Tax Reform and Your Delaware Itemized Deductions

Prior to the Tax Cuts and Jobs Act (TCJA), individuals were permitted to claim an unlimited amount of state and local real property and income taxes paid as itemized deductions. Starting with tax years 2018, those deductions will be limited.

Delaware follows federal law regarding itemized deductions, and taxpayers will be entitled to an itemized deduction for state and local taxes equal to the total real property taxes and local income taxes paid – up to the maximum $10,000 (or $5,000 for married individuals filing a separate or combined separate return).

Taxpayers will continue to be allowed to claim itemized deductions on a Delaware return, even if the taxpayer has claimed the standard deduction on a federal return.

For more information, and detailed examples, the Delaware Division of Revenue has published a Technical Information Memorandum, available here: https://de.gov/tim201901.


Overstated Withholding May Delay Your Tax Refund

With tax season well underway, Division of Revenue officials are noting an uptick in Delaware returns reporting overstated Delaware income tax withholding. The appropriate amount to report is limited to the total in Box 17 of the W-2 form provided by your employer (or the sum of those amounts if you have multiple employers), plus any state income tax withholding reported on a Form 1099-R.

Division of Revenue Director, Jennifer R. Hudson, Esq. noted “We are reviewing all returns that have overstated withholding, and they may be treated as fraudulent returns.”

Overstated withholding can be a sign of fraud, and returns with higher amounts than usual are being treated as suspicious. That means these returns will be pulled for review, extending the length of time required to process your return – and potentially delaying your refund.

If you have questions about the appropriate amounts to report, please contact the Division of Revenue Public Service area at 302-577-8200, or 1-800-292-7826.


Delaware’s Office of Unclaimed Property Website Is Moving

State Escheator and Office of Unclaimed Property Director Brenda Mayrack this week announced that Delaware’s Office of Unclaimed Property will be moving its website to unclaimedproperty.delaware.gov. By federal policy, U.S. government-related domain names (“.gov”) are only available to official governmental organizations in the United States. Originally launched in October of 2015, delaware.findyourunclaimedproperty.com has provided the public with easy access to the state’s searchable unclaimed property database, and allowed visitors to submit and check claim status online. The basic website and all of its functionality will remain the same, and visitors to the old address will be automatically redirected to unclaimedproperty.delaware.gov in the short term.

“Given the high number of unclaimed property scams we see across the country, we want to increase confidence among owners trying to recover property held here in Delaware,” said Director Mayrack. “With the new domain, users will be able to immediately recognize that they are using an official state website.”

Additionally, the site now offers enhanced property searching. Potential claimants may perform their own searches online anytime, or they may submit a request for an enhanced search to be completed by Delaware’s Unclaimed Property staff.

Unclaimed Property holders, which include banks, insurance companies and other business entities, should note that they must now file all reports via the website – the Office of Unclaimed Property no longer accepts filings on paper or other digital media. Holders (inclusive of most business entities, except banking organizations and insurance companies) who must comply with the state’s approaching March 1, 2019 spring reporting deadline should note the new website to ensure timely filing of their reports. All holders must report by uploading a National Association of Unclaimed Property Administrators (NAUPA)-compliant file or by using the Manual Online Reporting option. Manual Online Reporting allows holders with only a few properties to enter the property and report details online, and avoid the expense of creating a NAUPA-compliant file. For technical assistance with reporting, please see the Updated Holder Reporting guidelines available online, or contact Delaware’s Holder Reporting Unit at: escheat.holderquestions@delaware.gov or 302-577-8782, option #2.


Delaware Sets Health Care Spending Benchmark

Benchmark initiative will limit spending growth, improve quality of care

NEW CASTLE, Del. – The Delaware Economic and Financial Advisory Council (DEFAC) on Wednesday issued a recommended Benchmark Index that set the state’s health care spending growth target at 3.8 percent for 2019 – the initial year of Delaware’s newly created Health Care Spending Benchmark. This move furthers the state’s goals of managing the growth of future health care spending, increasing transparency into how health care is delivered and paid for, and improving the quality and cost of health care for the citizens of Delaware.

DEFAC set the target based on Executive Order 25 signed by Governor John Carney in November. The order called for the initial benchmark to be equivalent to the advisory Benchmark Index for overall State budget growth established under Executive Order 21 signed by the Governor in June 2018.

“We know that the rising cost of health care crowds out other important state investments, keeps companies from hiring, and makes it harder for families to manage their household budgets,” said Governor Carney. “This benchmark initiative is about providing Delawareans with more transparency around their own health care spending, and making sure that Delawareans are getting the quality of health care that they’re paying for. At the state level, Delaware taxpayers rightly expect us manage their money wisely. This initiative will help us do just that.”

