Property Tax Exemptions Worth Knowing About

It’s no secret that property taxes can get pretty high, and, while you can’t escape paying them altogether, there definitely are things that you can do to cut down on your property taxes. In fact, there are quite a few credits, deductions, and exemptions that you may qualify for. We’ll cover a few of the basics here, but remember, you should always be able to go to your accountant and/or tax adviser to learn more about available discounts and how to take advantage of them.  

Veteran Assistance

First things first, are you a veteran? If so, then there are probably several different property tax related credits, deductions, and/or exemptions that you can qualify for. However, these do vary from state to state, so, where you live will play a big role in which of these you can receive. Ask your tax adviser to point you in the right direction!

Aid for Senior Citizens

Veterans aren’t the only ones who can get a break on their taxes! Senior citizens are another group that is often eligible for discounts, especially in the case of senior citizens who are over 65 and fall into a lower income bracket. Again, these discounts do vary from one state to the next, so check with your tax adviser. It’s definitely worth the effort because some discounts are so good they can keep you out of foreclosure.

A Hand for Farmers

Finally, even farmers can get a little credit...literally. Land that is deemed “agriculturally productive” qualifies for property tax breaks in most states, especially Florida, which is very liberal when it comes to handing out this credit. Other states, however, have more stringent requirements, but, no matter where you live, this credit and all the others are worth looking into. In fact, you should really ask your tax adviser to help you uncover and make the most of every possible discount you may be eligible for!

Road Taxes on the Rise

Many states take a percentage of taxpayers’ dollars and use them to pay for roads, bridges, and other transportation-related costs. A large number of states, however- a whopping one-fourth of them to be exact- have recently added a special tax just for transportation expenses. These same states are also charging higher fines and fees for road-related offenses in an effort to raise money.

While many taxpayers aren’t happy about the added costs, they make sense. Federal and state fuel taxes

aren’t generating as much revenue these days, due in large part to an increase in public transportation, more fuel-efficient vehicles on the road, and tax rates that, until now, haven’t changed to reflect the current times.

There are a few states, such as Georgia and Seattle that haven’t gotten onboard with the additional taxation yet, but many are speculating all states will have to make this change eventually.

If you’re being hit by an increase in taxes, talk with your tax advisor about how to circumvent the damage to your wallet. While you can’t escape required taxes, you can do other things, such as qualifying for more exemptions or boosting your savings rate, to make the impact less hard-hitting.

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Do You Need a Tax Advisor?

IRS 1040 Tax Form Being Filled Out (Photo credit: kenteegardin)

There are some people in the world who can file their taxes just fine on their own. Then, you have others who benefit from hiring a CPA to take care of the job for them. Some people need even more help than just a standard account will provide, however. Yes, there are some people who can really benefit from the pointed, expert advice of a professional tax advisor. But, how do you know if you’re one of those people?

Well, to begin with, if you are having trouble keeping track of your monthly finances, then that’s a pretty good sign you need a tax advisor. If you can’t keep tabs on what’s going on monthly, how can you be expected to turn out a report of your finances for an entire year? Advisors can get you on track both in your daily life and in terms of your taxes.

Also, if you’ve recently started making more money or have come into a large sum of money, such as an inheritance, unexpectedly, it’s wise to seek the expertise of a tax advisor, so that, come tax time, you won’t end up losing everything you’ve gotten or paying extra taxes.

There are many good reasons to work with a tax advisor. In fact, there’s really no reason not to. Hiring one today could see good returns for you by the time this tax season rolls around.

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The Potential Impact of Maryland v. Wayne

The Supreme Court is gearing up to hear arguments in the much talked about Maryland v. Wayne case. The case all has to do with Maryland’s tax laws, which allow residents to deduct income taxes they’ve paid in other states on their income tax forms. However, the deduction cannot be applied to income tax collected by various counties and municipalities in the state.  

The Maryland Court of Appeals found it unconstitutional for the state to provide credit for state income tax but not for county income tax. Now, it’s up to the Supreme Court as to whether or not it wishes to uphold that ruling.

Experts are speculating that, if the ruling is upheld, tax laws around the country could change, with more states being forced to follow in Maryland’s forced footsteps.

Cases like this one just go to show that tax laws are always changing. You can be prepared for whatever changes are thrown your way by having an in-the-know tax advisor to count on. You can find a trustworthy Naperville tax advisor through Susan S. Lewis, Ltd.

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Where is Your Money Being Held?

These days, taxpayers have access to a wide range of great investment opportunities. Unfortunately, however, not all of these opportunities are what they appear to be. In recent years, more and more people have been suckered into what they believe to be legitimate and very profitable investments or business deals, only to find out later that the money they’ve invested and any potential profits are being stowed away in foreign accounts that they cannot access without engaging in illegal activity.  

While there are some legitimate transactions in which money is held in a foreign account, it’s important to understand that there are strict rules and requirements when it comes to having and reporting on those accountants. If you’re involved in some kind of a scam or if you simply cannot justify your use of the foreign account, you could find yourself in trouble.

Don’t wind up in a situation such as this one; run every potential investment opportunity by a tax advisor and see if the opportunity is really as good as it appears to be. Furthermore, always know the rules and regulations surrounding any financial decision you make; your tax advisor can fill you in on what’s required when certain decisions are made. Find your advisor and start making smart decisions today by contacting Susan S. Lewis, Ltd. of Naperville.

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Taming Taxes

Small-business owners and independent contractors may be more likely than other taxpayers to benefit from the home-office tax deduction, which has an average value of more than $2,600.¹ But some taxpayers may be hesitant to claim this potential tax benefit on their personal tax returns, fearing that it could trigger an IRS audit.

Their worries are not entirely unfounded. Taxpayers who claim home offices often don’t meet the requirements, or they calculate the deductible amount incorrectly. This checkered past may explain why the government tends to take a closer look at returns that include this deduction.

Even so, business owners who operate out of a home office and are legitimately entitled to claim the deduction should consider taking advantage of this valuable tax break.

Calculating the Benefit

Eligible taxpayers can write off a percentage of home expenses such as depreciation, rent, property taxes, insurance, utilities, maintenance, and repairs. The percentage is based on the square footage of the office space relative to the total size of the home.

Passing the Test

To qualify for a write-off, a home office must be used in a trade or business activity — not to manage personal investments or pursue a hobby. It must also be used regularly and exclusively for business. If part of your home is used to provide day care or to store products, you may not have to meet the exclusivity test. In addition, your office must meet at least one of the following three criteria:

• It is the place where you normally meet with patients, clients, or customers.
• It is your principal place of business, meaning there is no other fixed location where you work on a regular basis.
• It is a separate structure that is used exclusively for trade or business. If the office space is not attached to the dwelling, it does not have to be the principal place of business.

If you take the deduction, make sure to keep good records, including pictures that show how your home office is used. You may want to ask a tax professional to help determine your eligibility and evaluate whether the potential tax savings may be worth the added IRS scrutiny.

1) businessweek.com, February 21, 2012

The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek Naperville Tax Services advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. Copyright © 2012 Emerald Connect, Inc.

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