Tax Information

States with flat rate individual income tax

  • Colorado – 4.63% (2016)
  • Illinois – 4.95% (July 2017)
  • Indiana – 3.3% (2016) (until 2017, when the rate will fall to 3.23%.
  • Note also that counties may impose an additional income tax). 
  • Massachusetts – 5.1% (2016)
  • (most types of income)
  • Michigan – 4.25% (2016)
  •  (22 cities in Michigan may levy an income tax, with non-residents paying half the rate of residents)
  • North Carolina – 5.75% (2016); 5.499% (2017)
  • Pennsylvania – 3.07% (many municipalities in Pennsylvania assess a tax on wages: most are 1%, but can be as high as 3.9004% in Philadelphia)
  • Utah – 5.0% (2016)
  • As of 2016 records

States with No Personal Income Tax

  • Alaska
  • Florida
  • Nevada
  • South Dakota
  • Texas
  • Washington
  • Wyoming


Tennessee - No tax on wages

New Hampshire - No tax on wages

States who don't Tax a NYS Pension

  •  Alabama 
  •  Alaska 
  •  Florida 
  •  Hawaii 
  •  Illinois 
  •  Mississippi 
  •  Nevada 
  •  New Hampshire 
  •  New York 
  •  Pennsylvania 
  •  South Dakota 
  •  Tennessee 
  •  Texas 
  •  Washington 
  •  Wyoming 


Certain restrictions apply to some states, such as age, how much income can be excluded, and other factors.

Any Changes for 2018?

I will update this page as we get closer to the filing year. 

 

Under the Tax Cuts and Jobs Act of 2017 (the Act), taxpayers may no longer deduct unreimbursed employee expenses—including unreimbursed expenses related to business use of a personal vehicle—as “miscellaneous itemized deductions” to the extent the total of such expenses exceeds 2 percent of his or her AGI. However, the 2018 alternative standard mileage rate applicable to eligible business use of a vehicle is 54.5¢ per mile, up from 53.5¢ in 2017. In order for such expenses to be deductible, they must have been:

  • paid or incurred during the tax year
  • for the purpose of carrying on the taxpayer’s trade or business
  • ordinary and necessary
  •  The standard mileage rate applicable to a taxpayer’s use of a personal vehicle for charitable purposes is based on statute and remains unchanged at 14¢ per mile.  

 

The Act has increased the standard deduction for 2018. Under the new law, standard deductions are:

  • $24,000 for married couples whose filing status is married filing jointly or surviving spouse
  • $12,000 for singles and married couples whose filing status is married filing separately
  • $18,000 for taxpayers whose filing status is Head of Household

A taxpayer who can be claimed as a dependent is generally limited to a smaller standard deduction, regardless of whether the individual is actually claimed as a dependent. For 2018 returns, the standard deduction for a dependent is the greater of:

  • $1,050
  • the dependent’s earned income from work for the year plus $350 (but not more than the standard deduction amount, generally $12,000)

 

The AMTI exemption amount is reduced (but not below zero) by 25 percent of the amount by which the taxpayer’s alternative minimum taxable income exceeds:

  • $1,000,000 for taxpayers whose filing status is married filing jointly or qualifying widow(er)
  • $500,000 for taxpayers whose filing status is single, Head of Household, married filing separately, and for trusts and estates

This is a pretty big change:


 

High-income taxpayers are subject to higher capital gain and qualified dividend tax rates. For tax years beginning in 2018, the long-term capital gain and qualified dividend tax rate is 20 percent for married taxpayers filing jointly whose taxable income exceeds $479,000 and to singles whose taxable income exceeds $425,800.

For taxpayers in lower income tax brackets:

  • the 0 percent rate applies to:
    • single filers with income up to $38,600
    • joint filers with income up to $77,200
  • the 15 percent rate applies to:
    • single filers with income between $38,601 and $425,800
    • joint filers with income between $77,201 and $479,000

 

Before passage of the Act, an eligible educational institution at which a distribution for expenses of enrollment or attendance would be considered qualified education expenses under a § 529 Tuition Savings Plan included an educational institution eligible to participate in a student aid program administered by the U.S. Department of Education such as a:

  • college
  • university
  • vocational school
  • other post-secondary educational institution

Elementary and secondary school expenses were not considered qualified education expenses. The Act broadens the definition of qualified education expenses by authorizing an annual qualified distribution of contributions made after December 31, 2017 (and income on such contributions) of up to $10,000 from all of a taxpayer’s § 529 plans for elementary or secondary school tuition. Such schools may be:

  • public
  • private
  • religious


The IRS called me?

