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 →
Rich Wealthy
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 →
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 →
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 →
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 →
Treasury Secretary Janet L. Yellen speaking at the Austin, Texas, Internal Revenue Service campus Friday, Sept. 6. The Secretary's remarks included news of progress collecting unpaid taxes from rich nonfilers. (Screen capture from Treasury YouTube video) The U.S. Treasury’s balance has grown recently, thanks to Internal Revenue Service’s success in collecting from high-wealth individuals who neglected to file tax returns. Treasury Secretary Janet L. Yellen and IRS Commissioner Danny Werfel this morning announced that to date $1.3 billion has been recovered from wealthy nonfilers. The new collection effort, kicked off in 2023 and led by dozens of senior employees, focused... Read more →
Photo by Antoni Shkraba Capital gains, the money made when you sell an asset that’s increased in value, have been in the tax code since the modern income tax was ratified in 1913. Back then, these earnings were taxed at a top 7 percent rate. In 1921, an alternative top capital gains tax rate of 12.5 percent was allowed. The 5.5 percentage point hike was not that bad, though, when you compared it to the top ordinary tax rate more than a century ago of 73 pct. Then the investment tax followed the adage that what goes up must come... Read more →
Yes, alligators, like this one enjoying an open water area of the everglades, are as much a cliché as Florida man escapades. But a gator seemed a good emblem for the IRS' persistence in going after a Florida man who evaded millions in taxes for around two decades. (Photo by Kay Bell) This Florida man story is much more serious that the Sunshine State memes you tend to see online. Aug. 13, Roger Whitman pleaded guilty to evading more than $2.4 million in taxes on income he earned from his business. The 76-year-old Ormond Beach, Florida, man’s business was manufacturing... Read more →
Keeping track of your finances when you're older can alert you to the possibility that you might owe tax on some of your Social Security benefits. Most of us look forward to retirement. Some of us also get a tax shock once we start collecting Social Security. Some of our federal retirement benefits, in some cases as much as 85 percent of our annual payout, could be subject to federal taxation. Not only is that tax an unwelcome surprise to older taxpayers, it also has become part of the current presidential campaign “Seniors should not pay tax on Social Security,”... Read more →
Photo by Lance Reis on Unsplash In March, the Internal Revenue Service and Treasury Department announced they were going after non-filing millionaires. Today, they reported that the IRS has collected more than $1 billion from high-wealth taxpayers with past-due taxes. With resources bolstered by added Inflation Reduction Act funds, the IRS said it stepped up compliance activity specifically on 1,600 individuals whose incomes were more than $1 million per year and who each owed the IRS more than $250,000 in recognized tax debt. The IRS assigned 1,500 to revenue officers to the cases. They got payments from more than 1,200... Read more →
Photo by Nick Night on Unsplash All taxpayers are supposed to be guaranteed privacy when it comes to their tax information filed with the Internal Revenue Service. Unfortunately, the IRS’ system is not immune to security breaches. Most of the time, it’s regular taxpayers like you and me whose personal data is of interest to crooks who want it to file fraudulent tax returns. But from 2018 to 2020, an IRS contractor stole years of tax returns and filing information related to thousands of the United States' wealthiest people. The contractor, Charles Littlejohn, then disclosed that tax info to the... Read more →
Paul Baxendale-Walker, a former tax advisor and attorney, or solicitor as the profession is known in the United Kingdom, has had his share of run-ins with British officials. Most recently, Baxendale-Walker was facing a £14 million penalty ($17.7 million U.S.) sought by His Majesty's Revenue & Customs, or HMRC, the British version of our Internal Revenue Service. HMRC filings against the Baxendale-Walker estimate his schemes have cost the exchequer some £1 billion ($1.27 billion U.S.) in lost taxes. Now, however, Baxendale-Walker is off the hook for the fine. But what's probably more frustrating for U.K. tax officials that losing out... Read more →
Credit: David Boeke via Flickr You’ve probably read that some of the country’s wealthiest people are warming to a second Donald J. Trump presidency. Today’s announcement from the U.S. Treasury and Internal Revenue Service might be part of the reason. The country’s financial division and its tax collection arm agency say they are going after “a major tax loophole exploited by large, complex partnerships.” The initiative, say Treasury and IRS, is one step in ongoing efforts to “shut down abusive transactions using existing regulatory authority and ensure wealthy individuals, complex partnerships, and large corporations pay taxes owed.” Focus on opaque... Read more →
Photo by Ben White on Unsplash Remember the Paradise Papers? They are part of the alliterative financial revelations by the International Consortium of Investigative Journalists (ICIJ). Per the ICIJ’s blurb, the Paradise Papers reveal in 2017 exposed the “secrets of the global elite” hidden in the files of “prestigious offshore law firms, a specialized trust company and 19 company registries in secrecy jurisdictions.” That ICIJ financial scoop was preceded in 2013 by the Panama Papers, and followed in 2021 by the Pandora Papers. Now, best-selling Swedish author Håkan Nesser, whose name appeared in the Paradise Papers, has been sentenced to... Read more →
Scenic Georgetown is one of the most popular neighborhoods in Washington, D.C. It’s where the D.C. Office of the Attorney General (OAG) alleged a bitcoin billionaire lived for years, but did not pay District income taxes. (Photo courtesy GeorgetownDC.com) Where you live affects your taxes, says the woman who’s spent most of her life in two states, Texas and Florida, without a personal income tax. For a while, though, I did live in two tax collecting jurisdictions, Washington, D.C., and Maryland. Fortunately for the hubby and me, when we resided in the national capital, we weren’t on the District of... Read more →
Today's post on the second half of the 2024 Internal Revenue Service's Dirty Dozen tax scams looks at a wide range of schemes and potential victims. Tax pros are targets, as are high income earners in schemes 7 through 12. Together with the Dirty Dozen's first six scams posted last week, there's a scam for almost all of us taxpayers. Take notice and don't become a Dirty Dozen victim. Last Friday, I shared the first six of the Internal Revenue Service's annual Dirty Dozen list. As promised, this post wraps up schemes, cons, and scams 7 through 12. This compilation... Read more →
Photo by Zachary Keimig on Unsplash The Internal Revenue Service is processing millions of returns that are coming in as Tax Day for the main 2024 tax season nears. But thanks to added Inflation Reduction Act money, the tax agency also is looking more closely at some returns. It recently resumed sending automated notices that had been on hold since February 2022 due to COVID-19 pandemic problems. And it got even more attention when IRS Commissioner Danny Werfel announced that his agents were going to crack down on individuals who use corporate jets for personal travel jets. While most of... Read more →
Expensive homes are subject to higher mansion taxes in 17 locales across the United States. (Photo by Daniel Barnes on Unsplash) A couple of weeks ago, I blogged about growing opposition to higher taxes on expensive real estate in Los Angeles and Chicago. So naturally, a recent Institute on Taxation and Economic Policy (ITEP) piece on these so-called mansion taxes caught my eye. Local mansion taxes have been around since 1982, notes ITEP local policy analyst Andrew Boardman in his article for the Washington, D.C.-based nonprofit. However, the momentum for them has built in recent years. Nearly all of today's... 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 →