1

2019 Louisiana Returns – Revised 12/21/2019

Screen shots from 2018 software; 2019 not yet available

TaxSlayer® is a copyrighted software program owned by Rhodes Computer Services. Screen shots in this guide are used with permission of Rhodes Computer Services to provide help for preparers. Commercial distribution is prohibited.

Federal Return Entries Needed for Correct LA Returns 1. Prepare federal return – info for federal return flows to state

2. Personal Information – make sure resident state is correct

. . .

3. Interest or dividends from U.S. Obligations – LA does not tax – Code 01E – LA

Schedule E, line 4

From Form 1099-INT, box 3 – to exempt from state tax, enter as follows:

Interest Income

2

. . .

From Form 1099-B (Composite), detail sheets – to exempt from state tax, enter as follows:

Dividend Income

4. Louisiana Estimated Payments

Federal Section > Payments and Estimates > Payments > Enter amounts in appropriate boxes. State Estimated Payments

3

LA Resident Return Entries Click pencil icon for LA resident options.

Click and you get:

4

Blocks explained below:

Basic Information (common)

First box asks if name or address has changed; select from dropdown.

Second box reads, “Are you required to file a Federal Tax Return?” – select from dropdown. Not a trick question! Not asking “Did you file a federal return?” Asking if you must. See “Who Must File” in IRS Pub 4012. Many VITA clients have no federal filing requirement; they just file to get withholding back or claim credits. If taxpayer has no federal filing requirement, answer “NO,” and taxpayer gets back all LA withholding. If taxpayer has no federal filing requirement, but you forget to answer “NO,” LA keeps some withholding (and you are doing a disservice to our poorest clients.)

TIP: If only reason for federal filing requirement is to reconcile APTC, this is NOT a federal filing requirement for LA purposes.

Additions to Income (rare) – LA SCHEDULE E - “ADJUSTMENTS,” Line 2

Skip unless taxpayer has item 1 - 4 below:

1. Interest or dividends from other states excluded from federal return – Form 1099-INT, box 8 (Tax-Exempt Interest) or Form 1099-DIV, box 11 (Exempt Interest Dividends)

5

2. Recapture of a START contribution

3. Add-back of donation to student tuition program credit

6

4. Add-back of Pass-through Entity Loss [new in 2019; hopefully TaxSlayer will

have an entry block.]

To add this income to LA return, enter as follows:

Subtractions from Income (common) LA SCHEDULE E - “ADJUSTMENNTS,” Line 4; click and you get:

Blocks explained below:

Retirement Benefits – Click and you get boxes to enter retirement income.

TIP: Retirement dates not required

NOTE: Enter retirement benefits in correct box. Otherwise, codes will be wrong, will not match LA’s computer data, LA will send a letter questioning exemption, and taxpayer will pay LA tax on exempt income.

Enter taxable amount of LA State Employees Retirement Benefits in box – Code 02E

7

Enter taxable amount of LA State Teachers Retirement Benefits in box – Code 03E

Enter taxable amount of Federal Retirement Benefits in box – Code 04E Payers for federal retirement benefits include Federal Employees Retirement System, Civil Service Retirement System, Office of Personnel Management, U.S. Railroad Benefits, Defense Finance & Accounting Services, etc.

Enter taxable amount of certain other (public) retirement benefits – Code 05E Enter name of retirement system. See list at end of this guide.

Annual Retirement Income Exemption for Taxpayers 65 or over – Code 06E

In addition to the above fully-exempt benefits, LA exempts up to $6000 of other retirement benefits for each taxpayer 65 or over, such as priavte company pensions, IRA distributions, public retirement systems not on exempt list, etc). TaxSlayer calculates if there are no other exempt retirement benefits. NOT so, if taxpayers have multiple exempt retirement benefits!

EXAMPLE: Taxpayer receives taxable retirement benefits of $24,276 from LA State Teachers Retirement System and $15,231 from Assessors Retirement System. Spouse receives taxable retirement benefits of $42,158 from U. S. Railroad Retirement System and $13,209 from ExxonMobil Retoirement.

