Don't forget to double-check that return

By Martha McNeil Hamilton
Washington Post

Every year, millions of taxpayers' returns are questioned or rejected because of minor errors or omissions. Mistakes, notes the Internal Revenue Service, delay processing of returns and refunds. The IRS lists some areas where double-checking is recommended:

• Enter the names and Social Security numbers of yourself, your spouse and your dependents. Include those of children for whom you are claiming the child credit or the earned income tax credit.

• Include your daytime telephone number next to your signature on the return. The IRS can often resolve a problem quickly with a phone call.

• If you use the tax tables, be sure to use the correct column for your filing status.

• Sign and date the return. It's amazing how many people forget to do this. And if you are filing a joint return, your spouse must also sign and date it.

• Attach Copy B of the W-2 form from your employer or employers.

• If you owe tax, enclose a check or money order with the return, and write your Social Security number, the tax form (Form 1040, for example) and the tax year on the payment. Make the check payable to "United States Treasury." Note that you are also allowed to pay by credit card or, if you are filing electronically, by electronic withdrawal of the money from your bank account.

• If you are mailing your return, the address may be different from last year's because the IRS has changed the filing location for several areas. If you received an envelope from the IRS, use it. If not, check the filing directions with your return.

• If you go to the IRS Web site — www.irs.gov — for information, be sure any forms, publications and instructions are for tax year 2002. The site also has material for past years and guidance for 2003.

Addition to the family?

• If you had a baby last year, add him or her to your exemptions.

• There is a credit of up to $600 per child available to many families. Don't forget it. Also, low-income workers can benefit from the earned income tax credit.

• You may want to adjust your withholding to factor in the child credit. That way, you get less withheld from your paycheck, giving you money sooner. Also, if you are eligible for the earned income credit, consider applying for the credit in advance. You may be able to get part of it in your paycheck during the year — again giving you money sooner.

Home, sweet tax shelter

• If you sold your home last year, you generally do not need to report the sale unless the gain is more than $250,000 for a single person or $500,000 for a couple filing jointly. To qualify for these exclusions, you have to have lived in the house for at least two of the past five years. But there are exceptions, and the IRS has eased the rules covering them. Check IRS Publication 523, "Selling Your Home."

• Points paid for a mortgage when you bought your home are generally deductible, but those paid in a refinancing must be written off over the life of the loan. If you refinanced again, however, what was left of the points on the first refinancing can be deducted immediately.

• Keep receipts and records of major additions and improvements done to your house. These costs, while not deductible, can be added to the "basis," which is the amount, primarily the purchase price, that you subtract from the selling price to calculate your gain. Boosting the basis may keep you below the exclusion thresholds, and if you are above it, reduce the amount of gain on which you have to pay taxes.

Business, self-employment

• The standard reimbursement for business driving is 36.5 cents per mile.

• Frequent-flier miles received because of business travel and converted to personal use are not taxable unless they are converted to cash; used as compensation, such as payment for services; or used in some sort of tax-avoidance scheme.

• Self-employed people can deduct 70 percent of the cost of medical and long-term care insurance for themselves and their families.