Tax Commission News Release
“Fiscal cliff” solution impacts some Idaho income tax filers
BOISE, IDAHO — Jan. 9, 2013 — The changes Congress recently made to prevent the country from sliding over the “fiscal cliff” will impact Idaho taxpayers who file 2012 income tax returns if they’re claiming a deduction for: state and local sales taxes, tuition and related expenses, or teachers’ classroom expenses.
State and local sales tax claimed on federal Schedule A: Those taking a deduction for state and local sales tax on the federal Schedule A will need to claim it on Form 40, line 14 or Form 43 (for part-year residents), line 34. The instruction on those lines previously included “general sales taxes” as an amount reducing the federal itemized deductions; however, those words were left out of the 2012 return due to the uncertainty over actions Congress would take.
Tuition and related expenses: Part-year Idaho residents who qualify for an income tax deduction for tuition and related expenses can claim it on Form 43, line 22. This is the same line that allows a deduction for moving expenses, alimony payments, and student loan interest. Full-year residents who claim the deduction don’t have to do anything on the Form 40, which automatically allows for the deduction when included on the federal return. Tuition and fees were included on the Idaho Form 43 for 2011, but like the state and local tax deduction, the wording was removed from the 2012 form due to uncertainty over whether Congress would renew the credit.
$250 expense deduction for teachers: Idaho teachers can now claim a deduction of up to $250 on their Idaho tax return for teaching materials they bought and used in their classrooms. In previous years, Idaho teachers were allowed a federal tax deduction of up to $250 for out-of-pocket teaching expenses, but Idaho didn’t allow the deduction, which had to be added back to taxpayers’ income on their Idaho tax return. Congress just extended the deduction for federal purposes, and the 2012 Idaho Legislature changed the law to allow the deduction on Idaho tax returns. Full-year residents don’t need to do anything special on the Form 40, as the deduction flows automatically from the federal form; part-year residents should deduct teacher expenses on Form 43, line 25 (Other Deductions).
For more information on these changes, contact Cynthia Adrian, tax policy specialist, at (208) 334-7670.