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 →
Rich Wealthy
Photo by dylan nolte on Unsplash There are nine states with no personal income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. I mention this today because the lone winner of last night’s Mega Millions $361 million ($157.3 million one-time cash option) jackpot bought the slip in Texas. If that person lives here, he/she/they are in luck, since the millions only have to be shared with the Internal Revenue Service. California, Washington special situations: The same goes for the other no-income-tax states, as well as California. Yep, although California is infamous for many and varied... Read more →
Update, Monday, Jan. 29, 2024: Former IRS contractor Charles Littlejohn today was sentenced to five years in prison for disclosing tax return information without authorization. Update, Friday, Oct. 13, 2023: Former IRS contractor Charles Littlejohn pleaded guilty on Oct. 12 in federal court to disclosing tax return information without authorization. As noted in the post below, the compromised tax data was that filed by former president Donald J. Trump, and billionaires Jeff Bezos, Elon Musk, and Warren Buffett, among others. The tax material was given to two separate media organizations, which published stories based on the information. Littlejohn's sentencing hearing... Read more →
IRS Commissioner Daniel Werfel, pictured at a Senate Finance Committee hearing in February, today announced the agency's new, expansive plans to enforce federal tax laws in a more equitable way. Artificial intelligence (AI) has been part of the Internal Revenue Service's arsenal for a while. Now, thanks to more money from the Inflation Reduction Act, the tax agency is going to use more AI to expand its examinations of high-dollar earners. That includes not only individuals, but also partnerships and corporations. This shift of compliance efforts will shift the IRS' focus from working-class to wealthy taxpayers, noted IRS Commissioner Danny... Read more →
America's elite billionaires club last week welcomed a new member. The person who has the sole winning ticket, purchased at a Publix grocery store in Neptune Beach, Florida, can claim the $1.58 billion Mega Millions jackpot. The Aug. 8 jackpot was the largest Mega Millions jackpot awarded, according to the national lottery. The winner, who has yet to come forward, has the option of taking the nearly $1.6 billion spread out over 30 years. Or the winner can slide into the millionaires' club by getting a single cash payment of $783.3 million. One vs. 30 payouts: Most people opt for... Read more →
Flags of member nations at the United Nations office in Geneva, Switzerland. (Photo by Photo by Peda Run on Unsplash) Here in the United States, the Internal Revenue Service has gotten a lot of attention for its efforts to fight tax evasion. Earlier this month, the IRS reported that it IRS had collected $38 million from more than 175 high-income tax delinquents. That money was the result of a new initiative made possible from $80 billion new Inflation Reduction Act funds, although Republicans clawed back $1.4 billion of that money (and more to come in future years) in the debt... Read more →
Photo by Chris Ensminger on Unsplash The federal estate tax has always been politically divisive. Opponents, usually Republicans, argue it essentially is double taxation on a deceased person's wealth. They cite instances where families lose property that's been held for generations when they must pay estate tax. The GOP goal is to eliminate the estate tax. Supporters, typically Democrats, say the estate tax only applies to a very small group of ultra-wealthy families. They want to expand the amount subject to the levy. Collecting more from those estates, they argue, would help fund programs for middle- and lower-income taxpayers. At... Read more →
Updated Tuesday, Dec. 24, 2024 A New Jersey resident has finally claimed the nearly $1.13 billion Mega Millions jackpot that was won on March 26, according to New Jersey Lottery officials. For obvious reasons, the winner of the fifth highest jackpot in the national lottery’s history wants to remain anonymous. But regardless of whether we find out the identity of America’s newest millionaire — the winner has opted to take a lump payment of $537.5 million before state and federal taxes — the winner needs to take some steps, like those listed below, to preserve the newfound wealth. The same... Read more →
Harvard University, pictured here in Richard Rummell's 1906 watercolor landscape, would pay the most if a Massachusetts tax bill tied to students who get in based on family connections is enacted. (Image Courtesy of Arader Galleries via Wikipedia Commons) Following the Supreme Court's ruling that effectively ends affirmative action in college admissions, a proposal by two Massachusetts state lawmakers is getting a lot of attention. Their bill would tax rich colleges in the Bay State, including Harvard, whose policies were the basis of the high court decision, and put the money into a trust to fund community colleges is getting... Read more →
If you were rich, what would you buy with all your money? (Photo by Leon Kohle on Unsplash) During the 1992 presidential election, then-candidate Bill Clinton's mantra was "It's the economy, stupid." It worked. Clinton was elected and served two terms. Now a group of wealthy individuals worldwide are hoping a tweaking of Clinton strategist James Carville's iconic phrase will help them convince governments to increase taxes on the rich and simultaneously raise the minimum wage. "It's the inequality, stupid," say those who are part of the nonprofit Patriotic Millionaires. The group points to the astounding escalation of economic inequality... Read more →
