NEW MEXICO (KRQE) – Many New Mexico families will see several changes that will benefit them as they prepare their 2019 tax returns this year.
Two changes were passed and signed into law by the 2019 Legislature to increase Working Families Tax Credit and a deduction for dependents. The deduction was made to counteract a negative effect of the 2017 federal Tax Cuts and Jobs Act.
The Working Families Credit previously was worth 10% of the Earned Income Tax Credit, but now is worth 17%. As many as 216,000 New Mexicans may qualify for the credit and refund, even if they do not have any tax liability.
Applicants with children must have valid social security numbers and cannot claim the credit if their filing status is ‘married filing separately.’ Taxpayers with dependents may now take a $4,000 deduction from net income for all but one dependent. The change was meant to offset elimination exemption from federal income taxes. Taxpayers who do claim this deduction must file as either ‘head of household’ or ‘married filing jointly.’
This year, taxpayers will also see a change in the deduction for capital gains. Taxpayers previously could take a deduction of up to 50% of net capital gains, but now can deduct the first $1,000 in net capital gains income or 40% of all net capital gains.
There are a variety of organizations that can help senior citizens and low-income families with their taxes, a list of agencies can be found here under the “Individuals” tab on the homepage.
The New Mexico Taxation and Revenue Department offers some tips for taxpayers to make filing season easier and quicker.
Tips for taxpayers
- Be prepared: keep a folder throughout the year to keep receipts for spending on things like reimbursed medical expenses that may quality for deductions.
- Gather all year-end tax forms like interest and dividends, contract work, mortgage interest and property tax statements.
- If you worked in another state during the year, collect those returns.
- Start early to know ahead of time what additional documentation you may need and help avoid return-related identity theft.
- If you can, file electronically. Electronic forms are processed quickly and if you are owed a refund, it can be directly deposited into your bank account.
- Respond quickly to requests for more information for faster return time.
- Beware of email phishing scams and unsolicited phone calls seeking your social security number or credit card information.