 Many taxpayers have encountered individuals impersonating IRS officials – in person, over the telephone and via email. Don’t get scammed. The IRS wants you to understand how and when the IRS contacts taxpayers and help you determine whether a contact you may have received is truly from an IRS employee.The IRS initiates most contacts through regular mail delivered by the United States Postal Service.However, there are special circumstances in which the IRS will call or come to a home or business, such as when a taxpayer has an overdue tax bill, to secure a delinquent tax return or a delinquent employment tax payment, or to tour a business as part of an audit or during criminal investigations 


 Even then, taxpayers will generally first receive several letters (called “notices”) from the IRS in the mail. 


 The IRS does not:

  • Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail a bill to any taxpayer who owes taxes.

  • Demand that you pay taxes without the opportunity to question or appeal the amount they say you owe. You should also be advised of your rights as a taxpayer.

  • Threaten to bring in local police, immigration officers or other law-enforcement to have you arrested for not paying. The IRS also cannot revoke your driver’s license, business licenses, or immigration status. Threats like these are common tactics scam artists use to trick victims into buying into their schemes.


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How do I reduce taxes as a wage earner?

#1. Contribute to an IRA, 401K,  403B, 457 plan before you do any other kind of after tax savings for retirement! then contribute to a HSA or FSA for your health expenses


HSA -  The amount you or any other person can contribute to your HSA depends on the type of HDHP coverage you have, your age, the date you become an eligible individual, and the date you cease to be an eligible individual. For 2016, if you have self-only HDHP coverage, you can contribute up to $3,350. If you have family HDHP coverage, you can contribute up to $6,750 


 FSA-You don’t pay federal income tax or employment taxes on the salary you contribute or the amounts your employer contributes to the FSA. However, contributions made by your employer to provide coverage for long-term care insurance must be included in income 


Five Tax Credits that Can Reduce Your Taxes 


Tax credit reduces the amount of tax you must pay. A refundable tax credit not only reduces the federal tax you owe, but also could result in a refund.Here are five credits the IRS wants you to consider before filing your 2012 federal income tax return: 

  1. The Earned Income Tax Credit is a refundable credit for people who work and don’t earn a lot of money. The maximum credit for 2012 returns is $5,891 for workers with three or more children. Eligibility is determined based on earnings, filing status and eligible children. Workers without children may be eligible for a smaller credit. If you worked and earned less than $50,270, use the EITC Assistant tool on IRS.gov to see if you qualify. For more information, see Publication 596, Earned Income Credit.

  2. The Child and Dependent Care Credit is for expenses you paid for the care of your qualifying children under age 13, or for a disabled spouse or dependent. The care must enable you to work or look for work. For more information, see Publication 503, Child and Dependent Care Expenses.

  3. The Child Tax Credit may apply to you if you have a qualifying child under age 17. The credit may help reduce your federal income tax by up to $1,000 for each qualifying child you claim on your return. You may be required to file the new Schedule 8812, Child Tax Credit, with your tax return to claim the credit. See Publication 972, Child Tax Credit, for more information.

  4. The Retirement Savings Contributions Credit (Saver’s Credit) helps low-to-moderate income workers save for retirement. You may qualify if your income is below a certain limit and you contribute to an IRA or a retirement plan at work. The credit is in addition to any other tax savings that apply to retirement plans. For more information, see Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs).

  5. The American Opportunity Tax Credit helps offset some of the costs that you pay for higher education. The AOTC applies to the first four years of post-secondary education. The maximum credit is $2,500 per eligible student. Forty percent of the credit, up to $1,000, is refundable. You must file Form 8863, Education Credits, to claim it if you qualify. For more information, see Publication 970, Tax Benefits for Education.

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