The Internal Revenue Service has delivered two rounds of COVID-19 economic impact payments (EIPs). The first was the $1,200 per person approved in late March 2020 under the Coronavirus Aid, Relief and Economic Security (CARES) Act. The second EIP for $600 per person was authorized at the end of last December as part of the Consolidated Appropriations Act (CAA), with payments distributed through the first two weeks of January 2021. By now, folks know that if they didn't get the full amounts, which included additional payments for eligible dependents, they need to claim the Recovery Rebate Credit (RRC). You'll do... Read more →
Finances
Five turkeys might not technically be enough to be classified a rafter or gang or death row of turkeys — and yes, all are among the many collective nouns for a gathering of this particular fowl — but these birds represent today's fifth and final Tax Turkey to Avoid. (Photo by Chris Henry on Unsplash) Are you enjoying your Thanksgiving break? Maybe time off from work this week has you thinking about when you can leave the 9-to-5 completely. Whenever that happens, you’ll want to have enough of a nest egg to enjoy your retirement. That will be possible if... Read more →
You need to get your medical flexible spending account (FSA) expenditures in a row so you don’t lose any of the tax-favored account money. (Photo by Jackie A) Thanksgiving get-togethers can be wonderful. They also can be stressful. And in many cases, literally painful. There are headaches caused by traffic hassles, anxiety prompted by annoying relatives, indigestion from over eating, and back pain from sleeping on that horrid bed in your parent’s guest room. The good news is that you can use your flexible spending account (FSA) funds to pay for the Tums, aspirin, or whatever over-the-counter (OTC) remedies make... Read more →
This showy Texas turkey, not to be confused with music icon Bob Wills' Turkey, Texas, hometown, is a spectacular representation of the ol’ blog’s first tax turkey to avoid this holiday season, or any time of year. It’s Thanksgiving week. Most Americans are looking forward to the upcoming fourth Thursday in November, when they’ll gather to share food and fun with family and friends. A turkey will be the featured food on most tables, a tradition dating from the turn of the 19th century. But turkey also is disparaging slang for loser. Tax turkeys, in addition to being unwanted, can... Read more →
If you've met or exceeded your IRA savings target, a Qualified Charitable Distribution, or QCD, might be worth considering. This month, millions of U.S. residents gather with family and friends. But you can help others find thing to be thankful this Thanksgiving season by donating to charitable organizations. Gifts typically are cash, which in Internal Revenue Service parlance includes those made by check and credit card. If the tax agency rules are met, the donations also might be tax deductible. But some older philanthropists have another option. They can give part or all of their required minimum distribution, or RMD,... 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 →
Prescription co-pays are just one medical expense that can be paid with money in a healthcare flexible spending arrangement, or FSA. If you watch cable television (or like me, too much cable TV), you know that it’s Medicare open season for older Americans. Many younger people also are making medical selections for the coming year from the cafeteria of benefits offered by their companies. The biggest employer-provided benefit is health care. In addition to medical insurance coverage, lots of businesses also offer their workers the option of opening a healthcare medical flexible spending arrangement (or account), popularly known as an... Read more →
Before law changes, the now inflation-indexed Alternative Minimum Tax, known as the AMT, seemed to work like an ATM for the U.S. Treasury. When the AMT was created in 1969 to ensure wealthy individuals paid at least some tax, it wasn't indexed for inflation. Until that changed with the 2017 tax reform law, the AMT adversely affected a lot of less-wealthy taxpayers. (Photo by Ali Mkumbwa on Unsplash) What's worse than figuring your tax bill? Having to figure a second, higher, parallel amount you might owe. That's a situation that taxpayers who owe the Alternative Minimum Tax, or AMT, end... 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 →
Photo by Kay Bell My life has worked out pretty well, especially financially. I’ve come a long way from when I was in college, constantly keeping an eye on my income, which wasn’t much. I remember times back in the day before minimum balances and monthly fees where my bank account balance was in double digits, and those numbers were after the decimal point. That’s why I still obsess over how much cash I have on hand, and still use an old school check register even though I pay bills electronically. I like to see the income and payments written... Read more →
On Oct. 10, Social Security recipients got the annual word on how their benefits will change in the coming year. It was not exactly the news many had hoped to hear. The 2.5 percent increase for 2025 for around 68 million retirees and disabled workers who receive Social Security payments was one of the lowest in recent years. Recipients’ grumbling about the 2025 increase also were likely influenced by this year’s 3.2 percent hike, and the 8.7 percent boost in 2023 when inflation was at an historic level. Fixed-income folks also are still worried about inflation. Although it has eased,... Read more →
