December 1996 Issue

Keywords: Stock Photography Tax Tips, Tax Attorney Photo, Travel Tax Tips

Tax Tactics

December 1996 Issue

Julian Block, a former IRS agent and tax attorney, is the author of "Julian Block's Tax Avoidance Secrets" ($29.95 p&h included, 560 pgs. Mention you are a PhotoStockNotes subscriber and receive the book for $19.95. 3 Washington Sq, Station 5, Larchmont NY 10538-2032). Julian can be reached on the PRODIGY (EXPT16B) bulletin board or join him in the Chatroom for a chat on Taxes on Monday nights at 10:00 EST.

Taxable Dividends

Q. I received a refund in 1996 of my state income taxes for 1995. Do I have to report that refund as income on Form 1040 for tax year 1996?

A. Only if you claim an itemized deduction for those taxes on your Form 1040 for tax year 1996 and the deduction decreases your 1996 Federal

taxes. But you do not have to report that refund on your 1996 form if you either (1) figured your tax the regular way for 1996, passing up itemizing and using the standard deduction, or (2) were subject to the Alternative Minimum Tax, which applies only when it produces a higher tax bill than the tax figured out the regular way and, among other things, bars a deduction for state and income taxes.

Q. My insurance company sent me a statement saying it paid dividends and interest on my life-insurance policy. The company did not actually send me a check. Does any of the payment have to be shown on my 1040?

A. The dividends are not taxable unless the dividends you have received exceed the premiums you have paid. Interest on dividends left on deposit is taxable.

Stock Photography Tax Tips, Tax Attorney Photo, Travel Tax Tips

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