How To Sign Missouri Claim

How to document type sign claim missouri

in this video we're going to be discussing Missouri tax returns up until now you've had practice on the federal tax returns and where everything goes on those we haven't spent a lot of time on Missouri because Missouri primarily takes off from the federal return it's starting point is federal AGI it flows over from the federal return to the state return however when you look at the Missouri return it actually splits up the income according to who owned it so if you remember when you put information in for federal returns income and deductions it will often ask you to source it either joint taxpayer or spouse and it has makes no impact on the federal return but the reason it has you source that is so that when it flows over onto this onto the state return it will split it will know how to split up that income there are a few adjustments however that do get made to Missouri income we don't see a lot of these invite up but I need to make you aware of what they are just in case you have somebody who would have these for Missouri returns there is something called a form mo a which is kind of like a Schedule A on the federal form 1040 it lists itemized deductions and it also lists ad backs things that add into the taxable income if you look at the mo a you'll be able to see all of the items that would be included in this video I only want to talk about those things that you may possibly see at our vitae site so highlighting those things the first thing that you'll want to keep in mind is if there is any tax-exempt interest on state and local obligations that showed up that were deducted from the federal return they need to be added back to the Missouri return in some years the tax software will automatically make this adjustment if you have it put into the system correctly if you remember on the federal return you still have to enter information for tax-exempt interest it just doesn't count in your taxable amount if you've done that there's a chance that it may carry through onto the missouri return there is also equally a chance that they won't carry it through because tax layer is not the best software in the world so you want to make sure that you check your mo a when you're finished to make sure that this tax-exempt interest from state and local obligations is showing up on there and is adding back again we don't have a lot of people that have this type of adjustment but it could happen again another item you might see and the most you would see it would probably be on one return during the semester if you have a person who has itemized deductions on the federal return and one of those itemized deductions was a charitable contribution to a Missouri food pantry then that deduction has to be added back to the Missouri tax return and the reason it gets added back is because later on on the Missouri tax return the people will get a credit for that and it will offset their tax so they actually end up coming out better to add it back to taxable income and then take it off of tax but again you don't see that often and it only applies if federal deductions were itemized if the person took the standard deduction then there is no add back to make but just be aware let that ring a bell if there was somebody with food pantry contributions remember there's something that you may need to do with that another add back that applies only if federal deductions were itemized if there was a person who was itemizing their taxes and they claimed an itemized deduction for state and local taxes paid to a locality that was not in Missouri then we have to add that back to the Missouri tax return and the reason that we have to add that back is because later on these people will be able to take a credit for taxes paid to localities outside of Missouri so we add them back here and then take a credit for them later they end up coming out better but again you only do this if item if deductions were itemized on the federal return and it showed up there otherwise you don't have to worry about this adjustment either now because this is tax of course there's a rule and there's an exception and there's an exception to the exception so if you have something if you have a potential add back if the locality actually allows a subtraction to income for Missouri property taxes paid you don't turn around and add it back here and of course the question is well how the heck do I know that because every locality is different if you have this potential situation we're gonna have to look it up so call me over we'll figure it out together again it's not something you're likely to see but it could happen then there are additional adjustments on the MOA and these are subtractions and again there are more subtractions than what we are going to cover but I only want to talk about the ones that could possibly pop up at our vitae site the first one is interest from federal bonds that was taxable on the federal return so if a person had a brokerage statement that's usually where this shows up and on the brokerage statement there were federal bonds that were held and for some reason they were taxable if they were taxable on the federal return you get to turn around and take a subtraction here I don't think that the software automatically does this for you so you have to remember to check another item that's going to be a subtraction that is much more likely to show up is if you had a taxpayer who had a taxable state income tax refund if it was included in federal AGI then you get to turn around and subtract it out of the missouri AGI remember state income tax refunds are only taxable to a person on a federal return if they itemized