OKLAHOMA CITY – It’s tax season and, for a lot of people, that’s already stressful enough.
But, thanks to a couple of state laws that passed last year, you could end up owing the state more.
Senate Bills 1604 and 1606 were passed last May, and both are bringing unpleasant surprises.
Oklahomans could end up owing more in state taxes or missing out on a refund.
“This was something that is not well publicized,” said CPA Joshua Jenson, who feels the laws flew under the radar. “It does feel a little unfair, because you started out using the tables that should lead you to the right result but, then, when you get to tax time, it's not the result that you hoped.”
One of the big changes has a huge impact on Oklahomans who itemize their deductions.
“In 2015, we got to deduct all of the federal itemized tax deductions. In 2016, we have to add back the state tax,” Jenson said.
Bottom line, you could end up owning more or get less of a refund.
Oklahoma Senator Greg Treat said one law was passed to close a loophole.
“Your state income tax has your adjusted gross income, minus the part that has the state tax,” he said. “So, you no longer get to deduct what you paid the State of Oklahoma from what you paid the State of Oklahoma.”
Another change deals with earned income credit.
It will no longer be refundable in certain situations.
“For a low-income taxpayer in Oklahoma, they might have in the prior year been able to collect another $100, $200, $300, $400, $500, a thousand dollars. Where this year, they’re not,” Jenson said.
As for advice, he said to plan ahead.
“To really take action, withholdings should be changed for 2017, so you don't have the same issue when you go to file in 2018.”
According to an impact statement from the Oklahoma Tax Commission, one of the new laws could bring in more than $97 million to the state.
However, Treat said that’s just an estimate and the goal wasn’t to bring in additional revenue – it was to close a loophole.
The additional money is just an added benefit.