Tag: Missouri income tax

Posted on by Jan Roberg

How To Pay Your Taxes Online

Sometimes it seems like I should just wrap my tax payment up with a box.

 

The best thing about paying taxes on-line is that you get a confirmation that you actually paid the tax.  (It’s also especially helpful when you’re waiting until the last minute and didn’t get your check in the mail on time!)

 

If you’re paying the IRS use IRS Direct Pay.  Direct pay has no extra fees.  You make the payment directly from your bank account.  Here’s the link:  IRS Direct Pay

It’s going to ask the reason for your payment.  For most people, it’s going to be “Tax Return or Notice”.  But, if you’re reading this and you haven’t filed yet, it’s also the place to go to file an extension.  I’m talking about paying your federal taxes, so in the next section where it says “Apply payment to” you’re going to pick “1040, 1040A, 1040EZ”.

The next block is for the tax period.  You’re going to pick the year.  So, if you’re paying your current tax bill, that’s your 2017 taxes.  Click on 2017 and hit “continue.”

 

The next page is the verification page.  This is where they want to prove it’s really you.  They want your name and social security number and the address you used on your tax return last year!  Note the last year part!  If you’ve moved, the IRS doesn’t know that yet.

 

And here’s something else helpful.  If you are married, and your spouse’s name is listed first on the tax return – use his/her name and his/her social security number when you pay that bill.  The IRS systems aren’t that sophisticated.  If you use the “spouse” social instead of the “taxpayer” social, your account might not get credited properly.

 

After the IRS identifies you, then you proceed with the payment screens.  It’s actually pretty easy from there.

 

 

If you want to pay with a credit card instead, you can go to 1040paytax.com

But remember, using your credit or debit card has fees.  The higher your tax bill, the higher the fees.  So if you can pay the full balance due with your bank account, that’s going to save you some money.

 

If you are trying to pay your Missouri taxes, you may use the Missouri Department of Revenue JetPay site. The catch is – if I give you the link to Jet Pay, it times out.  So, I’m going to give you a link to the Missouri Department of Revenue site – from there, on the right hand side of the page you’ll see where it says “Popular Online Services”.  In that box is a link to Jet Pay.  So you’ll click on that.   Here’s a link to Missouri Department of Revenue

Click on:  “I would like to Process a Payment”.

 

 

The City of St Louis does not currently accept online payments, but if you want to you pay call and make the payment by credit card over the phone.  There is a 2.45% service fee for that though.  The City of St Louis line for business returns is (314) 622-4248.

 

 

If you owe Illinois taxes, go to  My Tax Illinois

You will click on “Make an Individual Income Tax Payment” and you’ll follow the prompts from there.  (If you get a white page that says click here to start over, do that and it should take you right there.  The web address is mytax.illinois.gov in case you have trouble getting there.)

 

 

 

 

 

 

Posted on by Jan Roberg

Missouri Seniors May Want to File Separately

If you’re married and receiving a public pension or social security in Missouri, it may make sense for you to file your tax return as married filing separately instead of jointly.  It sort of defies the conventional wisdom of tax preparation, but it’s worth checking out.

Usually, as in 99.5% of the time, a married couple is better off filing a joint return, at least as far as their federal tax return is concerned.  But often times, especially when there are no dependents claimed on the return, the difference is negligible if anything.   It’s just natural to file a tax return jointly because it’s easier and usually cost effective.  But most tax software programs that do a “married filing jointly (MFJ) vs married filing separately (MFS)” comparison analysis usually don’t include the state results in the analysis. 

If you live in Missouri, and you both have a public pension, you’ll want to take a closer look at the potential difference.  Here’s why:  If you’re married and your combined income exceeds $100,000, your public pension exemption becomes limited.  If you change your status to MFS, you each are allowed income of $85,000 before any limitations kick in.    The higher your income, the more you’re going to want to consider splitting your return.  Now remember, this works for public pensions and social security, if you have a private pension, the rules are different and there’s no tax benefit to filing separately.

Public pensions are pensions from government organizations such as the military, the postal service, or state or local governments.  Teacher pensions are considered to be public pensions.  Private pensions are from corporations like Boeing or Nestle.  If you’re not sure what kind of pension you have, call your plan administrator. 

Let’s say for example that you and your wife are retired school teachers–meaning that you both have public pensions.  Your income is $70,000 and your wifes’ is $74,000.  Combined, you’re well above the $100,000 limitation.  Because you’ve exceeded the income limitation, your pension exemption is limited to $23,406.  If you filed separately, the income limitation would be $85,000–which you’d both be under, and you’d each get a pension exemption for $33,703 (or a total of $67,406.)  That’s a difference of $44,000!  Compute that out at the 6% tax rate for Missouri and you’ll have saved $2,610. 

