Don't Mess With Taxes

Photo by Matheus Bertelli Happy New Year! I know, we’re well past the Jan. 1 hangover phase, but it is the first full work week of 2025, so I stand by my greeting. And I up it with Happy New Tax Year! On Jan. 20, Republicans who crafted that major tax reform bill will be in control of all three branches of federal government. They plan to keep and, if reports are true, expand the TCJA. As for paying for all those tax breaks, well that's another matter. Like I said, exciting tax times ahead. But while lawmakers on Capitol... Read more →

It’s the day after Christmas. That means we’ll find a handful of holiday cards in our snail mail box. And watch the neighbors stack boxes that held presents on the curb, even though our recycling and trash pickups are days away. Those boxes also are a reminder that in many parts of the world Dec. 26 is Boxing Day. It’s typically a day to keep the season of giving going a bit longer. There are many explanations as to how Boxing Day, and its name, came to be. One commonly accepted origin story is that it began in the United... Read more →

Stumped when it comes to some Christmas presents? It can happen to even the most experienced gift-giver. Here are some tax-related suggestions that might help you be a good Tax Santa this year. Not that anyone is counting, but Christmas is just two weeks away. OK, we’re all counting. And some of us are freaking out a little bit over what to get certain people in our lives. If you, like me, haven’t finished your holiday shopping, here are five financial gifts, some with Internal Revenue Code benefits, that could help you be a great Tax Santa. Open a Roth... Read more →

Last month, the Internal Revenue Service issued its annual inflation adjustments for myriad tax provisions. The new numbers were released before the Nov. 5, so there was a bit of concern that these figures could dramatically change after 2025. The trepidation was based on the expiration at the end of next year of mostly individual tax breaks in the Tax Cuts and Jobs Act (TCJA) of 2017, the signature tax law in Donald J. Trump’s first term. Now, with Trump returning to the Oval Office in January, along with Republican majorities in the House and Senate, there’s a bit more... Read more →

Plus, a look at what next year’s inflation bumps mean to estate planning, gifts you give before you go, youngsters' investment earnings, and more. Leonardo DiCaprio in "The Great Gatsby," the 2018 movie version of F. Scott Fitzgerald's novel. (Warner Brothers Pictures promotional photo) “Let me tell you about the very rich. They are different from you and me.” F. Scott Fitzgerald didn’t add taxes in his elaboration of those differences in his 1925 short story “The Rich Boy,” but he could have. While most of us middle-income taxpayers get our money working for wages, wealthier individuals tend to let... Read more →

President Joe Biden has targeted capital gains tax laws in his fiscal year 2025 budget. But don't freak out if you have some money in the markets. For the most part, Biden's looking to get more from really wealthy market mavens who typically pay lower capital gains tax rates on the long-term assets they sell. Collecting billionaires' unrealized capital gains: When you sell an asset for more than your paid for it, that profit is a capital gain. The tax rate for these gains typically is less than ordinary tax rates that apply to earnings like wages. In most cases,... Read more →

Photo by Waldemar on Unsplash The major challenge for Congress right now is finalizing funding so the federal government won't shut down in March. But some members also are, as noted in yesterday's post, trying to get a mini tax extenders measure passed. And that's not the only tax bill on some lawmakers' minds. A bill to eliminate the federal estate tax was introduced just as the larger bipartisan House/Senate tax bill was clearing the House Ways and Means Committee. Estate tax elimination effort. Again: Some cynical Washington, D.C., watchers might say this bill was introduced primarily for political purposes.... Read more →

No need to wrap cash holiday gifts. Here are three that also have some tax benefits. (Photo by Kira auf der Heide on Unsplash) Still shopping for the perfect gift? Lots of folks who get stuck turn to cash. As the old saying (OK, cliché) goes, any amount is the perfect size and green looks good on everyone. Many people, though, find giving cash too crass. There are, however, ways around this that are a bit more subtle, and which can financially help others in a tax-favored way. Here are three. 1. Open a Roth IRA for a young worker.... Read more →

You have a lot to do, and which you'd rather be doing, this month. But also take some time to check out a few December tax moves. (Photo via Unsplash+ in collaboration with Getty Images) It's December! Are you ready for all the decorating and shopping and cooking and parties and tax moves to make? Me neither. Although I love the holidays and Christmas decorating, my time and patience get shorter this time of year as my seasonal to-do list gets longer. So I understand if you are rolling your eyes right now as I suggest adding some tax moves... Read more →

