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Tax expert says changes in tax code this season are the biggest in 40 years

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Nebraskans will start the process of filing their taxes in a few weeks and one expert says he’s seeing more significant changes in the tax code this season than in the past 40 years.

Creighton University accounting professor Tom Purcell says one big change relates to home equity debt. Purcell says if you have a home equity line of credit, for example, you can’t write off the interest anymore.

“The home equity debt rule has changed and you can no longer get the deduction for home equity,” Purcell says, which reduces the tax incentive for home ownership.

Other changes include raising the standard deduction and the amount of child tax credits, the suspension of personal exemptions, and changes to withholding amounts on employee pay.

On the plus side, Purcell says some new taxpayers in Nebraska will find they don’t need a CPA to complete their simplified returns.

“Some entry-level people might just realize they can do this for themselves, it’s not that hard,” Purcell says. “You get a W-2, that’s all you’ve got, you’re not going to claim itemized deductions, you don’t have to worry about dependency exemptions and personal exemptions, you can be done in 20 minutes.”

He says entry-level taxpayers, and those who itemized in the past who will now claim the standard deduction in 2018, should self-prepare using an electronic filing service which can be free through the IRS.

Many other Nebraskans may be in for a surprise if, due to changes in federal withholding, they haven’t withheld enough.

“It’s very possible that some people will be under-withheld, which means when they file their tax return, they might have to write a check to the IRS,” he says.

A federal report estimates 30-million Americans aren’t withholding enough money from their paychecks and will owe the IRS money when they file for 2018 this year.

For Nebraskans who find they aren’t withholding enough, Purcell recommends they revise their W-4 forms with their employers.

 

Ag & ed leaders join forces to push legislature for property tax reform

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John Hansen, president of the Nebraska Farmers Union, addresses the group in Beatrice.

Leaders of a coalition of Nebraska farm and education groups say 2019 represents the best chance in many years for the Unicameral to enact property tax relief.

John Hansen, president of the Nebraska Farmers Union, says every time a major tax study is done, the same conclusion is reached, along with the same reaction.

“Nebraska as a state has altogether too much reliance on property taxes and we need to develop a more fair and balanced state tax system,” Hansen says. “And then, what happens after the study comes in? ‘Thank you very much for the study,’ and then we move on and we kick the can down the road one more time.”

Hansen says it will take a community-based effort and it’s vital that more rural residents get directly involved in the push for a plan to reduce the state’s dependence on property taxes.

“We’re going to have to have more involvement from the country than we’ve had,” Hansen says. “We’ve had a lot of complaining, but when push comes to shove and you have hearings in the legislature over really important bills, we haven’t shown up.”

York Public Schools Superintendent Mike Lucas leads the group Schools Taking Action for Nebraska Children’s Education. In the past decade, Lucas says York was forced to cut six teachers and 18 support staff while enrollment rose by 200 students.

“Since we’ve lived this painful journey, we have said Nebraska has much more of a funding problem than it does a spending problem,” Lucas says. “It’s offensive when I hear lawmakers say, ‘You just have to tighten your belt.’ We’ve been tightening our belt.”

Lucas says schools don’t really know if the state’s school funding formula works, because it’s never been fully funded.

The panel representing Nebraskans United for Property Tax Reform and Education met in Beatrice last week. Over 70-percent of Nebraska school districts no longer receive any equalization aid, forcing them to rely more on property taxes.

Coalition members maintain the state needs to provide more aid for education. The group proposes removing many sales tax exemptions, raising the state sales tax by a half-percent and making other adjustments.

By Doug Kennedy, KWBE, Beatrice

 

Property tax reform, bridges, top counties’ wish list at Unicameral

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When the 2019 session of the state legislature opens a week from today, many expect property tax reform to top the agenda.

Larry Dix, the executive director of the Nebraska Association of County Officials, says county leaders statewide will be watching progress carefully as counties typically end up in stuck in a difficult position on the much-debated issue.

“There are things that counties need to do for the public, for the taxpayers, and the taxpayers want those services but they don’t want their tax bill to go up, and the legislature doesn’t want any increased taxes,” Dix says, “so we’re right in the middle.”

Many solutions have been offered in past years to halt fast-rising property taxes, including raising sales taxes to offset property taxes, but finding universal appeal is very difficult.

Dix says Nebraska’s county leaders are waiting for the legislature to come up with a viable solution.

“A lot of these ideas are ideas that come about when somebody says, ‘Well, if we do this, this will solve the problem,’ and it may solve the problem for a year, but three or four years down the road, then, sometimes we’re in a worse condition than what we’re in right now,” Dix says.

Dix says county leaders also want to see lawmakers work to bolster a bridge cost-sharing effort with the Nebraska Department of Transportation.

“The legislature a couple of years ago implemented a bridge match program,” Dix says. “I think it was wise. There’s some state money that goes into it and some county money. It’s dedicated to solely to getting rid of structurally-deficient bridges.”

Dix says county leaders are also concerned with water quality and the availability of mental health services. The 2019 session of the Unicameral will begin January 9th.