in a prior year so you might see this sum you're not gonna see it a lot but it could happen I do believe that this is an automatic carry but again always check the Missouri return to see that it's showing up there if you had a tax payer who had railroad retirement that was taxable on the federal return then that should be deductible for the taxpayer on line 4 actually on the mo a and then it carries up to the line 4 also some military pay can be deducted but we don't do military tax returns at our site so that's a non-issue for you a couple of other subtractions if we have somebody who had qualified health insurance premiums and they were not deducted on the federal Schedule A then we get to take a deduction for those on the Missouri return and of course the reason that they wouldn't be deductible on this get on the federal return would be if we have somebody who took the standard deduction rather than itemizing so if they didn't get to take a deduction for them on the federal return then they get to take a deduction for them on Missouri I suppose it could also happen if somebody was filing itemized but they didn't have enough medical expenses to exceed 7.5 percent of AGI in which case they're not really deducted on the federal return again we can deduct them there on Missouri another item that we have would be Home Energy Audit expenses we almost never see this at our site however I have had one person come through who did this and asked about it and I actually had to look it up in that year so if you have a Missouri resident who gets a home energy audit the cost of the audit itself and any cost of implementing recommendations can actually be deducted from federer I'm sorry from state AGI however there is a limitation it's limited to $1,000 for single taxpayers or $2,000 for people who are married filing combined by the way Missouri calls it married filing combined instead of married filing jointly I don't know why they decided to deviate in the language but they did and it's the same thing for this however we have to keep in mind that a person can only claim amounts that are not deducted on the federal return so if they didn't take a credit for something similar to this something that was essentially the same thing on the return then they can take a deduction on the Missouri return the next item on Missouri returns that are a big deal and we do see this fairly frequently at the site our pensions the rule in Missouri is that public pensions and military pensions are 100% tax exempt in the state of Missouri that's not necessarily true from the for the federal government Social Security and Social Security disability are at least partially exempt in the state of Missouri and they actually may be partially taxable for the federal government so we need to make sure that the software is doing the correct calculation I believe it will automatically pull through Social Security that is listed on the federal return however for public pensions and military pensions it won't again we're not doing military return to the site so you don't have to worry about the military exemption but the pension for public employees we do have to worry about and this is something that does not automatically pull because the software doesn't know about this so we actually have to go in and make a physical adjustment on the Missouri return we're going to work through a problem at the end of this video that does that and then you're going to have a chance to do some homework where you make that adjustment as well again Social Security should automatically adjust always make sure when you finish with your return that it does adjust for that but it should now the question is what is a public pension and how do you know when something is a public pension well a public pension is a pension earned by somebody who was a public employee now how do you know usually you have to rely on the taxpayer to tell you there are certain people that you know will have public pensions for example rakaat retired public schoolteachers it's always a public pension if you have retired police officers retired firefighters those people have public pensions otherwise if they are a person that doesn't know if it's a public pension they need to go find out so you know whether or not to give them this clusion okay I'm skipping ahead now to line 18 I'm skipping over anything that I know will automatically calculate if you've filled the right information in on the federal form I only want to focus on those things that you may need to check on or the things that may require some specific action from you so on the Missouri Missouri Form 1040 line 18 there's a deduction for long-term care insurance so long-term care insurance is defined as insurance coverage for at least 12 months for long term care expenses should such care become necessary because of a chronic health condition or a physical disability any premiums paid for that type of insurance are deductible on the missouri form 1040 line 18 also on line 19 there's a line for health care sharing ministry so if a person has a health care sharing ministry coverage for health expenses rather than other health care they can actually deduct premiums paid to that sharing ministry this is an up and coming thing I've only seen it once on a tax return and this was it was in private practice it was not actually at our Vita clinic so I'm not sure how much we'll see it but I do know that you need to be aware that it's there also keep in mind that this deduction only applies if a person didn't take a deduction for it from their federal taxable income so it can't have been included as an itemized deduction next I want to skip down to line 29 it's called the resident