Although no major changes took place in the Louisiana tax code, accountants and financial advisers want taxpayers to remember the little things, like claiming often-ignored tax credits and exemptions.
“Some of the things that people should be aware of that they sometimes miss are the little things, like the Citizens Insurance tax credit,” said Jennifer McGinnis, director of tax compliance and consulting services with Bourgeois, Bennett LLC in New Orleans. “That’s the assessment on your homeowners’ insurance declaration page.”
The Louisiana Citizens Property Insurance Corp. tax credit was 3.5 percent of homeowner’s insurance premiums in 2014. The credit, typically found on the first page of the insurance policy, is directly refundable. Property owners can get the money back as part of their Louisiana tax refund, or they can file for just the Citizens tax credit.
Despite being one of the easiest tax credits to claim and an annual education campaign by both the state Insurance and Revenue departments, the Citizens assessment is also routinely ignored. Roughly half of the state’s property owners overlook the credit each year.
Steve Everly, Jackson Hewitt district manager in Baton Rouge, said most of the people who forget to claim the tax credit don’t itemize their taxes, but the Citizens credit is one of the few where itemization isn’t required.
“It really is free money, and for most folks, their state refund is fairly small. So it makes a significant difference,” Everly said.
Other frequently missed tax deductions or credits that taxpayers should pay attention to as they file state returns by the May 15 deadline include:
- Educational expenses for students in grades K-12 in public, private or home schools. “If you’re paying private-school tuition or if you’re home-schooling or if you’re child’s in public school and you had expenses, you can take a credit for that on your return,” McGinnis said.
The maximum credit is $5,000 per child. The credits don’t apply to extracurricular fees, such as athletic or band fees, the cost of field trips or school lunches.
“If you’re in the 6 percent tax bracket, that works out to $300 of tax dollars in your pocket,” McGinnis said
- Education credit. “This is very small, just straight-up education credit, and it’s $25 per child,” McGinnis said. “If they’re in school, K-12, you get the credit.”
- Sale of Louisiana-owned businesses are excluded from the state’s capital gains tax.
- Correct addresses: Everly said one of the most important basics taxpayers should check is to make sure the address on their form matches the one on their driver’s license or state ID.
The last two years, Louisiana has held refunds where the addresses don’t match, he said.
“They’re doing it to prevent identity theft, and it’s a very good idea to do that, but it has created a lot of delays in refunds because people were not aware of it,” Everly said. “The easy fix for it is to make sure that you have the correct address on your photo ID, and you’re using the same address on your photo ID as the state tax return that you file.”