Tax & Accounting News
TaxBuzz Top 5 - Bipartisan Child Tax Credit Bill Passes House, TN Dems. Introduce Firearm Tax Bill, & More
Each Friday, TaxBuzz brings you the top five tax and accounting headlines you need to know from the workweek. We know life can get busy and you don't always have time to scroll through your news feed to stay informed.
We weed through all of the week's stories to showcase the most important updates in the tax and accounting world.
1. House Passes Bipartisan Child Tax Credit Bill
In a significant bipartisan move, the House of Representatives this week approved the Tax Relief for American Families and Workers Act of 2024, signaling a rare victory amid divided government. The legislation, passed by a resounding 357 to 70 vote, aims to expand the popular federal Child Tax Credit and revive certain business tax credits. While 188 Democrats and 169 Republicans supported the bill, 23 Democrats and 47 Republicans opposed it.
The legislation now advances to the Senate. Per CBS News, the bill enhances the Child Tax Credit -- which was expanded during the COVID-19 pandemic but has since expired -- increasing amounts and broadening eligibility, with projections suggesting it could lift over half a million children out of poverty. Additionally, the legislation includes revived tax cuts for businesses, such as research and development deductions, helping it to potentially garnering support from congressional Republicans concerned about the expansion of the Child Tax Credit. The bipartisan agreement emphasizes financial security, growth, competitiveness, and job creation, presenting a comprehensive tax framework for working families.
2. Tennessee Dems. Introduce "Thoughts and Prayers" Firearm Tax Bill
Democratic lawmaker Representative Bo Mitchell (D-Nashville) seeks to instigate changes in Tennessee's gun laws with a proposed 15% tax on the retail sale of firearms, as outlined in his new bill, HB 2193. The generated revenue would fund the Tennessee Department of Education exclusively for staffing school counselors in elementary and secondary schools.
Mitchell was inspired by a suggestion from an opposing party voter who proposed taxing firearm sales as a solution to address the state's gun issues. Acknowledging the legislative challenges as a member of the superminority in the Volunteer State, Mitchell believes action is necessary, even if the likelihood of significant change is slim. He told Nashville's ABC News 2, "In the environment in this state, would that [taxing gun sales] be tough? Yes. Do I want to put a tax on anybody? No."
Despite repeated Republican resistance to stricter state gun laws, Mitchell points to fellow Democrats' bills, such as safe storage and red flag legislation, as alternative measures for enhancing public safety.
3. Thousands of Southern California Homeowners Could Save on Their Tax Bills
Despite high property tax bills in Southern California, approximately one-third of Los Angeles County homeowners, roughly 435,000 households, fail to claim the state's homeowners tax exemption, resulting in an extra $30 million in tax payments, according to Los Angeles County Assessor Jeff Prang.
The Los Angeles Times reports that, since 1974, California has offered a $7,000 reduction in the assessed value of owner-occupied homes, yielding an annual tax bill reduction. This exemption, applicable until a move or sale, requires just one application. While the $7,000 exemption only saves about $70 per year per household, the cumulative amount adds up over time.
Prang emphasizes the importance of claiming the exemption for those considering Proposition 19 benefits, allowing tax reassessment-free property transfers to children. To receive the full $7,000 reduction, homeowners must apply by February 15; afterward, their savings will be prorated.
Application forms are available in English and Spanish on the assessor's website. Local residents can also call (213) 974-3211 for assistance.
4. IRS Confirms Minnesota Tax Rebates Will Be Taxed Federally
The Internal Revenue Service (IRS) has declared that the nearly $1 billion in state tax rebates distributed to over 2 million Minnesotans last fall will be subject to federal income taxes, contradicting state officials' pleas. Recipients could face a federal tax burden ranging from $26 to $286 per person, depending on income and rebate amount.
Despite lobbying efforts by Minnesota Governor Tim Walz and the state's congressional delegation, the IRS maintained its stance, asserting that the rebates don't qualify as general welfare or disaster relief exempt from federal taxes. The rebates, part of the 2023 legislative session's tax cut package, aimed to return a portion of a $17.6 billion budget surplus to taxpayers. Individual rebates reached $260, with an additional $260 for each dependent, totaling a maximum of $1,300.
According to CBS News, Governor Walz criticized the IRS for treating Minnesota differently from states with pandemic-era relief, emphasizing that the federal government's COVID-19 health emergency ended on May 11, while the rebates were authorized on May 24.
5. IRS Aims to Make Tax Filing Easier For Select Taxpayers This Year
The 2024 tax filing season commenced this week, and the IRS has introduced new initiatives to facilitate filing for taxpayers. Funded through the Inflation Reduction Act, these programs aim to enhance IRS operations, making filing easier for select taxpayers. Per an ABC News report, Free File now provides qualifying taxpayers with an adjusted gross income of $79,000 or less access to IRS-partnered tax software for free filing.
Additionally, all taxpayers can use Free File Fillable Forms, although with less guidance. The Direct File option, a pilot program offering free federal tax return filing with step-by-step guidance, will have a phased rollout plan throughout the 2024 season, becoming widely available by mid-March in 12 participating states. The IRS's increased funding also supports the expansion of in-person services, with 50 Taxpayer Assistance Centers operating with extended hours. While emphasizing electronic filing with direct deposit for a swift return, the IRS anticipates nearly 129 million individual tax returns this season, with most due by the April 15, 2024, tax deadline, except for taxpayers in Maine and Massachusetts, who have until April 17.
Which headline this week most interests you?
Feature Image Credit: d3sign/Getty Images
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