they could claim the amount this year has been changed for 977 it's something that I think all men and women facing divorce or having gotten a divorce should thank a bat and go and consider very carefully now the husband all of the non-custodial parent will have to contribute twelve hundred dollars a year per child and that can my amount up on quite a few children.

What about filing jointly after a divorce the year of the divorce. Well I would advise against it definitely. Why would you go there again the wife is going to be responsible for that. If she sends it. And if there's an audit she's going to be responsible of taxes and she's going to be responsible if there's a penalty or interest she's going to be responsible. And I really don't think what is she doing she's helping him to file in a lower tax bracket but filing jointly with them and I think that he may decide then just to see if if you are divorced and your husband supports you totally He's not entitled to claim you as an exemption and that rights last run. No as an exemption you are not. He can claim you as an exemption but not a dependent a RIF is never dependent on exemption. All right. We talked a little bit about Social Security for home makers but I'm not sure that we made it absolutely clear the way that the women are discriminated against in the Social Security benefits. Can we talk

particularly about widows. Are there ways that the widows are discriminated against. Not that not the single heads of household and the other people. Well widows who don't have children really are just thrown into the category of single single taxpayers. As far as taxes are concerned. I don't think Social Security payments for the woman who stops claiming them herself are adequate. Would you advise women in that situation to write letters. Surely in all situations whether we're out of time. I thank you for the information and thank you for watching and good night. This program was produced by w n e d TV which is soley responsible for the

content. Make your funding was provided by public television stations. Additional support was provided by unrestricted general program grants from the Corporation for Public Broadcasting and the Ford Foundation a.