Enter as follows

. . .

8

For this Scenario, only way to exempt $6000 of the Souse’s ExxonMobil benefits is as follows:

TaxSlayer is asking for total exempt retirement benefits already reported and listed above. Taxpayer: TRSL + Assessors = $39507. Spouse: Federal = $42158. Do not enter amount of ExxonMobil benefits anywhere!

Louisiana School Expense Deduction (common) – Worksheet; click and

Select “Yes” from dropdown

Select student name from dropdown (New TaxSlayer enhancement)

Enter school name

Select school type from dropdown

9

Enter expenses required by school, by category: tuition and fees, uniforms, textbooks and instructional materials, supplies. (Deduction is lesser of $5000 or 50% of expenses; TaxSlayer calculates.

Other Subtractions – click and you get:

Taxable social security benefits – Code 07E; TaxSlayer automatically subtracts

Less common exemptions from dropdown (rare)

24-E – Pass-Through Entity Exemption [new in 2019] NOTES:

• Native American income = earned on reservation • START contribution limits are per beneficiary • Military: 120 or > more consecutive days served outside LA • Road Home: 100% of benefits included in federal AGI • Recreation Volunteer: 30 hours per year at public recreation department • Volunteer Firefighter: 24 hours of continuing education and active status

with LA State Firefighter’s Association or LA State Fire Marshall’s office • 49E - “Other” also includes up to $5000 of cost to adapt home for disabled

person (family income <$50,000)

10

Rest are business exemptions

Federal Income Tax Deduction – LA Schedule H; TaxSlayer calculates; skip unless

Taxpayer had Hurricane Katrina or Rita or other disaster relief credits or casualty losses (rare)

Use Tax (8.45%) – click and you get entry screen (rarely admitted)

Enter amount of out-of-state or online purchases on which taxpayer did not pay LA sales tax

Credits – click and you get:

Blocks explained below:

Nonrefundable Credits (occasional) – LA SCHEDULE C; TaxSlayer knows limits

Disability credit for taxpayer, spouse, and dependents – disability must exist at year-end or death. Select disability from dropdown. For dependents, click “BEGIN” next to “Dependent Disability Credit,” enter name, and select disability from dropdown. (Credit = $72 per person, per disability; TaxSlayer calculates)

11

Definitions:

DEAF – one who cannot understand speech auditorily and must use visual or other means

BLIND – one who is totally blind or whose central field of acuity is no > than 20/200 in the corrected, better eye or whose visual acuity is limited to a field no > than 20 degrees

MENTALLY INCAPACITATED - one who is incapable of self-care or of performing routine daily health requirements due to condition

LOSS OF LIMB – one who has lost (or permanent use of) one or both hands, at/above wrist, or one or both feet, at/above ankle

Donated Computer Equipment to educational intuitions (occasional) – Enter value; credit = 29%; TaxSlayer calculates)

Eligible Federal Credits (occasional) – calculate and enter lesser of $18 or 7% of federal credit for elderly/disabled and foreign tax credit Credit for Taxes Paid to Other States (occasional) – Prepare all state returns. TaxSlayer calculates unless LA is a part-year return. If part-year, click BEGIN and enter info.

Child Care Credit Carryforward from 2015-2018 - enter form taxpayer’s records Other Non-Refundable Priority 1 Credits (rare) from dropdown

12

NOTES:

• Family Responsibility – calculate and enter lesser of $144 or 24% of contribution

• Small Town Health Professionals – Enter amount from taxpayer-provided certification letter

• Enforcement ED – calculate and enter lesser of $540 or 72% of expense to purse law enforcement degree

• Bulletproof Vest – calculate and enter lesser of $72 or 72% of price • Qualified Playgrounds – calculate and enter lesser of $720 or 36%

of value of equipment, cash, goods or services donated • Conversion of Vehicle to Alternative Fuel (also includes Purchase

of Alternative Fuel Vehicle) – calculate and enter lesser of $2500 or 30% (conversion cost) or 10% (purchase price)

