Geralt via Pixabay Economists use a variety of measurements to track inflation, but the one that matters most to you and me is the personal consumption expenditure, or PCE, price index. This gauge of consumer spending increased 1.1 percent in June. The difficulty many folks are having in meeting their rising living expenses finally prompted some Congressional action. The Senate is expected to vote next week on what's been dubbed the Inflation Reduction Act of 2022, a budget reconciliation package that includes tax, climate change mitigation, and health care provisions. But closer to home, 16 state governments are taking more... Read more →
Inflation
Image by Wokandapix from Pixabay The 2022 calendar aligned this year so that July 4th provided many of us with an extra-long holiday weekend. But the fireworks are over and, sadly, we'll never be independent of taxes. So it's back to work this first week of July, and back to making tax moves that can at least keep a few more dollars out of Uncle Sam's clutches. Here are five to consider this July. 1. Note the taxable driving change. If you use your vehicle for business or medical travel, that tax benefit got a bit better on July 1.... Read more →
Shutterstock The hubby and I are spending the Independence Day holiday like we usually do. We're staying home. Even in our younger days, we didn't travel on holidays. We also lived in places where fireworks, the big draw on the Fourth of July, were easily accessible or visible from our homes. Of course, there was that year in Washington, D.C., where our car almost got towed, but that just added excitement to the festivities on the National Mall. Almost 48 million people, however, disagree with the way the hubby and I celebrate July 4th, according to AAA. That's how many... Read more →
With inflation at historic levels, U.S. families are re-examining their budgets. Uncle Sam recently did the same with his money, or rather the Congressional Budget Office (CBO) did. What this federal agency within the government's legislative branch found was surprising. The word that the CBO actually used was unexplained in connection with the robust growth of tax collections. Unexplained income tax revenue: "Tax collections in both 2020 and 2021 were larger than the currently available data on economic activity would suggest," according to the CBO report "The Budget and Economic Outlook: 2022 to 2032" issued on May 24. "That unexplained... Read more →
Evening traffic on Pennybacker Bridge in Austin, Texas. (Photo by Manuel Garza via Flickr) The Internal Revenue Service today delivered a bit of good news to taxpayers who use their vehicles for medical and business purposes. The standard optional mileage rates used to calculate tax deductible amounts are going up on July 1. The increase of the rates, which last were adjusted in December as part of the IRS' annual review of transportation costs, comes as the nation's national average price for a gallon of regular gasoline nears $5. "The IRS is adjusting the standard mileage rates to better reflect... Read more →
Plus, a look at when Uncle Sam gets to tax some of the federal retirement payouts he distributes. The U.S. economy might be slowing down a bit, but people still are finding jobs. May's unemployment figures, released by the Bureau of Labor Statistics on June 3, showed a slight increase in jobs. That kept last month's unemployment rate at 3.6 percent, just above the lowest level since December 1969. Work data for last month also showed that the jobless rate, the federal government's employment count that includes those not looking for work and those holding part-time positions for economic reasons,... Read more →
This coming Memorial Day long weekend is the first in more than two years that millions of Americans are treating as more-or-less normal. (Remember that?) And people's pent-up travel wishes are pushing aside COVID-19 pandemic worries in a big way. AAA Memorial Day 2022 forecast AAA predicts 39.2 million people will travel 50 miles or more from home this Memorial Day three-day holiday. This is an increase of 8.3 percent over 2021, and brings travel volumes almost in line with those in 2017. But another year also comes to mind. Back in 2012, gasoline was $3.64 per gallon. When adjusted... Read more →
Photo by Andrea Piacquadio These last 2+ years of lingering coronavirus pandemic have prompted some folks to become more adventurous. They've done isolation 180s, now opting to hit the road. Some have even gone as far as to move far, far away from their homes. When U.S. residents make international moves for work, there's one part of the country they keep. They still must file tax returns and pay tax to Treasury on their overseas earnings. Yeah, I know. Not exactly the memento from home you wanted to take on your travels. The good news, though, is that Uncle Sam... Read more →
The inflation we're experiencing right now is truly a pain. Thank goodness most of my driving is my weekly trip to the grocery store, but those bills have almost doubled. However, the current inflation level does have one, tiny bright spot for folks who have a specific type of health care coverage. It's bumping up tax benefits for individuals who have a high deductible health plan (HDHP) and associated health savings account (HSA). HDHP coverage has grown in popularity as health care costs kept rising, even before this historic inflation increase. As the name indicates, these plan enrollees face more... Read more →
