The Arkansas Department of Finance and Administration recently assessed additional income tax on an individual as a result of a denied credit of taxes paid to another state. The taxpayer paid property taxes to another state and claimed them on Form AR1000TC which is used to report income tax paid to another state. The purpose of the form is to avoid double taxing the same income. An administrative court determined that property tax is not an income based tax, so the credit was properly disallowed.
For more information on income tax credits, contact your state and local tax professional.
An Indiana married couple was recently assessed additional tax when the Indiana Department of Revenue determined that they did not qualify as professional gamblers. The State’s assessment is a result of a Federal adjustment. Professional gamblers report their winnings, losses, and expenses on Schedule C, which typically results in a lower income tax liability. The IRS’s denial of the taxpayer’s protest of their categorization as casual gamblers was adopted by the State without further analysis.
Are you considering doing business or having employees in the state of Illinois? Have you had issues with your state tax filing? Join us on March 30 to learn more about Illinois sales and income tax filing considerations. Click here to learn more and to register.
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The Oklahoma Tax Commission recently ruled that a lawn mowed with a “propane mower conversion” fails to qualify for an income tax credit for “clean burning motor vehicle fuel property.” On the other hand, Oklahomans with lawn tractors may be relieved that they won’t have to get license plates.
Oklahoma’s Alternative Fuel Vehicle Income Tax Credit provides a state income tax credit of 10% of the cost of a new “alternative fuel vehicle,” with a maximum credit of $1,500. The credit also can apply to the costs of converting a standard vehicle to burn alternative fuels, which include compressed or liquefied natural gas or liquefied petroleum gas.
Oklahoma isn’t the only state with special tax incentives for alternate fuel vehicles. Contact our State and Local Tax team if you think you might qualify.
The Minnesota Department of Revenue (MN DOR) has started reviewing 2015 income tax returns for conformity with federal tax law. MN tax laws did not match the federal tax laws for the 2015 and 2016 calendar years. MN legislation in January, 2017 retroactively conformed MN tax law to federal tax law for 2015 and 2016. The MN DOR was able to correct the filing forms for the 2016 tax year based on the January, 2017 update of MN tax law prior to the filing of 2016 tax returns. As 2015 income tax returns are reviewed by MN DOR, the MN DOR will be contacting taxpayers directly with modifications, refunds or questions. Therefore, the MN DOR does not recommend filing amended returns for years 2015 or 2016, unless there is a reason other than the change in MN tax law. No additional tax will be owed to the MN DOR because of the conformity changes.
The Seattle city council has enacted an individual income tax on Seattle “residents.” Residents is defined as someone with a “permanent place of abode” who spends 183 days or more there, or who “domicile” there. Whether anyone will have to pay the income tax is uncertain.
The 2.25% tax would apply on Gross income over $250,000 for single filers and $500,000 for married filers starting in 2018, with collection beginning in 2019.
Washington has no state income tax. It seeks to become the first municipality to impose an income tax in a state without one. The Tax Foundation says the Seattle tax faces an “uphill legal battle” because of doubts over its constitutionality and the authority of Seattle to pass such a tax.
The Seattle mayor is reported to be “eager” to be sued over the issue.
Given the likely legal challenges to a Seattle income tax, it may be premature to start planning for it. Still, it remains an issue to be watched closely by Seattle residents.