Rest are business credits

Nonrefundable Priority 3 Credits (rare) – LA SCHEDULE J – from dropdown; all are business credits except:

Organ Donation (living organ to spouse) – calculate and enter lesser of $7200 or 72% of travel, lodging, lost wages Household expenses for Physically Incapable Persons – calculate and enter amount of dependent care expenses per IRS code, section 21

13

Donations to School Tuition Organization – form R-10604 required Owner of Accessible/Barrier-free home – calculate and enter lesser of $5000 or cost of building/renovation; Form R-1089 required

Refundable Credits (common and occasional) – LA SCHEDULE F – click and you get:

Block explained below: Military Servicemen, spouses and dependents (occasional) – calculate and enter 72% of cost of a 1-year, non-commercial hunting/fishing license

Musical and Theatrical Productions (business only)

Other Refundable Credits (occasional) – dropdown; Priority 2 Credits; all are business credits except:

• Historic Residential – up to $18,500; certificate from Department of Culture, Recreation & Tourism required

• Child Care Directors and Staff – Level comes from taxpayer-provided certificate; enter amounts

Director I/Child Care Teacher I $1756

Director II/Child Care Teacher II $2341

Director III/Child Care Teacher III $2926

Director IV/Child Care Teacher IV $3511

NOTE: There are Refundable Credits with no entry blocks; TaxSlayer calculates automatically

• Earned Income Credit – 5% of federal EIC (LA return line 16)

14

• Louisiana Child Care Credit – a % of federal childcare credit; % depends on income. Refundable if AGI is $25,000 or less; non-refundable if AGI is > $25,000; TaxSlayer calculates (La return, line 14)

Citizens’ Property Insurance Assessment (common) – enter amount of small, separate premium from homeowners’ policy declaration page. (Credit is 25%; TaxSlayer calculates.) May be called

Louisiana Citizens FAIR Plan REGULAR Assessment

Louisiana Citizens FAIR Plan EMERGENCY Assessment

Louisiana Citizens Coastal Plan REGULAR Assessment

Louisiana Citizens Coastal Plan EMERGENCY Assessment

NOTE: Louisiana Citizens Insurance Corporation customers who paid the Tax-Exempt Surcharge are not eligible for this credit.

School Readiness Credit (occasional)

School Readiness Credit – enter number of dependents < 6 in each Star Rate from taxpayer-provided form (10614); TaxSlayer calculates

School Readiness Credit Carryforward (AGI > $25,000) – enter amounts from taxpayer’s records

Taxes – skip – out of scope for VITA

Payments (rare) – skip unless taxpayer

Wants to pay with request for extension Has credits carried forward Wants to apply refund toward next year’s taxes

Enter amounts in appropriate boxes.

REMEMBER: Estimated taxes paid during year to LA are entered in Federal Section > Payments

Donations (rare) – skip unless taxpayer wants to donate all/part of refund

Enter amounts in appropriate boxes.

Miscellaneous Forms (rare)

Estimated payment Vouchers for next year Form IT-540 ES Installment Agreement Form R-10926

15

Married Filing Separate Allocation LA 2015 Recovery Worksheet

Selecting a Non-Resident or Part-Year Return

TaxSlayer creates a Resident return for resident state selected in Personal Information for deferral return For a Non-Resident or Part-time Resident return, delete state return (red trash can) and select another status.

TIP: A part-time LA resident can choose Resident or Non-Resident, whichever is better

TIP: For married taxpayers, when one spouse is a resident and other spouse is not, taxpayers can choose Resident or Non-Resident, whichever is better

Selecting a Different State

Delete state return, as above, and select a state from map or dropdown

16

These states do not have individual income taxes

Other states’ residency definitions are like LA’s. Select correct one. See “State Department of Revenue Links” on left side bar in TaxSlayer, select state, and read instructions. (This guide does not include info about other states’ returns.)

