Remember the 94-year-old Minnesota woman whose home was seized by country tax collectors after she stopped paying her property tax bills? Such action is commonplace, as noted in my earlier post on this topic. But in Geraldine Tyler's case, Hennepin County kept all the money it got when it sold her condo, not just the amount needed to cover her delinquent real estate taxes. Those taxes, plus penalties, interest, and other costs, came to $15,000. The Minnesota county got $40,000 for the property. Yesterday (May 25), the Supreme Court of the United States, or SCOTUS, unanimously ruled in Tyler's favor.... Read more →
Elderly
Photo by Gustavo Fring Millions of Americans are worrying about the damage to their retirement accounts if the United States (aka Congress) defaults on the country's debt. But there's another retirement fear that could put federal and state governments on the hook for trillions more dollars. Many Americans aren't saving enough for retirement, and new research says that if the trend continues unabated, the country could by 2040 face a retirement savings gap and resulting economic burden of almost $1.3 trillion. The federal government would bear the bulk of the saving shortfall, $964 billion. The remaining $334 billion burden would... Read more →
Updated, Thursday, May 25, 2023 (see so-noted paragraph below) The interior of the U.S. Supreme Court (Photo by Phil Roeder, Flickr via Wikipedia) April is not a fun fiscal month for a lot of us. In addition to Tax Day, when many of us, including the hubby and me, owe the U.S. Treasury a bit, along with an estimated tax payment, it is property appraisal time here in Texas. The last couple of years, that's been particularly distressing. If we were putting our house on the market like a couple of our neighbors, we'd be happy that we could ask... Read more →
Photo by Nicola Barts If you turned 72 last year and didn't take your first required minimum distribution (RMD) by Dec. 31, 2022, you have a few days to take the mandatory withdrawal. April 1 is your deadline to take out the specified amount from your tax-deferred retirement savings account(s). This year, however, is the last one for the age 72 RMD trigger. The latest retirement law changes in the Setting Every Community Up for Retirement Enhancement (SECURE) Act 2.0 changed the RMD starting age to 73. However, there's been a bit of confusion about the change. Some people have... 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 →
If you're in your seventies, it's time to start preparing for nest egg withdrawals, some of which are required by federal tax law. A couple of new retirement laws over the last few years, collectively known as the Setting Every Community Up for Retirement Enhancement (SECURE) Acts, have made a lot of changes to retirement plans and the collection of associated taxes. One revision was the bumping up the date when most older owners of tax-deferred retirement accounts must start taking some money from these savings. Starting in 2023, required minimum distributions, known by the acronym RMDs, don't kick in... Read more →
You need to file your taxes, but you need help. You're on a tight budget, so you gave Free File a look. But you quickly discovered that you want more help than a tax software program provides. Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) could be your answer. VITA and TCE sites are nationwide, usually at locations that are convenient for community residents to find and get to. They are staffed by Internal Revenue Service-trained volunteers. In many locations, the tax preparers are able to help taxpayers whose first language isn't English. And they are... Read more →
Photo by Polina Zimmerman While millions are debating when to file their tax return, others are asking a more elemental question. Do I have to file a 1040 at all? It's a good question. The short answer is probably. But there are some situations where the Internal Revenue Service doesn't demand individuals file. Here's a look at just who is off the tax filing hook. Filing requirements for most of us: Generally, if you are a U.S. citizen or resident you must consider three things when determining whether you have to file a tax return: your age, your filing status,... Read more →
Every filing season, eager taxpayers, most of them expecting a refund, send their returns to the Internal Revenue Service as soon as they can. For most it works out OK. Others, however, discover on their own, or learn from the IRS, something just not quite right, and costly, on their Form 1040. It works the other way, too. In some instances, folks submit a return without claiming a tax break that would have saved them dollars. The IRS isn't going to tell you about that! The best way to make sure you enter all the data that the IRS wants,... Read more →
We're just a couple of weeks into this new year, and I've received three 1099s and a donation thank-you letter. I am not alone. Official tax forms and statements are filtering into mail boxes, both curbside and electronic, across the country. The exact tax-related documents differ from taxpayer to taxpayer, but we all share one thing. We need them in order to accurately fill out annual tax returns. They include W-2 forms for folks with wage-paying jobs, 1099-NECs for freelancers, and 1099-MISC and DIV documents for those who have investment earnings. It is, after all, called an income tax. But... Read more →
