My Favorite Wisconsin Tax Deductions

Around this time of year, it’s easy to find Top 10 lists on a variety of topics including books, movies and music. While not as entertaining, I’d like to share my favorite Wisconsin tax deductions as you prepare for the upcoming tax season.

Healthcare and education deductions

Since health care is a popular topic of conversation let’s start with the ability to deduct medical care insurance premiums you pay out of pocket (i.e. it’s not paid pre-tax such as premiums paid by employers or deducted from your wages). Examples of premiums you pay with after-tax money typically include Marketplace plans, COBRA continuation coverage, Medicare Part B & D and Medicare-supplements. When it comes to Marketplace plans, you only deduct what you actually paid after the Premium Tax Credit has been subtracted from the total cost.

Another deduction designed to reduce taxes for families relates to education expenses. For families with children in private schools, they can deduct up to $4,000 per child for elementary school (K-8) tuition and up to $10,000 for secondary school (grades 9-12). For post-high school tuition, there’s another deduction for up to $6,974 per student. The college deduction is only available to families with incomes below certain levels ($111,300 for married couples or $66,780 for single parents).

For families saving for college, up to $3,280 per child can be deducted from their Wisconsin income for contributions to the Edvest 529 College Savings Plan. Even grandparents and others can claim this deduction so it’s not just limited to parents. The deadline for 2019 contributions is April 15th so there’s still time for last year.

Property Tax deduction

Anyone who rents or pays property taxes on their primary residence during the year is also eligible for up to $300 from the school property tax credit. One exception is amounts paid towards assessments or fees for utilities or garbage must be subtracted from the total.

If your income is below $24,680 (including non-taxable Social Security benefits), you may also be eligible for the homestead tax credit if you paid rent or property taxes during the year. The maximum credit for 2019 is $1,168.

After the federal tax laws changed in 2017, many people no longer itemized their deductions due to the higher standard deduction and limitations on what could be deducted. However, Wisconsin still offers an itemized deduction tax credit which some people can claim if it exceeds their Wisconsin standard deduction. Items included in the calculation include medical expenses (with the exception of insurance premiums which are deducted separately), mortgage interest on property located in Wisconsin, and charitable donations.

While the tax code can feel overwhelming and confusing, knowing what deductions are available is the first step in determining whether you can benefit. Visit the Wisconsin Department of Revenue’s website at www.revenue.wi.gov to learn more about these deductions as well as other changes for the coming year.

As seen in the Racine Journal Times | January 2020

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