Indiana Offers Tax Breaks For Elderly, Insulation, Property Taxes

In your recent column about Indiana tax breaks,
you said elderly taxpayers are entitled to an additional exemption of $500 if
income is below $40,000'If we are a married couple and both are over age 65,
can our income be $80,000 to qualify for the tax break?

E.C., Indianapolis

The new tax break that applies to Indiana's over-65 taxpayers gives an exemption of $500 to taxpayers whose adjusted gross income is below $40,000'Although this may not seem equitable, the law states that $40,000 is the income threshold, no matter what the filing status of the taxpayer is'Therefore, the answer to your question is no, joint filers are subject to the same $40,000 threshold as single filers.

  • Here's the way the exemptions will work for the 1999 tax returns of taxpayers over age 65:
  • Each taxpayer is entitled to a $1,000 exemption, no matter what the age of the taxpayer is.
  • Each taxpayer over age 65 is entitled to another $1,000 exemption, no matter what the income of the taxpayers is.
  • Each taxpayer over age 65 is entitled to another $500 exemption if the Indiana adjusted gross income on the tax return is less than $40,000.

I'm getting ready to put in new storm windows'
Does Indiana still offer a credit for insulation items and would storm windows
count for this credit?

G.N., Indianapolis

Indiana offers a deduction, rather than a credit, for certain insulation expenses'These expenses include such things as weather stripping, insulation, storm windows, storm doors, and double or triple pane windows.

To qualify for the deduction, which you take on Schedule 1 of your Indiana income tax return, the insulation must be installed in your principal home which must be located in Indiana, the insulation must be an upgrade to some new and better form of insulation rather than a replacement or repair of an existing item, the home must have been built before 1/1/95, and the deduction must be claimed in the year you install the insulation.

You get to claim a dollar for dollar deduction of up to $1,000 for the cost of insulation, including labor costs'Note that the labor costs have to be paid to some outside person whom you hire, so it appears that the Indiana Department of Revenue would frown on your bribing your spouse to install those storm windows with an offer of a tax deductible night on the town.

When taking the insulation deduction, you must attach to your tax return a sheet of paper on which you list a description of the item, the cost, the place where the item was purchased, the date of the purchase, the date of the installation, and the amount you paid for labor.

On the federal tax Form 4835, which is a farm
report, you can deduct your real estate farm taxes, but on the state form you
have to add that back on line two'Is there any chance we will not have to add
that back?

B'G., Indianapolis

The changes to the Indiana income tax laws for 1999 include the repeal of the tax add-backs that formerly plagued small business owners and farmers'From here on, you don't have to worry about adding back your real estate taxes on your Indiana tax form'This new law will take place starting with your 1999 tax return.

This change applies to farmers who file a federal Schedule F, farmers who file federal form 4835, small business owners who file federal Schedule C, landlords who file federal Schedule E, and participants in partnerships and small business corporations who receive a federal schedule K-1.

I'm going to donate an old computer to charity'
Isn't there some way I can save on my Indiana taxes my making this donation?
Are there specific rules about the kind of computer I donate?

G.N., Indianapolis

I'm afraid you're a year too late'Starting with 1999 Indiana income tax returns, there is no more tax credit allowed for donations of computers'Of course, you are still entitled to take a charitable donation deduction on your federal tax return for the fair market value of the computer.

copyright © 2000 Gail Perry - Fun with Taxes


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