Other LA Tidbits

Click blue SAVE or CONTINUE button at bottom of entry pages. If no blue button, click BACK. When finished, click EXIT LOUISIANA RETURN. Warning appears if you don’t!

LA gives a personal exemption to everyone, including those claimed as dependents on another’s return; TaxSlayer calculates

LA gives and extra exemption for Qualifying Widow(er); TaxSlayer calculates

A first-time LA filer cannot get direct deposit of refund

The math for the LA Return starts with LA Schedule E (which subtracts certain income and deductions). TaxSlayer subtracts these amounts from federal AGI and puts the difference on LA Return, page 2, line 7. LA subtracts federal income tax, imposes LA tax on difference, then applies credits.

Other Resources This guide discusses income, exemptions, and credits seen at VITA sites. There are others. Complete instructions are at

http://revenue.louisiana.gov/TaxForms/IT540i(2019).

This guide does not discuss the Act 125 Recovery provisions. See http://revenue.louisiana.gov/TaxForms/6410(1_18)F.pdf

This guide addresses LA resident returns. LA non-resident or part-year resident returns have different rules not addressed here. Read instructions at http://revenue.louisiana.gov/TaxForms/IT540Bi(2019)

17

18

Public Retirement Benefits Exempt from LA Income TAX (Alphabetically)

Benefits from these systems are completely exempt from LA income tax

Assessors’ Retirement Fund Bossier City Firemen’s Pension and Relief Fund Bossier City Policemen’s Pension and Relief Fund Bus Drivers’ Pension and Relief Fund of the City of Monroe City of Alexandria Employees’ Retirement System City of Baton Rouge Retirement System City of Bogalusa Employees’ Retirement System

City of Monroe Police Pension and Relief Fund

Clerks’ of Court Retirement and Relief Fund Disability Pay to World War II Veterans District Attorneys’ Retirement System Electrical Workers’ Pension and Relief Fund of the City of Monroe Employees’ Retirement System of City of Shreveport Employees’ Retirement System of East Baton Rouge Parish Employees’ Employees’ Retirement System of the Sewage and Water Bd. - City of NO Firefighters’ Pension and Relief Fund for Baton Rouge Firefighters’ Pension and Relief Fund for Bogalusa Firefighters’ Pension and Relief Fund for the Cons. Fire Districts of Bastrop Firefighters’ Pension and Relief Fund of New Orleans Firefighters’ Retirement System Funded Judicial Retirement Plan Harbor Police Retirement System (Port of New Orleans) Lafayette (City of) Firemen’s Pension and Relief Fund Lafayette (City of) Policemen’s Pension and Relief Fund Louisiana School Employees’ Retirement System Louisiana State Employees Retirement System (has its own entry box) Louisiana State Police Pension and Retirement Fund Louisiana State University Retirement System Monroe Firemen’s Pension and Relief Fund

19

Municipal Employees’ Retirement System of Louisiana Municipal Police Employees’ Retirement System New Orleans (City of) Employees’ Retirement System Non-contributory Judicial Retirement Plan beginning after 12/30/80 Parochial Employees’ Retirement System Pension for Confederate Veterans and Widows of Confederate Veterans Policemen’s Pension and Relief Fund for Alexandria Policemen’s Pension and Relief Fund for the Department of the City of NO Policemen’s Pension and Relief Fund of the City of Shreveport Registrar of Voters Employees’ Retirement System Retirement System of Jefferson Parish Sheriffs’ Pension and Relief Fund Teachers’ Retirement System of Louisiana (has its own entry box) Teachers’ Retirement System of Orleans Parish

TIP: Money transferred from LASERS, TRSL or any other public retirement systems to an IRA is taxable by LA. Likewise, money transferred from a Deferred Retirement Option Plan (DROP) account to an IRA is taxable by LA. How to tell? Look at Payer’s name. If it is a retirement system, it is exempt. If it is a private company, it is not exempt.