Tax season has officially begun in Idaho, with the Idaho State Tax Commission starting to process 2022 Idaho individual tax returns on Jan. 23, 2023. If you haven’t started yet, or feel intimidated by the process, here’s what you need to know about filing in Idaho and information on tax credits.
Am I required to file?
You are required to file if your gross income is above a certain amount (see chart below.) Part-time Idaho residents must also file if their total gross income from all sources while an Idaho resident and Idaho-sourced income while a non-resident is over $2,500.
Non-residents of Idaho must file if their total gross income from Idaho sources is $2,500 or more.
Idaho State Tax Commission
E-filing versus filling by paper
The Idaho State Tax Commission says e-filing your tax return is the safest and easiest way to file. It is also the quickest way to get a refund and using direct deposit gets you your money even faster. It takes seven to eight weeks to get a refund when you e-file in Idaho, compared to 10 to 11 weeks when filing by paper. All Idaho tax returns go through fraud-detection reviews and accuracy checks, so the tax commission may send you a letter to verify your identity or to ask for more information.
Free webinars hosted by Idaho State Tax Commission
The Idaho State Tax Commission, along with the Taxpayer Advocate Service, are hosting Tips for Filing 2022 Income Taxes webinars in January, February and March. The sessions are all online and go from 1 to 4 p.m. MT.
The class will cover tax credits and deductions, what income is taxable and what isn’t, what slows down a refund and how to avoid common errors. It also includes how to find free tax preparation help, who can e-file for free, how to choose the right preparer and more. You can sign up for a session on the Idaho State Tax Commission website.
Think twice about Googling tax advice
The Idaho State Tax Commission has also put out a warning about using search engines like Google or social media platforms to find out how they can increase their tax refund. Websites can offer real tax solutions, but they can also give bad information that leads to incorrect returns.
When online, watch out for promises to increase your refund through falsifying credits, business expenses or other lines on the tax returns. Following bad tax advice can result in you being audited and owing extra money, including penalties and interest. If you intentionally sought information to inflate your refund, you can be charged with a felony according to the tax commission.
If you realize you have filed a return that has bad information, the tax commission says to amend the return as soon as possible.
Tax credits in Idaho
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- An Idaho Medical Savings Account allows you to save for medical expenses and long-term care costs while reducing the amount of Idaho individual income tax you owe. If you are contributing to a federal MSA or health savings account, that does not qualify for this Idaho deduction. For the account to qualify as an MSA, the financial institution must include the words “Medical Savings Account” or the letters MSA on the statement as well as in the name, title, description or designation of the account.
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First-time Homebuyers Program and Deduction
- If you are an Idaho resident, you can save to buy a first home while reducing the state income tax you owe. The first home must be a single-family residence that you will own and occupy as your primary residence.
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- A capital gain is when you sell or exchange a capital asset for more than the cost or other basis, according to the state tax commission. It can be short-term or long-term and must be reported on an income tax return. Idaho allows a capital gains deduction for qualifying property, like cattle and horses, located in Idaho.
- Claim of Right Income Repayments
- If you had to repay over $3,000 that you included in your taxable income in a previous year, you may be able to claim a credit or deduction on your Idaho return. The state tax commission says you must have claimed a claim of right deduction or credit on your federal return under IRC section 1341.
- IDeal Idaho College Savings Program
- The IDeal Idaho College Savings Program is the state’s official college savings program. It helps families save money to pay higher education costs like tuition, certain room and board costs, books, supplies and other qualified expenses and families receive a tax benefit for their contributions. Anyone can contribute to an Idaho college savings program, including family and friends.
Property Tax Reduction
If you are a qualified Idaho homeowner, you may also be eligible for the Property Tax Reduction program, which could reduce property taxes from $250 to $1,500 on your home up to one acre of land. The state tax commission and county assessors administer the program and you can apply through your county assessor’s office. When you apply, you must provide proof of income, payment of medical and funeral expenses, requirements and home ownership.
In Boise, Mayor Lauren McLean and City Council approved the allocation of $1.2 million to fund the City of Bose Property Tax Rebate Program last November. Boise homeowners who applied and were approved for the state’s Circuit Breaker Program last April are also eligible for the City of Boise PTR. Eligible residents have until May 1, 2023, to apply.
You can check your refund status, make payments and find tax help on the Idaho State Tax Commission website or by calling 208-334-7660 in the Boise area or toll-free at 800-972-7660. The deadline to file your 2022 income taxes is April 18, 2023.