Everyone who helps fellow taxpayers, regardless of language, makes a real-life difference. So here's also a look at some of those who do that as VITA and TCE volunteers. Photo by Dakota Corbin on Unsplash Back in October, the Internal Revenue Service announced it had awarded $41 million in grants to 348 programs that help U.S. taxpayers complete their annual federal tax returns. These groups sponsor Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs, where low-to-moderate income and elderly filers can get free tax prep help and e-filing. Even before the sites were announced, the... Read more →
Photo by Guneet Jassal on Unsplash It's December! Are you ready for all the decorating and shopping and cooking and parties and tax moves to make? Yep, tax actions need to be added to your already very long holiday to-do list. You only have 31 days to take advantage of some Internal Revenue Code provisions that could save you money. That's always a welcome gift from Uncle Sam, but especially at this time of year. Plus, if you take relevant tax steps sooner in the month, you'll also free up time for more traditional festivities. So let's get to it.... Read more →
These senior citizens celebrate their shared birthday month, if not the required traditional IRA withdrawals the big days may trigger. A QCD can help avoid tax on the mandated distributions. (Photo by Kay Bell) Most of us still have a real life, old-school, snail mail box. Every November, it is the target for the most mail of the year. Yep, the holidays are here. My curbside box is jammed with two types of correspondence, catalogs and charity solicitations. I get a kick out of thumbing through the catalogs. And yes, I even order a few (too many) things. The donation... Read more →
If you've been to a doctor recently, refilled a subscription, had to go to an emergency room, or just bought over-the-counter medications, you know that all these cost a lot more than in previous years. It's enough to make you sick, or at least nudge up your blood pressure a bit. However, the tax code might have an Rx that can help. There are a variety of medical tax breaks that can help lower your federal tax bill. Several of them are adjusted each year to account for inflation. Here, in today's Part 5 post of the ol' blog's annual... Read more →
With some tax planning now, along with some help from tax-favored accounts, you can ensure your retirement is full of smiles, love, and flowers. (Photo by RODNAE Productions) It's always a good time to start saving for your eventual retirement. The U.S. tax code helps via a variety of tax favored retirement options. And the Internal Revenue Service helps every year by making cost-of-living (COLA) adjustments that boost the amounts you can put into your post-work accounts. The tax agency today announced how much you can stash in 2023 in tax-deferred — or tax-free — retirement accounts and pension plans.... Read more →
Tax year-in and tax year-out, most filers claim the standard deduction instead of itemizing. The standard option has always been appealing because it's easy. There are no receipts to save, no added calculations. Even better, the Internal Revenue Service provides the standard amount you can claim, based on your filing status, right there at the bottom of the first page of Form 1040. The standard deduction train picked up even more passengers after the Tax Cuts and Jobs Act (TCJA) of 2017 essentially doubled the standard amounts. And those now more valuable deduction amounts are getting even better, thanks to... Read more →
The Social Security Administration (SSA) gave retirees and other recipients of the program's payments good news this week. Next year, they'll get an 8.7 percent cost-of-living increase. That's the highest in more than 40 years, and comes on the heels of this year's bump that, at the time, was the largest retirement benefits bump in decades. Some higher earners, however, aren't so happy. Today's SSA announcement also noted that the amount of income subject to payroll taxes also is going up in 2023. This amount, known as the Social Security wage base, is the maximum earnings, by both salaried workers... Read more →
Don't look now, but tax filing season is just three months away. The Internal Revenue Service is working on getting ready, both staff and system wide, for the influx of 2022 tax returns in 2023. The agency also is counting on its usual cadre of volunteers to help filers meet their tax obligations. To do that, the IRS has awarded $41 million in grants to 348 groups that support Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs. Nationwide help sites: VITA and TCE sites are nationwide, and offer tax preparation and filing help to underserved... Read more →
You have lots of choices when it comes to helping your neighbors and community. There's even an option if taxes are of particular interest to you. Hey, it happens. You are, after all, reading my tax blog right now. If that's you, then the Internal Revenue Service wants you to fill up your free time by helping people prepare and file their tax returns next year. The IRS and its community partners are recruiting people to be a part of the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs during the coming 2023 tax season.... Read more →
Financial advice for older people also should include planning for taxes on Social Security benefits, unless a House bill to end that process passes. If you're of a certain age (confession: I am), you're likely getting lots of notices about the possible hike in 2023 of Social Security benefits. At one point, prognosticators were saying it could be as much nearly 11 percent. However, the recent easing of inflation lessens the likelihood of a double-digit percentage bump. The latest prediction is a 9.6 percent bump. Still not bad. Most folks who get Social Security benefits will welcome any increase in... Read more →