Tax filing season will require 2014 ACA enrollees to reconcile estimated and actual incomes. And it won’t be easy, reports CNNMoney. Health insurance companies must send enrollees Form 1095-A by Jan 31. The IRS form will list household members who had policies and how much they received in monthly subsidies. Taxpayers will use that information to fill out Form 8962 and detail their insurance, subsidies, and income. It’s complicated, and taxpayers may need help. But they are not likely to get it from the IRS. Congress slashed its budget in spite of what could be the most complicated tax filing season the IRS has ever seen. “Phone calls won't be answered even as poorly as they were last year," said TPC’s Bob Williams.
Ikea would like a $9.5 million, 11-year tax subsidy to build a Memphis store. The Swedish furniture giant plans to invest over $64 million in the first store in either Tennessee, Mississippi, or Arkansas. In return it would like to pay lower property taxes. Ikea promises to create at least 175 new full-time jobs, plus 50 seasonal full-time positions. Ikea’s average annual wage paid would be $41,000, plus benefits including health care. City and county tax breaks would cost $9.5 million over 11 years. During that time, Memphis’ economic development initiative estimates that sales and other taxes collected would yield up to $15.6 million. Tax subsidies for economic development hardly ever pay for themselves. Maybe Ikea will prove more popular than Graceland.
California’s wealthy taxpayers can catch a tax break and help low-income college students. Individuals or corporations that contribute to the state’s Cal Grants program, which helps low-income community or four-year college students pay for books, housing and transportation, can get a tax credit against state taxes and a federal income tax deduction. Californians who contributed in 2014 can claim a 60 percent credit, though the credit will decline to 55 percent of their donation in 2015 and 50 percent in 2016.
Legal marijuana’s buzzkill: Colorado and Washington tax revenues are up, but modestly. The Associated Press reports that the first year of legalized marijuana sales brought only small boosts to multibillion-dollar state budgets. Much of the drug’s tax revenues have been used to pay for regulating the drug. Complicating revenue estimates: New legal marijuana markets may soon open in Oregon, Alaska, and California.
And Colorado’s budget surplus may prompt earlier tax refunds. Colorado's Taxpayer's Bill of Rights (aka TABOR) requires the state to refund money to taxpayers when revenue exceeds the combined rate of inflation and population growth. The first refunds for nearly $137 million were expected in 2016, but the governor's office says that given stronger than expected revenue growth, refunds could be sent out as soon as this spring. Democrats may push a voter initiative that would allow the state to use the tax dollars to restore budget cuts.
Will a corporate tax cut in Japan improve its economy? Japan’s Prime Minister Abe hopes one will boost corporate investment and raise wages. The nation will lower its corporate tax rate by 2.5 percentage points beginning in April. Japan’s national and local governments’ current combined tax rate is about 34.6 percent on corporate earnings. That’s lower than the US rate, but higher than most other major economies. The tax plan also commits to raising the national sales tax in 2017, this time to 10 percent. When Japan increased the sales tax last spring to 8 percent from 5 percent, consumer spending fell and the nation slipped into an unexpected recession.
Interested in subscribing to The Daily Deduction, the Urban-Brookings Tax Policy Center summary of the day’s tax news? Sign-up here for free access. If you’d like to tell us about a new research paper or have any comments about our new feature, write us at email@example.com.
Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.
- © Urban Institute, Brookings Institution, and individual authors, 2022.