Inflation has increased the cost of everything, including health care. That's why many people, even before the recent jump in the cost of living, have chosen a high deductible health plan, or HDHP. As the name indicates, HDHPs require enrollees to pay more out-of-pocket costs, aka the high deductible amount, before policy coverage kicks in. However, HDHPs typically have lower monthly premiums than the traditional type of medical insurance. Many individuals, especially those in generally good health, accept the risk of a higher deductible in exchange for the immediate cash-flow benefit of lower premiums. Another part of the HDHP trade-off... Read more →
Deductions
Spring is the traditional time to clean out all the junk you've accumulated. Our neighborhood has a community yard sale the first weekend in May. Some of what doesn't get sold ends up going to local charities. That's a good way to dispose of clothing and household goods that are in good condition and, if you itemize, claim a tax deduction. Follow donation rules: The state of the donated goods is just one of the conditions you must take into consideration, especially if you're planning to deduct their value as an itemized charitable gift. The other key donation deduction factor... Read more →
Coastal flooding in a Florida community. (Photo by Barry Bahler via Wikipedia Commons) They may be more than 3,100 miles apart, but residents of counties in California and Florida now have a couple of things in common. They recently were pummeled by major disasters. They now have an Aug. 15 deadline to meet certain federal tax responsibilities. Florida flooding: The Internal Revenue Service is offering relief to those who live or have businesses in the Federal Emergency Management Agency (FEMA) disaster designation are of South Florida that endured tornadoes, severe storms, and flooding from April 12 to April 14. The... Read more →
A Cole, Oklahoma, home destroyed by the EF3 tornado that went through McClain County on April 19, 2023. The National Weather Service estimated winds at 152 miles per hour. (Photo by U.S. National Oceanic and Atmospheric Administration via Wikipedia Commons) The Oklahoma City area seems to be a tornado magnet. I'm aware of this unwanted meteorological frequency not just because of my weather fixation and its tax connection, but also because my brother lived in OKC back in 1999 when an EF5 twister destroyed much of the state capital's southern suburbs. Back then, my parents were in Western Oklahoma, which... Read more →
Vice President Kamala Harris and President Joe Biden share a lighter moment. Last week, they also shared their 2022 federal and state tax returns with the American public. (Photo courtesy K. Harris/White House) The U.S. president's and vice president's tax returns were among the more than 117 million filings that the Internal Revenue Service has received through mid-April. We know this because, as is once again tradition, President Joe Biden and his wife, First Lady Jill Biden, made their 2022 tax return public. So did Vice President Kamala Harris and Second Gentleman Douglas Emhoff. The Bidens' filing showed they paid... Read more →
Photo by Lachlan Ross Procrastinating taxpayers are rushing to file their returns this Tax Day 2023. Some, however, have extra time. Unfortunately for them, the reason for the delayed filing deadline is not one any of us want. They live or have businesses in areas that were declared major disaster areas. Indiana residents are the latest to join this later Tax Day club. Today, the Internal Revenue Service announced that Hoosier storm victims now have until July 31 to file various federal individual and business tax returns and make tax payments. Yeah, I know getting the word out that Tax... Read more →
The IRS' tax relief for tornado-stricken Tennessee residents and business owners is welcome. But that's just one part of picking up the pieces after a major disaster. Keep reading after the Volunteer State tax specifics for tips that all of us can use to recover, financially and physically, if we ever must cope with a catastrophe. Damage caused by an EF3 tornado that touched down southwest of Covington, Tennessee. Covington is the county seat of Tipton County, one of 10 counties in the Volunteer State that the Internal Revenue Service granted tax relief following the March 31-April 1 tornado and... 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 →
The IRS' tax relief for tornado-stricken Mississippians is welcome. But devastated residents could use more help. If you want to provide some support, read on for groups that are conducting a variety of recovery efforts in the storm-stricken areas and could use donations to continue their work. The devastation from the March 24-25 tornadoes that plowed through the lower Mississippi River Valley is horrific. A massive EF4 twister that cut a 59-mile path of destruction left 26 people dead. Hundreds of residents and businesses were displaced by the severe storms. The Federal Emergency Management Agency (FEMA) and the White House... Read more →
Photo by Zac Durant on Unsplash The damage Mother Nature can do is long-lasting. So, in the case of many storms, is the clean-up process. The Internal Revenue Service realizes this. Earlier this year, the agency extended original tax relief, including filing deadlines, it provided individuals and businesses in Alabama, California, and Georgia that were hit by major natural disasters. New York storm victims now have joined this group. A deadly winter snowstorm hit parts of the Empire State around last Christmas. The Federal Emergency Management Agency (FEMA) and the IRS followed up quickly with, respectively, disaster declarations and tax... Read more →
