Moneyline By Neil Downing

Tuesday, April 11th 2000, 12:00 am

By: News On 6

You [wrote] that we could sidestep the problem of having to pay excess federal tax at the end of the year by having our Social Security withheld on tax. As far as I know, Social Security will never withhold any kind of tax. I've tried to get them to and they just don't do it. . . I've been using Social Security for nine years and they will not take a penny out, so I have to pay a little estimated tax. -- J.A., Greenville

You probably tried so often that you finally gave up out of frustration, but you gave up too soon. Effective last year, you may direct the Social Security Adminstration to withhold federal income tax from your benefit payments, according to agency spokesman Kurt Czarnowski. You do this by filling out a form (Form W-4V) and mailing it to the Social Security Administration. Internal Revenue Service spokeswoman Barbara C. Shuckra said you may get a copy of the form by calling the IRS at 1-800-829-3676 or by contacting the agency's World Wide Web site: www.irs.gov

On the form, you can pick the rate (but not the dollar amount) at which you want federal income tax withheld: 7, 15, 28 or 31 percent. Once you've completed and signed the form, bring it or mail it to your local Social Security office. It may take about four weeks to process, Czarnowski said. (You can later change the rate you want withheld, or stop withholding altogether, by completing and returning a new Form W-4V.)

If you have enough federal income tax withheld from your monthly Social Security check, you may be able to avoid having to make quarterly estimated tax payments to the IRS.

Keep in mind, however, that some people prefer to make quarterly payments because it lets them hold on to their money longer. Remember, too, that even if you do have federal income tax withheld from your Social Security payments, you may still have to file quarterly estimated payments with your state (depending on where you live).

You may get more information by calling the Social Security Administration at 1-800-772-1213, or from its Web site:

www.ssa.gov

Could you tell me if nursing home care is deductible for tax purposes? My wife has the latter stages of Alzheimer's, and also she's not in a nursing home yet, but she will be going shortly, probably, and she's going to [an] adult day care center . . .

-- A.S., Cranston

In general, you may claim a federal income tax deduction for money you spend to care for a spouse who has Alzheimer's disease, said Judy A. Riggs, director of state and federal policy for the Alzheimer's Association, a nonprofit group.

"There's a lot of confusion about this point," she said. Nevertheless, expenses are generally deductible for "virtually any person with Alzheimer's disease who's reached the level where they really need supervision and care."

Expenses include money you spend on such things as assisted living, day care, group homes, respite care, in-home care and incontinence treatment supplies.

"The bottom line is that long-term care expenses, including maintenance and personal care -- the non-sklled medical care -- is clearly deductible as a medical expense," she said. "If he's paying for somebody to help him at home, if he's paying for respite care . . . all of that is deductible."

The expenses may be deducted on a return filed for the person with Alzheimer's, on a joint return filed by his or her spouse, or on the return of another person (a son or daughter, for instance) if the patient is that person's dependent.

To claim the deduction, you need to get a certification from a doctor or qualified health-care professional that the person is chronically ill and needs the services as part of a plan of care, Riggs said. You needn't file the certification with your tax return, but you must keep it on file.

In addition, the person must be officially considered chronically ill. In other words, the person must be certified as being unable to perform at least two activities of daily living (eating, toileting, transferring, bathing, dressing and continence) without the substantial assistance from another person.

By claiming a deduction, you get to reduce the amount of income you report to the IRS. This can lower your tax. However, you may claim the deduction in this case only if you itemize your deductions (on Schedule A of your U.S. Form 1040), instead of taking the lump-sum standard deduction.

In addition, you may claim only those expenses that exceed 7.5 percent of your adjusted gross income. (For more information, see "Today's Tip" below.)

TODAY'S TIP: There are lots of rules for claiming a deduction for expenses for an Alzheimer's patient, too many to list here. The Alzheimer's Association has an eight-page memorandum that explains details.

For a free copy of the memorandum, "Are the Costs of Caring for Person with Alzheimer's Disease Deductible?", contact your local chapter of the Alzheimer's Association (call 1-800-272-3900 to find the chapter nearest you) or contact the group's Web site:

www.alz.org

William J. Speck, chief of information for the Rhode Island Department of Elderly Affairs, also notes that the Rhode Island chapter of the Alzheimer's Association will hold its annual Caregiver's Conference on April 25 at the Crowne Plaza at the Crossings, Warwick. The conference will feature information about the care and treatment of people with Alzheimer's, and will also focus on support services for caregivers. For information, call the Rhode Island chapter at 1-401-421-0008.

Neil Downing is a Journal staff writer and author of Maximize Your IRA. If you have questions about your money matters, call us at 1-401-277-7484 orcall 1-888-697-7656 and leave a message. (When calling toll-free, please ask for ext. 7484.) Or write: MoneyLine, Providence Journal, 75 Fountain St., Providence, R.I. 02902. We can't reply personally; as many questions and issues as possible will be addressed in this column.