credit we do see this periodically at our site we probably see this in 10 Returns out of 300 or 400 that we do in any given season so there is a chance that you may have somebody who has this issue if you have a person who was a full year Missouri resident but they paid taxes to another state or to another locality they actually can take a credit against their Missouri taxes paid and the reason is that Missouri says you shouldn't have to pay tax on income twice because Missouri is going to tax them on all of the income that they earned and then if they had to pay tax on that income again to another locality Missouri says well that's not fair so we're going to reduce the amount of taxes you pay to us and so that it kind of even evens out you're not taxed twice on that income this happens a lot to people who either travel for work or people who live in one state and cross the state border to work in another town in Springfield it doesn't happen as much as it would happen in let's say Joplin Missouri or Kansas City Missouri those towns that are right on the border but it does happen and as a matter of fact we sometimes see our students who have that they have summer internships in another state and so maybe they go to Arkansas to work for the summer when they come back if their Missouri residents they have to pay Missouri tax on it and take a credit for any chunk that Arkansas took out of that and we are going to work through a practice problem and we are going to have a homework problem on that one as well skipping ahead again to line 40 I want to talk a little bit about some miscellaneous tax credits there are actually probably about 50 different types of miscellaneous tax credits that a taxpayer can claim on their tax return however most people don't even come close to being eligible for them but I do want to highlight some that I have seen show up we actually had a professor that had this one a couple of years ago they had a child who was special needs and they adopted that child if a person has a special-needs child that has been adopted they're eligible for a Missouri tax credit on that they can claim up to $10,000 for non-recurring adoption expenses for each child also another one of those credits is the Food Pantry Tax Credit we mentioned that one earlier when we talked about things that had to be added back to the return so if a person itemized deductions and they took a charitable deduction for this contribution you have to add it back early on in their return then you can turn around and take a credit of up to $2,500 per taxpayer per year for taxpayers who make donations of cash or food supplies to a qualified food pantry the credit is limited to 50% of the donations and it has to be a qualified charity so when the notes say that it has to be a Section 501 C 3 charity that just means a qualified domestic charity and the final credit that I want to talk about that I want to put in the back of your mind is a credit that a lot of people don't know they are eligible for in the state of Missouri if there is a public safety officer who has passed away and they have a surviving spouse that surviving spouse might actually be entitled to a credit on their Missouri tax return they the public safety officer has to have been killed in the line of duty the spouse cannot be remarried at the time that the tax year ends the surviving spouse has to own a homestead in Missouri and pay property taxes on the dwelling and the homestead can't be occupied by more than two families and if the person meets all of these criteria then they can get a credit on their taxes of up to the amount of tax that they have paid on their homestead now we're going to go into examples of specific things that I have mentioned that we need to do calculations on and be familiar with okay so now we're going to go through a few examples of things that will necessitate adjustments on the Missouri return and make sure that you have this document open in front of you and pause the video as you walk through and do this piece by piece I want you to have the practice because you're going to do a homework problem in just a moment and you're going to need to know how to do these steps so this document that you see up right now is posted on Moodle make sure you download it and you've got it alright so the first item that we're going to add is a $450 state of Missouri tax refund and we're going to assume that the tax payer itemized deductions last year we're going to open either our Clark or our Cunningham return depending on which year this is and make the changes to that now I don't believe on either of those returns that the taxpayer did actually itemize last year but for the sake of this updated example we're pretending that they did so we're going to go in the fastest way to add in that state income tax refund is to scroll down and find line 10 the taxable refunds line click on the nu ber and it will take you there because I'm just doing this for the purpose of the example I'm going to enter the 450 in the bypass line if I was doing this return for real then I would go in and make sure I have all of these questions answered hit continue and if I go back up to the summary page we'll see that it shows up there scroll back down to line 10 there's my four hundred and fifty dollars next I want to go into the w2 and add a line for state taxes paid to Kansas for two hundred dollars and indicate that there were state wages of one thousand so essentially what I'm telling the software is that out of all of the income earned a thousand of that should be taxed in Kansas and that I paid two hundred dollars to Kansas in taxes this is going to set us up for the resident credit a little bit later on so