BSW Tax Blog

Federal and Louisiana Taxes

Monthly Archives: March 2012

Standard Deduction vs. Itemizing: Seven Facts to Help You Choose

Standard Deduction vs. Itemizing: Seven Facts to Help You Choose.

IRS Tax Tip 2012-43, March 5, 2012

Each year, millions of taxpayers choose whether to take the standard deduction or to itemize their deductions. The following seven facts from the IRS can help you choose the method that gives you the lowest tax.

  1. Qualifying expenses – Whether to itemize deductions on your tax return depends on how much you spent on certain expenses last year. If the total amount you spent on qualifying medical care, mortgage interest, taxes, charitable contributions, casualty losses and miscellaneous deductions is more than your standard deduction, you can usually benefit by itemizing.
  2. Standard deduction amounts -Your standard deduction is based on your filing status and is subject to inflation adjustments each year. For 2011, the amounts are:
    Single $5,800
    Married Filing Jointly $11,600
    Head of Household $8,500
    Married Filing Separately $5,800
    Qualifying Widow(er) $11,600
  3. Some taxpayers have different standard deductions – The standard deduction amount depends on your filing status, whether you are 65 or older or blind and whether another taxpayer can claim an exemption for you. If any of these apply, use the Standard Deduction Worksheet on the back of Form 1040EZ, or in the 1040A or 1040 instructions.
  4. Limited itemized deductions – Your itemized deductions are no longer limited because of your adjusted gross income.
  5. Married filing separately – When a married couple files separate returns and one spouse itemizes deductions, the other spouse cannot claim the standard deduction and therefore must itemize to claim their allowable deductions.
  6. Some taxpayers are not eligible for the standard deduction – They include nonresident aliens, dual-status aliens and individuals who file returns for periods of less than 12 months due to a change in accounting periods.
  7. Forms to use – The standard deduction can be taken on Forms 1040, 1040A or 1040EZ. To itemize your deductions, use Form 1040, U.S. Individual Income Tax Return, and Schedule A, Itemized Deductions.

These forms and instructions may be downloaded from the IRS website at www.irs.gov or ordered by calling 800-TAX-FORM (800-829-3676).

Links:

  • Publication 17, Your Federal Income Tax (PDF 2.3MB)
  • Schedule A, Itemized Deductions (PDF)
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Louisiana State and Local Sales Tax Refund Procedures Compared

Nicole F. Gould, M.B.A., J.D.
State and Local Tax Controversy

Of Counsel—Baton Rouge
Phone:
225.381.3165
nicole.gould@bswllp.com

Grounds for granting a refund of an overpayment due to:

 

State

Local

Taxpayer’s error in mathematical computation

X

X

Taxpayer’s construction of the law contrary to the collector’s at the time of payment

X

X

Taxpayer’s or Collector’s error, omission, or a mistake of fact of consequence to the determination of the tax liability

X

X

Collector’s change made in an assessment, notice, or billing

X

X

Subsequent determination taxpayer was entitled to pay tax at a reduced rate

X

X

Payment exceeded the amount shown on the return or voucher

X

X

La. R.S. 47:1621 and 337.77

Issuance and Reversal of the Refund:

 

State

Local

A refund ordered by judge must be issued in 45 days from the date the judgment becomes non-appealable.

X

Before the Collector issues a refund, he may determine if the taxpayer owes any other liability the Collector administers and credit that liability instead of issuing a refund.

X

X

Collector can use any collection means to recover a refund later-determined not an overpayment within 2 years from December 31 of the year the refund was paid.

X

X

Collector can use any collection means to recover a credit made later-determined not an overpayment within 2 years from December 31 of the year the refund was paid.

X

La. R.S. 47:1621, 1622, 337.77 and 337.78.

Interest on the refund of overpayment

 

State

Local

Interest is provided the taxpayer on an overpayment if it is credited against another liability.

*

X

Only 2% interest for first 60 days after the refund claim is made as penalty if the overpayment is due to taxpayer administrative error.

X

Interest begins to accrue at 2 % on an overpayment from the date of payment until the refund is requested.

X

Judicial interest accrues on an overpayment from the date of refund request, notice of payment under protest, or notice of intention to file suit to recover the overpayment until paid.

X**

Judicial interest accrues on an overpayment refund or credit beginning with the later of:  date the return was due, the date the first return for that period was filed, or the date the tax was paid until paid.

X

No interest is paid if taxpayer deliberately overpaid tax to gain interest.

X

X

No interest on refund or credit to pre-petition tax periods for taxpayers in bankruptcy.

X

X

La. R.S. 47:1624 and 337.80.

*Presumably, the state does not provide interest on an overpayment credited to the taxpayer’s account because there will be an offset of interest having accrued on the liability being credited.  La. R.S. 47:1624

**The local rate of interest on refunds initially appears to be less, but should be nonetheless judicial interest pursuant to La. R.S. 13:4202.

Deadline to Make Refund Claim

 

State

Local

Later of:i)      December 31st,  3 years from date the tax was due, orii)1 year from date the tax was paid.

X

X

Claim for refund must be filed with the Secretary before the deadline

X

Claim for refund must be received by the Collector before the deadline

X

La. R.S. 1623 and 337.79.

After the Refund is Denied or Ignored.

 

State

Local

If the Collector fails to act for 1 year or denies the refund claim, the taxpayer may request redetermination hearing within 30 days with the Collector.

X

The Secretary’s failure to respond to the refund claim is deemed a denial after 1 year.

X

Days from the Secretary’s/Collector’s date of certified mailing, denying the refund, the taxpayer has to appeal.

60

30

Forum in which the taxpayer appeals the denial of refund

BTA

District Court or Mandatory Arbitration

Once appeal is lodged, the Collector may assert a demand for any tax, interest or penalty due from refund tax period.*

X

X

La. R.S. 1625 and 337.81.

*The constitutional prescription of taxes should remain except for that amount needed to offset a refund claim.