By Jerry Oster, WNAX, Yankton

 

Senator: Property tax reform is priority for Unicameral in 2019

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Sen. Tom Briese of Albion

A key state legislator in the effort to curb property tax hikes says it remains the number-one issue lawmakers are hearing about ahead of the 2019 legislative session.

Senator Tom Briese of Albion says he’s open to suggestions that may lead to cutting taxes.

“I’ve thrown out various ideas and proposals, a good strategy to see what sticks,” Briese says, “and see what ideas and what concepts can gain some traction.”

Briese sponsored a bill last session that would have raised sales taxes to cut property taxes. It failed.

He says there is plenty of discussion behind-the-scenes to reach accord on property taxes early in the legislative session.

“There is more of a concerted effort this year to come to some sort of agreement ahead of time on proposals, concepts and ideas, but I’m not sure there’s been a meeting of the minds on a whole lot,” Briese says. “It may boil down to various ideas get thrown into the hopper and see what happens.”

Governor Pete Ricketts has talked of moving property taxes to a productivity base instead of being based on sales. Briese says he could support that, but it would not make much of a difference for many years.

“It doesn’t do anything about our general overreliance on property taxes,” Briese says. “We still are going to fund local goverment, K-12 education, with property taxes to the same degree we always have if we rely simply on these types of valuation adjustments.”

The 2019 session of the Unicameral will begin on January 9th.

By Jerry Oster, WNAX, Yankton

 

IRS warns: Watch for phishing scams in your email

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Nebraskans are being reminded about the importance of keeping their personal financial information safe, especially when scanning through email.

Christopher Miller, a Nebraska spokesman for the Internal Revenue Service, says an alarming trend has reappeared this year.

“We’re seeing a large increase in bogus e-mail and phishing scams that seek to steal people’s tax data,” Miller explains. Phishing is when someone uses an email address that looks legitimate, but is not, and they are trying to get your personal information. He says reports of the problem are up dramatically.

“We saw a 60% increase in bogus emails and phishing scams, and what’s perhaps most disturbing about that, before that, in the three previous years, we saw a decline,” Miller says. “So we know that the crooks are back at the phishing game.”

Miller says the scams can be very sophisticated and Nebraskans need to beware.

“If they get an email in their inbox that looks like a trusted source has sent it to them — like a bank or credit card company or even the IRS — be very cautious. Don’t open any of the links, because that’s where people get into trouble,” Miller says.

He says once you open the links, they ask you for personal information that they can use to file a tax return in your name. They will try all avenues to get to you and it may be someone close to you.

“Thieves may have even compromised your friend’s email address so it might look like your friend is sending you a message, but they are spoofing that address with a slight change in text. Maybe a letter or two is changed. So, be sure to look at your friends who are sending you messages that seem a bit suspicious,” Miller says.

If the email is asking you for things like your Social Security number or bank information, that’s a big clue that it’s a phishing attempt.

“Remember, the IRS doesn’t initiate contact with taxpayers by email to ask for personal information,” Miller says, “in fact, no reputable agency or business will ask for personal information over email.” Miller says you can help them try to stop these attacks.

“If you get one of these phishing email scams in your inbox, we want to you take the entire thing and copy it and put it into another message and send it to the IRS,” Miller says. “You can send suspicious emails to phishing@irs.gov and we’ll try to track it or potentially shut it down.”

One recent campaign used emails with subjects like “IRS Important Notice,” “IRS Taxpayer Notice” and other variations to demand a payment or they threaten to seize the recipient’s tax refund.

 

Platte Institute study shows Nebraskans want property tax relief now

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The Platte Institute for Economic Research in Nebraska recently conducted a survey from residents on property tax reform. Communications Director Adam Weinberg says what they found is Nebraskans are very concerned about property tax. Nebraska has the sixth highest growth in housing prices over the past ten years and the seventh highest property tax rate among states. People are feeling that burden but what are they willing to do about it.

The Platte Institute’s “Get Real About Property Tax” report shows that 61% of the people that participated said they would be potentially willing to pay some other taxes to see lower property taxes but they would want something significantly done. People want to see a 20% to 30% reduction in property taxes and that amounts to about $1 billion a year. Weinberg says the only way that can be done is if the state takes a hard look at their tax structure.

Weinberg says, “People are open to a general idea that maybe we could look at our sales tax base as a way to do it. There are a lot of good researchers, from the Tax Foundation and others who say this is the way to go. I think that the deal that is going to have to happen is that the public is going to have confidence that this is for property tax reform because if it just seems like another tax, people are going to get nervous about that.”

The full report can be seen at platteinstitute.org.

Nebraska Congressman pushes to make tax cuts permanent (AUDIO)

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Congressman Adrian Smith/Photo courtesy of Congressman Smith’s office

A Nebraska Congressman says it is time to make permanent the tax cuts which went into effect this year.

Congressman Adrian Smith says there have been some unexpected benefits from the tax reform measure Republicans pushed through Congress.

