Tax Answers

March 04, 1994

Here are answers from members of the Maryland Association of Certified Public Accountants to readers' tax questions. The Sun will publish answers through April 15.

Q: Last year I filed a joint return with my wife. This year I'm separated. I will get a 1099 from the state reporting the refund of state taxes we got last year. Who pays what on this refund? Do I pay 50 percent and she 50 percent or do I have to pay it all?

A: Assuming the state refund must be included in income (you can determine this by reviewing the "Tax Benefit Rule" in your Form 1040 tax package), the overpayment is the property of the spouse whose income and tax payments created the overpayment. Basically, each of your and your ex-wife's shares of the joint tax liability is in the same ratio as the amount of tax liability you would have incurred if you had filed separate returns. Therefore, to determine the exact amount of each of your tax liability you must recalculate your 1992 taxes as if you were filing separately.

Q: Is college financial aid, such as a Pell Grant, taxable? According to the 1040-EZ instructions it is; however, IRS recorded message #422, "Scholarship and Fellowship Grants," states it is excludable.

A: Pell Grants are generally excluded from income when calculating your tax as long as the amount was used for qualified tuition and related expenses such as fees, books, supplies and equipment required for courses of instruction at a qualified educational organization.

The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary. Consult with a tax adviser for specific advice.

Readers may submit questions by phone, mail or fax. Selected questions will be answered in The Sun and The Evening Sun.

To ask a tax question by phone, call Sundial, 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 Sun's Business News Department at (410) 783-2517. Callers are encouraged to leave their names and phone numbers. Questions will not be answered by phone.

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