Today is EITC Awareness Day! OK, Jan. 28 isn't an official holiday to celebrate the Earned Income Tax Credit, usually referred to (at least in the tax world) by its acronym EITC. But it is an annual event promoted by the Internal Revenue Service. Every year in late January, the tax agency focuses on getting the word out about the EITC. The reason is simple. Millions of individuals regularly overlook the EITC and surrendering thousands of dollars they could use. The EITC itself, however, is not so easy to claim. That's why a lot of folks ignore it. The IRS... Read more →
Credits
Photo by Vidal Balielo Jr. The Child Tax Credit was expanded in 2021 to help families coping with the adverse economic effects of the COVID-19. During the height of the pandemic, the American Rescue Plan Act (ARPA) temporarily bumped up the amount available via the already popular CTC. It went from $2,000 per qualifying child to $3,600 a year for children younger than age 6, and $3,000 per child for youngsters ages 6 to 17. The credit amounts were phased out once tax-filing families hit certain income levels. More of the increased CTC also was refundable, meaning that if the... Read more →
Singer-songwriter James Taylor provided the soundtrack for the White House's Sept. 13 celebration of the enactment of the Inflation Reduction Act. (White House photo via Facebook) The Biden Administration this week celebrated the enactment of the Inflation Reduction Act (IRA) with a ceremony on the White House lawn. And while a government report on inflation that came out the same day warned of continuing inflation costs, President Joe Biden and attendees didn't let the new dampen the festivities. The White House insists that the IRA will work as planned, and Biden touted the law's provisions, including the climate-change-prompted energy provisions,... Read more →
Photo by Alexander Grey on Unsplash Millions of people whose student loan debt will be wiped out now face another financial question. What to do with a bit more disposable income. Financial advisers suggest they pay off other debt, such as high-interest credit card balances. That's a smart move. So is the recommendation that folks put their newly available former debt payments into an emergency fund. I'd like to also toss out there the option of saving for retirement. As an added bonus, most retirement account options offer some sort of tax benefit. Here are some tax-favored retirement-saving possibilities that... Read more →
School is back, and that means homework. College students and their parents especially need to review some lessons on ways the Internal Revenue Code can help pay many higher education costs. The table below offers a look at two popular educational tax credits, the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). The AOTC is the one most undergraduate students (or their parents) will claim. The LLC is for additional educational costs beyond the first four years, including classes you take after getting out of school. Education Benefits Comparison Tax Year 2022 Criteria AOTC LLC Maximum benefit... Read more →
The good tax news for environmentally conscious drivers is that the electric vehicle (EV) tax credit is back. The bad tax news for environmentally conscious drivers is that it's not all that easy to claim the reworked $7,500 EV credit. The Treasury Department and Internal Revenue Service, however, are trying to smooth that road a bit. They've issued some initial guidance on the new EV tax credit changes. EV tweaks in the inflation bill: With President Joe Biden's signing yesterday, Aug. 16, of the Inflation Reduction Act, it's highly touted climate protection provisions will be taking effect. One followed closely... Read more →
Coming back from an appointment today, I saw school buses roaming my neighborhood. Classes for my local school district start Wednesday, so I guess the drivers were just on reconnaissance runs. Students, their parents, and of course teachers are making preparations, too, not just here in the Austin, Texas, area, but nationwide. Much has been written (or, in my case, blogged) about state sales tax holidays (a few are still on the horizon) and the savings on school-related items. In most cases, we tend to think of students and their families taking advantage of the no-tax events. However, teachers also... Read more →
Summer's winding down, with schools opening their doors across much of the country in just a few weeks. So of course, you're thinking of one last getaway to escape the sweltering dog days. But before you head out to a beach retreat or cooler mountain cabin, take a few minutes for taxes. August is a good time to make some tax moves that could save you some dollars and future headaches. Here are four to consider. 1. Make your tax holiday shopping list: The return this fall of students to classrooms is most welcome by COVID-weary parents who saw much... Read more →
More of my Austin, Texas, neighbors could be driving (and recharging) electric vehicles if the recently agreed-upon economic bill makes it into law. (Photo by Kay Bell) As the tax world frantically thumbs through the Democrats 725-page economic plan, one thing is clear. Makers of electric vehicles and the folks who want to buy them are winners. The Inflation Reduction Act of 2022, the catchy (OK, as far as political monikers are concerned) new name for the measure that salvages some of President Joe Biden's retooled Build Back Better proposals, was worked out this week by Senate Majority Leader Chuck... Read more →
Families in Puerto Rico who haven't filed to claim the enhanced 2021 tax year Child Tax Credit should do so, preferably by using the tax break's special online simplified filing tool. (Image from IRS Publication 5649) The Internal Revenue Service is still trying to deliver 2021 tax year Child Tax Credit money, this time focusing on families in Puerto Rico. The tax break amount was increased last tax year to a potential maximum of $3,600 for each child ages 5 and younger, and up to $3,000 for youngsters ages 6 through 17. It's also a fully refundable tax credit for... Read more →
