Did you know 9 states do not require residents to pay a personal income tax? Folks that live in Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming, are exempt from this bill. Furthermore, 7 other states simply enforce a flat tax rate. So what’s the moral to the story? People who live in these states are able to buy more stuff because they pay less tax.
But for the rest of us, residential income tax is a necessary evil, one that takes a serious bite out of our disposable income. And while the forms are designed to collect the same data, they’re all constructed differently. What follows is a breakdown of Form IT-540, the Louisiana Individual Income Tax Return. If you don’t live in Louisiana, not to worry, we’ll be tackling the other 34 states soon enough.
I’m telling you up front, I’m not a fan of this form. Why? Because it’s so badly done, it’s bound to cost residents money.
First it’s repetitive and that makes it super long. The longer a form is, the more opportunity for filer error. Next it asks you some wacky stuff, like figuring the difference between your federal itemized deduction and your standard federal deduction. There’s no legitimate reason for that. Lastly, it allows you to pay electronically, but doesn’t give you an option to get paid electronically. That’s just dumb.
For these reasons and more I’m giving Louisiana’s IT-540 a 3 of 10 on our user-friendly meter. That’s about the lowest in the country. I’m sorry residents have to deal with such a crappy form.
Begin by filling in your name, address, and Social Security number at the top of the form. Then you can knock off your filing status, exemptions, and dependents before getting into the meat of this debacle.
On Line 7 enter your federal adjusted gross income. You’ll get this amount from your 1040, 1040A, or 1040EZ form. If you itemized your federal deductions, record that amount on Line 8A. If you took the federal standard deduction of $5,700 (doubled if married filing jointly), record that amount on 8B. If you did itemize, you’ll have to subtract that amount from the standard deduction and put the difference on Line 8c. Ugh!
On Line 9 enter your federal income tax, then subtract Line 8c and 9 from Line 7 with the balance going on Line 10. Then look up your Louisiana income tax (you can find it in the tax table), and record it on Line 11 before moving on to page 2. Don’t forget to record your Social Security number at the top of the second page; it’s pretty easy to miss.
If a federal child care credit applies, jot it down on Line 12a. If your federal adjusted gross income is larger than $25,000, you may be eligible for the Louisiana child care credit; just record that amount on Line 12b. If you failed to claim one of these credits from a previous year, you get another chance on Line 12c. Lines 12d and 12e are child school readiness credits. Fill in the appropriate amounts if they apply.
Line 13 is a $25 credit for each dependent who attended a grade from K through 12. The line provides for a four-figure credit, so you’ll have to have spawned an army of 400 kids, before you can maximize it. As I said, this form is wacky.
Line 14 is for other nonrefundable credits you’ll have to work through and include a Schedule G if any apply. Next add Lines 12b through 14 to get your total nonrefundable credits, which goes on Line 15. Now you can subtract Line 15 from Line 11 with the result going on Line 16.
If you incurred a consumer use tax, that is, you bought something online and didn’t pay tax on it, you’ll have to work through the consumer use worksheet and enter the total on Line 17. Now you’re able to get your total tax, by adding Lines 16 and 17, with the sum going on Line 18.
If your federal AGI is equal to or less than $25,000, you may be eligible for a Louisiana child care and readiness credit; just work through Lines 19 and 20 if these apply. If you earned an income credit, record it on Line 21; if you’re eligible for a citizen’s insurance credit, that goes on Line 22; and if you have any other refundable tax credits coming, they go on Line 23.
On Line 24 enter the amount of your Louisiana withholdings. Next enter the amount of credit you carried forward from last year on Line 25. If estimated payments or amounts paid with an extension request apply, fill in those amounts on Line 27 and 28. Now add Lines 19, 20, and 28 to get your total refundable tax payments and credits, which goes on Line 29.
The verbiage on Line 30 is more dense than it needs to be. Simply put, it’s your overpayment line. If Line 29 is greater than Line 18, enter the difference on Line 30. If it’s not, you still owe Louisiana some tax. Just subtract Line 29 from Line 18 to see how much. The form also assumes you won’t want to donate to charity if you have a tax liability, so it tells you to put a zero on Lines 30 through 44 before moving on to Line 46.
Line 31 is looking for an underpayment penalty. If it applies subtract it from Line 30 to get your adjusted overpayment, which goes on Line 32. In this scenario, the form assumes you might want to apply some of your refund to a number of good causes. When you’re done donating, add the amounts of Line 33 through 44 and put the result on Line 45.
Subtract Line 45 from Line 32 and put that balance on Line 46. If you want a portion of this amount to go toward next year’s tax, record it on Line 47. Then subtract Line 47 from Line 46 to get your total refund, which goes on Line 48. Sadly, there isn’t a place to record your banking information so you can get your money directly deposited. That means you’ll have to wait for snail mail. Bogus!
If Line 18 is greater than Line 29, subtract 29 from 18 and print the amount you owe on Line 49. If you owe, the Department of Revenue will again assume you won’t want to donate to any additional charities on Lines 50 and 53. If you’ve incurred any interest, late or underpayment penalties, fill in those amounts on Lines 54 through 56. Now you can add lines 49 through 56 to yield the final amount you owe. Conveniently, for Louisiana, there are electronic payment options. Bogus!
All that’s left is to sign date and record your phone number at the bottom of the form. If you used a tax guy or gal to help you, they will do the same.
If you owe, mail your return with payment to:
Department of Revenue
P.O. Box 3550
Baton Rouge, LA 70821-3550
If you have a refund coming send your return to:
Department of Revenue
P.O. Box 3440
Baton Rouge, LA 70821-3440