On July 30, 2013, District of Columbia Mayor Vincent Gray signed the “Fiscal Year 2014 Budget Support Emergency Act of 2013.” Part of this legislation, the Out-of-State Municipal Bond Tax Repeal Emergency Act of 2013, repeals the 2011 law which required interest income from out-of-state municipal bonds acquired after January 1, 2013 to be included in determining DC taxable income for individuals, estates, and trusts.
On Friday, May 17, 2013, the Maryland Court of Appeals denied the comptroller’s motion for reconsideration in Brian and Karen Wynne, et al v. Comptroller of Treasury. The original ruling was in favor of the taxpayer, allowing taxes paid to another state to count as a tax credit against the income taxes paid to a Maryland County.
The ruling is still standing in favor of the taxpayer, although the effective date is on hold, allowing Maryland time to petition the U.S. Supreme Court.
Stay tuned for additional guidance from Maryland and for more updates on this court case. For more information on how this may affect your tax return, view our previous post.
Virginia will begin to issue tax refunds via debit card or direct deposit only starting with refunds issued in 2013 for the 2012 tax year. Virginia is making the change in hopes of saving money by reducing check printing and mailing costs. The switch to debit cards will be more secure than mailing a check since it will be protected by federal and state banking laws. It can also only by activated by using the holder’s personal information (SSN and DOB). Direct deposit will still remain the fastest way to receive a tax refund so make sure you verify your account information with your tax preparer. For more information check out the FAQs on the VA Department of Taxation’s website: http://www.tax.virginia.gov/site.cfm?alias=refunddebitcardfaq.
In 2011, a ruling in the Maryland court system had very interesting implications for many resident taxpayers with out-of-state sourced taxable income.
The court case: Brian and Karen Wynne, et al v. Comptroller of Treasury.
In court the Wynne’s argued that it is unconstitutional for the state of Maryland to disallow a tax credit for taxes paid to another state against the income taxes paid to a Maryland county.
As schools across the Country begin to open their doors, students and parents are confronted with soaring costs for college education. According to a report by the College Board, the annual cost at four-year private nonprofit colleges averaged $38,589 in 2011-2012, a 14% increase after inflation from five years earlier. Over that same period, the in-state cost at four-year public colleges rose 20%, to an average of $17,131. Mounting state deficits and a stagnant economy are placing pressure on state funds to support education, leading to increased costs for students. Furthermore, Federal budget cuts targeting grant funding are making access to subsidies more exclusive than ever.
Parents of young children, with the luxury of time and ability to start saving, should consider beginning to save now in order to mitigate sky-rocketing costs. State Qualified Tuition Programs, commonly referred to as 529 plans, are a tax-advantaged vehicle for college savings.