Tax Answers

February 03, 1994

To get the ball rolling while members of the Maryland Association of Certified Public Accountants prepare answers to reader questions, here are two frequently asked questions. Answers are provided by CPAs who belong to MACPA.

Q: My husband and I have a combined taxable income of $150,000. Are we subject to the retroactive tax increase in the new tax law?

A: Yes. You are subject to the tax retroactive to Jan. 1, 1993. The new 36 percent rate, up from 31 percent, applies to taxable incomes in excess of $140,000 for married couples filing jointly, $115,000 for singles, $127,500 for head of household and $70,000 for married filing separately.

Q: What if I can't pay all my taxes by April 15?

A: If the retroactive increase is the reason you cannot pay your tax liability, you get a break from the IRS. You will have the option to pay the portion of tax due to the retroactive increase in three equal, interest-free installments, beginning on or before the due date (without extensions) of your 1993 return, with subsequent payments made on an annual basis over the next two years. However, if you are not subject to the new tax rates and can't meet your liability by April 15, you will owe interest on any tax not paid by the regular due date of your return. And, you may be also be subject to a late payment penalty.

The above advice is for general purposes only. Specific situations may vary.

A joint service from The Baltimore Sun and the Maryland Association of Certified Public Accountants can help you with your state and federal tax queries. Association members, all CPAs, will answer questions from readers until April 15.

Readers may submit questions by calling Sundial or writing or sending a fax to the Business News Department. Selected questions will be answered in The Sun and The Evening Sun. Callers are encouraged, but not required, to leave their names and phone numbers should questions need to be clarified. Questions will not be answered by phone. Names and numbers will not be published.

To ask a tax question on Sundial, call The Sun's telephone information service at (410) 783-1800. In Anne Arundel County call 268-7736, in Harford County 836-5028, and in Carroll County 848-0338. Using a touch-tone phone, enter 6120 after the greeting.

Written queries may be sent to TAX QUESTIONS, The Baltimore Sun, Business News Department, 501 N. Calvert St., Baltimore 21278.

Fax questions to the Business News Department at (410) 783-2517.

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