Photo by Anastasiia Chepinska on Unsplash Among the many lessons we've learned, or not, from the COVID-19 pandemic is that we'll likely never be rid of it. And as the transition to endemic status progresses, we'll continue to deal with flare-ups like, irony alert, the one that erupted following the Centers for Disease Control (CDC) and Prevention's recent first in-person Epidemic Intelligence Service conference in four years. The same persistence seems to apply to taxes, too. As the severity of COVID-19 became clearer, most of the United States went into lockdown to help slow its spread. While that saved lives,... Read more →
Coronavirus COVID-19
Photo by Karolina Grabowska Nearly 1.5 million people across the United States are due tax refunds they didn't claim in 2020 by filing a 2019 tax year return. They can get that money, which totals almost $1.5 billion, by filing that old return. Even better, they don't have to mess with the old filing by this year's April 18 filing deadline. Instead, they get until July 17 to file for their 2019 refunds. 3-year window's opening and closing: Tax law gives taxpayers three years to file a return and collect the associated refund. The three-year filing period is from the... Read more →
Doing taxes isn't nearly as much fun as riding a carousel, but a round of tax credits can help families save some tax dollars. (Photo by Brett Sayles) Tax deductions get a lot of attention, mainly because the Internal Revenue Service makes us choose between taking the standard deduction or itemizing. We make this decision every year, based on which method gives us the better write-off amount. Standard has always won, and since the Tax Cuts and Jobs Act of 2017 became law and nearly doubled the standard, adjusted annually for inflation amounts, the margin of victory has grown. But... Read more →
White House Budget video screenshot. Full video is available at Facebook and Twitter. The Biden Administration released its fiscal year 2024 budget today (March 9, 2023). Thanks to previews from President Joe Biden, there are no surprises as far as taxes. "I want to make it clear I'm going raise some taxes," Biden to told a group in Virginia Beach, Virginia, who gathered Feb. 28 to hear about healthcare. "Many of you are billionaires out there. You're going to stop paying at 3 percent. Not a joke." The president's promise was put in writing today with the issuance by the... Read more →
Photo by Kris Gonzalez via Flickr CC Parenting presents many challenges. One of them is finding quality child care. The tax code can help a bit here if you, and your spouse if you're married, both work. The Child and Dependent Care Credit offsets some child care expenses. Since it's a tax credit, it does that by reducing your tax liability dollar-for-dollar. But if you're a working mom or dad who enjoyed the pandemic-prompted enhancements to the child care credit last year, get ready to be disappointed when you file your 2022 return. The tax break afforded by the Child... Read more →
Hello, February! Yeah, I know my regular monthly tax moves post is late. But February started off here in Central Texas with a nasty ice storm that knocked out our power for four days, and I'm still catching up on delayed blog (and real life) tasks. I appreciate your patience and understanding. So, since we're already on this shortest month's fifth day, and nobody wants to hear my continued whining about the storm and our local electric company, let's get right to some fun stuff. Like February Tax Moves! Here are three to consider this month. 1. Collect your tax... Read more →
Photo by Dewang Gupta on Unsplash In 2019, the Internal Revenue Service received nearly 156 million tax returns. Then came the COVID-19 pandemic. In 2022, the number of 1040s filed hit 169.7 million. The increase continued in 2021 with the IRS receiving 169.1 million returns, and into 2022, when 164.3 returns were sent to the tax agency. The main reason for the 2020-2022 filing spikes was the coronavirus-related financial help — economic impact payments and increased advance Child Tax Credit amounts — that the IRS was tasked with delivering. Many, OK most, of those millions who hadn't filed before 2020... Read more →
Every filing season, eager taxpayers, most of them expecting a refund, send their returns to the Internal Revenue Service as soon as they can. For most it works out OK. Others, however, discover on their own, or learn from the IRS, something just not quite right, and costly, on their Form 1040. It works the other way, too. In some instances, folks submit a return without claiming a tax break that would have saved them dollars. The IRS isn't going to tell you about that! The best way to make sure you enter all the data that the IRS wants,... Read more →
Unemployment benefits can be a godsend when you lose your job. They also can be a god-awful problem at tax time. That money you get to help tide you over until you find another job is taxable income. In certain situations, however, lawmakers have provided unemployment compensation, or UC (and yes, that's its official name, so the compensation moniker explains the taxing), have exempted some of the government money from federal tax. COVID UC exemption: That was the case during the height of the COVID-19 pandemic. The extraordinary circumstances of so many people losing their jobs at the same time... Read more →
One of the forms in the long list of tax documents you need to file your 2022 return is the 1099-K. This form has been used for years for third-party payment processors — for example, PayPal, Amazon, eBay, Facebook Marketplace, rideshare companies, and many more — to report to fund recipients the money they got during the year. The Internal Revenue Service also gets a copy so it can check the amounts that the earners report on their tax returns. Taxpayers have been getting 1099-K forms since 2012, with this initial reporting coving third-party amounts in 2011. The factors that... Read more →
