International air carriers on tarmac photo by Marek Ślusarczyk via Wikipedia Got summer plans? Or maybe they're just wishes. Eighty-five percent of those who participated in a recent survey by the digital financial services company Ally said they wanted to travel, but financial concerns are putting the brakes on their trips. And if your dream excursion is beyond U.S. borders, another fiscal issue could keep you grounded. The U.S. Department of State can pull your passport or prevent its issuance or renewal if you have a substantial unpaid federal tax bill. Tax amounts that will curb travel: So what exactly... Read more →
Debt
The outlook remains a bit cloudy for reaching an agreement to prevent the United States from defaulting on its debt. (Photo by Harold Mendoza on Unsplash) Many think the debt ceiling debate is just political posturing in Washington, D.C. However, the head of the nation's top consumer watchdog agency says we all should be worried. "It's a big worry. Every family should be concerned,” Rohit Chopra, director of the Consumer Financial Protection Bureau, told CNN in an interview last week. So, as we await Congressional action to keep the United States and its residents out of financial freefall, this weekend's... Read more →
Scammers tend to use tried and true techniques to con people out of their identities and money. One of the most popular schemes involves crooks pretending to be real-life officials. And the Internal Revenue Service is near the top of government agencies that con artists impersonate. CloudFlare, a company which provides security for many companies' online operations, says that the IRS ranks sixth in the 50 top brands when it comes to phishing attempts that use fake sites. The example given by CloudFlare included "IRS" along with the words "contact" and "payment." A big tip-off that the URL is fake... Read more →
Photo by Andrea Piacquadio Forgiveness of debt piled up by college students has been a campaign mainstay in recent elections. It finally became a reality in August 2022. Sorta. On Aug. 24, 2022, President Joe Biden directed the Department of Education to forgive up to $10,000 per borrower of federally-held student loan debt, $20,000 for those who went to school on Pell grants. The next month, six Republican state attorneys general filed a lawsuit to stop the Biden move. In October 2022, a federal appeals court ordered the loan forgiveness plan put on hold while the case is considered. Now,... 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 →
The only thing worse than college course overload is the debt you went into to get into the university. Now, some students will be able to have some of their student loan amounts forgiven. (Photo by Pixabay) The Department of Education is now accepting online applications for full or partial discharge of student loans up to $20,000. It's a soft, beta launch, so be prepared to encounter some glitches if you're in a hurry to be done with your college debt. Technically, you'll be a test subject for the Education Department. The webpage notes: We're accepting applications to help us... Read more →
You've had that student loan for what seems like forever. So naturally, you're eager to take advantage of the debt forgiveness offered by the Biden Administration. But don't act too quickly or you could be a scam victim. Soon after President Joe Biden announced his plan that will erase in some cases up to $20,000 in undergraduate student loans, consumer advocates had some suggestions of their own. Beware of perps on the prowl with promises that they can get rid of your student loan obligation more quickly. Or get you even more loan relief if the federal plan doesn't cover... 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 →
College can be fun. Paying for it, not so much, especially when you have to take out loans. Some student borrowers are getting loan relief from the White House, but also might end up owing state taxes on their forgiven student debt. (Photo by cottonbro) Around 20 million folks who borrowed money to attend college got good news last week when President Joe Biden canceled a chunk of their student loan debt. The Biden plan's major component says that individuals earning less than $125,000 (or $250,000 for married couples or heads of households) a year will be eligible for up... Read more →
Figuring out how to pay off student loans is a math problem that goes well beyond school days. (Photo by Karolina Grabowska) The payment pause on student loans expires in six weeks. As that Aug. 31 deadline approaches, former students also are waiting for President Joe Biden to take further action to help lessen, or eliminate, their higher education debt. In addition to the political ramifications of any White House action, especially in an important midterm election year, there also are tax implications. Taxable forgiven debt: The tax code generally treats forgiven or canceled debt as taxable income. It's officially... Read more →
President Joe Biden's fiscal year 2023 budget proposal of a minimum tax on the wealthiest Americans, as well as a levy on unrealized gains on assets (including stock holdings), is getting the most attention. Biden's plan to collect at least a 20 percent tax on U.S. households worth more than $100 million would apply to about 20,000 households, but more than half the revenue would come from households worth more than $1 billion, according to White House estimates. It also would, says the administration, help reduce the nation's budget deficit by $1 trillion over the next decade. Wish list only:... Read more →
