Receive $26,907 Refund : Reagans Pay $122,703 in Taxes on $394,492

Like millions of Americans, President and Mrs. Reagan waited until the April 15 due date was almost upon them before filing their 1985 tax return, even though a copy released Friday showed that they are entitled to a $26,907 refund.

The First Family paid $122,703 in federal income tax, a little more than 31% of their combined gross income of $394,492.

The Reagans chose not to accept their refund, directing the Internal Revenue Service to apply it to their 1986 taxes instead.

$167 Interest Penalty

Among the items of note in the 10-page return released by the White House was $167 in interest to federal and state authorities penalizing the Reagans for misreporting an item in their blind trust last year.

White House spokesman Larry Speakes said the President’s tax return is routinely audited and that the payment resulted from “a ruling on the way that the trust had handled something, which, of course, he was not aware of.”

When elected in 1980, Reagan placed all of his financial holdings in a blind trust to avoid possible conflicts of interest in policy-making decisions. The trust is managed by Raymond J. Armstrong, president of Starwood Corp., a New York investment firm.

The bulk of the Reagans’ 1985 income came from the President’s $200,000 salary. They also earned substantial interest from banks, with the largest account held by the Bank of California, which paid the Reagans $34,712. The blind trust earned $66,026.

Pension Reported

The President reported his $28,091 pension as a former governor of California, along with $17,282 in royalties accrued over several years from his 1961 autobiography, “Where’s the Rest of Me?”

Mrs. Reagan reported $782 in union-mandated fees she received for appearing on television shows “Different Strokes” and “One to Grow On.” The guest appearances promoted the First Lady’s campaign against drug abuse and the payments were turned over to charity.

The Reagans’ total charitable contribution was $23,298. Topping the list of recipients were Eureka College, the President’s alma mater, and Northwestern University Medical School, which named a professorship in surgery to honor Mrs. Reagan’s late stepfather, Dr. Loyal Davis, a neurosurgeon who was on the faculty.

Need for Reform Cited

Speakes cited the presidential tax return, which included seven different forms and three supporting statements, as evidence that Congress should take action on Reagan’s tax reform proposal, which the Republican-controlled Senate has threatened to hold hostage to progress on the federal budget.

At a press conference Wednesday evening, Reagan said he was “more than ever convinced we must have reform” after seeing the return prepared by his accountant. “When I finally saw it, it was all made out, and I still didn’t understand it,” he told reporters.