Washington's capital gains tax proposals have people talking. On both coasts. In Washington, D.C., President Joe Biden's call for those earning more than $1 million to pay a 43.4 percent tax on their investment earnings instead of the current 20 percent tax rate has anti-tax lawmakers and lobbyists working overtime to stop it before it gets going. That total comes from a return to the pre-George W. Bush tax cuts ordinary income tax rate of 39.6 percent plus the 3.8 percent Affordable Care Act investment income surcharge. Meanwhile, around 2,350 miles to the west, a new capital gains tax on... Read more →
Politics
No, that money from the Internal Revenue Service that just showed up in your bank account or snail mail box is not another COVID-19 economic impact payment. It's the result of the IRS working through tax returns that were filed before a new tax law that excludes a chunk of unemployment benefits from taxation. This week, the IRS announced that another 1.5 million taxpayers will get these unemployment-income-related refunds. The IRS says the average refund going out now is $1,686. COVID relief for the out-of-work: This is the latest round of refunds made to comply with changes in the American... Read more →
The newly built Japan National Stadium in Tokyo will host the 2020 Summer Olympics opening ceremonies on July 23, 2021, as well as some of the COVID-delayed games' events. (Photo by Arne Müseler via Wikipedia Commons) The 2020 Olympics from Tokyo officially start on Friday, July 23. No, the opening ceremonies arriving after some events' preliminary matches have already been played doesn't mean we get do-overs. Sorry, women's U.S. soccer team. Yes, the global sporting event is keeping last year's designation for continuity's sake, as well as not having to go to the expense of reproducing material created before the... Read more →
TurboTax won't be a Free File option when the 2022 tax filing season arrives. Taxpayers who used TurboTax to complete and e-file their returns at the Internal Revenue Service's Free File website are going to have to find a new program in 2022. The popular tax software is leaving the Free File program next filing season. It will, however, remain on the IRS.gov site for use by taxpayers who got an extension until Oct. 15 to finish their 2020 returns. TurboTax is the second major tax software provider to leave the Free File Alliance, the nonprofit coalition of tax software... Read more →
The Internal Revenue Service and those who want Uncle Sam to go after tax evaders were elated when a bipartisan infrastructure bill included money for enhanced tax collection efforts. Proponents said the beefed-up proposal to close the Tax Gap could bring in an additional $100 billion over the next 10 years in owed but unpaid taxes. However, that funding option has been scuttled. "Well, one reason it's not part of the [infrastructure] proposal is that we did have [Republican] pushback," said Sen. Rob Portman (R-Ohio) during an appearance today on CNN's "State of the Union" program. But there's still hope... Read more →
These youngsters' parents will join them in jumping for joy if the expanded Child Tax Credit, which was expanded for the 2021 tax years, is extended or, as some in Congress want, made permanent. On the eve of the expanded Child Tax Credit going out to millions of families, a group of Democratic members of Congress want the enhanced tax break to become a permanent part of the Internal Revenue Code. Under the American Rescue Plan Act (ARPA), the COVID relief measure that became law in March, the Child Tax Credit (CTC) was increased, for qualifying families, to $3,000 for... Read more →
Some of the world's billionaires are looking to escape earth, but for those who like terra firma, New York City is home to most of the world's richest people. (Photo of lower Manhattan skyline by MusikAnimal via Wikimedia Commons) Richard Branson today proved yet again how different the rich are from you and me. The British billionaire owner of Virgin Galactic and three spaceplane crewmates reached suborbital heights on Sunday, July 11, before gliding back to earth. I was once a child with a dream looking up to the stars. Now I'm an adult in a spaceship looking down to... Read more →
Knowing whether a group is a tax-exempt organization is important, not just from Uncle Sam's revenue collection (or not) perspective, but also from a public standpoint. Donors who want to deduct charitable gifts need to know that the group to which they're giving is legit in the Internal Revenue Service's eyes. These public charities are referred to as 501(c)(3) organizations, getting their name from the section of the tax code that created them. However, there are several other tax-exempt classifications under Internal Revenue Code section 501(c). They are granted, for example, to groups that have charitable, educational, religious, or similar... Read more →
American artist John Trumbull's painting of the presentation of the draft of the Declaration of Independence, which is the artwork's name, to Congress. (Image from Wikimedia Commons) Happy July 4th everybody! I hope all y'all are having great and save 245th birthday party for what became the United States. Relatively speaking, we're still a young country. And like most juveniles and young adults, we're still making mistakes. But we're learning (I hope) from them as push ahead to reach what our Constitution calls a more perfect union. To get there, we need to turn to another critical U.S. document, the... Read more →
Photo by 竟傲 汤 from Pexels Texas is pretty much open. Even my local grocery store, which for almost a... Read more →
Almost 40 million U.S. families could get monthly Child Tax Credit payments this year. The extra money no doubt would be a big help, but some might discover they have to pay back the advanced amounts when they file their 2021 tax returns. (Photo by August de Richelieu via Pexels) You're fully vaccinated. Your company is open again, with everyone returning to the office. You got your kiddos, who also got jabbed, into a summer day camp. Hello, sort of normal summer! Even better, you're about to get some added monthly cash from Uncle Sam thanks to early Child Tax... Read more →
