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Monday, January 14, 2008

State Income Taxes and Politics

NOTE: I am by NO MEANS a tax professional. Nor am I qualified to give tax advice. I am not a CPA, don't have a business degree, and am only mentioning some things I have found that might be helpful. Truly my only suggestion here is to do the research yourself to see if you qualify for this tax credit!

When I moved away from Tennessee, I knew one financial change would be moving from a state without an income tax, to one with a state income tax (Arkansas). This year I will end up paying over $1,000 in state income tax, and still have to pay a sales tax of 9.75%. It doesn't seem hardly fair! Since I do have to pay state income tax, I searched for ways to limit how much I have to pay. To my knowledge there isn't yet a deduction or credit for education expenses on Arkansas income taxes (without itemizing), though there is a deduction for interest paid on student loans (AR 1000 ADJ, line 4).

This year in the packet that I received, however, I paid more attention to the forms that I hadn't used before. AR 1800 - the Political Contributions Credit. Basically, I can donate up to $50 (or up to $100 as a married couple) to a candidate seeking public office (state level or lower - not federal), an approved PAC (Political Action Committee), or a political party, and receive a 100% tax credit. The donation must be made by April 15, 2008 to count as a credit for this year. This year we have decided to send $100 to the Arkansas Right for Life PAC. After filling out AR 1800, we will send in $100 less in state income taxes, making this donation cost us nothing more than we would be spending otherwise! Oregon and Virginia also have similar laws.

If you have to pay state income tax, check and ask around - see if you can make a contribution to a political organization and thereby become qualified for a tax credit! What a great way to quite easily make your voice heard!

NOTE: I am by NO MEANS a tax professional. Nor am I qualified to give tax advice. I am not a CPA, don't have a business degree, and am only mentioning some things I have found that might be helpful. Truly my only suggestion here is to do the research yourself to see if you qualify for this tax credit!