Photo by Elisa Ventur on Unsplash When you make a mistake on your Form 1040, the best thing that could happen is the Internal Revenue Service will catch your relatively insignificant error, fix it, and send you a notice about the change. A worse outcome is the IRS changes reduce and/or delay the refund you're expecting. And the absolute worst tax error outcome is that your mistake isn't a minor one, and the IRS decides to take a longer, closer look at your filing. The only way to avoid these situations is to double check your return to ensure it's... Read more →
Blinders may work for horses, but they're terrible for taxpayers who might miss out on some tax savings. (Photo by Graham Ruttan on Unsplash) The Tax Cuts and Jobs Act's expansion of the standard deduction amounts means even more taxpayers are using that filing method. Most think that since they don't itemize, they don't need to worry about tax breaks. They're wrong. There are the above-the-line deductions, officially known as adjustments to income, that anyone can take (if they qualify), regardless of whether they take the standard deduction or use Schedule A. Then there are some tax credits, again available... 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 →
Photo by Emanuel-Kluge via Flickr When U.S. residents make international moves for work, there's one part of the country that goes with them. They remain U.S. taxpayers, filing federal tax returns on the on their overseas earnings. Uncle Sam, however, does provide some tax breaks to his citizens living and working abroad. Their filing deadline is June 15. Thanks to tax treaties, globally peripatetic taxpayers also get certain foreign earned income exclusions and/or foreign income tax credits. These exclusion amounts also are affected by the cost of living, as noted in Part 8 of the ol' blog's 2023 annual inflation... Read more →
Photo by Liza Summer The Tax Cuts and Jobs Act's substantial increase in standard deduction amounts accomplished one of its supporters' major goals. More taxpayers have an easier time filing now because they claim the standard deduction. But the 2017 tax reform law had a less-welcome side effect. Charitable giving, which must be claimed as an itemized deduction, has dropped. Even for wealthier taxpayers, who are the most likely to still itemize and who under the law change can claim an even larger percentage of their charitable gifts, deductible donations have plummeted. Some federal lawmakers, however, are hoping to change... Read more →
March is supposed to come in like a lion and go out like a lamb, at least according to the old weather saying. Feline ferocity also could help when it comes to taxes. We need that predatory focus since we only have around six weeks — less due to that dang hour we'll lose this month to Daylight Saving Time! — until our federal (and state, for some folks) returns are due. That aggressiveness also could pay off long after the annual tax deadline, thanks to tax breaks that can help add to your post-work savings. So let's not waste... Read more →
Photo by Kelly Sikkema on Unsplash Enough already, Mother Nature! We're not even through two full months of 2023, and you have been in a particularly foul mood too much of this time. The latest disastrous outbursts are leaving thousands across the country dealing with blizzards, high winds, and tornadoes. And the devastating weather system is still moving east. Meantime, folks who endured major disasters in January — which now cover most of California and parts of Alabama and Georgia — are still pare still picking up the pieces. That's why the Internal Revenue Service has decided to give these... Read more →
The tax reform law enacted back in 2017 did fulfill one of its promises. It made filing easier for millions, mainly folks who no longer itemize deductions because the standard claim amounts are so much larger. But some of the associated tax return mechanics also could mean some taxpayers might miss some tax breaks. Tax law and form changes: When the Tax Cuts and Jobs Act became law, the Internal Revenue Service also revised tax return forms. Most notably, it dramatically shrank Form 1040, beginning with the 2018 version. It wasn't quite the postcard-sized tax return long touted by Republicans... Read more →
Casino sportsbooks like this one in Las Vegas still take plenty of sports bets, but thanks to the Supreme Court's 2018 ruling allowing states to open up sports gambling within their borders, this year's Super Bowl wagering broke betting records. Happy Super Bowl Monday hangover! I'll try to type softly for all y'all skipping work today to recover from either celebrating your Kansas City Chiefs hoisting the Lombardi Trophy again or hunkering down because you drowned your Philadelphia Eagles' fan sorrows a bit too much. Regardless of the National Football League championship result, I hope at least some of your... Read more →
… and yes, there is a tax connection beyond winning wagers being taxable income. Photo by Scott Webb As is usual each Super Bowl Sunday, bets are getting a lot of attention. There are the big-dollar wagers on the game. Two seven-figure bets were placed last week on the Philadelphia Eagles to defeat the Kansas City Chiefs in today's Super Bowl LVII championship game. Then there are the prop bets, many of which have nothing to do with National Football League plays on the field. For any of those bets that pay off, the winners will owe taxes to the... Read more →