From the Senator's Desk . . .
April 25, 2008
Tax season is back. First, income taxes and now property taxes. How do you feel when your appraisal goes up 70%, but your paycheck stays the same? We’ll, let’s talk about what to do.
Written by Senator Eliot Shapleigh, www.shapleigh.org
“Ways to Save on Taxes”
Dear Neighbor,
Tax season is back. First, income taxes and now property taxes. How do you feel when your appraisal goes up 70%, but your paycheck stays the same?We’ll, let’s talk about what to do.
Politicians in Austin don’t want to talk about it, but the main issue is the Texas tax system. Way too much burden is placed on homeowners to pay for schools, city, county, community college and hospital taxes. Now, add storm taxes to that.More and more, the wealthy who write the campaign checks have shifted the burden to the middle class to pay for government. As a result, Texas now has one of the most regressive tax systems in the US.
At the state and federal level, our lawmakers need to take a close, hard look at a tax system that makes Texans families pay more, when the paycheck doesn’t pay more. Forty three states have a much better system. Just right across the state line, in many instances, property taxes are 90% lower than here in El Paso.
To help you help yourself, I am sharing with you "Ways To Save On Taxes." Some of the savings come from state and local government, others from the federal government. Remember, according to the CAD, you have until 30 dates after the notice of appraisal or June 2nd to protest the appraisal on your home. Here’s the website, e-mail address and phone number to contact:
El Paso Central Appraisal District
www.elpasocad.org
admin@epcad.org
915-780-2131
The CAD will start their hearings in early May. Also, right now we are working with Appraisal District to make it easier for you to protest from home via the Web. Last year, Houston put online protests into place and people love it. Here’s a link to that article: http://www.chron.com/disp/story.mpl/front/5648870.html.
I hope that this information is helpful to you and your family. Please feel free to call the CAD and ask them to get online soon!
Federal Earned Income Tax Credit (EITC)
If you work and your family made less than $39,783 in 2007, you may qualify for Earned Income Tax Credit (EITC). EITC is a federal income tax credit that is refunded to qualified taxpayers after their taxes have been paid. Even if you don't have to pay any taxes on your income, you may still qualify for a refund.
EITC is based on the amount of your earned income; it is set up on a sliding scale and is claimed by filing a federal income tax return. For more information, see publication 96-540 at http://www.window.state.tx.us/taxinfo/eitc/96-540.pdf.
Federal Deferring Income and Accelerating Deductions
Because of the time value of money, a dollar spent today costs more than if paid in 2002 or beyond. Thus, an age-old strategy, when it comes to tax planning, is to delay the day of reckoning with the IRS as long as allowed. With the drops in the regular tax rates that began this year and the (hoped for) repeal of the personal exemption and itemized deduction phase outs beginning in 2006, this strategy looks especially appealing right now. Not only does it allow you to hang onto your tax dollars longer, hopefully, you'll also have to spend less of them when it's finally time to pay up because of the scheduled tax rate decreases.
How do you legally put off paying the IRS? The typical approach is to push taxable income into a later year and pull deductible expenses into the current year. For example, on the income side, this could involve participating in a deferred compensation arrangement or, perhaps, structuring a disposition of business or rental property as an installment sale or like-kind exchange. In addition, cash-basis taxpayers who are self-employed frequently have significant flexibility in deferring income into another tax year (for example, by delaying billing so that the money isn't collected until after year-end).
On the deduction side, many taxpayers have tax deductible expenses that can be moved between years. The available options include making at least a portion of 2002's charitable contributions in late 2001, paying property taxes or mortgage interest that will accrue by year end in December rather than January, and completing and paying for minor repair and maintenance (or other deductible) expenses on rental properties before the year is out.
Texas Energy Star Sales Tax Holiday
(http://www.window.state.tx.us/taxinfo/taxpubs/tx98_836/)
During Memorial Day weekend, Texas shoppers get a break from state and local sales and use taxes on purchases of certain energy efficient products. The 2008 Energy Star sales tax holiday begins at 12:01 a.m. on Saturday, May 24, and ends at 11:59 p.m. on Monday, May 26 (Memorial Day).
The products qualifying for the exemption are:
- air conditioners priced under $6,000 (room and central units)
- clothes washers (but not clothes dryers*)
- ceiling fans
- dehumidifiers
- dishwashers
- light bulbs (incandescent and fluorescent)
- programmable thermostats
- refrigerators priced under $2,000.
* Because most dryers use similar amounts of energy, Energy Star does not label clothes dryers.
Qualifying products will display the Energy Star logo, which may appear on the appliance, the packaging or the Energy Guide label. Energy Star is a joint program of the U.S. Environmental Protection Agency and the U.S. Department of Energy. Earning the Energy Star means a product meets strict energy efficiency guidelines set by these two federal agencies.
There is no limit on the number of qualifying items one can purchase during this sales tax holiday, and an exemption certificate is not required.
The Texas Clothing Tax Free Holiday (http://www.window.state.tx.us/taxinfo/taxpubs/tx98_490/tx98_490.html)
Texas shoppers get a break from state and local sales taxes on August 15, 16 and 17 - the state's annual tax holiday. Lay-away plans can be used again this year to take advantage of the sales tax holiday.
The law exempts most clothing and footwear priced under $100 from sales and use taxes, which could save shoppers about $8 on every $100 they spend. Backpacks under $100 and used by elementary and secondary students are also exempt. A backpack is a pack with straps one wears on the back. The exemption during the sales tax holiday includes backpacks with wheels, provided they can also be worn on the back like a traditional backpack, and messenger bags. The exemption does not include items that are reasonably defined as luggage, briefcases, athletic/duffle/gym bags, computer bags, purses or framed backpacks. Ten or fewer backpacks can be purchased tax-free at one time without providing an exemption certificate to the seller.
El Paso Homestead Exemption
Most taxing authorities permit a homeowner to file an application with their local appraisal district to "exempt" a portion of value from taxation for local property taxes. This can result in savings of as much as 20% of the annual tax bill.
While the requirements to obtain this tax exemption are basically the same standards used to determine homestead status under the Texas Constitution, these are still two distinct and separate concepts and one does not necessarily determine the other. For more information, you can contact the El Paso Central Appraisal District (CAD) at (915) 780-2000.
I hope this information is useful to you and your family. If you have any further questions or comments, please feel free to reach out to my office at (915) 544-1990 or e-mail: Joana.Alferez@senate.state.tx.us.
Eliot Shapleigh
Related Stories