The United States avoided defaulting on its debt, thanks to last-minute deal reached by President Joe Biden and House Speaker Kevin McCarthy and grudgingly agreed to earlier this month by Congress. Park of the package was a $21.4 billion cut to money the Internal Revenue Service was supposed to use for tax enforcement. The agreement called for an immediate $1.4 billion reduction, plus the loss of $20 billion over the next two years, most of that coming from the nearly $80 billion in extra funding the IRS was given as part of the Inflation Reduction Act. Critics of the hit... Read more →
After legislative and court fights, Washington State's capital gains tax took effect on Jan. 1, 2022. The Evergreen State's 7 percent tax applies to the sale of stocks, bonds, and other financial assets exceeding $250,000. And its collection, with the tax's first payments due this past April, has been a boon for the state's treasury. Initial estimates predicted the capital gains tax might provide Washington State around $248 million in this fiscal year, which ends on July 1. The actual amount the state has collected as of May 9 was more than three times that: $849 million. Education boost: Washington... Read more →
A view from the left field upper deck of the Milwaukee Brewers' ballpark, back when what is now American Family (AmFam) Field was known as Miller Park. (Photo by Brewersfan1061 via Wikipedia Commons) We're six weeks into the Major League Baseball season and my two favorite teams are giving me plenty of reasons to cheer and rant. But ain't that the way with all sports? At least my teams, the Orioles and Astros, are settled in Baltimore and Houston. I feel for the Oakland fans, where the few still going to Oakland-Alameda County Coliseum are watching their underperforming A's run... Read more →
The Treasury Department and Internal Revenue Service today released an extensive plan on how the tax agency will spend the nearly $80 billion in added funds it received in the Inflation Reduction Act (IRAct). New IRS Commissioner Daniel Werfel, in the introduction to the 150-page Strategic Operating Plan, said the plan is structured to achieve the following five objectives — Dramatically improve services to help taxpayers meet their obligations and receive the tax incentives for which they are eligible. Quickly resolve taxpayer issues when they arise. Focus expanded enforcement on taxpayers with complex tax filings and high-dollar noncompliance to address... Read more →
White House Budget video screenshot. Full video is available at Facebook and Twitter. The Biden Administration released its fiscal year 2024 budget today (March 9, 2023). Thanks to previews from President Joe Biden, there are no surprises as far as taxes. "I want to make it clear I'm going raise some taxes," Biden to told a group in Virginia Beach, Virginia, who gathered Feb. 28 to hear about healthcare. "Many of you are billionaires out there. You're going to stop paying at 3 percent. Not a joke." The president's promise was put in writing today with the issuance by the... Read more →
There's still time to give for 2022 tax purposes, especially if you make an electronic donation. If you're among the minority of taxpayers who still itemize, year-end philanthropy is one of the easiest ways to boost your Schedule A deductions. And much of that giving his happening right now. Nonprofits Source, a digital marketing consultant for nonprofit groups, says an estimated 30 percent of annual giving occurs in December. Ten percent of those gifts are made in the last three days of the year. If you're part of this last-minute giving group, here are some tips on getting your potentially... Read more →
Merry Monday Holiday After Christmas on Sunday. Happy Boxing Day. Joyous End-of-Year Tax Tasks to Complete Week. Yep, the start of the last week of 2022 has a lot of identities. But it's that last designation that you need to pay close attention to, since the end of the tax year is critical when it comes to many tax moves. Here are eight you need to consider and, if they apply to you, complete by Dec. 31 — or actually by Friday, Dec. 30, in some cases since it's the last business day of 2022. 1. Take your required minimum... Read more →
Not all foreign tax havens are tropical islands, but the idyllic getaways do conjure images of tax crooks enjoying isolated beaches at Internal Revenue Service's expense. (Photo by Asad Photo Maldives) Correlation does not imply causation, but in a couple of high-profile offshore tax evasion cases, it's starting to look like trying to allegedly put one over on the U.S. tax collector is not a healthy move. For the second time in four months, a defendant in an offshore tax evasion case has died. Carlos Kepke, a Houston-based tax attorney who was indicted on charges that he helped hide $225... Read more →
These senior citizens celebrate their shared birthday month, if not the required traditional IRA withdrawals the big days may trigger. A QCD can help avoid tax on the mandated distributions. (Photo by Kay Bell) Most of us still have a real life, old-school, snail mail box. Every November, it is the target for the most mail of the year. Yep, the holidays are here. My curbside box is jammed with two types of correspondence, catalogs and charity solicitations. I get a kick out of thumbing through the catalogs. And yes, I even order a few (too many) things. The donation... Read more →
A single winning ticket for the record $2.04 billion Powerball lottery jackpot was sold in Altadena, California. The good news for the buyer, or buyers if it's a shared ticket, is that California is one of two states that don't tax lottery winnings. The other is Delaware. The bad news is that the U.S. Treasury still gets a big chuck of the huge payout when the winner(s) finally collect. Winnings are ordinary taxable income: Since lottery winnings are considered under the Internal Revenue Code as gambling proceeds, the Internal Revenue Service will get a cut. When winnings are more than... Read more →