let's go back into the w2 that shows up on line seven so I'm just going to click there super fast to get there open my w-2 and scroll down to the bottom where I've got the state information I've already got the missouri information that really did come on the w2 now i'm going to add a state we said it was kansas and you can add in any ein looks like something auto-populated for us that's fine again because of this example if you were doing a real return obviously gonna put in the real yah in-state wages we said were 1000 and state tax paid was 200 as far as we know there were no local wages or local tax paid so we can't get past that part and then make sure it hit continue so that it saves that and ignore that error that pops up it continued there right so that's going to be in there we won't show see that show up on the front page of our form 1040 it would affect itemized deductions and it will affect the Kansas return when we generate that here in just a second in fact let's just go ahead and generate that so we have that out of the way I'm going to go down to the state section and I'm going to add another state return we said that this way just were from Kansas so we will generate a Kansas return and that makes sense at the site when we have somebody come in who has wages from another state we do have to generate a return from that state we don't train on all 50 states because generally we only see Missouri returns but if we have to do a return for another state we do that to the best of our ability and we try to help them out the best that we can so I've chosen Kansas and they were a non-resident of Kansas they were a resident of Missouri all year so non-resident of Kansas and we see this fairly frequently when we have people who live in one state and work in another sometimes people are away on temporary assignment that happens a lot even with our jury students they might be Missouri residents and they have an internship in Arkansas for the summer and part of their wages are taxable in Arkansas or it's even more common for people who live right on the border for example people who live in Kansas City Missouri they will work in Kansas City Kansas and we see people from Joplin who work in Galena Kansas so it's not an uncommon thing although the further you move into the interior of the state for example Springfield's a little further end than Kansas City or Joplin we don't see it quite as much all right we're going to click non-resident and hit continue and it's going to generate this return now we have done what we needed to do to be able to generate the credit for Missouri I'm not going to go in and do the whole Kansas return if we really did have somebody at the site who really did need a Kansas return we would go through it line by line and make sure everything that we would expect to show up is showing up I can tell you that for the purposes of this example and to be able to generate the credit for the Missouri form which is the whole purpose of this I've done everything that has to be done so now I'm going to back out and go on to the next item on my list okay and then we're also going to add in the 1099-r on this page so here's the 1099-r and let's go in and add that go into the income section my retirement income add or edit a 1099 R and I'm going to put that in I believe it was 838 so I went ahead and added that in there I didn't make you set with me through that on the video so now I have my grass distribution and my taxable amount and all of the information for the payer I come down here and there was code 7 in box 7 we don't have to do the special worksheet because the taxable amount was already determined and we do not check this box because if you look at the example the box is not checked they're checking that box makes a difference on what line it shows up on on your tax return and it's going to this one should show up as a pension so we scrolling down and we don't have any state or local information hit continue and to make sure that that's in I mean obviously we can see right here that it's in but we can go back up and we can take a look at that on our summary page shows up right here on pensions and annuities line 16 be the full amount was taxable that's why the full amount shows up there and it doesn't none of it shows up here it would only show up here if these two sums were different so now let's go in and take a look at where these things are going to show up on the Missouri return we don't get a preview on a screen like this so we actually have to generate a PDF which means we scroll up here and hit view slash print return for those of you who have not generated a PDF before on the software and then hit print your 2017 return and it actually will generate this PDF it will print it for you but it will generate the PDF if you really did want to print it you would go up here until it to print one more time all right we have a 28-page return because it has the federal Missouri in Kansas we're going to scroll all the way near the bottom because that's where Missouri is going to be I'm a little too far down here we go the form 1040 you can tell it's a Missouri form because it's got a little state of Missouri up there and it's got the form number published right in there so the first thing that we want to look for is this first adjustment that we made the subtraction to Missouri AGI for the four hundred and fifty dollars of the state of Missouri refund that was taxable on the federal return it is subtracted out right down here you see the subtraction show up on line four and that comes from the mo a part one line 17 the mo a form comes right after the Missouri 1040 so we'll scroll down here we go here is those there's the mo