Tax info from Paul Boyer

An Open letter to all CORE members and other Retirees:

I have read a few letters from some of our retirees concerning the high cost of their health care each year. If you are not already doing it, taking advantage of this tax savings can save you some big bucks.

I have always done my own taxes, doing them by hand when they were much simpler than they are today. For many years now I have used the TaxCut Program.

In the early 90's I spent about four years in the Tax Aide for the elderly. This is a program run by AARP under contract with IRS. It is all volunteer with legitimate expenses paid. I was responsible for nine counties and had to take a few days' training each year.

I recruited and taught volunteers and set up various sites where seniors could come and receive free help. The program is still available here but vastly changed since I was in it. Anyone living in Ohio and receiving retirement income may receive a tax credit.

A little reminder - a tax deduction is something you subtract from your income before taxes; A tax credit is something you deduct from your tax bill after it is all figured.

Here is a simple paragraph copied and pasted from the Ohio Tax book:

Line 49 — Retirement Income Credit

To qualify for the Ohio retirement income credit, you must meet all of the following tests:

• You received retirement benefits, annuities or distributions that were made from a pension, retirement or profit-sharing plan. However, qualifying social security benefits and railroad ben­efits that you have already deducted online 40 of Ohio Sched­ule A do not qualify.

You received this income because you have retired.

• This income is included in your Ohio adjusted gross income on line 3.

The amount of the credit is as follows:

Amount of qualifying retirement Line 49 retirement

income received and included in income credit for

Ohio adjusted gross income (line 3) taxable year:

during the taxable year:

$500 or less………………………………….......................….0

More than$500, but not more than $1,500 xxxxxxxxxxxxxxxxx$ 25
More than $1,500, but not more than $3,000 xxxxxxxxxxxxxx$ 50
More than $3,000, but not more than $5,000 xxxxxxxxxxxxxx$ 80
More than $5,000, but not more than $8,000 xxxxxxxxxxxxxx$130
More than $8,000 xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx$200

The maximum credit per return is $200.

Please note the last statement. This means that if both spouses have retirement income , you need to file separately so that you can get the credit on both returns. If you are 65, there is also a $50.00 credit for each return. These are figured on the back of the 1040 return.

If you decide to do this, then Ohio requires you to use the Married filing separately return for Federal taxes also.

Now, here is where the nice part comes in. If one spouse has higher health care costs that the other, you will usually be able to claim higher health care deductions because they must be above .075% of your total income. When you file married, filing separately and you both have income, you must both itemize. On the federal returns, income and medical expenses for each person must be put on each person’s return. For all other deductions, you may use your own judgment as to which return you put them on. Sometimes you can save taxes by putting certain deductions on one return or the other.

IRS has for years tried to tell us that married filing separately always results in higher taxes but that is rarely true. Alice and I have saved thousands of dollars over the twenty years of our retirement by doing our taxes this way. If this is confusing to you, feel free to send me an email (planboyer@prodigy.net) or call me at 419-225-7027 and I will try to help you.

Paul L. Boyer