The tax code is like a car. A big, old, clunky car that just keeps chugging along. But every now and then you need to tune it up and change the tires. Here are some tweaks to the 2023 filing season model. (Photo by Andrea Piacquadio) Tax filing rolls around every year. But every year, there also are a few changes that make the process slightly different from prior filings. We didn't have any major tax law changes in 2022. But some old rules come into play, as does the expiration of some tax breaks that many folks had enjoyed... Read more →
The tax year is over. Long live the tax year. Taxes are, if nothing else, persistent. Sure, there are a few (or more) changes every year, even if it's only inflation adjustments. But even in years when the changes are negligible, they are back, starting to add up on the first of every January. That's why 2023 is the first By the Numbers honoree of this new year. The transition from an old to a new tax year is also the focus of this post. It's a look at six tax matters that affected or at least fascinated us in... Read more →
Drivers faced plenty of challenges in 2022, notably the dramatic jump this year in fuel prices. That prompted the Internal Revenue Service in June to hike 2022's optional standard mileage rates for the last six months of the year. Now the IRS has bumped up the business rate again as part of its annual adjustments to a variety of tax laws. Beginning on Jan. 1, 2023, the standard optional mileage rate for a car (or van, pickup or panel truck) used for business purposes will be 65.5 cents per mile. That's up 3 cents from the midyear increase that applies... Read more →
Are you worried about getting a slew of 1099-K forms next year in connection with your side gig earnings? The Internal Revenue Service has an early Christmas present for you. The tax agency today announced that it was going to delay the requirement that third-party settlement organizations — places like Venmo, PayPal, CashApp, and similar payment mechanisms — issue the 1099-Ks to earners who in 2022 received at least $600 in a single payment or in aggregate, regardless of the number of transactions, for their goods or services. Instead, the new lower earnings level that triggers issuance of 1099-Ks will... Read more →
via GIPHY Seven days from now, many of us will be opening Christmas presents. Hanukkah is underway. Regardless of what or how you celebrate December holidays, your purchases probably increase this month. And this year, inflation, even though it's abated a bit recently, means you have or will pay more for all those gifts, food, and other festive trimmings of the season. Every year, PNC financial services issues its Christmas Price Index, or CPI. It measures, using a methodology similar to Uncle Sam's official CPI, or consumer price index, the current costs of the gifts given in the classic holiday... Read more →
Back in the darkest days of the COVID-19 pandemic when companies and workers were struggling due to health-related shutdowns, they were given a bit of a tax reprieve. The Trump Administration on Aug. 8, 2020, issued executive memo that called for the deferral of the payroll tax portion of the Federal Insurance Contributions Act (FICA) tax that goes toward Social Security. The White House argued that the move would put more money into workers' hands, give employers some financial breathing room, and keep the economy moving during the initial coronavirus closures. There was a lot of political consternation about the... Read more →
Some taxpayers might not be this happy in 2023 with their federal tax refund. (Image via Giphy) Many folks are already eagerly anticipating the 2023 tax filing season because they expect to get a refund from Uncle Sam. They might be disappointed. In a recent news release encouraging taxpayers to get ready for the upcoming filing season, the Internal Revenue Service slipped in this warning: Refunds may be smaller in 2023. There are three tax issues in 2022 that contribute to why the IRS will be sending some taxpayers smaller refunds when they file next year. No extra coronavirus funds:... Read more →
Photo by Chris Henry on Unsplash You're heading home from your Thanksgiving get-together, loaded down with leftovers and maybe something less welcome. Yeah, your indigestion has been acting up, inflamed by overly rich food and some family members who just wouldn't let things go. The good news is that you can use your flexible spending account (FSA) funds to pay for the Tums or Gaviscon or whatever over-the-counter (OTC) remedy works for you. You may remember that not too long ago, you had to jump through hoops to get FSA coverage for these store shelf treatments under an Affordable Care... Read more →
Updated Wednesday, Nov. 16, 2022 You still have time to electronically claim the benefits, but not much. The deadline to e-file is Thursday, Nov. 17. If you missed out on the special COVID-19 relief payments, notably the enhanced Child Tax Credit (CTC), then head to the Internal Revenue Service's Free File website. The IRS is keeping Free File operating through Nov. 17 so eligible nonfilers can e-file a Form 1040 to claim their eligible COVID benefits at, as the name says, no cost. In addition to the CTC, eligible taxpayers may be able to claim some or all of the... Read more →
The United States' tax system depends on voluntary compliance by taxpayers. But Uncle Sam is no fool. He and his tax collectors are believers of the adage "trust, but verify." The Internal Revenue Service also follows up on that verification with penalties when it finds taxpayers — and the professionals we pay to take care of our taxes — aren't fulfilling our tax responsibilities on our own. The most severe punishments come via criminal tax prosecutions. The IRS also employs civil actions to get due taxes. And many of us are familiar with the various fines and fees that are... Read more →