Changes in deductions could limit benefits
While state income taxes are lower this year, changes in what can be deducted could limit the benefit taxpayers see.
Although Kansas income tax rates have dropped, with the bottom income tax bracket at 2.7 percent and the top bracket at 4.8 percent, several often-used deductions have been eliminated.
Deductions for qualified residential interest and real and personal property taxes are now 50 percent of the deduction claimed on federal income taxes.
Jeannine Koranda, director of communications for the Kansas Department of Revenue, said the state no longer allows deductions for medical and dental expenses, casualty and theft losses, job expenses and all miscellaneous deductions.
Barbara Smith, VITA volunteer for Marion County Department on Aging, said the biggest change she sees when assisting senior citizens with their state income tax forms is that the Kansas income tax credit for food purchases is no longer given to filers who get a refund.
“Nobody gets it unless they owe,” Smith said.
Charitable contributions can still be deducted at 100 percent of the amount claimed on federal income tax returned.
Interest on late tax payments to KDOR is now four percent per year.
Partnership guaranteed payments reported on Schedule K-1 of federal returns are now included in Kansas adjusted gross income.
Certain deductions can no longer be taken on federal returns. These include tuition and fees, educator expenses, mortgage insurance premiums and state and local sales taxes.
A credit can no longer be claimed for certain nonbusiness energy property.
According to information from the Internal Revenue Service, health insurance companies are required this year to send verification of coverage during 2015. The information will be needed to complete a federal return.
If someone in the household didn’t have insurance for all of 2015, the shared responsibility payment can be much higher this year.
Under Affordable Care Act guidelines, fines are charged for any month taxpayers don’t have health insurance meeting minimum coverage requirements. However, if the premium for bronze level health insurance exceeds 8.05 percent of income, taxpayers can apply for an exemption.
Smith said she’s seeing some clients who had to temporarily cancel health insurance in order to afford other needed items.
”That is what the tax system has made really difficult for those people,” Smith said of the change. “It really generates about six pages of paperwork.”
Depending on the circumstances, filers might be able to claim an exemption from the health care coverage requirement.
The health coverage tax credit was reinstated retroactive to 2014.
The 2016 due date for filing income taxes will be three days later than usual because Emancipation Day will be observed on April 15. The April 18 date applies to filing both federal and state income taxes.