“Establishing the health care spending benchmark is an important step forward in learning more about how health care dollars are spent in our state,” said Dr. Kara Walker, Secretary of the Delaware Department of Health and Social Services. “In order to meet the current and future health care needs of Delawareans, our system of providing and paying for care has to change in order to be sustainable. We look forward to working with health care providers, insurers, businesses and consumers as we move forward in improving the patient and provider experience, while improving the overall health of Delawareans and doing it at a lower cost.”

“Establishing the Health Care Spending Benchmark is a vital step in establishing realistic economic measures that provide meaningful insight toward producing optimal outcomes with the limited health care dollars available to the state, our citizens and the private sector,” said Rick Geisenberger, Secretary of the Delaware Department of Finance.

In subsequent years, Executive Order 25 requires the health care spending benchmark to be calculated based on long-term projections for growth in Potential Gross State Product (PGSP). Currently, long-term PGSP is forecast at 3 percent. The target approved today provides a transitional market adjustment with the benchmark starting at 3.8% and then gradually expected to decline to 3% over the next three years.

A Health Care Spending Benchmark Subcommittee of DEFAC will monitor PGSP forecasts and health care spending trends and make annual recommendations for the Benchmark in future years.

The path to creating the health care spending benchmark began in the summer of 2017, when the General Assembly passed House Joint Resolution (HJR) 7 authorizing the Department of Health and Social Services (DHSS) to develop a spending benchmark. The Governor signed HJR 7 in September 2017, just months after an analysis by the Centers for Medicare and Medicaid Services (CMS) indicated that Delaware had the third-highest per-capita health care spending rate in the country, and a rate that was 27 percent above the U.S. average.

That fall, DHSS and Secretary Dr. Kara Odom Walker, a board-certified family physician, began a series of summits to explore how a spending benchmark could work for Delaware. In February 2018, Governor Carney signed Executive Order 19 creating an Advisory Group to provide feedback to Secretary Walker on the health care spending and quality benchmarks. While the overall health of Delawareans has been improving – Delaware is now ranked 30th among the states, according to America’s Health Rankings ¬– the pace of that improvement is trailing the growth of health care spending in the state.

Delaware has historically ranked among the top 10 states in per-capita health care spending, including in 2014, when the state ranked behind only Alaska and Massachusetts. The 50-state analysis by the Centers for Medicare and Medicaid Services (CMS) released in 2017 found that Delaware’s per-capita rate was $10,254. Without changes, the analysis estimated that Delaware’s total health care spending would more than double from $9.5 billion in 2014 to $21.5 billion in 2025.

Click here to learn more about the health care spending benchmark.

###

Related news:
Governor Carney Signs Executive Order Establishing Health Care Spending and Quality Benchmarks
Governor Carney Signs Executive Order on Budget Smoothing


Avoid Getting Reeled In by Phishing Scams This Holiday Season

Data thieves don’t take a break during the holidays, and the Delaware Division of Revenue wants to warn taxpayers that the IRS is seeing a large increase in bogus email schemes that seek to steal money or tax data.

The most common way for cybercriminals to steal money, bank account information, passwords, credit cards and Social Security numbers is to simply ask for them. Every day, people fall victim to phishing scams or phone scams that cost them their time and their cash.

Here are a few steps taxpayers can take to protect against phishing and other email scams. When reading emails, people should:

  • Be vigilant and skeptical. Never open a link or attachment from an unknown or suspicious source. Even if the email is from a known source, the recipient should approach with caution. Cybercrooks are good at acting like trusted businesses, friends and family. This even includes the IRS and others in the tax business.
  • Double check the email address. Thieves may have compromised a friend’s email address. They might also be spoofing the address with a slight change in text. For example, using narne@example.com instead of name@example.com. Merely changing the “m” to an “r” and “n” can trick people.
  • Remember that neither the Division of Revenue nor the IRS initiates spontaneous contact with taxpayers by email to ask for personal or financial information. This includes asking for information via text messages and social media channels. The IRS does not call taxpayers with aggressive threats of lawsuits or arrests.
  • Not click on hyperlinks in suspicious emails. When in doubt, users should not use hyperlinks and go directly to the source’s main web page. They should also remember that no legitimate business or organization will ask for sensitive financial information by email.
  • Use security software to protect against malware and viruses found in phishing emails. Some security software can help identity suspicious websites that are used by cybercriminals.
  • Use strong passwords to protect online accounts. Experts recommend the use of a passphrase, instead of a password, use a minimum of 10 digits, including letters, numbers and special characters.
  • Use multi-factor authentication when offered. Two-factor authentication means that in addition to entering a username and password, the user must enter a security code This code is usually sent as a text to the user’s mobile phone. Even if a thief manages to steal usernames and passwords, it’s unlikely the crook would also have a victim’s phone.
  • Report phishing scams. Taxpayers can forward suspicious emails to phishing@irs.gov.

If you have questions, or suspect someone is trying to commit tax fraud, you can also fight back by contacting the Division of Revenue’s Tax Fraud Hotline at (302) 577-8958.