Tax season is here
As many of you know I am an accountant in Fort Wayne.
Tax season has begun and I have not had a lot of time for blogs (or anything else!)
I have to BRIEFLY discuss one of the best things about the tax code this year and one of the dumbest things our politicians have done.
Lets start with the good.
If you live in Indiana and if you contribute to the Indiana 529 plan in 2007 you may be eligible for a tax credit of up to $1000 on your taxes NEXT year.
Per the Indiana Education Savings Authority:
The CollegeChoice 529 Investment Plan, governed by the Indiana Education Savings Authority (IESA) and administered by JP Morgan Funds Management, Inc., allows Hoosiers to plan for their children's or loved one's future, making contributions into an investment account for higher education expenses. And recently, Indiana enacted a new tax credit that makes the CollegeChoice Plan and even better option.
Qualified withdrawals from a CollegeChoice 529 Plan account are already state and federal tax-exempt. And, during the last legislative session, Indiana Treasurer of State and IESA Chair Tim Berry successfully lobbied for House Bill 1029, which creates a 20% tax credit up to $1,000 on Hoosiers' contributions to their CollegeChoice accounts.
The credit takes effect January 1, 2007 .
Every state offers some form of 529 college savings plan, but Indiana residents are eligible for their 20% tax credit only with an Indiana CollegeChoice account. CollegeChoice accounts can be used to pay for expenses at any accredited college, university, and many vocational training programs, in Indiana or worldwide.
Additionally, Indiana residents can enroll in the plan's Age-Based investment option free of any sales commissions and authority fee. For more information about the CollegeChoice Plan, visit the web site at collegechoiceplan.com or call toll free 866-400-PLAN.
This is pretty cool. The "Indiana plan" is not one of the better plans available in my humble opinion; however, there is currently not a rule in place preventing you from contributing to the Indiana plan and then "rolling" it into a better plan.
Tax credits are good...
The bad thing is extremely typically of our government and is extremely frustrating.
Since 1898 the government has been collecting an excise tax on long distance phone usage. This tax was used to help fund the Spanish-American war and was intended to be a luxury tax... Times have changed and the telephone is no longer a luxury item.
Several groups have challenged the tax over the years and the IRS lost several court cases; however in their infinite wisdom, they kept collecting the tax. Last year the IRS finally decided to stop fighting and they stopped forcing the telephone companies to collect the tax. They also "decided" to refund the last few years of the tax to taxpayers. This is where the fun begins...
If you are an individual taxpayer (Not a business or a not-for-profit) this tax credit will be easy for you to receive. If you file your taxes and have one exemption you will get a tax credit of $30. If you have a family of four you will max out and get a credit of $60.
If you are a business they are making it much harder; in fact, if you are a small business it may be easier to ignore the credit then to file for it. To file for it as a business you will have to spend a lot of time gathering information and either calculating the exact tax you paid or estimating it. Either method will require you to look at 41 old phone bills. This is government in action...
This has been very frustrating. The IRS could not decide on the method they would use until very recently. Most tax software packages are not finalized because they were waiting on the IRS...
Good grief.
Mike Sylvester
Tax season has begun and I have not had a lot of time for blogs (or anything else!)
I have to BRIEFLY discuss one of the best things about the tax code this year and one of the dumbest things our politicians have done.
Lets start with the good.
If you live in Indiana and if you contribute to the Indiana 529 plan in 2007 you may be eligible for a tax credit of up to $1000 on your taxes NEXT year.
Per the Indiana Education Savings Authority:
The CollegeChoice 529 Investment Plan, governed by the Indiana Education Savings Authority (IESA) and administered by JP Morgan Funds Management, Inc., allows Hoosiers to plan for their children's or loved one's future, making contributions into an investment account for higher education expenses. And recently, Indiana enacted a new tax credit that makes the CollegeChoice Plan and even better option.
Qualified withdrawals from a CollegeChoice 529 Plan account are already state and federal tax-exempt. And, during the last legislative session, Indiana Treasurer of State and IESA Chair Tim Berry successfully lobbied for House Bill 1029, which creates a 20% tax credit up to $1,000 on Hoosiers' contributions to their CollegeChoice accounts.
The credit takes effect January 1, 2007 .
Every state offers some form of 529 college savings plan, but Indiana residents are eligible for their 20% tax credit only with an Indiana CollegeChoice account. CollegeChoice accounts can be used to pay for expenses at any accredited college, university, and many vocational training programs, in Indiana or worldwide.
Additionally, Indiana residents can enroll in the plan's Age-Based investment option free of any sales commissions and authority fee. For more information about the CollegeChoice Plan, visit the web site at collegechoiceplan.com or call toll free 866-400-PLAN.
This is pretty cool. The "Indiana plan" is not one of the better plans available in my humble opinion; however, there is currently not a rule in place preventing you from contributing to the Indiana plan and then "rolling" it into a better plan.
Tax credits are good...
The bad thing is extremely typically of our government and is extremely frustrating.
Since 1898 the government has been collecting an excise tax on long distance phone usage. This tax was used to help fund the Spanish-American war and was intended to be a luxury tax... Times have changed and the telephone is no longer a luxury item.
Several groups have challenged the tax over the years and the IRS lost several court cases; however in their infinite wisdom, they kept collecting the tax. Last year the IRS finally decided to stop fighting and they stopped forcing the telephone companies to collect the tax. They also "decided" to refund the last few years of the tax to taxpayers. This is where the fun begins...
If you are an individual taxpayer (Not a business or a not-for-profit) this tax credit will be easy for you to receive. If you file your taxes and have one exemption you will get a tax credit of $30. If you have a family of four you will max out and get a credit of $60.
If you are a business they are making it much harder; in fact, if you are a small business it may be easier to ignore the credit then to file for it. To file for it as a business you will have to spend a lot of time gathering information and either calculating the exact tax you paid or estimating it. Either method will require you to look at 41 old phone bills. This is government in action...
This has been very frustrating. The IRS could not decide on the method they would use until very recently. Most tax software packages are not finalized because they were waiting on the IRS...
Good grief.
Mike Sylvester
posted by LP Mike Sylvester at 1:52 AM
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