If a new piece of legislation is enacted, these two youngsters might bring their classroom enthusiasm to the accounting profession. Tax professionals have been unsung heroes for the last two tax filing seasons. They've dealt with complicated and often last-minute tax law changes created to deal with the COVID-19 pandemic's economic problems. Not only did they have to decipher and apply the changes, tax pros had to explain them to their clients and, in many cases, hand hold taxpayers through the process more than usual. Plus, this all happened as tax deadlines were upended by the coronavirus and multiple major... Read more →
While one accused wealthy tax cheat awaits a Spanish court's decision on whether he'll be returned to the United States to face charges, U.S. lawmakers look for ways to snare more rich tax evaders. Or at least get more from them up front. Rather than letting the wealthy have more money to burn, efforts are underway in Washington, D.C., to make it easier to catch rich tax scofflaws, as well as to simply tax them even more. Billionaires who've managed to use tax laws to avoid paying any tax have been getting even more attention lately. Some wealthy people, however,... Read more →
Photo courtesy Zutobi Could it be? Is Infrastructure Week finally happening? Maybe. There are bills and revisions to bills and working groups and bipartisan agreements and partisan criticisms of agreements. The only thing that the, at last rough count, eight transportation-plus proposals floating around on Capitol Hill have in common is that none has the votes right now in either chamber to pass. But things are fluid and could change, for better or worse (depending on your political and fiscal position), at any time. The only certainty is that something must be done by the end of this 2021 fiscal... Read more →
Photo by Roberto Nickson via Pexels On May 26, sky watchers across much of the world were awed by the Blood Moon lunar eclipse. It coincided with the moon's closest approach to Earth, meaning the so-called supermoon took on a reddish hue during the event, giving it the dramatic name. Then just last week, some of us were treated to an annular solar eclipse that appeared as a ring of fire when the moon blocked out only the middle of the sun, leaving its glow around the edges. Most, however, saw the June 10 astronomical phenomenon as the moon taking... Read more →
Overhead view of flooding. (Image by Pok Rie via Pexels) It's already been a literally disastrous year for millions of Americans. When Mother Nature does her worst, major disaster areas are declared, meaning affected residents get access to federal assistance. However, the process for providing disaster-related tax relief can take time and be confusing. Sometimes it can be frustratingly close to, or even after, impending tax deadlines. The Internal Revenue Service can't make any decisions to give disaster-struck individual and business taxpayers any filing and payment relief until the president declares a major disaster and the Federal Emergency Management Agency... Read more →
ProPublica's recent article on how little — sometimes nothing — that rich people pay in taxes was not a revelation. It's long been known that the tax code is full of loopholes, which aren't necessarily illegal. Equally acknowledged is that the super wealthy can afford high-dollar tax professionals to find and put these tax breaks to work. Still, the trove of Internal Revenue Service information from, per the investigative journalism nonprofit, "the tax returns of thousands of the nation's wealthiest people, covering more than 15 years" has captured the fancy of all us fellow and much less well-off taxpayers. It's... Read more →
Unemployment benefits were a lifesaver for many Americans who saw their jobs eliminated during the height of coronavirus pandemic. Now some of those unemployment insurance (UI) recipients are getting another boost from the benefits thanks to a change in how the COVID-related funds are taxed. The American Rescue Plan Act of 2021 (ARPA) deemed up to $10,200 per taxpayer in unemployment compensation as tax-free. ARPA became law on March 11, meaning some filers submitted their 2020 returns and paid tax on all the UI benefits they got last year before the change took effect. Rather than make those folks redo... Read more →
No diet drinks in our pantry! (Photo by Kay Bell) Today we celebrate the sweet, iced or glazed, and often decorated treat we know as doughnuts. The first Friday of June each year is National Doughnut Day. On the other 364 days, though, many of us try to avoid calorie-heavy foods and beverages. And many lawmakers want to help us resist our collective sweet tooth by making such items more expensive. Specifically, they want to tack on new or additional taxes to the belt-busting products. In some cases, the so-called sin tax is on high-fat foods. But the main target... Read more →
The Biden Administration has made no secret of its support for electric vehicles. President Joe Biden emphasized that commitment, as well as his general love of motoring, when he took the wheel of Ford's new electric pickup truck at the Michigan plant on May 18. Now Congress is following up on the White House electric auto initiative. $5,000 EV credit hike: Part of the Clean Energy for America bill would boost the current maximum electric vehicle (EV) tax credit from $7,500 to a potential $12,500. It cleared the Senate Finance Committee on May 26. The added $5,000 in tax credits... Read more →
Joe Biden's campaign slogan "Build Back Better" now is part of his presidency's agenda. Many promises he made in 2020 now are part of the Biden Administration's first federal budget proposal. President Joe Biden's first federal budget proposal, which is for the 2022 fiscal year that starts Oct. 1, comes in at $6 trillion, detailed in more than 1,700 pages. The White House projects its changes will bring $3.6 trillion to the Treasury over the next decade. It also projects a $1.84 trillion deficit. That's a substantial number, up from 2019's $984 billion deficit, but a sharp decrease from the... Read more →