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
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 →
Photo by Liza Summer from Pexels Everyone needs help now and then. That truism especially applies to filing taxes. But not everyone can afford to hire a tax professional. That's where the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs come into play. For decades, these two programs have provided free tax preparation and filing assistance during the annual filing season to millions of lower- and middle-income taxpayers, as well as elderly filers. The Internal Revenue Service just announced its financial support for 334 VITA and TCE programs in 2022. Now the agency is looking... Read more →
Millions of Americans rely on their workplace benefits to cover then health care and other needs. Most of them also are paying even more attention to those job-based benefits this year in light of the persistent COVID-19 pandemic. Medical insurance is a top priority. But other benefits also are getting added attention during this annual fall period, during which many U.S. companies allow workers to enroll in or change their benefits for the coming coverage year. Many of the office-based benefits also offer some tax advantages. Here are five questions with an Internal Revenue Service-inspired perspective to ask yourself as... Read more →
Free tax-preparation and filing help is offered ever tax season through groups community groups nationwide, like this Volunteer Income Tax Assistance (VITA) program run by the Summit-Medina, Ohio, United Way. As the COVID-compromised 2020 and 2021 tax filing seasons demonstrated, most taxpayers needed some help to make sure they got all the tax breaks they were entitled to, as well as just file their annual returns. That need for tax assistance isn't going away, even if we do (fingers and toes tightly crossed) get to a more normal tax season next year. And volunteers who've received the Internal Revenue Service... 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 bet the biggest benefits bump in decades. Some higher earners, however, aren't so happy. That government benefits announcement also noted that the amount of income subject to payroll taxes also is going up in 2022. This amount, known as the Social Security wage base, is the maximum earnings, by both salaried workers and the self-employed, that are subject to that retirement portion of the Federal Insurance Contributions Act (FICA) tax. In 2021, the wage base is $142,800. On Jan.... Read more →
Did you discover when you filed your taxes, either earlier this year or this week to get in under the Oct. 15 extended deadline, that you were due a refund? Or, yikes, that you owed Uncle Sam? Either way, now is a good time to review your tax withholding. With 2021's third quarter just under way, you have plenty of time to deal with the differences either way. And there is enough time left in the year to spread the changes over several pay periods so they don't produce a major shock either way to your budget. Rationalizing over-withholding: Around... 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 →
The big deadline change for 2021 was when the Internal Revenue Service extended the regular income tax filing deadline from April 15 to May 17. But it also made a few more calendar moves, including one that this month affects folks with foreign financial accounts. The IRS left in place the due date for filing Form 114, Report of Foreign Bank and Financial Accounts, usually referred to as FBAR. Sort of. Although the tax agency didn't move the April deadline, it did grant FBAR filers an automatic extension until Oct. 15. That's right. Owners of foreign accounts now face the... 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 →
The loss of tax revenue is substantial, since most states collect tax (or are supposed to) on all their meals, from eat-in to pick up to delivery. Tasty and taxable. (Photo by Adrienn via Pexels) Running a restaurant poses many challenges. Dealing with increased food costs. Hiring and training staff. Finding an accessible and affordable location. Complying with health and other regulatory rules. Paying taxes. The tax consideration is getting special attention in California, where an extended investigation reveals that around a fifth of the state's restaurants are using high-tech methods to skip out on taxes. "The California Department of... 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 →
The Internal Revenue Service has signed new contracts with three private tax debt collection agencies. (Image via Giphy) When the Internal Revenue Service four years ago reinstituted, per Congressional mandate, the latest private tax collection program, it signed four collection companies. Today, the IRS announced new deals with three collection agencies. The private collection agency (PCA) contracts take effect tomorrow, following today's expiration of the old contracts. So starting Thursday, Sept. 23, taxpayers with unpaid tax bills may be contacted by one of the following agencies: CBE Group, Inc. P.O. Box 2217 Waterloo, IA 50704 800-910-5837 Coast Professional, Inc. P.O.... Read more →
Photo by sarachicad via Flickr CC Since COVID-19 lockdowns began in March 2020, both employers and employees have been struggling to recover. There was hope when vaccines became widely available in early 2021, things would change. Coronavirus jab hesitancy and the Delta variant wrecked that. Some blamed added federal unemployment benefits on the trouble companies had finding staff when they reopened. Others said it was the businesses' fault for not offering better wages and benefits. Now, in the midst of the Great Resignation in which millions of workers have opted not to return to their prior workplaces, companies are still... Read more →
The Great Resignation created by folks deciding not to return to their jobs after extended COVID-19 absences has led to a lot of new businesses. That means there a many new bosses out there, most of them dealing with a different part of the Internal Revenue Service for the first time. As business owners, they potentially face new types of taxes. Exactly which taxes depend largely on how their new company is established. That's why selection of a business entity is a major tax decision. Business entity options: As part of 2021's National Small Business Week, sponsored annually by the... Read more →
Who hasn't felt this way at work from time to time? This year, after COVID-forced reassessment of their jobs, millions decided to quit. (Photo by Andrea Piacquadio from Pexels) The COVID-19 pandemic has changed a lot of things, including workplaces. Where offices stayed open or reopened, there are the coronavirus precautions, such as work station spacing and staff masking. Other offices are allowing or requiring their staff to work remotely. Hello home offices (that, sorry, likely aren't tax deductible) and Zoom glitches. COVID also gave us the worst-case scenario for too many workers. Reduced consumer demand meant some businesses needed... 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 →
So how was your summer? Yep, it's over, or will be officially a bit later in this brand new month of September. In addition to bringing some cooler temperatures (eventually, or so promise my local weathermen and women), the ninth month of the year also marks the opening of schools (at least in part, depending on COVID-19 Delta outbreaks), and football seasons (American, not Ted Lasso's version). Tax tasks also are on this month's agenda. Yeah, taxes aren't as fun as football (either U.S. or global leagues) or as welcome as a break from the heat or the kiddos going... Read more →
Damage in the Galliano, Louisiana, area from Hurricane Ida as seen by U.S. Coast Guard overflight on Aug. 30. (Photo courtesy U.S.C.G./VIRIN: 210830-G-G0108-1006M) Hurricane Ida went from Tropical Depression 9 to a category 4 hurricane that slammed coastal Louisiana on Aug. 29 in just about three days. The Internal Revenue Service has reacted just as quickly. Today, the IRS announced that its offering tax relief to Ida victims. That includes pushing the Oct. 15 extended filing deadline (and other tax dates) to Jan. 3, 2022. The tax relief applies to any area designated by the Federal Emergency Management Agency (FEMA)... Read more →
Even before the COVID-19 pandemic created a plethora of economic problems, student debt was a national concern. Student loans are among the largest contributors to household debt, according to a recent U.S. Census Bureau analysis. It cites Department of Education estimates that in 2017 the total amount owed in federal student loans was $1.37 trillion. That figure no doubt has grown dramatically in the last four years, exacerbated by the recent job losses caused by the coronavirus. Federal student debt relief moves: As the higher education debt dollars pile up, Washington, D.C., is working on ways to deal the costs... Read more →
It's fitting that I just learned today, late in the day, that Aug. 10 is National Lazy Day. I definitely will note this date on next year's calendar, if I can muster the energy, so I make the most of it in 2022. National Day Calendar, which keeps track of the myriad special designations for our 365 (plus one in a Leap Year), doesn't have much information on National Lazy Day. That would require some work, which is antithetical to the day's commemoration. But it does say that Aug. 10 is the day where we are given permission to relax... Read more →