Don't Mess With Taxes

No, that money from the Internal Revenue Service that just showed up in your bank account or snail mail box is not another COVID-19 economic impact payment. It's the result of the IRS working through tax returns that were filed before a new tax law that excludes a chunk of unemployment benefits from taxation. This week, the IRS announced that another 1.5 million taxpayers will get these unemployment-income-related refunds. The IRS says the average refund going out now is $1,686. COVID relief for the out-of-work: This is the latest round of refunds made to comply with changes in the American... Read more →

July has become a big month for the Internal Revenue Service. Last year, in the heart of the COVID-19 pandemic, July 15 was the delayed regular tax return filing deadline. This year, July 15 is the kickoff date for Advance Child Tax Credit payments and resumption of some IRS collection and enforcement efforts. This summer month also a welcome time for folks who early in 2021 filed tax returns reporting all their 2020 unemployment benefits. The IRS announced today that around 4 million of those taxpayers are about to get refunds for their tax overpayments. Where the IRS has taxpayers'... Read more →

With companies reopening as the coronavirus has abated somewhat, rush-hour traffic has returned to highways across the United States. Austin area workers, like these on the Capital of Texas Highway, are among those resuming commuting. (Photo by Tony Webster via Flickr) Many workplaces across the United States are returning, at least in part, to pre-COVID-19 form. That means many employees are heading back to their offices. And that means commuting is returning, too. The good news for many workers is that they get tax-free help in going back to their jobs. Since it's been a while between bus, train, vanpool... Read more →

Cleaning up after customers. (Photo by RODNAE Productions from Pexels) Some businesses reopening after the lifting of COVID-19 pandemic restrictions have struggled to hire workers. The big debate is whether coronavirus relief, primarily Uncle Sam's added unemployment benefits, or low wages is why so many jobs are going unfilled. That argument is likely to continue, along with the Congressional battle to raise the federal minimum wage. Earlier this year, the effort to increase it from $7.25 per hour to $15 an hour failed. Some state, city minimum wages hiked: Wage increase advocates, however, have had more success at other governmental... Read more →

It's Dirty Dozen Week at the Internal Revenue Service. That's right, a week of examining the 12 most common and/or worst tax scams that have cropped up over the last year. I've been blogging about the annual IRS scam list for as long as Don't Mess With Taxes has been around. Sadly, some of the scams that I noted in my first list post back in the spring of 2006 — phishing for taxpayer identity details, fake charities, unscrupulous tax preparers — tend to show up year after year. You can see the repeat offenders in the 2019 and 2020... Read more →

Photo by 竟傲 汤 from Pexels Texas is pretty much open. Even my local grocery store, which for almost a... Read more →

Photo by Min An from Pexels Among the many welcome events that are returning as we continue to move beyond complete COVID-19 lockdown are weddings. Congratulations and best wishes to all the brides and grooms out there who finally are enjoying their long-planned celebrations. My gift to all y'all newlyweds is a few words of marital tax advice. With apologies for the spare gift wrapping, here are some tax tasks you need to take care of now, or at least as soon as you get back from your honeymoon. 1. Make sure everyone knows your new name. After marriage, some... Read more →

Unemployment benefits were a lifesaver for many Americans who saw their jobs eliminated during the height of coronavirus pandemic. Now some of those unemployment insurance (UI) recipients are getting another boost from the benefits thanks to a change in how the COVID-related funds are taxed. The American Rescue Plan Act of 2021 (ARPA) deemed up to $10,200 per taxpayer in unemployment compensation as tax-free. ARPA became law on March 11, meaning some filers submitted their 2020 returns and paid tax on all the UI benefits they got last year before the change took effect. Rather than make those folks redo... Read more →

It's a good summer for young people looking for jobs. (Photo by Andrea Piacquadio from Pexels) Before COVID-19, one of the traditional rites of passage for young people was getting a summer job. After literally being locked out last summer due to business pandemic precautions, young workers are returning. In fact, for American teenagers looking for work, this may be the best summer in years. The share of teenagers working is above pre-pandemic levels. The staffing firm Challenger, Gray & Christmas projects teens will add about 2 million jobs to the economy this summer. Still, despite all that economic and... Read more →

When it comes to funding a comfortable retirement, most of us look at every possible revenue stream. For some, however, the searching is more difficult. They are the owners of unclaimed retirement savings accounts. When enough time passes, the accounts essentially are lost. And it's a substantial amount that's sitting around waiting to be claimed. Recent studies published by the University of Wisconsin-Madison's Center for Financial Security found that in 2016, there were an estimated 70,000 unclaimed retirement accounts across the United States. These accounts totaled $38 million. Those numbers jibe with other analyses of lost retirement accounts. Investment manager... Read more →

