Any kind of saving is good, but for your retirement, a better option is a workplace retirement plan or IRA. A new Saver’s Match will help some when it takes effect in a couple of years. (Photo by Diane Helentjaris on Unsplash) The Setting Every Community Up for Retirement Enhancement (SECURE) Act, enacted at the end of 2022, includes a notable change in how eligible individuals can collect the Saver’s Credit. This tax credit turns contributions to popular retirement plans, which already are tax-favored, into addition funds. Qualifying lower- and middle-income savers who put $2,000 into an Internal Revenue Service-authorized... Read more →
Credits
The Child Tax Credit (CTC) has been one of the most popular since its creation as part of the 1997 Taxpayer Relief Act. Since its $400 per child origin, the credit has increased notably. During the COVID-19 pandemic, the American Rescue Act bumped up the CTC in 2021 to a potential maximum of $3,600 per each child younger than age 6, and $3,000 per child up to age 17. The Internal Revenue Service also sent the credit amounts to qualifying amounts directly to eligible families so they didn’t have to wait until tax filing season to claim the funds. The... Read more →
Election results, however, could change that. Here's how to claim the alternative fuel vehicle tax credit now, just in case things change after the Nov. 5 results. Republican presidential nominee Donald J. Trump has softened his stance on electric vehicles, likely because of his burgeoning personal relationship with Tesla CEO Elon Musk. But even though Trump says he’s now “totally for” EVs, he also says he would consider eliminating a $7,500 tax credit for some of the vehicles. “Tax credits and tax incentives are not generally a very good thing,” Trump told Reuters after a campaign event Monday, Aug. 19,... Read more →
Vice President Kamala Harris, Democratic presidential nominee, revealed some of her economic plans in a speech Friday, Aug. 16, in Raleigh, North Carolina. (Screenshot of X-Twitter video) Vice President Kamala Harris rolled out her presidential campaign’s economic proposals Friday in a roughly half-hour speech in Raleigh, North Carolina. They included a federal ban on alleged corporate price gouging on food products, ways to help people buy their first home, and financial help for families. Much of Harris’ assistance would come from tax breaks, some of them familiar fiscal tools, both enacted or previously proposed by the Biden Administration. New tax... Read more →
The Internal Revenue Service is giving businesses that discover they’ve benefited from an incorrect Employee Retention Credit (ERC) claim a chance to correct that error. The tax agency announced today that a it is reopening for a limited time its ERC Voluntary Disclosure Program (VDP). This second ERC disclosure period, which will be open through Nov. 22, will be similar to the original one that ended this spring. In addition to relying on taxpayers to voluntarily correct their wrong ERC claims, the IRS says it also will mail up to 30,000 new letters to reverse or recapture potentially more than... Read more →
In addition to moving more valid Employee Retention Credit (ERC) payments through the system, the Internal Revenue Service says it has stopped $5 billion invalid claims of the business tax credit. The Employee Retention Credit (ERC) saga continues, this time with some good news for businesses awaiting the benefits of the tax credit. The ERC was created in 2020 to help businesses and their staff stay afloat during the COVID-19 pandemic. But a rash of recent claims, many of them questionable filings encouraged by aggressive ERC promoters, created problems for the Internal Revenue Service and legitimate claimants. The IRS instituted... Read more →
The Senate recessed last week after failing to pass a bipartisan tax bill that the House approved back in January. On Jan. 31, after more than a year of negotiations, the House overwhelmingly approved a tax bill that included some popular business tax breaks and Child Tax Credit (CTC) enhancements. The House's 357-to-70 support of the Tax Relief for American Families and Workers Act, plus its bipartisan origin — it was a compromise worked out by Democratic Senate Finance Committee Chair Ron Wyden of Oregon and Republican House Ways and Means Chair Jason Smith of Missouri — seemed to indicate... Read more →
August is the month that brings us the sunsetting of summer. But amid the season's waning days, find some time to take care of some tax tasks. (Photo by Kay Bell) It’s August. Already! How did this final summer month sneak up on us, or at least on me? Maybe it was all the other distractions. The presidential campaign has been unusual, to say the least. The Paris Olympics kicked off with a controversial opening ceremony (I loved it!), and still have more than a week to go. Then there’s the unrelenting heat wave across the United States. And, of... Read more →
When the COVID-19 pandemic was at its worst in 2020 and 2021, Uncle Sam offered help to businesses who kept workers on payroll. But the Employee Retention Credit (ERC), like many tax benefits, was complicated. That's led to wrong claims, so the IRS is asking companies to review their claims, both filed or about to be submitted. The Internal Revenue Service says another major announcement about the Employee Retention Credit (ERC), the tax break created to help companies weather the COVID-19 pandemic’s economic challenges, is on the way. But until then, the agency is urging businesses to re-evaluate their filings.... Read more →
Photo by Helena Lopes Is college worth the cost? It depends. That’s not a cop out. That’s the finding of a new Pew Research Center survey. “The public has mixed views on the importance of having a college degree, and many have doubts about whether the cost is worth it,” reports the Washington, D.C.-based nonpartisan organization that follows issues, attitudes, and trends shaping policy. College survey findings: About a fifth of U.S. adults (22 percent) say the cost of college today is worth it even if someone has to take out loans. Nearly half (47 percent) say it’s worth it... Read more →
