CPA: Idaho tax changes could mean owing more
Yes it's June and taxes are the furthest thing from anyone’s mind but they shouldn't be especially regarding changes to Idaho state tax.
Holmstead, Heward and Howe CPS firm calculated for KMVT reporter Morgan Rumpf how Idaho changing state tax laws to mirror federal tax changes will impact you.
Let’s breakdown a family of six, with two married parents and four kids making $100,000 a year, starting with the old or 2017 year rates.
"We have what's called the standard deduction and that would've been $12,700," said Certified Public Accountant Jared Reward.
With four children the exemption would have been $24,300.
"And that would've left us with taxable income here of $63,000," Heward said.
Now here's a look at the changes that will happen this coming year using the same scenario but the standard deduction is going to increase.
"Now under the new system there is no exemption anymore so it's just the $24,000 is what gets deducted,” Heward said. “That puts our taxable income now at $76,000."
There is no longer a child deduction but there is a child tax credit but that rate is not going to come close to what exemption rates were.
It is this firm's fear, Idahoans are not withholding enough from their paychecks to cover the new tax difference.
"So there's a big tax increase from the old system to the new system just on the surface," Heward said.
Some CPA firms have created their own W-4 form with a specific Idaho state withholding box, since most forms haven't yet been updated.
"I would just say they just need to write it in the margin,” said CPA partner Shawna Howe. “Because at this point in time Idaho does not have their own form."
The best way to see your tax obligations are to speak with a tax professional and your employer so at the end of the year you aren't surprised with how much you owe back to the state.