“But last January, February when companies saw that they were getting some reduction in taxes, they passed that along to their employees,” Smith tells Drive Time Lincoln on Nebraska Radio Network affiliate KLIN. “That’s how you grow an economy. That’s how you grow a business with consumer confidence and so many good things that can happen across an economy.”

Smith is a member of the House Ways and Means Committee, the tax-writing committee in the House.

Smith backs a measure passing the House which would make individual income tax cuts permanent. Those cuts along with the doubling of both the standard deduction and Child Tax Credit are set to expire in 2025.

The Republican tax reform measure that became law in January made a permanent cut to the corporate tax rate, bringing it down from 35% to 21%. It also cut individual income tax rates, yet those rates were not made permanent. The measure passing the House at the end of last month would make the individual cuts permanent as well.

Republicans also moved to make changes to tax law regarding retirement savings. Smith says too many people hesitate to increase their contributions to a 401k, because they fear they might need the money and cannot access it. The measure would give flexibility to 401k accounts, allowing withdrawals for major events without penalization.

Other provisions would encourage savings.

Small businesses would be able to pool resources to create retirement savings plans for their workers under the measure.

Democrats have criticized the tax bill as tilted toward wealthy Americans. They also charged it will continue to add to the national debt.

AUDIO: Brent Martin reports [:40]

Plan promises to cut property taxes while fully funding schools

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The Nebraskans United coalition is preparing to release a proposal that promises to adequately fund K-12 education while also providing property tax relief.

Coalition member and Nebraska Farmers Union president John Hansen says the group is made up of leaders in agriculture, education and public interest.

“We’ve updated the proposal that we had last year and we’re working out some of the different revenue amounts for some of the different options we’re thinking about including,” Hansen says. “So, we’re trying to work out those final details.”

Hansen says they want to improve on a bill that failed to pass in the last legislative session, LB-1084 from Senator Tom Briese of Albion.

“1084 did broaden the sales tax base and increased the sales tax rate along with a bunch of elimination of business incentives and income tax exemptions,” Hansen says. “We are trying to find a more appropriate revenue fix for how to pay for K-12 education.”

Hansen says members of the coalition plan to lobby legislators this month.

“We’ll start meeting with senators and begin the process of taking our proposal out for a spin and see what folks say about it,” he says, “both elected officials as well as other organizational partners.”

Hansen says the only way to fix the education funding problem and high property taxes is to address the revenue issue.

By Jerry Oster, WNAX, Yankton

 

IRS: Nebraskans should do a “paycheck check-up” to confirm withholding

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The Internal Revenue Service is urging Nebraskans to take a close look at their paychecks to make sure the right amount of taxes are being taken out.

IRS spokesman Chris Miller says it’s important to look at the numbers now.

“Time is running out for taxpayers to do a paycheck checkup,” Miller says. “To check their withholding yet this year — to make sure the right amount of tax is being withheld from their paycheck for their particular situation.”

Miller says if you find a problem, there are still a few months to adjust your withholding amount to fix it.

“Doing a paycheck checkup now is going to help those taxpayers avoid a potential unwelcome surprise at tax time,” according to Miller. “That could be an unexpected tax bill and a penalty. Or it could be a refund that’s unnecessarily large.”

He says it’s better for you to not get a big refund, because you can use that money throughout the year.

Miller says they made an earlier push for everyone to check their withholding after the new tax law went into effect.

“The new tax law will change the way many of us calculate our taxes, and it also has changed the amount of tax our employers are withholding from our paychecks,” Miller explains.

Those with more complicated tax returns are the ones who most need to check their withholding. That includes two-income households, those with two or more jobs at a time, those who have had a job only part of the year, and those who claim the child tax credit or itemize deductions in 2017.

He suggests visiting the agency’s website and click on the link to do a paycheck checkup.

 

Norfolk residents vent frustration over Unicameral’s lack of property tax reform

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Sen. Tom Briese

A forum on property taxes held this week in Norfolk outlined the problem but provided no answers.

State Senator Tom Briese of Albion says more than a-hundred people attended the event and many expressed frustration at the lack of action by the Unicameral.

“The legislature hasn’t accomplished much on the property tax front and it’s very disappointing to me that we haven’t and we’ll continue to try,” Briese says. “There was quite a bit of sentiment that the public needs to take it into their own hands because of the inaction of the legislature.”

Briese says several possible solutions are being discussed.

“They were throwing out some ideas about other avenues toward property tax relief,” Briese says. “I think they, too, feel the frustration that I do in the inability of the legislature to put together 33 votes to do anything meaningful.”

Briese says it will take additional taxes somewhere else to roll back property taxes.

“The only route to meaningful, substantial and responsible property tax relief, property tax reform, is finding new revenue to replace property taxes,” Briese says. “That is always an option and should be the first option but it’s a difficult task to get the numbers needed to do that.”

Briese says he will again introduce a bill in the 2019 legislative session to raise sales taxes to offset property taxes. He says he would also support a constitutional amendment on property taxes.

The group Nebraska Taxpayers for Freedom is launching a petition drive to put a constitutional amendment on the 2020 ballot that would bring property tax relief through tax rebates.

By Jerry Oster, WNAX, Yankton