University of Wisconsin - Extension

MENOMONIE, Wis.—“Households with an income less than $24,000 for 2004 may qualify for Wisconsin’s Homestead Credit,” says Lana Anderson, University of Wisconsin-Extension Family Living Educator for Barron and Dunn Counties. The Homestead Credit a tax credit for renters and homeowners with low or moderate incomes.

The Homestead Credit is designed to lessen the impact of rent and property taxes. Qualifying persons can get back some or all of their state taxes withheld during the year. Those who do not have earnings, or whose earnings were too small to have taxes withheld, can get extra cash back from the State.

To qualify, an applicant must have been a legal resident of Wisconsin for all of 2004 and must have rented or owned a home and lived in the home in Wisconsin during 2004. The home may be a house, an apartment, a rented room, a mobile home, a farm, or a nursing home. The home may not be exempt from property taxes. The applicant must be at least 18 years by the end of 2004 and cannot be claimed as a dependent on anyone else’s federal income tax return for 2004 (unless the claimant is at least 62 years old).

Household income counted in the $24,500 includes all income reportable for tax purposes, plus certain nontaxable income. Examples of nontaxable income counted in “household income” for this credit include Social Security, Unemployment Compensation, child support, IRA contributions and nontaxable scholarships. A $250 deduction for each dependent (other than the taxpayer and spouse) who lived with the applicant for at least six months of 2004 can be subtracted from the household income before the final income is determined.

Cash government benefits can reduce the Homestead Credit. The benefits that affect the Homestead Credit include Wisconsin Works (W-2), county relief, and Kinship Care. Countable rent or property taxes are reduced by 1/12 for each month in which cash welfare benefits were received during 2004. The Schedule H Wisconsin Homestead Credit includes information on how to handle this.

To claim the Homestead Credit, complete a Wisconsin Homestead Credit Claim (Schedule H). Governor Jim Doyle announced that a “Homestead-EZ” form has been made available this year as only about half of the people who qualify actually applied for it last year. You may attach that form to the Wisconsin income tax return of Form 1 or 1A, or 1NPR.

Applicants who own their home should attach a legible copy of their property tax bill. Applicants who rent their home should attach a rent certificate (found in the Schedule H booklet), which the landlord needs to complete and sign.

Taxpayers who might have qualified in the past, but did not claim the credit may file amended forms for 2000, 2001, 2002 and 2003.

For further information on managing personal finances, contact your county UW-Extension office.