One of the big selling points of taking your taxes electronic is that the Internal Revenue Service's turnaround is quicker. The tax agency has long touted that when taxpayers e-file and have their refunds direct deposited, the tax cash usually shows up within 21 days. Usually. The only thing certain about taxes is that they'll find a way to frustrate you. That's the case when e-filed refunds take longer. Here are six reasons, from the IRS and tax community, as to why your refund may be delayed. 1. Math errors: Yes, taxes are complicated. That's why most of us use... Read more →
The U.S. Department of Education announced this week the cancelation of another $415 million in federal student loan debt. This batch of debt was owed by nearly 16,000 borrowers whose for-profit colleges violated law and educational standards. It brings to around $16 billion the total student debt that has been discharged for more than 680,000 individuals. Uncle Sam's action definitely is good news for those misled students. However, it also raises some questions in connection with another government agency, the Internal Revenue Service. Canceled debt income issues: Normally, any canceled or discharged debt amount counts as income. Officially, it's known... Read more →
The Internal Revenue Service has signed new contracts with three private tax debt collection agencies. (Image via Giphy) When the Internal Revenue Service four years ago reinstituted, per Congressional mandate, the latest private tax collection program, it signed four collection companies. Today, the IRS announced new deals with three collection agencies. The private collection agency (PCA) contracts take effect tomorrow, following today's expiration of the old contracts. So starting Thursday, Sept. 23, taxpayers with unpaid tax bills may be contacted by one of the following agencies: CBE Group, Inc. P.O. Box 2217 Waterloo, IA 50704 800-910-5837 Coast Professional, Inc. P.O.... Read more →
July 15 is a big day for the Internal Revenue Service and taxpayers. Millions of families will start getting Advance Child Tax Credit payments this Thursday. It's also the day the IRS resumes additional collection and enforcement actions that, due to the COVID-19 pandemic, had been suspended. "The majority of compliance operations are already running normally after being suspended to provide pandemic-related relief during the People First Initiative April 1, 2020, through July 15, 2020," notes the IRS on a recent update to its mission critical functions web page. However, says the agency, it kept its systemic and automated lien... Read more →
More older Americans are going into debt. For many, it seriously undermines their ability to save for a comfortable retirement. (Photo by Tima Miroshnichenko via Pexels) It's no secret why personal finance folks urge us to save early and often. It takes a lot to live like you want when you retire. If you don't have enough stashed after you're done with the 9-to-5 grind, it could be because you are like the individuals in a recent Government Accountability Office (GAO) study. They went into more debt as they aged. The government auditing agency's analysis found that older Americans held... Read more →
Some people got less COVID-19 relief money because the IRS took some to pay other debts. Every year, some taxpayers find the tax refunds the Internal Revenue Service sends them are less than they expected. The usual reason for the shortfall is that the federal refund amounts were offset by other debts, such as unpaid taxes, student loans or delinquent child support. That situation cropped up last year when the Recovery Rebate Credit was created as part of COVID-19 relief legislation. The rebates were paid in advance to millions of taxpayers. And in some, but not all, instances, economic impact... Read more →
The Internal Revenue Service has delivered two rounds of COVID-19 economic impact payments (EIPs). The first was the $1,200 per person approved in late March 2020 under the Coronavirus Aid, Relief and Economic Security (CARES) Act. The second EIP for $600 per person was authorized at the end of last December as part of the Consolidated Appropriations Act (CAA), with payments distributed through the first two weeks of January 2021. By now, folks know that if they didn't get the full amounts, which included additional payments for eligible dependents, they need to claim the Recovery Rebate Credit (RRC). You'll do... Read more →
Forgiven debt can help ease financial burdens, but it usually comes with a tax cost. (Image: CreditRepairExpert/Flickr) The Internal Revenue Service usually is all about information. It wants it from taxpayers getting money and it wants it from those issuing payments. Not so, however, with Paycheck Protection Program (PPP) loans that are forgiven under the Coronavirus Aid, Relief and Economic Security (CARES) Act. It doesn't want to know about any of these forgiven loans. In fact, the tax agency has officially told lenders not to mess with Form 1099-C in connection with these special COVID-19 loans. Latest pandemic tax twist:... Read more →
Are you one of those folks who's worrying about how you'll pay your tax bill on July 15? If it's an amount that you just can't come up with or cover with a credit card, look into paying off Uncle Sam over time. The Internal Revenue Service offers a couple of ways to spread out your tax bill over several months. As with most tax transactions nowadays, you can apply for a payment plan online. But depending on the way you decide (and qualify) to pay your tax bill also involves some forms. Those documents, Form 9465 and possibly one... Read more →