Hurricane refunds: free cash for SCP taxpayers
Beginning with the 2006 tax year, residential and commercial property insurance policyholders will receive an income tax credit under the Louisiana Citizens Property Insurance Corporation because of regular and special assessments they paid due to Hurricanes Katrina and Rita.
“The assessments are a result of losses on insured property caused by both hurricanes,” Byron Arthor spokesman for the Louisiana Department of Revenue told the Herald-Guide.
"The refundable tax credit will be reimbursed if the policy holder paid prior to January 1, 2007, but if the policy holder paid the assessment on or after January 1, 2007, they will have to wait and claim the tax credit on the 2007 tax year return," he continued.
Arthor said the tax credit will offset $239 million in property insurance premium costs for policyholders in this state budget year alone.
According to LDR the massive losses of both hurricanes cost the citizens in Louisiana over $1.2 billion dollars.
Tax papers may file the amount of the Louisiana Citizen's assessment shown as a separate item on the face of the premium notice (bill). Taxpayers may claim the credit on Line 9 of Schedule F of Form IT540 or Form IT-540B. Line 9 is labeled "Other Refundable Tax Credits." Taxpayers will be required to attach a copy of their premium notice(s) to the return in order for the credit to be allowed.
All individuals should keep a copy of all paperwork associated with this tax refund for four years in case of an audit, an investigation to determine whether the information provided to the government on the information/tax return is correct.
The credit is claimed for the year paid regardless of the due date of the premium. Citizens assessments paid before Jan. 1, 2007 can be claimed on the first income tax return with an original or extended return due date in 2007. Only LA citizens’ assessments acutally paid in 2005 or 2006 will be allowed as a credit on a 2006 income tax return.
If multiple assessments were paid, for example, one in Dec. 2005 and another in Dec. 2006. you are entitled to claim a credit for both payments on your 2006 income tax return.
A citizen’s assessment paid in 2007 can only be claimed on the first income tax return due in 2008.
Policyholders who are not required to file a state income tax return are eligible for a direct refund from the state.
These policyholders may pick up Form R-540 INS, (Request for Refund of Louisiana Citizens Property Insurance Corporation Assessment), from any of the eight Louisiana Department of Revenue Regional Offices listed on the Internet, including the main office, or from any local Library.
Louisiana Department of Revenue's website is www.revenue.louisiana.gov.
Plus: college savings plan plus tax credit equals more money
Two phrases that normally strike fear into the hearts and checkbooks of hard working Americans are tax season and college tuition, but with Louisiana’s START Saving Program contributions to a college savings account can also net the crafty consumer a nice tax deduction as well.The program is part of the state’s 529 college savings plan and offers account holders a variety of tax benefits and incentives. Account owners may exclude the deposits that make into their START account from their taxable income on their state tax returns up to $2,400 per year, per account or $4,800 for married couple filing jointly.
START savings grow tax-deferred, and withdrawals are exempt from federal income tax, as long as they’re used for qualified higher education expenses. However, contributions to a 529 college savings plan are not deductible for federal income tax purposes.
Louisiana’s unique educational savings program offers other benefits as well. For instance, the state offers matching funds on account owners’ deposits. As part of the START saving program, the state will annually match a percentage of the deposits made to an account during the calendar year - up to 14 percent – depending upon the category into which the account has been classified and the federal adjusted gross income reported by the account owner for the previous year. This match is called an earnings enhancement.
Getting started is simple and accounts may be opened for a beneficiary by anyone, including parents, legal entities, grandparents, friends, relatives, etc., as long as the account owner or the beneficiary is a Louisiana resident. Best of all, there is no limit on the frequency of deposits and the minimum deposit is only $10.
START accounts fall into several categories and may be opened any time of the year for a beneficiary at any age – provided they have a social security number. Either the account owners or the beneficiary must be a Louisiana resident.
There’s no limit to the number of accounts that can be opened for a beneficiary; however, the sum of funds in all accounts may not exceed the maximum allowable account balance for a beneficiary or $218,535. START funds may be used for undergraduate programs and professional programs.
There are six different investment options available through the START program, ranging from conservative to aggressive, to everything in between. For instance, START offers and aggressive variable return equity investment, managed by the Vanguard Group. It offers greater earnings potential, but the redemption value is not guaranteed. Or you can choose the more conservative Louisiana Principal Protection Option, which is managed by the State Treasurer wherein deposits are guaranteed by the State of Louisiana.
And since the program is a qualified tuition program, earnings are exempt from federal taxes when used to pay qualified higher education expenses. Account holders are able to track all earnings and account information online at any time.
For complete details on the START college saving program or to open a start account, go online to www.startsaving.la.gov or call 1-800-259-5626 (ext. 1012) for more information.
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