Indiana Returns Surplus To Taxpayers With Tax Breaks For Everyone
Occasionally people ask me about the name of this column, with gentle comments like, 'Are you nuts? What's fun about taxes?'or 'I heard about someone who had fun with his taxes once, and it landed him in jail!
You may not rank taxes at the very top of your list of fun things, like bunji jumping and tackle basketball, but after you read today's column, you might at least start thinking of taxes as interesting.
While our Senators and Congress-people in Washington sputter and complain about Clinton's impending veto of their big tax reduction bill, Indiana legislators have proven they can get the job done'Although it's a little early to start preparing your 1999 income tax returns, it's not to early to start planning on how you can spend the extra money you'll be getting back from the State of Indiana in the spring'In case you haven't heard, here's what Indiana legislators did for the individual income taxpayers of Indiana this year:
Dependent children under the age of 19 (or full-time students under the age of 24), who, for the past two years, qualified for a special $500 Indiana exemption (in addition to the regular $1,000 exemption for each dependent), now qualify for an additional $1,000 exemption'This means you will reduce your Indiana Adjusted Gross Income by a total exemption of $2,500 for each qualifying child.
Elderly taxpayers (age 65 or older) are entitled to an additional exemption of $500 (in addition to the existing $1,000 exemption for the elderly and the regular $1,000 exemption for each taxpayer and dependent) if their federal adjusted gross income is less than $40,000'This means as an elderly taxpayer you will reduce your Indiana Adjusted Gross Income with $2,500 worth of exemptions if your income is lower than $40,000 ($1,500 if your income is $40,000 or higher)'This amount will double for a married couple where both spouses are elderly.
Renters who previously were entitled to a deduction of $1,500 for rent paid to an Indiana landlord, are now entitled to a deduction of the lower of $2,000 or the actual amount paid'This deduction is taken on Schedule 1 of the IT-40 or on the back of the IT-40EZ.
Homeowners are entitled to a residential property tax deduction of up to $2,500 on their principal residence'If you paid real estate tax on your principal residence during 1999, you can reduce your Indiana Adjusted Gross Income by the amount of real estate tax you paid, up to a maximum of $2,500'Take this new deduction on Schedule 1 of the IT-40.
Business owners, partners, and shareholders who previously had to add back property tax deducted on their federal tax return, are no longer subject to this provision'For example, a person filing a Federal Schedule C for a home-based business, who takes a deduction for office-in-the-home and automobile expenses, previously had to add back the real estate taxes and automobile excise taxes deducted on the federal return for Indiana tax purposes'This no longer needs to be done.
Indiana taxpayers expecting a refund (which will probably include a majority of taxpayers in the Spring of 2000 due to these sweeping changes) may request a direct deposit to their bank account'This should speed up the refund process in Indiana, as it has for federal income tax refunds.
These changes are all effective for 1999 taxes, so you will notice the reduced taxes when you prepare your return next April'Most taxpayers will be affected by at least one of the above provisions, and some taxpayers will benefit from several of these changes.
For the year 2000 and in future years, if you prefer to have less money withheld from your Indiana taxes because of the new dependent and elderly exemptions, instead of waiting until April for a refund, you can file a revised Form WH-4 with your employer.
Now who says taxes aren't fun?
copyright © 2000 Gail Perry - Fun with Taxes
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Which isn’t completely true. I mean, occasionally I drop by when I manage to sneak out of the nonstop frat party over at Going Concern, but I’m mostly a wallflower over there. I’m happy to say that I’ve been given express permission (or explicit orders, if you like) to wander over here to AccountingWEB more often.
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