Photo by Anna Shvets from Pexels Inflation is the biggest domestic, and political, concern right now. And after months of waiting, the Federal Reserve's expected reaction to rising prices came last week. The board members of the United States' central bank raised interest rates on Wednesday, March 16, for the first time since 2018. The bump of a quarter percentage point to its benchmark rate is the first of expected increases to combat the country's highest inflation in four decades. When all is said and done, most financial observers say the previously near-zero interest rates to be near 2 percent... Read more →
Even before Russia invaded Ukraine, gasoline prices in the United States were going up due to that Econ 101 basic supply and demand. During the COVID-19 pandemic, more U.S. workers starting doing their jobs remotely. Working from home meant no commuting, so fewer vehicle fill-ups. Oil producers, notably the OPEC (Organization of the Petroleum Exporting Countries) cartel, responded by cutting production sharply in 2020. Since then, things have returned to, for lack of better words, more normal. Demand for oil and products like gasoline has surged since pandemic lows. But production has not kept up. More people wanting a scarce... Read more →
UPDATE, June 9, 2022: When retail gasoline prices skyrocketed this summer, the Internal Revenue Service acted to reflect the increased expense. On July 1, it hiked 2022's optional standard mileage rates by 4 cents per gallon through the end of the year. That means for the last six months of 2022, business travel may be claimed at 62.5 cents per mile, and travel for medical reasons is calculated for those final six months at 22 cents per mile. You can find more on the midyear revision and the double deductible driving record keeping it requires in my increased 2022 mileage... Read more →
The United States has a voluntary compliance tax system. Uncle Sam trusts all of us to follow the tax laws and file and pay any amounts that are due the U.S. Treasury. But Uncle Sam is no fool when it comes to taxes. He also has a system of penalties to encourage or, if we refuse, punish us for not fulfilling our tax responsibilities on our own. The most severe are criminal prosecutions. The Internal Revenue Service also employs civil actions to get taxes due. Most of us, though, are more familiar with the fines and fees that are assessed... Read more →
Photo: JHL via Flickr The last couple of years have been challenging for U.S. citizens living and working abroad. The COVID-19 era for expatriates has meant they've had to deal with changing demands from their American-based employers along with the health rules of the nation where they live. One thing, however, has remained the same. Most Americans who go abroad for work still must deal with the Internal Revenue Service. They owe U.S. taxes on their income, regardless of where it's earned, because Uncle Sam still relies on a worldwide tax system at the individual level. There are, however, some... Read more →
This lord a-leaping and his nine other colleagues will cost you a hefty sum this year if you give them and the 11 other gifts inspired by the "12 Days of Christmas" carol to your true love. (Photo by Yogendra Singh from Pexels) Did you survive Black Friday shopping? More to the point, did your bank account survive? The crowds this year apparently were smaller, but the freedom to shop in real life didn't offer as many savings. Plus, there was inflation. As everyone knows by now, prices have been rising. That definitely is true for the annual PNC Financial... Read more →
AMT law changes plus annual inflation adjustments mean that this parallel tax aimed at the wealthy is no longer such a broadly-based ATM for the tax collector. The political and legislative battle over how to collect from the wealthiest taxes, which was mentioned in yesterday's Part 6 tax inflation post on (among other things) estate taxes, is not new. It's been going on for decades. The Alternative Minimum Tax, or AMT, is one way that Washington, D.C., came up with to ensure that the rich pay at least some taxes. This post, Part 7 of the ol' blog's 10-part inflation... 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 →
Medical matters have been front and center for the last two years due to the COVID-19 pandemic. Even without a global health crisis, taxpayers know they need to keep an eye on not just their wellbeing, but also on how medical expenses could create a tax outcome that's healthier for the filers rather than the Internal Revenue Service. There are a variety of medical tax breaks. And several of them are adjusted each year to account for inflation. Here, in this Part 5 of the ol' blog's annual tax inflation series, is a look at those changes for the 2022... Read more →
There's one thing that every taxpayer, regardless of their financial situation, can agree on. We all want to pay the least amount of taxes to Uncle Sam as possible. The key way to get our taxable income to the lowest possible level is by claiming deductions, either the standard option by itemizing as discussed in Part 2 of the ol' blog's annual inflation adjustment series. Either option helps lower your taxable income. But there are additional deductions we should check out at filing time, like the above-the-line deductions anyone can claim. Then there are tax credits, which are a better... Read more →
Tax year-in and tax year-out, most filers claim the standard deduction instead of itemizing. The 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 on the first page of Form 1040. The standard deduction trend got even more participants after the Tax Cuts and Jobs Act (TCJA) of 2017 essentially doubled the standard amounts. And those now more valuable deduction amounts still usually get a boost at the end of every year... Read more →