UPDATED, Sunday, Nov. 19, 2023, to add a couple of new links as I found as I caught up on my own weekend tax reading. Source: Monopoly Wiki An inheritance from a friend or relative can be a nice surprise and a way to fondly remember that person. Such gifts typically do not have any tax implications for either the estate or heirs, at least not immediately, at the federal level. As noted in Part 6 of the ol' blog's annual tax inflation series, the value of an estate that is exempt from Uncle Sam's clutches goes from $12.92 million... Read more →

Plus, a look at how a higher cost of living affects gifts before you go, youngsters' investment earnings, and more. Photo by Lance Reis on Unsplash What we would do with our wealth may differ, but most of us want to be rich. And even if the Internal Revenue Service is successful in its recently announced effort to crack down on higher income tax evaders, having money is always preferable. In fact, if you've got beaucoup cash, you don't really have to try to slip one past Uncle Sam. Many of the current wealth-related provisions in the Internal Revenue Code... Read more →

Photo by Chris Ensminger on Unsplash The federal estate tax has always been politically divisive. Opponents, usually Republicans, argue it essentially is double taxation on a deceased person's wealth. They cite instances where families lose property that's been held for generations when they must pay estate tax. The GOP goal is to eliminate the estate tax. Supporters, typically Democrats, say the estate tax only applies to a very small group of ultra-wealthy families. They want to expand the amount subject to the levy. Collecting more from those estates, they argue, would help fund programs for middle- and lower-income taxpayers. At... Read more →

Updated Tuesday, Dec. 24, 2024 A New Jersey resident has finally claimed the nearly $1.13 billion Mega Millions jackpot that was won on March 26, according to New Jersey Lottery officials. For obvious reasons, the winner of the fifth highest jackpot in the national lottery’s history wants to remain anonymous. But regardless of whether we find out the identity of America’s newest millionaire — the winner has opted to take a lump payment of $537.5 million before state and federal taxes — the winner needs to take some steps, like those listed below, to preserve the newfound wealth. The same... 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 →

Plus a look at how higher costs of living affect capital gains, youngsters' investment earnings, gifts, and more. Image via Giphy Them that got, are them that get. Not only is that a lyric (and theme) from a fabulous Ray Charles song, it's a good synopsis of the current estate tax law, especially with 2023 inflation adjustments. Many of the current wealth-related tax provisions help the richest among us stay that way. But some of them can help all of us, regardless of our income level, increase our relative wealth. And, as reviewed in this Part 6 of the ol'... Read more →

Current political talk (OK, fights) on Capitol Hill is full of discussions (OK, fights) over how and how much to tax the rich. The discussions (OK, fights) are driven by the fact that the tax code already is full of provisions that help the wealthiest among us stay that way. But some of the tax laws can help all of us, regardless of our income level, increase our relative wealth. And some of those Internal Tax Code components are adjusted each year for inflation. This Part 6 of the ol' blog's annual tax inflation series looks at how these annual... Read more →

Elected officials come into office with grand plans. Then the reality of governing hits. Although President Joe Biden has a nominally Democratic House and Senate, the margin in both chambers, especially when we're talking about the perpetually infighting Dems, is razor thin. That means Biden is not going to get everything he proposed on the campaign trail. That's become obvious in the wrangling still going on over his scaled-back Build Back Better (BBB) budget bill. Estate tax/other benefits tradeoff: The Biden Administration had hoped to help pay for new and increased family-focused tax breaks in the BBB by upping another... 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 →

UPDATE, Jan. 10, 2023: The two national lottery jackpots are huge. The next Powerball drawing on Wednesday, Jan. 11, will be at least $360 million ($188.7 million lump sum). Mega Millions is now mega billion-plus. The drawing Tuesday, Jan. 10 (that's tonight!) will pay out more than $1.1 billion ($568.7 million cash) to a single winner. If your numbers do come up, congratulations! After you recover from the shock and elation, check out these tips to help you cope with being a sudden millionaire. Picking lucky numbers from a lottery game dispenser. Benjamin Franklin wasn't wrong, but he was pre-national... Read more →

We need to follow Santa Claus' example this month. Just as he checks his naughty or nice list, we need to check on tax moves to make by Dec. 31. It's December. 2020 and its craziness is almost over! Are you ready? Specifically, are you ready for the holidays? For those of us still committed to pandemic precautions, it's going to be a different, and yes, a bit less jolly, season. But one thing is the same as in previous Decembers. We still need to make some tax moves before Jan. 1. Some December tax moves will demand a little... Read more →