| Tax Season 2006: What's new for Wisconsin? by Mei-Feng Moe |
| You may be aware that Wisconsin allows a tuition deduction of up to $3,000 (from 1998 to 2004) per student for attending a qualifying post-secondary school. This deduction has been increased to $4,244 per student for 2005. The tuition must have been paid for the taxpayer, spouse, or dependent child to attend a school in Wisconsin which qualifies as a university, college, technical college, or other post-secondary schools that have been approved by the Wisconsin Educational Approval Board. Public vocational schools or institutions of higher education in Minnesota under the Minnesota-Wisconsin reciprocity agreement also qualify. Educator Expense The above-the-line educator expenses deduction of up to $250 allowed by federal for the 2002-2003 tax years and extended to the 2004-2005 tax years was not allowed by Wisconsin for 2002, allowed for 2003, disallowed for 2004, and guess what? It's allowed again for 2005. Teachers and other educators may take this deduction for materials used in the classroom. Veterans Trust Fund Donation In addition to the existing endangered resources donation, breast cancer research donation, Packers football stadium donation, a new line has been added to WI tax form for donations to the veterans trust fund. The donations will be used by the Wisconsin Department of Veterans Affairs for the benefit of veterans or their dependents. Veterans and Surviving Spouses Property Tax Credit Effective in 2005, an eligible veteran or an unmarried surviving spouse may claim this refundable credit at 100%! Yes, the credit is based on 100% of property tax paid on a principal home. An eligible veteran must have served on active duty; was Wisconsin resident at the time of entry into active service; currently a Wisconsin resident at least 65 years of age and has a service-connected disability rating of 100%. If you are an eligible veteran or an eligible unmarried surviving spouse, you must request verification from the Wisconsin Department of Veterans Affairs indicating that you qualify for the credit. Farmland Tax Relief Credit This refundable credit has been changed to 20% of property tax on farmland. The maximum credit remains the same at $1,500 based on up to $7,500 farmland property tax (2004 credit was based on 15% of farmland property tax up to $10,000). You must own at least 35 acres of Wisconsin farmland in agricultural use and the prior year's property tax must have been paid. The farmland must have produced at lease $6,000 gross profit during 2005 or at least $18,000 gross profits for 2003 through 2005. But if at lease 35 acres of farmland was enrolled in the Conservation Reserve Program, you are not required to meet the gross profit requirement. Venture Capital Credit Two new venture capital credits were created: Angel Investment Credit effective for 2005-2006 tax years and Early Stage Seed Investment Credit effective beginning 2005. The angel investment credit is 12.5% of "Angel Investment" made directly in a qualified new business venture certified by the Department of Commerce. The early state seed investment credit is 25% of investment paid to a fund manager certified by the Department of Commerce that the fund manager invests in a certified business. Both credits are nonrefundable and the unused credit may be carried forward for 15 years. The credit amount is taxable income in the year first claimed. About the author Mei-Feng Moe is a Master Tax Advisor certified by H&R Block. In addition to giving tax advice and preparing tax returns, she has also been teaching income tax courses for a number of years. She is an Enrolled Agent who may represent clients before the IRS. She also holds series 6 and series 63 security licenses. This column welcomes your questions on tax issues. Please e-mail your tax questions to dlc@triwest.net. The questions will be answered in a future issue. |
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| In the past, we have discussed important federal tax laws that impact the bottom line for your tax returns. This article will review some of the Wisconsin tax laws and what's new for the 2005 tax year. Tuition Deduction |
| Mei-Feng Moe |
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