That’s a big difference.  Using the standard “MFJ vs MFS” calculator for the federal return, I showed that with the married filing separately status, you’d owe an extra $12.  I’ll gladly pay $12 to save $2600.  But without doing the extra work, I wouldn’t have known there was that huge difference.

While the take home tax software products are really good, this is one of those situations where you can miss out on a major tax savings.  You have to know about the public pension exemption.  You have to know about the different income limitations.  And most importantly, you have to actively set up and do the work to make sure you don’t miss this opportunity.  If you think you might be missing out on important deductions like this one, maybe it’s time to set up an appointment with a professional.

Posted on by Jan Roberg

Missouri Health Insurance Deduction

Missouri has a tax deduction for health insurance premiums

 

When you live in a state that has an income tax, like Missouri, you need to be aware of the state’s little deductions that aren’t automatically on your federal tax return.  One of these is the Health Insurance deduction.

 

It’s very difficult to claim any medical deductions on your federal income tax return because you have to meet the requirement that your medical expenses exceed 10% of your adjusted gross income.  In Missouri, you don’t have that.  If your health insurance isn’t already exempt from taxes, you can claim your health insurance as a deduction on your Missouri State income tax return.

 

You’ll find the deduction on line 12 of the Missouri schedule A.  For most people, its just a straight, direct entry on the form.  If you happen to have been able to claim your health insurance on your federal schedule A, or had medicare payments withheld from your Social Security, there’s a worksheet to determine just how much of a deduction you’ll get to claim on your Missouri return.  (For some people, your computer software will automatically calculate the amount of medicare insurance you can deduct, but you need to watch out if you’re adding additional insurance payments that you don’t delete the medicare payments.)

 

The health insurance deduction is especially valuable to senior citizens who may qualify for the Missouri Property Tax Credit.  It not only reduces their taxable Missouri income, but by reducing the income, it can increase the amount of property tax credit they receive.  Many seniors who qualify for the property tax credit don’t have any Missouri taxable income so the preparers don’t bother to look for deductions and that’s a mistake.

 

If you’d like to take a look at the worksheet for the qualified health insurance deduction, click on this link:

Missouri Health Insurance Worksheet

 

Also, if you happen to be self employed, be sure to check my post about the Missouri Self-Employed Health Insurance Tax Credit.  If you qualify for that, it’s even better for your taxes than the deduction.

 

 

Posted on by Jan Roberg

Last Minute Tax Tips: Missouri Food Pantry Credit

UPDATED FOR 2013

 

Did you know that if you donate money to a local food pantry in Missouri, you may be eligible for a Food  Tax Credit worth 50% of what you donate?  Let’s say for example that you gave $500 to your local food pantry.  You would get a receipt (or have the food pantry sign a special form) and then you’d use that to take $250 off of your Missouri state tax liability.  But that’s not all!  It’s a charitable donation so if you file a Schedule A to itemize your deductions, you’d reduce your federal taxable income by $500.  So if you’re in the 25% tax bracket, that would be another $125 you’d get back on your taxes.  That’s like paying $125 to have $500 worth of value.

But it’s even better than that.  I read on one of the food pantry websites that for every $1 of cash donated to the pantry, $20 worth of food is generated for the hungry.  It’s a gift that just multiplies.

You can’t claim a credit for over $2,500 (that would be a $5,000 donation.)  The credit is non-refndable, that means you can’t get a credit for more than the amount of your tax liability. Remember, since you’re getting a tax credit for the donation, you don’t get to claim the donation as a deduction on your Missouri return-it’s an adjustment you’ll have to make on the return.

The state of Missouri has only allocated $2,000,000 for the tax credit.  What happens is that all the credits are held until April 15th before they are allocated.  If there are over $2,000,000 of credits applied for, they will be allocated among the applicants.  In that situation, the credits that you weren’t able to use can be carried forward to next year.

This is one of the those few tax credits that normal, everyday kind of folks can use.  There’s no dollar minimums but I recommend donating at least $100 to make it payoff.  Most tax companies charge an extra fee for preparing Missouri Tax Credits.  It doesn’t make sense to claim a credit for less than the amount of the charge to prepare the form.

For more information about the Food Pantry Tax credit, click here to go to the Missouri Department of Revenue web site:  http://dor.mo.gov/taxcredit/fpt.php

The food pantry shelves are low and the need is at an all time high.   Even if you don’t want or need a Missouri tax credit, this is a charity that’s worthy of your support.