Last month, while I was frantically trying to finish up a Pennsylvania client’s tax return, I discovered that we had missed a $500 to $650 state property tax credit for seniors. To snag that credit, it seemed that the return should have been filed by June 30. But, oh ho! The state had extended the deadline for which one can apply for the 2010 property tax credit to December 31, 2011, so we were able to grab it after all.
Other states, including Arizona, Mississippi, Montana, and New Mexico, have similar tax credits for the elderly, disabled, or widowed. Meanwhile, Connecticut’s property tax credit covers taxes both residences and vehicles.
Yes, you’ve got it. The biggest treasure trove of missed tax credits involves state tax credits. State tax credits that are similar to IRS tax credits are usually picked up. But tax credits that the IRS doesn’t offer tend to be overlooked. As you peruse the tax credits, make sure to watch in particular for those that get carried over to future years if they are not used currently.
Watch for these interesting state tax credits
- California, Idaho, and North Dakota have credits for folks who support a dependent parent, whether the parent lives with you or not.
- Delaware gives volunteer firefighters a $400 tax credit.
- Georgia has a life insurance credit for active members of the Georgia National Guard or Air National Guard.
- Hawaii has a credit for child restraints.
- Idaho offers residents and part-year residents a grocery tax credit.
- Illinois offers a credit for K-12 education expenses paid to schools within Illinois.
- Maryland has a credit to encourage public school teachers to take graduate-level courses.
- Massachusetts will reward you for removing lead paint from residential properties.
- Michigan will compensate you for a stillborn child. The state also gives you credit for your home heating costs.
- New Mexico offers a child daycare credit to low-income taxpayers.
- North Carolina has a credit for long-term care insurance premiums.
- Ohio has a displaced worker credit for folks who lost their jobs because a company moved out of the area or closed down.
- Oregon will give you $50 if you have permanently lost the use of at least two of your limbs.
- Utah offers a credit for certain capitals gains.
- Wisconsin has credits for working families and married couples.
Watch for these state tax credits as well
Some states with cities that border on others have reciprocal agreements to exempt their citizens’ income from each others’ taxation. Arizona, for example, offers a complete exemption of taxation to residents of Texarkana, while Indiana has reciprocity with Kentucky, Michigan, Ohio, Pennsylvania, and Wisconsin.
Also, look for credits for contributions to certain charities or educational facilities. This is especially useful when you don’t have enough deductions to itemize.
And finally, many states offer transportation or commuter credits that you should look into.
Incidentally, all states have a cornucopia of tax credits available to businesses—large and small. Be sure to see if any apply to you!
Eva Rosenberg, EA is the publisher of TaxMama.com , where your tax questions are answered. Eva is the author of several books and ebooks, including the new edition of Small Business Taxes Made Easy. Eva teaches a tax pro course at IRSExams.com and tax courses you might enjoy at http://www.cpelink.com/teamtaxmama.