Hispanic Taxpayers Could Benefit From $350 Billion In Tax Cuts

Kansas City, MO--(HISPANIC PR WIRE)--February 4, 2004--As Hispanic taxpayers prepare for another tax season, they need to be aware of recent changes in the tax law. More specifically, Latinos need to know about the increase in the Child Tax Credit, the tax benefits of the Saver’s Credit and valuable tax breaks that make getting a higher education more affordable. These breaks are of special interest to Hispanics who, according to the US Census, have at least two children under the age of 18 and nearly 70% have not begun planning for retirement.

The following tax law changes may be of particular importance to Latinos:

Child Tax Credit

The Child Tax Credit increased from $600 to $1,000 per qualifying child. Many taxpayers enjoyed the benefit of this increase last summer when the IRS issued advance payment checks of up to $400 to nearly 24 million taxpayers who claimed the Child Tax Credit on their 2002 return. Taxpayers who received the advanced credit must subtract their advanced payment amount when figuring the Child Tax Credit on their 2003 return. If you received an advance payment that was larger than the Child Tax Credit you were entitled to receive (for example, the child is no longer your dependent), you do not have to repay the difference when you complete your 2003 return. Or, if you had a child in 2003, you may be eligible to claim up to $1,000 for the Child Tax Credit.

Saver’s Credit

The Saver’s Credit was enacted in 2002 and allows taxpayers to receive a dollar for dollar reduction in their taxes, up to $1,000, for contributions made to a retirement account. The tax benefit is designed to reward low- and middle-income taxpayers who might not have a lot of extra money to save. To take advantage of the credit, taxpayers must be 18 or older and contributing to a traditional or Roth IRA, or a qualified employer retirement plan.. This also includes contributions to an H&R Block Express IRA which can be opened with as little as $300 from a taxpayer’s return.

But don’t delay because this valuable tax benefit is only available until 2006 unless Congress acts to make it permanent.

Marriage Penalty Relief

In many cases, couples filing taxes under the “married filing jointly” status have had to pay significantly more in taxes than two singles would pay with the same combined income. The new tax law reduces the marriage penalty by increasing the standard deduction for married taxpayers filing a joint return to $9,500, which is twice that of single filers. Now, married couples may find that taking the standard deduction is more advantageous than itemizing. It is certainly easier and may actually result in a bigger deduction.

Education Credits and Deductions

The Tuition and Fees Deduction allows taxpayers to deduct up to $3,000 in undergraduate and graduate expenses for themselves, their spouse or their dependents and they don’t have to be a full-time student to deduct the costs. However, only tuition and fees count, no room, board or book costs are eligible.

The Lifetime Learning Credit doubled this year, making it worth up to $2,000 annually for qualified tuition expenses. Also, the phase-out ranges that determine the income level where credits are reduced have increased for both the Lifetime Learning and Hope credits. An added benefit is that you don’t have to itemize to take advantage of either credit, saving you time and money.

It is also important to know that the interest paid on a qualified student loan can be deducted. A qualified loan is a loan used to pay for tuition, fees, books, supplies, equipment, and room and board necessary for attendance at an eligible post-secondary educational institution.

“There are many twists and turns to the new tax laws making it difficult for the average taxpayer to navigate on their own,” said Christina Fernandez, assistant manager of Hispanic programs at H&R Block. “This year more than ever, taxpayers may want to seek professional advice in order to take advantage of every tax break available to them.”

“Our Hispanic clients are in good hands,” says Guillermo Luque, a tax professional with H&R Block. “As Spanish-speaking tax professionals, we understand our clients’ concerns and provide them with our extensive knowledge of tax law changes in the language that they prefer.”

Information and assistance regarding tax law changes and H&R Block’s products and services is available in Spanish at more than 800 bilingual offices across the country. Spanish speaking representatives are also available by calling 1-800-HRBLOCK or by visiting http://www.hrblock.com/espanol.