a again a little state of Missouri with the form number in it and here's the subtractions section and here is the subtraction any state income tax refund included in the federal aid is it's turning around and taking that back out and you saw just a second ago where it flowed up to the main return and actually did that subtraction but here's where it shows up first then we also had long-term care insurance if the software was functioning correctly you would have seen it show up here as a subtraction on line 12 we filled everything out because there was only one box to fill out it's just not carrying it yet and if we run into that situation at the site we may actually have to pay per file them we don't have that issue very often but if we do then that's the way around it to do it on paper the next item that we would look for is the pension deduction so we had this 1099 R and we put that in and it was a public pension remember we said Teachers Retirement was a public pension assuming that they were a teacher in a public school and so that actually is recorded a little further down so here's where you would see the public pension calculation kick in it is blink there's nothing in there because we have not told the software that this is a public pension we actually have to go into the state return and tell it actually what it is doing though is it's going in and calculating it like it is a private pension and see how it's not indicating that any part of that private pension is eligible for a deduction that of course would be wrong because this is a public pension based on what the software knows it's right but we have to go in and tell Missouri that we need to make this a public pension so we're going to go into the state return and choose Missouri and we scroll down to the bottom under pension military retirement and ssa deduction and we have a public pension exclusion so it would begin here and we enter the public taxable pensions included in federal AGI if you remember by looking back at this form it was 838 so we're going to type in 838 and then if the person has Social Security disability benefits we would make the adjustment here if they had a military pension we would make the adjustment here but again we're not doing military returns so now to see the difference between nothing being filled out on the public pension calculation and what it should look like we're going to regenerate that PDF so now I have regenerated the PDF and we're looking at the exact same thing we were looking at a minute ago but it is now filled out all right and so you can see it goes through this whole series of calculations the only thing we care about is that we have the total public pension that's deductible that's the right amount 838 it should be the full amount and it does this calculation here it carries the number down to this total here where it totals up all of your exclusions from from pensions and Social Security etcetera and then it's going to carry it up to the Missouri 1040 line eight it tells you right here where it's going to take it so let's go up to the Missouri 1040 line 8 and see if it does in fact show up there and there it is Missouri 1040 line 8 838 that's the pension exclusion then the next thing that we want to look for is the credit right you remember we went in and we added state taxes paid to Kansas and then we generated at Kansas returned because now we're going to expect to see any taxes that we're actually doing owing to Kansas that were not refunded from Kansas showing up as a credit on our Missouri return so coming back down here that credit shows up further down and it's line 29 it's the resident credit so it looks like we got credit of $23 my guess would be that when we went through when we calculated Kansas tax we only ended up owing Kansas tax of $23 let's go see well pretty close we ended up owing Kansas tax of twenty-eight dollars so the state of Missouri actually goes through sort of this big calculation to determine how much resident credit you get sometimes you don't always get the full thing so you see here we had credit of twenty three we actually paid 28 to Kansas if we wanted to go and find the Missouri CR we can see how that's calculated so I've scrolled down to the Missouri see our form which as you can kind of tell is down at the end is page 27 out of 28 pages and it goes through this big calculation it finds out how much you paid to the other state it figures out what the income percentage is and based on the calculation it determines how much the maximum credit is it compares it against how much tax you actually paid to that state and then it's going to take the lower of the two so the maximum credit they were eligible for was only $23 based on the percentage of income that was actually paid to the other state or that was taxable to the other state they paid 28 so 23 is the credit that's why it's a little bit lower but that's how you make those adjustments that's where you would expect to see them show up on the return so we saw where the deduction or subtraction came in for the state taxes paid I'm sorry the state tax refund that was taxable in the federal return turned around and took it out of the Missouri return we just now looked at the credit that was generated from paying taxes to the other state we saw how to generate the deduction for public pensions and we saw how we should be deducting or how we should be generating the subtraction for long-term care insurance if the software was behaving appropriately so we are now at the end of the missouria tutorial and it's your turn to try this on your own so give the homework a shot the document should be posted on Moodle right after this video and the sample problem