Charging a Chevrolet Bolt EV outside a Go Forth electric-car showroom in Portland, Oregon. (Photo courtesy Forth) Governments use a variety of tax breaks to help shape their citizens' actions. In addition to the perpetual debate as to whether this is good or bad public policy, there's also the matter of which tax benefits should be used. When it comes to electric vehicle (EV) purchases, a recent study found that those interested in the alternative fuel autos prefer rebates to existing tax credits. Plus, the different financial reward method would be more cost effective for Uncle Sam. Pay then claim... Read more →
General Motors offered a sneak peek this week of the 2024 electric Chevrolet Blazer, due to be fully revealed next month. The above photo of the family-sized, SS performance Blazer EV model, expected to go on sale in spring 2023 starting at around $40,000, was tweeted by GM CEO Mary Barra. Regardless of what you think of Elon Musk, he's made Tesla the electric vehicle (EV). Even if you can't afford one, whenever someone says EV, it's the first vehicle most of us envision. Meanwhile, the other automakers are working to get some of the attention and, of course, customers.... Read more →
If you live in one of them, the state tax break is a nice add-on to the federal Child Tax Credit, which this year reverted to its lower, pre-COVID amounts. Child tax credits, at the federal level and in 10 states, can have the parents of these youngsters jumping for joy, too. (Photo by Guduru Ajay bhargav) The expanded federal Child Tax Credit (CTC) helped millions of households cope with finances stretched thin due to COVID-19 layoffs and even total business closures. During the height of the pandemic, the already popular CTC of $2,000 per qualifying child was increased. The... Read more →
The Child Tax Credit (CTC), already a popular tax break, was enhanced for the 2021 tax year. In addition to being larger — up to $3,600 for each child younger 6 and up to $3,000 for each youngster age 6 through 17 instead up the usual $2,000 per qualifying child — it was available to more families. Most eligible households got half of their qualifying CTC amount last year as monthly advance payments. They were sent automatically to taxpayers who had filed returns in prior years. Families who didn't have to file, usually because they earned less than the amount... Read more →
With Tax Day over, most U.S. taxpayers are done with their annual Internal Revenue Service interaction. Some, however, are dealing with non-filing issues. For those who need help resolving those tax matters, the IRS is opening some Taxpayer Assistance Center (TAC) doors across the United States for one more Saturday. This coming one. May 14. TACs in 24 states, the District of Columbia, and Puerto Rico, will be open and offering face-to-face help from 9 a.m. to 4 p.m. (local time) on Saturday. Unlike other TAC sessions that require weekday appointments, there's no need for such scheduling on May 14... Read more →
Back in the classroom. (Photo by Max Fischer) Today, Tuesday, May 3, 2022, is annual National Teacher Appreciation Day. It's actually part of a full week focusing on saying thanks to the men and women who are dedicated to educating young (and older) people. And it got President Joe Biden's official acknowledgement, which isn't a surprise since First Lady Dr. Jill Biden is a community college educator. The teaching profession has always been challenging. I personally saw how much time, effort, and love my grandmother put into being a first-grade teacher. She did that labor of love for almost six... Read more →
Taxes don't typically prompt celebrations like that of these school children welcoming May with a traditional Maypole dance. But thinking about tax moves this month can help you avoid costly faux pas. (Photo by Paul Barnett via Wikimedia Commons) May is supposed to be the month full of flowers from the previous month's showers. Unfortunately, this year the month is starting off on a decidedly unmerry note. In the wake of the devastating Kansas tornadoes, forecasters are warning of multiple rounds this week of severe thunderstorms, including tornadoes, across the Plains, Midwest, and South. That's why heeding weather warnings and... Read more →
via GIPHY So, you missed Tax Day. It happens. Don't panic. But don't dawdle. The Internal Revenue Service is serious about wanting your tax forms and, of course, any taxes you owe. If you miss the annual deadline, regardless of exactly when it falls, then you'll likely end up facing filing-related penalties, the harshest of which is for not filing at all. Below are four things you need to do now to get out of that penalty jam with as little damage as possible. Plus, there's a fifth tax move that could pay off for folks who aren't legally required... Read more →
Photo by Vidal Balielo Jr. via Pexels Filing status is one of those tax matters that seems so simple, but which often trips up taxpayers in real life. As noted (shameless plug warning) in my 5 filing status choices item for the April Tax Tips page, most folks' status stays the same from tax year to tax year. But a change (or two, or more) in your personal situation could mean you need to revisit how you file your return. The head of household (HoH) status is a frequent source of confusion. Here, an unmarried person takes care of the... Read more →
Do check out these following related — and legitimate — tax write-offs Sometimes your home is indeed located at the intersection of favorable tax breaks. Sometimes it's not. Below is a look at the difference between some questionable and acceptable residential (and more!) write-offs. Every tax-filing season, the great quest by filers is to find the most tax breaks. But there are some deductions and credits you should steer clear of. These expenses that don't meet Internal Revenue Service guidelines mean the agency will stop processing your tax return to give it second (or third, or …) look. At best,... Read more →
If you are a U.S. taxpayer living outside the country and frantically working to meet this year's April 18 tax-filing deadline, take a breath. Then mark your calendar for June 15. The Internal Revenue Service grants taxpayers who are overseas, including members of the armed forces stationed abroad, and automatic two-month extension to file. You don't have to send in Form 4868 to get it the extra filing time. Note, however, that this automatic extension to file is just that, an extension to file. If you owe tax for the 2021 tax year, you must pay it by this year's... Read more →