IRS urges social media users to give a thumbs down to bad online tax advice, like the non-existent Self Employment Tax Credit. How do you use social media? I get suggestions from neighbors for home repair services and local restaurants. I also check out cat videos. Way too many cat videos. I also interact with reputable tax pros I know, leading to innumerable interesting and informative online tax discussions. Again, this is with trained tax professionals, whom I’ve known online (and some in real life) for years. I do not, however, use social media to get tax tips from strangers... Read more →
Photo by Leeloo The First Tax scams tend to slow down after the main federal return filing season, but they never go entirely away. That’s still true as we head into the heart of summer 2024. The Internal Revenue Service is warning taxpayers there is a new scam involving the purchase of clean energy tax credits. This latest scheme, like so many, is based on a real tax break. Legal credit, but limited: The Inflation Reduction Act, which President Joe Biden signed into law on Aug. 16, 2022, contained provisions that dramatically changed federal clean energy tax credits. The law... Read more →
An aerial view of planes at John F. Kennedy International Airport in New York City. (Photo by Miguel Ángel Sanz on Unsplash) It will be a while before we get a final accounting of the COVID-19 pandemic costs, but last week we some good and bad tax-related figures connected to the health crisis. On the negative side of the ledger, there are the Employee Retention Credit (ERC) claims. This program that helped businesses keep workers on payroll in 2020 and 2021, but a rash of post-pandemic claims has cost the U.S. Treasury, at last count, $230 billion. There is, however,... Read more →
Unsplash+ in collaboration with Getty Images The Employee Retention Credit (ERC) was created to help businesses stay afloat and keep staff on the payroll during the height of the COVID-19 pandemic. Basically, this tax credit’s benefits — thousands of dollars per employee that eligible companies kept paying — were for the 2020 and 2021 tax years. It has turned into a major tax headache, for both businesses and the Internal Revenue Service. But, says the IRS, it has made progress on evaluating the plethora of claims filed after the pandemic’s peak. And it has some good news for small businesses... Read more →
Unsplash+ in collaboration with Getty Images Tax credits are better than deductions because credits provide a dollar-for-dollar reduction of tax you owe. But sometimes, getting a credit’s benefit in a real-life cash-flow situation is better than the financial results at tax filing time. That’s the case, for example, in making a major consumer purchase, like a car. And that’s why the Treasury Department and Internal Revenue Service last year issued guidance on the Biden Administration’s Inflation Reduction Act clean vehicle provisions to help buyers of qualifying energy-efficient autos get immediate use of the credit. Under the rules, eligible vehicle buyers... Read more →
Childcare is a must for working parents, but the costs keep rising. A couple of tax credits could help both businesses and parents. (Unsplash+ in collaboration with Getty Images) Youngsters are school-free for the next few months. That means working parents are searching for ways to keep their children occupied. And supervised. Many teenagers get summer jobs. Parents of pre-teens often turn to day camps to fill a few hours each workday. But when it comes to preschoolers, childcare is a year-round concern, and an increasingly expensive one. Rising childcare costs: A recent report from Child Care Aware of America... Read more →
Photo by Chris on Unsplash The tax code is complicated. Even for the most basic situations, there are income levels that determine whether you must file, and if so, what your tax rate is. As your life and finances get more complicated, so do your taxes. That’s why most of us depend on tax software to meet our annual filing needs. Even the tax professionals we turn to for added support go electronic, mostly at the Internal Revenue Service’s insistence. But it never hurts to have a least a rudimentary understanding of our tax system. It is our money that’s... Read more →
The Internal Revenue Service is holding refunds sought by thousands of filers it suspects inflated those amounts by improperly claiming some tax credits. While the IRS sorts through these questionable claims, those taxpayers aren’t going to see any refund money. Not even that amount unconnected to the questionable credit claims. The dubious claims delaying the refunds involve the Fuel Tax Credit, Sick and Family Leave Credit, and household employment taxes. “Scam artists and social media posts have perpetuated a number of false and misleading claims that have tricked well-meaning taxpayers into believing they’re entitled to big, windfall tax refunds. These... Read more →
Photo by Karolina Grabowska The Internal Revenue Service is about to turn out the lights on the 2020 tax refund party. The chance to get your part of more than $1 billion in unclaimed tax money ends on Friday, May 17. The eligible refund recipients are an estimated 938,800 folks nationwide who didn’t, for a variety of reasons, file a 2020 tax return during the 2021 filing season. Tax law says nonfilers have three years to file and collect their refund money. So why didn’t their deadline come and go on this past April 15? You might recall that three... Read more →
Happy Mother’s Day! I hope all the moms out there got everything they wanted today. Of course, we should be grateful for all that our parents do for us every day of the year. In additional to the emotional support, moms (and dads) literally pay for parenthood. A recent calculation of the average cost to raise a child to age 18 came to $312,202. That figure is for a middle-class family, and doesn’t include college expenses. Yikes! Isabel V. Sawhill, a senior fellow emeritus in economic studies at the Brookings Institution, told WTOP News that the true price could be... Read more →