By Deb Miller, JD, WV Senior Legal Aid volunteer
The difference between death and taxes is death doesn’t get worse every time Congress meets.”–Will Rogers, American humorist.
It was time for Jean to work on her 2023 taxes because she wanted to file her federal and West Virginia income tax returns online as early as possible. She had read about scammers who would swoop in and file a fake return to get her refund before she did. Identity theft means taking one’s identity and one’s money.
The IRS flagged more than 1 million tax returns for potential identity theft during the last tax season, according to the U.S. Department of the Treasury.
Jean’s tax priorities were to see whether she qualified for the federal child care and earned income tax credits from raising her grandson and the West Virginia income tax credits related to the Homestead Exemption she got on her property taxes. To claim any federal or state tax credit, Jean has to file tax returns, but does not have to itemize any deductions. She knew the tax credits she was eligible for were like gold. Each dollar of a credit eliminates a dollar of tax. Also, some types of tax credits can increase the amount of a refund when one is owed.
Federal law provides a child care tax credit for such expenses related to working when earning certain levels of income and raising one or more children under age 13. Learn more at https://www.irs.gov/taxtopics/tc602.
The federal earned income tax credit also helps working grandparents who are raising grandchildren of qualifying ages. The amount is tied to the grandparent’s earnings from employment (not government benefits) and the number of dependents. More information is available at https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit.
For West Virginia taxes, Jean and other older or disabled homeowners can benefit from two income tax credits that are available based on home ownership and signing up at their county assessor’s office during the qualifying period for the Homestead Exemption on their property taxes, as Jean had year before.
As part of this state’s property tax system, the Homestead Exemption program is available for homeowners who are age 65 and older or permanently disabled. The $20,000 exemption, or non-taxable amount, reduces the assessed value and total property taxes owed on owner-occupied residential property each year. There is no income limitation for the Homestead Exemption on property taxes.
At income tax time, homeowners qualifying for the Homestead Exemption may be eligible for the Senior Citizens Tax Credit to lower West Virginia income taxes, dollar for dollar. The State Tax Department’s Form SCTC-1, sent out in January each year, will list the amount of the tax credit which can be claimed.
There is a specific income requirement for Senior Citizens Tax Credit eligibility which is determined when calculating the amounts for the West Virginia tax return.
The second state income tax credit for those receiving the Homestead Exemption is the Homestead Excess Property Tax Credit. When a person’s or couple’s residential property taxes exceed four percent of their income, they are eligible for a tax credit for the excess amount. The maximum credit is $1,000.
If a taxpayer qualifies for both state credits, the amount of the Senior Citizens Tax Credit will reduce the amount of the Homestead Excess Property Tax Credit that can be claimed.
Additional information on the West Virginia tax credits is available at https://tax.wv.gov/Individuals/SeniorCitizens/Pages/SeniorCitizensTaxCredit.aspx.
For assistance with legal issues, including tax questions, at no charge if a person is a West Virginia resident age 60 or over, contact West Virginia Senior Legal Aid at 800-229-5068.
