Don't Mess With Taxes

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 Alexander Mils The Freedom Caucus on Capitol Hill is getting a lot of attention since one of its founders, Ohio Republican Rep. Jim Jordan, sought to replace ousted House Speaker Kevin McCarthy. The group, generally considered the most conservative and furthest-right bloc within the House GOP membership, was formed in January 2015 by conservatives who were emboldened by the Tea Party movement. You remember the Tea Party. It garnered much attention back in 2011 in its fight with the Internal Revenue Service over agency vetting of conservative (and, it ultimately was revealed, other) groups' applications for... Read more →

Unsplash+ in collaboration with Getty Images The U.S. Census Bureau's Current Population Survey Annual Social and Economic Supplement (CPS ASEC) shows that family-related reasons were a driver for more than a quarter, or 26.5 percent, of households between 2021 and 2022. Some of the moving vans were called to combine or create new family abodes as people who had put off wedding plans during the COVID-19 pandemic finally said "I do." In other cases, it was couples splitting their partnership and possessions, possibly due to too much time together during coronavirus lockdowns. There are tax implications when marriages begin and... 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 →

We made it through the debt limit's renewal, so of course the focus now is on tax cuts. Or at least the House Republican majority's focus. That's understandable, at least if you're familiar with how Capitol Hill works. The GOP wants to show that even with its slim House majority, it takes its position as the originator of federal tax laws seriously. And it wants to lay down some policy and political markers for, respectively, upcoming budget talks and the 2024 elections. To that end, the House Ways and Means Committee will consider next week a package of tax breaks... Read more →

Most U.S. workers get a salary or wages. Those amounts are reported to them early every year on Form W-2, which they use to file their annual tax return. But a lot of those folks also get other money throughout the year, and the Internal Revenue Service wants to know about that, too. These amounts, basically any income not reported on a W-2, go in Part I of Form 1040's Schedule 1, appropriately titled Additional Income. In many, but not all, cases the additional earnings are reported on one of the many types of 1099 forms. As with W-2s, 1099s... Read more →

Casino sportsbooks like this one in Las Vegas still take plenty of sports bets, but thanks to the Supreme Court's 2018 ruling allowing states to open up sports gambling within their borders, this year's Super Bowl wagering broke betting records. Happy Super Bowl Monday hangover! I'll try to type softly for all y'all skipping work today to recover from either celebrating your Kansas City Chiefs hoisting the Lombardi Trophy again or hunkering down because you drowned your Philadelphia Eagles' fan sorrows a bit too much. Regardless of the National Football League championship result, I hope at least some of your... 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 →

Before law changes, the now inflation-indexed Alternative Minimum Tax, known as the AMT, seemed to work like an ATM for the Internal Revenue Service, allowing it to collect this parallel tax from more than the wealthy for whom it was created. (Photo by Erik Mclean) Calculating one tax bill is bad enough, but some people have to deal with a second one at tax filing time. The Alternative Minimum Tax, or AMT, is a separate tax system created to ensure that the wealthiest pay at least some tax. The parallel AMT was added to the Internal Revenue Code in 1969... Read more →

Plus a look at how higher costs of living affect capital gains, youngsters' investment earnings, gifts, and more. Image via Giphy Them that got, are them that get. Not only is that a lyric (and theme) from a fabulous Ray Charles song, it's a good synopsis of the current estate tax law, especially with 2023 inflation adjustments. Many of the current wealth-related tax provisions help the richest among us stay that way. But some of them can help all of us, regardless of our income level, increase our relative wealth. And, as reviewed in this Part 6 of the ol'... Read more →

Looking up provides a lovely view of the Idaho statehouse dome. Gem State lawmakers, however, recently went the other direction, lowering the state's top personal income tax rate and making it the lone flat tax amount collected on individual earnings starting in 2023. (Photo by Kencf0618 - Own work, CC BY-SA 3.0) I've spent most of my earnings life in no-individual-income tax states. I was born, grew up, and got my first jobs in Texas. After a stint in Maryland, which collects state and local income taxes, the hubby and I moved to Florida, another no personal income tax state.... 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 →

I have a stock app on my phone. Yeah, that's it above, with all those ugly, jagged red lines. I'm smart enough not to get alerts, but now and then when I check other news, I see it. Like today, which got me thinking it's time to delete this piece of electronic info, at least for a while. But while I'm not enjoying the prospect of delaying the start of my golden years, the declining stock market is good news for some retirement account owners. If they have traditional IRAs, the current down market could be a good time for... Read more →

NOTE: You can find an updated version in my Oct. 13, 2023, post about tax myths and eclipse superstitions pegged to the Oct. 14. 2023, annular eclipse. Here are this weekend's full Flower Moon eclipse stages. The moon moves right to left, passing through the penumbra and umbra, leaving in its wake an eclipse diagram with the times (Eastern time zone) at various stages of the eclipse. Visualizations by Ernie Wright, NASA Scientific Visualization Studio. Click here for the video version. And if it's cloudy where you live, you can livestream the eclipse. It's Friday the 13th, the only one... Read more →

Does your tax bill seem too big? You are not alone in thinking that, according to a recent survey. Every filing season, a lot of taxpayers discover that, at least from their point of view, they are paying too much in taxes. That's still true, even though we've now had four full years of the Tax Cuts and Jobs Act (TCJA) changes. This major tax reform bill was supposed to simplify filings, and it did for millions by expanding the standard deduction amounts and shifting folks from itemizing. It also, according to the Republican lawmakers who crafted it, was supposed... 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 →

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 →

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 →