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Thursdav. March 24, 1988 / University Daily Kansan
State tax reform plan tops 1988 legislative agenda
By Flaine Woodford
Kansan staff writer
Tax reform, windfall, federal deductibility and increased personal deductions.
Although those phrases are often thrown around during intense debates on and off the floor of the Legislature, they might leave the average taxpayer wondering, "Huh?"
State tax revision and the return of $135 million from a federal tax windfall to taxpayers have been among the most hotly debated issues in the 1988 legislative session.
Because of changes in the federal tax system, legislators needed to reform the state tax system so that
tax rates would remain fair. Taxpayers could find themselves confused as a result of the reform, but the changes may bring some benefits.
State Rep. Ed Rolfs, R-Junction City and chairman of the House Taxation Committee, wrote a bill that eliminates the basics of state tax reform.
The goal of tax reform, Rolfs said,
is simplification.
Anyone who has tried to figure out his personal income taxes knows just
how complicated it can be to decide which deductions can be made, how much tax is owed and what amount of personal income is actually taxable, even if he files a 1040 E2 form.
Last week, the state Senate tentatively approved an income tax revision plan, which is expected to undergo major changes in the Legislature.
The bill is designed to provide tax breaks for most taxpayers, to simplify the state income tax system so it conforms to most federal tax laws and to remove about 105,000 low-income Kansas families from the tax rolls.
The total cost to the state for all the
tax breaks is estimated at $51.1 million next year.
The tax breaks will result in a lower range of tax rates for individuals and corporations. The rates will fall between 4 percent and 9 percent.
In terms of cash, personal exemptions would be increased to $1,950 for the 1988 tax year and $2,000 for the 1989 tax year. Standard deductions would be increased to $5,000 for married taxpayers and $3,000 for single taxpayers.
The state tax reform plan would return part of the $135 million windfall to taxpayers. A total of $46 million of the windfall would be returned to
taxpayers under the plan.
The windfall is money that the state will receive from taxpayers as a result of changes in federal tax laws.
But some legislators aren't happy with the plans for returning the windfall.
State Sen. Wint Winter Jr., R-Lawrence, said he didn't like the way the plan stands now. "People are supportive of the state retaining a large portion of the windfall," he said.
Winter and other legislators believe the windfall should be used to finance more state programs that
might not otherwise be financed.
"Education is a top priority," Winter said. "We need to have the money to fund the programs, such as the Margin of Excellence."
Winter published a survey in the Lawrence Daily Journal-World to find out what constituents thought should be done with the windfall.
"I know it isn't really scientific, but about 80 percent of the people felt the windfall should be used to fund other programs, largely educational programs," he said.
Rolfs agreed.
"I don't think we should give it back," he said.
Legal Services can reduce late tax preparation woes
Students should take W-2, other income forms to office
By Jeff Moberg Kansan staff writer
Now that spring break is over, KU officials at Legal Services for Students are expecting a rush of students seeking income-tax advice.
After a two-weekull in late February, business has picked up at the Burge Union office. Eighty of the more than 200 students who have used the free service this year have received tax help during the first two weeks of March.
Kevin Wickliffe, a lawyer with Legal Services, said the tax season usually followed this trend. Legal Services' three lawyers advised the first wave in early February after students received W-2 forms. Wickliffe expected the second wave to be more hectic.
"It's going to get worse since the deadline is April 15," he said.
'W
If a return is not filed by April 15, then students can face both a penalty for filing late and interest owed on the tax.
"We make it more of a learning
When students come in for tax help, an adviser goes through all federal and state forms step by step with the student.
'We make it more of a learning experience so they can see how it is done and hopefully in the future they can do it for themselves.'
— Kevin Wickliffe
Legal Services for Students lawyer
experience so they can see how it is done and hopefully in the future they can do it for themselves," Wickliffe said.
Students wanting tax advice should bring in all W-2 forms, all interest income statements numbered 1099, and any information regarding scholarships, Pell grants, stocks or bonds that a student might have.
