If you stopped at a Georgia gas station today to top off your tank, you might have encountered a line. Peach State motorists will see fuel prices increase tomorrow, Nov. 30, as the governor's emergency suspension of the state fuel excise taxes expires. So you couldn't blame them for trying to get one last bargain at the pump. Gov. Brian Kemp's decree, first issued in September and then extended in October through most of this month, saved drivers of gasoline-powered vehicles 31.2 cents per gallon. Drivers of auto that use diesel saved 35 cents per gallon. In addition to the... Read more →
Inflation
Tax mistakes, unintentional or otherwise, mean penalties when discovered by the IRS. And the amounts could add up. (Photo by Polina Tankilevitch) The United States' tax system depends on voluntary compliance by taxpayers. But Uncle Sam is no fool. He and his tax collectors are believers of the adage "trust, but verify." The Internal Revenue Service also follows up on that verification with penalties when it finds taxpayers — and the professionals we pay to take care of our taxes — aren't fulfilling our tax responsibilities on our own. The most severe punishments come via criminal tax prosecutions. The IRS... Read more →
Photo by Kyle Glenn on Unsplash This Thanksgiving week is a big travel week for millions of Americans. Most people are heading to friends' and/or relatives' where they'll share a Turkey Day spread. Others are using the time for other, non-holiday recreational pursuits. By this time next week, they'll be back home. In most cases, they'll return to homes are in the United States. However, thousands of U.S. citizens have relocated internationally. Despite the location distances, those Americans abroad share something with domestic residents other than celebrating a traditional U.S. holiday. They still owe U.S. taxes on their income, regardless... Read more →
Photo by Jon Tyson on Unsplash Taxes are all about the numbers, and this past week I've been posting inflation-adjusted figures that apply to a variety of tax provisions. Long-time readers know I parcel the numbers out in a 10-part series. But one of those posts, Part 3 on cost-of-living boosts in 2024 for tax-favored retirement savings plans, was published first because the Internal Revenue Service typically issues those adjustments first. Since that earlier Part 3 post hasn't gotten a sequential mention during this recent run of inflation series posts, I'm boosting it today. And I'm pulling out an item... 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. The AMT was created 54 years ago to ensure the rich paid at least some tax, but since it originally wasn't indexed for inflation, it increasingly affected a lot of less-wealthy taxpayers. (Photo by Unsplash+ in collaboration with Getty Images) What's worse than figuring your tax bill? Having to figure a second, parallel amount you might owe. That's a situation that taxpayers who owe the Alternative Minimum Tax, or AMT, end up facing at filing time. The... 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 →
Unsplash+ in collaboration with Getty Images 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 treatments 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 Part 5... Read more →
Taking advantage of these inflation-adjusted tax breaks could put more money in your pocket instead of Uncle Sam's bank account. (Photo by Sasun Bughdaryan on Unsplash) Each of our tax situations is unique. But every taxpayer can agree on one thing. We all want to pay the least amount of tax as possible. That universal goal can be reached by taking advantage of tax deductions, tax credits, and income exclusions. Deductions, like the standard amounts discussed in Part 2 of the ol' blogs annual tax inflation series, are a relatively easy, and popular, way to reduce a tax bill. Deductions... Read more →
Taxes are all about numbers, but generally speaking, we taxpayers are not big math fans. That's why we hire tax professionals or use tax software. That aversion to doing more calculations is why most of us have chosen, year-in and year-out, to claim the standard deduction. Sure, I know, we should use the tax deduction method, either standard or itemizing, that gives up the better tax due result. Still, I know some folks who use the standard deduction method without even comparing because, as noted, it's easier. There are no receipts to save, no additional adding, subtracting, and figuring percentages.... Read more →
Wide open spaces have a lot of appeal to many of us. Also appealing are the wider income tax brackets in 2024 just announced by the IRS. (Photo by Austin Pacheco on Unsplash) Inflation has dropped from its post-pandemic historic high in 2022, but it's still enough to cause financial pain. That, along with producers hanging on to their higher prices to recoup some of their COVID-19 losses, eats into our buying power, as every consumer is painfully aware. But there are a few instances when inflation can work to our advantage. One is when it prompts the Internal Revenue... Read more →
Substitute a cat for the dog, and that's pretty much how the hubby and I envision retirement! (Photo: Unsplash+ in collaboration with Getty Images) OK, boomer. When that catchphrase meme went viral a few years ago, it marked the end of friendly generational relations. It also could be seen as a wake-up call to retirement savers. With Social Security already facing financial challenges, many point to the added challenges that Uncle Sam's retirement program faces as even more of the Baby Boom generation retires. Congress has yet to address Social Security's future. Of course, the House and Senate seem to... Read more →
