THOSE CHECKS ARE CREDIT ON 2001 TAXES

Most taxpaying Americans are busy cashing their checks from the U.S. Treasury as a result of this year's tax cuts.

Emerging from the fog of tax-code changes is the good news that no one will suffer next year because of this year's checks.

The minimum tax rate has been reduced to 10 percent from 15 percent. Married couples who file jointly will owe $600 less on their first $12,000 of 2001 income. Similarly, heads of households are enjoying the same 5 percent tax cut on their first $10,000 of income for $500 rebates. And single taxpayers get up to $300 checks on their first $6,000 of income.

By the time tax forms are mailed out for 2001 taxes, the IRS will have adjusted tax tables. Those forms also will include worksheets to account for this year's special credit for the new lowest tax bracket. This will benefit new taxpayers who had no income in 2000 (recent college graduates, for example). If they earn more than $6,000 this year, they will be able to get a $300 credit on next year's taxes. Similarly, married couples filing jointly who are wage earners for the first time this year or who didn't receive checks this year because they sought filing extensions will get up to $600 credits on their worksheets.

By the same token, individuals who received checks this year based on their 2000 tax returns but didn't haven any income this year for some reason (laid off or died, for example) won't have to pay back anything.

The biggest issue for Missouri taxpayers is whether or not this year's checks will be treated as taxable income. A special session of the legislature next week is expected to make these credits exempt from state taxes.