After a change in tax laws this year, students may no longer claim themselves as dependents if their parents have already done so. Students should check their dependent status with their parents before seeking tax help.
should bring in tax forms from every state they have worked in. Legal services can order the forms for students who don't have them, but the forms can take up to four weeks to arrive.
Student Senate pays for Legal Services with the $2$ student activity fee.
If students need to file more than one state return, Wicklife said they
The Internal Revenue Service also offers tax help through the Volunteer Income Tax Assistance program. The IRS训22 volunteers from the KU Accounting Club to run the local division of its national program.
Sheryl Sacry, coordinator of the KU program, said the program was targeted at low-income families in the community. However, students also may use the free service at any of the four assistance centers until April 15.
The centers are the Indian Center of Lawrence, 1920 Moodie Road, open from 6:30 to 9:30 p.m. Tuesdays and 2 to 5 p.m. Thursdays; Penn House, 1035 Pennsylvania St., open from 8:30 to 11:30 a.m. and 2 to 4 p.m. Fridays; Ballard Community Center, 708 Elm St., open from 3:30 to 5:30 p.m. Wednesdays; and the ECKAN Douglas County Community Center, 331 Maine St., open 8 a.m. to noon on Mondays.
New tax laws confuse scholarship recipients
By Rebecca J. Cisek
Kansan staff writer
The new tax on scholarships and Pell grants is causing serious problems for students who are trying to figure out how to complete their tax forms, a financial aid official said this week.
For the first time, students have to pay taxes on the amount of money they receive from scholarships and Pell grants that exceeds the cost of tuition, fees and books.
Jeff Weinberg, associate director of financial aid, said that students might have trouble getting advice on how to figure their taxes if they tried to call the Internal Revenue Service.
He said that a University of Kansas student and her two roommates had recently called the toll-free telephone number for the IRS. Each received a different answer to questions about the tax on scholarships.
Advertising works. Kansan Advertising works wonders.
Weinberg said that representatives of the office of financial aid also had tried to get an answer about the taxes but that they were unsuccessful.
"It is impossible to get anything from the source, and the source is the IBS." he said.
Weinberg said he had seen student tax returns that reported scholarships that should never have been reported. He said the data may either pay
extra taxes or get smaller refunds.
extra taxes or get smaller refunds.
"Students seem to be reporting a little bit of everything on their taxes," he said.
This causes students to either pay
The financial impact of the taxes may vary from student to student.
Weinberg said that students with modest scholarships and grants would not be affected that much.
Students with large stipends, however, will feel the crunch of the new taxes. Because no taxes are withheld from scholarships and grants, students will have to pay federal and state taxes in a lump sum when they file their returns, he said.
Despite the unclear answers that students may receive from the IRS, Legal Services for Students in Burial Union offers KU students advice on how to deal with the new tax laws.
Kevin Wickliffe, a lawyer with the service, said scholarships that could be taxed were awarded after Aug. 16, 1988. Pell grants that were awarded after January 1987 also can be taxed.
Wickliffe said that students who欠 taxes on scholarships or grants must file form 1040. Students should list the difference between the scholarship or grant amount and school costs on line 21, which asks for information about other income. Wickliffe suggested
Do you have to report your scholarship and/or Pell grant money?
Cost of tuition,
fees, books - $
Difference = +/- $
Scholarships awarded after 8/16/86 and Pell grants. awarded in 1987 or after may be subject to taxes.
If the difference is positive, you need to report the difference on line 21 of form 1040.
RichardStewart KANSAN
Amount of scholarship and/or Pell grant $
attaching an explanation about the scholarship or grant.
He said that the major change for students was the need to better record expenses. Award letters, receipts for the amount of the scholarship received and copies of checks used to pay for books are examples of the documentation students need.
"You have to keep a lot better track of things than most people are accustomed to," Wickliffe said.
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