The coming wage base bump also means more FICA taxes for higher earners. It looks like this man got the good news that his Social Security benefit will be larger next year. However, the tax news for high earners who are still working isn't as welcome. (Unsplash+ in collaboration with Getty Images) The Social Security Administration (SSA) gave 71 million benefits recipients good news today. Next year, they'll get a 3.2 percent increase in their Social Security retirement benefits and Supplemental Security Income (SSI) payments. The cost-of-living (COLA) bump means that retirees will, on average in 2024, see more than... Read more →
Around this time each year, the Internal Revenue Service releases its annual inflation adjustments for a wide range of tax matters. The 2023 numbers kicked off the ol' blog's annual taxes and inflation series last Oct. 19. But the House Ways and Means Committee has already tinkered with those expected changes. The Congressional tax-writing panel has sent a bill to the full House that would increase the standard deduction by $2,000 for single taxpayers, $3,000 for head-of-household filers, and $4,000 for married couples filing joint returns. Standard deductions for the current 2023 tax year are $13,850 for single and married... Read more →
Inflation has increased the cost of everything, including health care. That's why many people, even before the recent jump in the cost of living, have chosen a high deductible health plan, or HDHP. As the name indicates, HDHPs require enrollees to pay more out-of-pocket costs, aka the high deductible amount, before policy coverage kicks in. However, HDHPs typically have lower monthly premiums than the traditional type of medical insurance. Many individuals, especially those in generally good health, accept the risk of a higher deductible in exchange for the immediate cash-flow benefit of lower premiums. Another part of the HDHP trade-off... Read more →
Millions say "no, back off," to their taxes every year, as Tax Day nears. They get an extension to delay doing their annual returns. They also have some strong feelings, as the survey discussed below reveals, about taxes and the filing process. (Photo by Alena Shekhovtcova) Tax Day 2023 — that's Tuesday, April 18, in case you forgot — is almost here. As of April 7, the latest date of tax filings the Internal Revenue Service has tallied for its filing season reports, the agency has received just more than 101.3 million returns. That down almost 2 percent from the... Read more →
Photo by Emanuel-Kluge via Flickr When U.S. residents make international moves for work, there's one part of the country that goes with them. They remain U.S. taxpayers, filing federal tax returns on the on their overseas earnings. Uncle Sam, however, does provide some tax breaks to his citizens living and working abroad. Their filing deadline is June 15. Thanks to tax treaties, globally peripatetic taxpayers also get certain foreign earned income exclusions and/or foreign income tax credits. These exclusion amounts also are affected by the cost of living, as noted in Part 8 of the ol' blog's 2023 annual inflation... Read more →
Image via California Franchise Tax Board Individuals who got special tax or inflation relief payments from their states last year won't have to worry about handing over a portion to the U.S. Treasury. The Internal Revenue Service announced late Friday, Feb. 10, afternoon, that, "in the interest of sound tax administration and other factors," recipients of the payments won't have to report the amounts on their 2022 tax returns that are now being filed. Disaster and general welfare exemptions: The IRS said that it will not challenge the taxability of payments related to general welfare and disaster relief. This means... Read more →
UPDATE, February 10, 2023: There's good federal tax news for residents in 21 states who last year got some financial relief from their states. The Internal Revenue Service has determined that the stimulus/tax refund payment amounts are not subject to federal tax. Remember back in January when I listed 6 reasons why you should wait to file your federal tax return? The Internal Revenue Service has come up with a new one for taxpayers in several states. Specifically, the IRS is telling individuals who last year received special state-issued payments to help offset higher inflation costs to wait before submitting... Read more →
Drivers faced plenty of challenges in 2022, notably the dramatic jump this year in fuel prices. That prompted the Internal Revenue Service in June to hike 2022's optional standard mileage rates for the last six months of the year. Now the IRS has bumped up the business rate again as part of its annual adjustments to a variety of tax laws. Beginning on Jan. 1, 2023, the standard optional mileage rate for a car (or van, pickup or panel truck) used for business purposes will be 65.5 cents per mile. That's up 3 cents from the midyear increase that applies... Read more →
via GIPHY Seven days from now, many of us will be opening Christmas presents. Hanukkah is underway. Regardless of what or how you celebrate December holidays, your purchases probably increase this month. And this year, inflation, even though it's abated a bit recently, means you have or will pay more for all those gifts, food, and other festive trimmings of the season. Every year, PNC financial services issues its Christmas Price Index, or CPI. It measures, using a methodology similar to Uncle Sam's official CPI, or consumer price index, the current costs of the gifts given in the classic holiday... Read more →