The Child Tax Credit (CTC) was expanded as part of the COVID-19 relief bill signed into law by President Joe Biden. Instead of $2,000 per child, the CTC in for the 2021 tax year is $3,600 per child age 5 or younger. It's $3,000 for children ages 6 to 17. Part of the 2021 credit money is going out through the end of the year as advance payments. The October payments went out last Friday. Two more rounds, on the 15th of November and December, will be issued. Few of us will turn down money, so the credit increase and... Read more →
Politics
Fans of peer-to-peer payment apps are worried that a proposed $600 bank account reporting threshold will affect their transactions. It won't. The U.S. tax system is based on voluntary compliance by taxpayers. But the Internal Revenue Service wasn't born yesterday. It knows full disclosure by all taxpayers is a pipe dream. That's why the agency relies on, and pushes for, increased third-party notifications. That's where taxable transactions are reported not only to the taxpayers, but also the IRS. The most common situation is the W-2 annual wage statement, but there are plenty of others. The latest instance of third-party reporting... Read more →
The tax voyeur in all of us enjoyed the latest unsurprising revelations of how rich people hide money around the world, including a dozen U.S. states and D.C., to avoid paying taxes. The attention to this not really news item also is a good time to note the difference between illegal tax evasion and legal tax avoidance. The South Dakota capitol building is in the state's capital city of Pierre. The state itself is the U.S. capital as far as the most trusts identified in the Pandora Papers. (Photo by Jake DeGroot via Wikipedia) Last week we got news that... Read more →
Saving is a key component to reaching financial independence. However, for individuals facing added challenges, putting aside money for the future can be difficult. Achieving a Better Life Experience, or ABLE, accounts were created in 2014 to help in these cases. They are tax-advantaged savings accounts for individuals with disabilities (and their families) to help them maintain their health, independence, and quality of life. While money put into ABLE accounts isn't tax-deductible, the distributions are tax-free when they are used to pay qualified disability-related expenses. Here are some key questions and answers about ABLE accounts. Who is eligible for an... Read more →
As the fight continues on Capitol Hill over how to pay for President Joe Biden's economic and infrastructure plans, property taxes are getting a lot of attention. In one case, it's the real and continuing battle by some lawmakers to repeal or at least revise the itemized deduction limit on state and local taxes, including income and real estate levies collected at those governmental levels. In the other, it's a false claim about a new, nationwide real estate tax. SALT deduction change: First, a look at the real taxes, the state and local taxes, or SALT, collected by almost every... Read more →
Young boy feeding the chickens. (Photo by ArtHouse Studio from Pexels) As we wind down the first weekend in October, Democrats are continuing to fight amongst themselves and with Republicans over how big President Joe Biden's economic plan should be and how to pay for however much it ultimately is. But one group of taxpayers is happy about what isn't in the mix. Potential changes to the tax treatment of inherited property are off the table, at least for now. There had been talk that the stepped-up basis rule would be eliminated. This tax rule allows heirs to set the... Read more →
In addition to visiting your local pumpkin patch this month, make time for these October tax moves. (Photo by James Wheeler via Pexels) It's October. I know I say this every month, but wow, this day got here quickly. And it's just the start of a busy month. This first full month of fall means it's time to winterize your house if you live in a place with changing seasons. You've got candy to buy so trick-or-treaters won't be disappointed. But take it from me, don't buy the sweets too soon or you'll have to buy more by the time... Read more →
Despite companies reopening as we've moved into a new phase of the COVID-19 pandemic, the number of folks filing for unemployment is raising some concerns. Yes, unemployment applications still are trending near the lowest levels of the pandemic. But first-time applicants for the benefits have edged higher the past three weeks. Today's numbers from the Department of Labor (DoL) for the week ending Sept. 25 showed seasonally adjusted initial claims of 362,000. That's an increase of 11,000 from the previous week's unrevised level of 351,000. And it's the highest since the 377,000 tally for the week ended Aug. 7. There... Read more →
Congress currently is debating who to tax and how much to pay for the Biden Administration's Build Back Better plan. The public, however, seems to have decided. A recent Pew Research Center poll found that a majority of Americans are for raising taxes on households that make more than $400,000 a year. Overall, the survey says that 61 percent of respondents approve of raising ordinary income tax rates on their wealthier neighbors. The current top rate is 37 percent, which was lowered from 39.6 percent with the enactment in late 2017 of the GOP-written Tax Cuts and Jobs Act (TCJA).... Read more →
Is the fifth time the charm? The owners of cannabis businesses legal in their states certainly hope that modified multiple maxim is true. The Secure and Fair Enforcement (SAFE) Banking Act would allow cannabis businesses in the 36 states with retail dispensaries (that are taxed) to operate the same way their non-marijuana related colleagues do. They could pay their federal taxes with a check, secure loans to expand their operations, and accept bank debit card transactions by customers. Right now, that's all problematic at best. Businesses that sell marijuana are limited in their banking options since the plant still is... Read more →
