Two days left till Tuesday, April 15, the deadline for tax season.
My tax was done back in February. I need the updated information to complete the applications for financial aids for my three children, and as it turned out, I would not qualify for any mortgage loan if I did not have the tax return of 2013.
Early birds get the worm.
If you are going to miss the deadline, do not at least forget to file for extension. Per IRS web site (http://www.irs.gov/uac/Extension-of-Time-To-File-Your-Tax-Return):
If you are not able to file your federal individual income tax return by the due date, you may be able to get an automatic 6-month extension of time to file. To do so, you must file Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return by the due date for filing your calendar year return (usually April 15) or fiscal year return. This form is also available en español.
I used to believe at least partial of the blame for people miss the deadline is the complexity of our tax code. The current tax code calls for different tax rates at different income levels for different kinds of income, allows numerous kinds of deductions. The task to complete a tax return is a challenge to this country’s average math and business education level.
Of course, politicians love this game. It is a pleasure to design and determine other people’s fortune. Power intoxicates people. If the tax rate is flat and no deductions apply, what else can the President, Senators, and Congressmen/women trade horses on?
So I am not optimistic about the flat tax proposal. It will not happen.
Understanding the tax code and making tax-smart decision is one’s life is mission impossible, so let me put that aside for now. I was sharing my latest experience of applying for a mortgage with two friends during a church function, and the topic of property tax exemption emerged. What I found out was alarming.
In Texas, we do not have to pay state income tax, instead, we pay a higher property tax than folks living elsewhere. Typical property tax rate for residential is between 2.0% to 2.5%, depending on the city one lives in. Each year, the tax appraisal office will send residents a notice stating the appraisal value of the house and tax collector will send the tax bill based one value. The tax consists of multiple components, for example, my current house has town tax, school district tax, and county tax.
On my tax bill, school district tax rate 1.47%. But the county also allows a $15,000 homestead exemption, which translate about $210 less tax I have to pay. All it takes is to fill out an claim form and the exemption applies for as long as one occupies the house as a primary residency.
Between the two friends I talked to, one has lived in the same area for over ten years and knows nothing about the homestead tax exemption. The other has live here for three years but “has not yet find time” to fill out the claim form.
My belief that complex tax codes is to be blamed has shaken somewhat.
If you read this article, just google “homestead tax exemption for x county”, replace the “x” with the name of the county you are in. You may be overpaying for property tax over the years.
Also, there are still two days left. File your tax on time this time around. You may find some other tax breaks that you have managed to avoid.
Diligent birds get the worm.