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PAGE 14-PLAINDEALER-FRIDAY, SEPTEMBER 1, 1972 This column of questions and answers on federal tax matters is provided l>y the local office of the U.S. Internal Revenue Service^and is published as a public service to taxpayers. The column answers questions most frequently asked by taxpayers. Q) My house borned down and I hired an appraiser to establish the amount of cas­ ualty loss on my home and - furnishings. Are his fees de­ ductible? A) Yes. If you itemize de­ ductions ori^y^ur return, ap­ praisal fees incurred in estab­ lishing the amount of a casualty loss are deductible as an expense incurred in determining your tax liability. Q) I sold my house several months ago, but I've been having trouble finding a new one. How much time do I have to acquire a new house in order to qualify for postpone­ ment of tax on the sale of my old one? A) The gain you realize on the sale or exchange of your personal residence is not taxed at the time of sale if within one year before or after the sale you buy and occupy another residence, the cost of which equals or ex­ ceeds the "adjusted sales price" of, the old residence. If you are constructing a new residence, construction must begin before the sale of your old residence or within one year after. The residence must be occupied within 18 months after the, sale. The running of the one- year or 18-month period after the sale of your old residence is suspended while you serve on extended active duty in the Armed Forces. The pension applies only if/*your service begins before |ne end of the one-year or yS-month period. The length o^/this sus­ pension plus the initial period cannot extend far more than four -ALears ^ffter you sold your residence unless you spent time on active duty in a combat zone. 7 Q) My employer reimburses me for business travel. Does this reimbursement have to be reported on the tax re­ turn? A) Reimbursements and al­ lowances for expenses you pay or incur for travel in con­ nection with your employment must be included in your in­ come tax return unless: 1) You are required to, and do, make an accounting for such expenses to your em­ ployer; 2) You do not deduct such expenses on your return; and 3) The sum of such ex­ penses equals the total amount of reimbursements and allow­ ances. If you include the allow­ ance or reimbursement in in­ come, you may deduct your allowable expenses to the ex­ tent of the allowance or reim­ bursement. Q) I know that in order to claim my son as a dependent, I must furnish more than half of his Mtal support for the year. Is everything I spend for him considered as total support furnished by me? A) No. Generally, total support includes expenditures for providing food, shelter, clothing, education, medical and dental care, recreation, transportation, and similar necessities. However, certain items are specifically excluded from total support. Some of these are life insurance pre­ miums, the purchase of an automobile, Federal, State or local income tax payments, So­ cial Security tax expenditures and funeral expenses. Q) Is it true that many re­ tirees do not have to pay tax on the gain from the sale of their homes? - A) Yes. If you sold or ex­ changed your principal resi­ dence during the year, you may generally elect to exclude from your gross income part or all of the gain on that sale or exchange if: 1) you were 65 or older before the date of the sale or exchange; and 2) you owned and used the prop­ erty sold or exchanged as your principal residence for a period of at least five years within the eight-year pefiod ending on the date of the sale or exchange. Taxpayers who meet these requirements can elect to ex­ clude their entire gain if the adjusted sales price is $20,000 or less. If the adjusted sales price is over $20,000, an elec­ tion may be made to exclude part of the gain. For more information, see IRS Publication 523, "Tax Information on Selling Your Home." It's available free by dropping a postcard to your IRS district office. Q) I found a copy of an old tax return of mine and noticed a deduction I neglected to take. Is it too late to correct the mistake? A) You can correct an error by filing an amended return, Form 1040X. It must be filed within three years from the date your original return was filed, or within two years from the time the tax was paid, whichever is later. If you filed your origi­ nal return before the due date, the three-year rule ap­ plies from the due date for that year. HAoe eee/° K^OUJAJ T© F«-Y UP TO I S O M - P . M . UiuuuuMiu* 9 MONTH STUDENT SUBSCRIPTION SPECIAL FOR THE mm JUST LIKE A LETTER FROM HOME TWICE EACH WEEK! Send your son or daughter, away at college, their home town newspaper, THE McHENRY PLAINDEALER. 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