Advance Child Tax Credit (AdvCTC) payments are producing a financial benefit to more than the families receiving the money. The early tax credit amounts, which started going out in July and will continue through December, also appear to keep more workers on the job. That's a finding from a report by Humanity Forward, which partnered with researchers at the Washington University of St. Louis, Appalachian State, University of North Carolina-Greensboro, and the Urban Institute to examine the potential effects of the tax break. In addition, the tax credit also is encouraging some to follow through on entrepreneurial plans. Popular tax... Read more →
Here's some news that's not news for many taxpayers. The Internal Revenue Service is still running behind in its processing of tax filings and getting payments, including refunds, out to taxpayers. What is new, though, is that the admission comes from the top of the tax agency. IRS Commissioner Charles Rettig praised the efforts of his employees during the ongoing COVID-19 pandemic in a recent A Closer Look column. The online IRS publication offers agency executives the chance to discuss issues of interest to taxpayers and the tax community. But Rettig also acknowledged in the Sept. 14 piece that "despite... Read more →
If you have it in your heart, and bank account, consider donating to your favorite charity. It could help many through a difficult year, and also might provide you an enhanced tax deduction. 2021 has been, to put it as nicely as I can, one heck of a year. We commemorated the 20th year since the Sept. 11 foreign terrorists' attacks. We've had major and deadly natural disasters. We're still dealing with the COVID-19 pandemic. And we've got 3½ months to go. All these events, and the possibility of more (hurricane season, for example, lasts until the end of November),... Read more →
Sin taxes, those government levies on products or activities generally deemed as not good for us, typically are a favorite revenue raiser for states. Now Uncle Sam, or at least Capitol Hill Democrats looking for ways to pay for their proposed $3.5 trillion economic package, are taking a page from their state tax counterparts. One of the suggested taxes is a hike of the current federal excise tax on cigarettes and cigars. Another is a new tax on vaping. The House Ways and Means Committee summary of the taxes says: This provision doubles the current rate of excise taxes on... Read more →
British Prime Minister Boris Johnson, left, and U.S. President Joe Biden talk during a break of the June 2021 G& summit in Cornwall, England. (Official White House Photo by Adam Schultz via Wikipedia) A country's leader is going head-to-head with its lawmakers over tax hikes to pay for more social services. But it's not U.S President Joe Biden and Congress duking it out over the proposed $3.5 trillion federal spending plan. It's U.K. Prime Minister Boris Johnson and Parliament. Johnson says he wants hike taxes to help pay for England's elder care services. Political + elder care costs: The tax... Read more →
With the financial situation of Uncle Sam's retirement benefits program getting more dire, a recurring suggestion — raise the Social Security payroll tax wage base — is getting some traction this year. Labor Day typically marks the end, at least unofficially, of summer. After the early September long weekend, most schools are back in session, albeit still in remote/real classroom combos due to the Delta COVID-19 variant. Workers, many also still in hybrid coronavirus cubicle/Zoom formats, tend to focus on their jobs. Those jobs are critical not just to the employees, but the economy as a whole and to two... Read more →
A record number of unemployment claims were filed due to COVID-19 layoffs. But billions of dollars of those benefits went to crooks who falsely filed for them. The weekly jobless reports from the U.S. Bureau of Labor Statistics (BLS) are always watched closely. They're seen as a sign of how well (or not) the economy is doing. The reports of how many people are (or aren't) looking for work have taken on added significance during the COVID-19 pandemic. The latest count was good news. BLS' Sept. 2 report showed that the United States saw the least number of new unemployment... Read more →
Republicans in the Mississippi legislature are again pushing for their state to end its personal income tax and replace some of the revenue that would be lost with a higher sales tax. This is not a Magnolia State receipt. Mississippi's sales tax is 7 percent, with the tax change plan calling for it to go to 9.25 percent. I get it. People hate paying income taxes, even when they know the money pays for things that are important to their communities. But things gotta be paid for somehow. That's the question facing Mississippi lawmakers and residents as the state once... Read more →
Capitol photo by Scrumshus via Citypeek-Wikipedia As Capitol Hill creeps toward further consideration of the Biden Administration's $3.5 trillion spending bill, the focus is narrowing on just how to pay for Uncle Sam's fiscal year 2022 budget. One of the ways the White House wants to pay for the measure's climate initiatives, paid leave, child care, education, and health care is by raising the top marginal individual income tax rate to 39.6 percent. That's the tax rate the wealthiest paid until the Tax Cuts and Jobs Act cut it in tax year 2018 to 37 percent. That tax reform change... Read more →
Image by Hucklebarry from Pixabay When the hubby and I started out our life together, we were young and poor. Like watching every cent poor. That included our food budget. All those decades ago, our regular Monday night meal was macaroni and cheese. In the budget-conscious beginning, it was store brand boxed mac and cheese mix. As our earnings increased, we upgraded to brand name boxes. We knew were doing OK when Monday Meal morphed into the frozen version. We still have Monday Meal, but not exclusively on the first weekday. But it's still a quick dinner that we supplement... Read more →