The 2020 tax return filing deadline for most U.S. taxpayers literally is just days away. If you're scrambling to meet the May 17 due date, don't be in such a hurry that you cheat yourself out of some tax savings. You can claim deductions, either by itemizing if that gives you more than your standard deduction amount or by claiming some income adjustments, most of which are still referred to (by me, at least!) as above-the-line deductions, that reduce the amount of income that's taxed. There also are tax credits, which are even better because they directly reduce what you... Read more →

Even before 2017's Tax Cuts and Jobs Act (TCJA) greatly increased the standard deduction amounts, most people chose to use the standard deduction amount. But one thing that the latest tax reform law didn't change is the ability for many to get some added deductions without itemizing. These used to be called, at least by the tax community, above-the-line deductions. They got that moniker because pre-TCJA they appeared in the last section of the old long Form 1040, just above the last line of that form's first page where your adjusted gross income (AGI) was entered. (A handful also were... Read more →

Still working through the retirement changes that were part of 2019's SECURE Act? Get ready. SECURE 2.0 is on its way. The Ways and Means Committee (W&M) today, May 5, unanimously — yes, Republicans and Democratic representatives agreed on something! — to send this latest set of retirement (and tax) law changes to the House floor. First round retirement law review: Provisions in the first SECURE, or Setting Every Community Up for Retirement Enhancement, Act took effect Jan. 1, 2020. It was the largest retirement reform bill since the Pension Protection Act back in 2006. Among the major changes in... Read more →

Every tax-filing season is different. One thing is constant, though. Taxpayers, and sometimes even the tax preparers they hire, make mistakes on 1040 forms. Hey, we're only human. But there are some common tax filing errors that we all need to be aware of and do our best to avoid. Here are 12, collected from my personal experience, talks with tax professionals and the Internal Revenue Service. They're in no particular order. Some might seem insignificant. Others obviously are huge. Either way, each and every one could, at best, slow down the processing of your tax return and subsequent refund.... Read more →

Shawn Campbell via Flickr Creative Commons Last year was difficult for lots of people. Millions lost their jobs due to coronavirus pandemic protocols. For many, that also meant losing their workplace provided healthcare coverage. Finally, though, there is a bit of good news for folks in this situation. The American Rescue Plan Act (ARPA), which was enacted in March, contains provisions to help individuals deal with COVID created health insurance issues. Plus, the Internal Revenue Service recently announced that taxpayers who received more federal advance subsidy than needed to help buy health coverage through the Affordable Care Act (ACA) exchange... Read more →

Sometimes it's worth the extra time and effort to file an amended tax return. In its regular email to tax professionals last week, the Internal Revenue Service remined them that their clients who filed 2020 returns before the American Rescue Plan Act (ARPA) excluded a portion of unemployment from tax don't need to file amended returns. The IRS says it will recalculate the tax liability of these filers, taking into account the tax they paid on $10,200 per person in unemployment benefits before ARPA's March 11 enactment date. If the early-filing taxpayers are due a refund, the IRS will automatically... Read more →

Photo: RODNAE Productions via Pexels April 7 is National No Housework Day. I didn't realize that until #TaxTwitter pal Joe Kristan noted it at the end of his Eide Bailly LLP tax roundup blog post today. In my defense, I overlooked No Housework Day because that's basically every day for me. Oh, I do some household chores, but grudgingly. And I'm lucky. The hubby is a more diligent cleaner than I. That means we don't (so far) have a paid housekeeper. But some folks do. And depending on the arrangement, those who hire household help have some tax tasks to... Read more →

While the Internal Revenue Service is working on recalculating taxes paid on unemployment benefits by early filers, other taxpayers are dealing with potential tax bills on money they didn't get. They are victims of unemployment insurance fraud. And their numbers increased last year as millions of people filed for the jobless assistance in the wake of the COVID-19 pandemic. To help people dealing with unemployment identity theft, the Department of Labor (DoL) has launched a new website. Alerted by mail: Many don't learn that unemployment benefits have been fraudulently collected in their names until they receive something in the mail.... Read more →

You lost your job last year and collected unemployment. You knew that the benefits are taxable income, so when you filed your 2020 tax return earlier this year, your calculations made sure that Uncle Sam got his piece of your unemployment money. Then along came the American Rescue Plan Act (ARPA), signed into law on March 11, and its provision excluding a portion of jobless benefits from tax. How do you get your overpaid unemployment taxes back? This week, the Internal Revenue Service followed up on its earlier announcement that filers shouldn't amend their 2020 returns because of the new... Read more →

It's April. You know what that means. Major League Baseball is back! Yep, the return of The Boys of Summer takes top billing this month since the Internal Revenue Service pushed the usual April 15 Tax Day to May 17. I'll be spending this Opening Day doing what I do every year when the professional baseball season starts: watching games. All 30 MLB teams are in action today, so that's a lot of innings to occupy my time. Update: Today's meeting of my East Coast team, the Baltimore Orioles, at the Red Sox's Fenway Park is postponed until Friday due... Read more →