The coming wage base bump also means more FICA taxes for higher earners. Running the numbers is important for everyone, but critical for older folks who rely on Social Security benefits, and the annual cost-of-living increases, to cover much of their expenses. (Photo by Getty Images via Unsplash) There’s some good news for the more than 72.5 million recipients of Social Security payments. The Social Security Administration (SSA) today announced they’ll soon see an increase in their retirement and/or Supplemental Security Income (SSI) benefits. Nearly 68 million retirees who receive monthly Social Security deposits will see a 2.5 percent cost-of-living... Read more →
If you have a big heart like the Tin Man in The Wizard of Oz classic movie, consider helping out fellow taxpayers as a volunteer during the coming tax-filing season. Volunteering is getting a lot of attention right now, as people are doing what they can to help each other in areas ravaged by Hurricane Helene. These good deed doers are as critical as the official government and organized philanthropic organization workers. The Internal Revenue Service also depends on volunteers every filing season. They are the IRS-trained people who staff Volunteer Income Tax Assistance (VITA) and Tax Counseling for the... Read more →
Americans have always been aspirational. We strive to be better, especially financially. And while we’d all like to be millionaires (or richer), we’re also pretty pragmatic. We want to do better than we did the year before, making progress as we continue our American Dream journey. That’s why candidates for all offices this election year are making promises they say will help middle-class voters Americans. Based on data gathered last year, those vote seekers better get to work. Fast. The United States’ middle class has been shrinking. Economic stresses have increased: Independent inflation data aggregator Truflation reported that the number... Read more →
Even the Internal Revenue Service has acknowledged the Employee Retention Credit (ERC) claim process has been beleaguered by fraud and abuse. That’s why the tax agency stopped accepting new ERC filings last year, and has focused on working through existing claims. While some ERC claimants have received tax credit money for keeping staff on payroll during the height of the coronavirus pandemic, others are getting bad news from the IRS. Their ERC claims have been denied. The unwelcome word is arriving as IRS Letter 105-C. The mailed correspondence means the IRS has found the claim ineligible, and has disallowed, or... Read more →
Photo by Haley Owens on Unsplash The hubby is a patient and tolerant man. I'm glad those traits apply to some of my annoying tendencies. But one thing I do that drives him crazy is picking up coins on the street. Or, in the case of the penny I found yesterday as I got out of my car at the grocery store, in parking lots. Lucky for me, he doesn’t see me do this very often. I stick the pennies and other found change in my pocket and dump them in the coin jar when I get home. And yes,... Read more →
Any kind of saving is good, but for your retirement, a better option is a workplace retirement plan or IRA. A new Saver’s Match will help some when it takes effect in a couple of years. (Photo by Diane Helentjaris on Unsplash) The Setting Every Community Up for Retirement Enhancement (SECURE) Act, enacted at the end of 2022, includes a notable change in how eligible individuals can collect the Saver’s Credit. This tax credit turns contributions to popular retirement plans, which already are tax-favored, into addition funds. Qualifying lower- and middle-income savers who put $2,000 into an Internal Revenue Service-authorized... Read more →
So how was your summer? That’s right, it’s that time of year again. The summer break officially ended on Sept. 1 with the arrival of meteorological fall, which runs through Nov. 30. I know, it’s kind of an arcane tidbit, but we have other more recognizable autumnal indicators. Youngsters across the country are back in classrooms. Their parents are back to the 9-to-5 grind after the long Labor Day holiday, with the next extended break not until the holidays. And temperatures here in Central Texas have dropped into the upper 80s! Yes, that’s early fall weather for us. I hope... Read more →
Labor Day isn't a holiday for some workers. They are on the job helping customers. (Photo by Ron Lach) Happy Labor Day! This holiday, which we celebrate with a three-day weekend, was created in the late 1800s to “recognize the many contributions workers have made to America’s strength, prosperity, and well-being.” States were the first to officially adopt the holiday. New York led the way as the first state to introduce a bill, but Oregon was the first to pass a law, on February 21, 1887, recognizing Labor Day. That year, four more states — Colorado, Massachusetts, New Jersey, and... Read more →
Photo by Katt Yukawa on Unsplash Crowdfunding, a personal way of raising money that’s been supercharged by social media’s reach, has tax implications. Most of us are familiar with charitable crowdfunding. Expect to see a lot more of that in the wake of natural disasters, with solicitations by individuals and groups looking for help for themselves or others. In addition to charitable fundraising, there also are lots of online financial solicitations by and for businesses. Regardless of the crowdfunding reason, the Internal Revenue Service notes that distribution of the funds may be includible in the gross income of the person... Read more →
Having trouble making your student loan repayment plan and your budget add up? A workplace benefit that helps cover college debt could help. (Photo by George Becker) School is, or soon will be, starting across the United States. That means students, parents, and teachers are hearing about the variety of educational tax breaks that could help them. But what about all the former students, especially those who took out loans to cover higher education costs? You and your lots of student loans are not forgotten. Almost 43 million U.S. borrowers have federal student loan debt, according to data collected by... Read more →