Arkansas State return

[Jesse]

I have a client that moved to Arkansas just after Christmas 2007. She mailed me her information this year so I need to prepare a full year AR tax return for 2008.

Basically she has retirement income approx $35,000 and Social Security. I am just wondering if there are any deductions or credits that might not be obvious for a single retired person with this income and Social Security?

For example Wisconsin has a deduction for 66.67% of medicare or health insurance premiums for nonworking taxpayers, but you would not know that by looking at the Wisconsin Form 1, you must enter a code number and take the deduction.

[thomtax]

I use Drake and it takes care of this automatically. But basically, things you would have are on lines 18A and 18B, if a spouse, for figuring on the regular tax table, Arkansas gives a $6,000 deduction from pension plans and Qualified IRAs. They will not get this if on low income tax table, which usually means there is no tax due anyway.

Also, Arkansas does not tax social security.

The itemized deductions are pretty much the same as federal, except you cannot deduct state income taxes paid.

As you will see, you are filing a complete return with Arkansas. By that I mean, it does not start with a Federal figure and go from there. If married, it is usually to taxpayer's advantage to go as Married, Filing Separately on the same return.

There is a concession on military pay, but I don't think you have this situation.

LT

[thomtax]

Jesse - one other thing. Arkansas does not tax unemployment compensation.

LT

[Jesse]

Thanks for the quick response. She's single and unfortunately she did not have any State withholding and has a bit of a balance due, I thought if there were some hidden deductions or credits I could reduce the balance.

[thomtax]

I don't know her age, but be sure that she gets the tax credits for being 65. It's just $23 for each box checked on 7A, but it adds up.

LT