Tax Refund


The House Ways & Means Committee approved a deal to temporarily enhance the child tax credit and certain business deductions. Lawmakers on the committee approved the plan with strong bipartisan support, voting 40-3 to advance the legislation after a markup session, per Politico (paywalled). However, lawmakers on both sides still have some concerns about the plan, which would be paid for by cracking down on claims for the pandemic-era employee retention tax credit.  

Tax season officially opens in one week; free electronic filing is possible. The IRS announced Jan. 29 as the official opening day of tax season. The Washington Post offers a rundown of the ways taxpayers can file their taxes for free, no matter their income or age. Among them is Direct File, the IRS’s new alternative to commercial tax software available in 13 states. Early users will be invited to try out the software in mid-February. Volunteer Income Tax Assistance centers offer free filing services as well, and some commercial software companies offer free electronic filing for qualified users. 

EV charger tax credits will be available to about two-thirds of Americans, per guidance. The IRS released new guidance that gives taxpayers a list of eligible census tracts for qualified alternate fuel refueling property credits. The guidance defines an eligible census tract as any low-income community not in an urban area. Non-urban is broadly defined to mean any census tract where at least 10 percent of blocks have not been designated as urban, which applies to about two-thirds of Americans. 

Wisconsin state lawmakers review income tax reciprocity with Minnesota. They aim to pass a law that would commission a study into the effects of income tax reciprocity with Minnesota. For decades, a reciprocity agreement allowed residents of each state who work in the other to file one state income tax return instead of two. Minnesota ended the reciprocity agreement in 2010 because of delayed payments from Wisconsin that exacerbated the state’s fiscal challenges following the Great Recession. A study could be a first step toward reestablishing a reciprocity agreement negotiated between executive branches of each state.

Oklahoma Supreme Court to decide whether Muscogee Nation residents must pay state income tax. The case centers around Alicia Stroble, an employee of the Muscogee Nation and a resident of Muscogee Reservation. The Oklahoma State Tax Commission denied her request for state income tax refunds, despite a US Supreme Court decision that the state government had no prosecutorial jurisdiction over the Muscogee Nation. But the tax commission argues that because Stroble lives on private land within the boundaries of the reservation, she is not exempt from state income tax. If Stroble wins, any tribal citizen living and working on reservation land could be exempt from paying Oklahoma state income taxes.

Massachusetts Gov. Maura Healey releases budget that could give municipalities ability to raise certain taxes. The Municipal Empowerment Act would allow cities and towns to raise more revenue by increasing to the maximum local option tax on hotels, motels and other rentals from 6 percent to 7 percent of the price of a room. In Boston the tax could climb from 6.5 percent to 7.5 percent. The local options meal tax could increase from 0.75 percent to 1 percent.

 

For the latest tax news, subscribe to the Tax Policy Center’s Daily Deduction. Sign up here to have it delivered to your inbox weekdays at 8:00 am (Mondays only when Congress is in recess). We welcome tips on new research or other news. Email Renu Zaretsky at [email protected].

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