Federal Tax Posts

The Congressional Budget Office (CBO) has reported that the estimated federal budget deficit for the first four months of fiscal year 2024 reached $531 billion. That amount is $71 billion more than the deficit recorded during the same period during fiscal year 2023. Although revenues this year were $112 billion (8%) higher, outlays rose by $183 billion (9%). Note that a significant portion of the [...]

If you have an Individual Taxpayer Identification Number (ITIN), make sure it’s current before you file your taxes. In general, certain nonresident and resident aliens, their spouses and dependents who aren’t eligible for Social Security Numbers use ITINs to file income tax and information returns. The IRS can still accept your return if your ITIN has expired, but the expiration may result in processing delays [...]

One of the provisions of the Inflation Reduction Act is intended to provide financial help to farmers, ranchers and forest landowners who experienced discrimination from the U.S. Dept. of Agriculture (USDA) prior to 2021. Applications for the USDA Financial Discrimination Assistance Program were due Jan. 17, 2024. The IRS recently released FAQs (https://bit.ly/42RXbWI  ) about the tax treatment of program payments taxpayers received. Payments generally [...]

If you’re due a tax refund and are reluctant to receive it by direct deposit, here’s a reason to reconsider. The Financial Crimes Enforcement Network (FinCEN) has reported a surge in check fraud schemes using the U.S. mail. The latest available figures from FinCEN show that from 2020 to 2022, the number of suspicious activity reports related to check fraud nearly doubled, to over 680,000. [...]

Just in time for tax filing season, the IRS has made several updates to (and added several new) FAQs related to the health insurance premium tax credit. This refundable credit is designed to help eligible individuals and families with low or moderate income afford health insurance purchased through the Health Insurance Marketplace. The size of the premium tax credit is based on a sliding scale. [...]

The IRS is beginning phase two of its Pre-Examination Retirement Plan Compliance Program. The overall project is intended to reduce taxpayer burden, minimize IRS time spent auditing plans and encourage plan sponsors to self-correct. Sponsors currently chosen for participation will receive a letter urging them to review their plan documents and operations for tax law compliance. If you’re selected and don’t reply to the IRS [...]

The employer-provided childcare tax credit is designed to help employers cover some of the qualified facility, resource and referral costs associated with providing childcare services to their employees. A qualified childcare facility is one that meets the requirements of all applicable laws and regulations of the state or local government in which it’s located. The credit is limited to $150,000 per year to offset 25% [...]

Recent IRS guidance provides the 2024 depreciation limits for “luxury” business vehicles. For vehicles placed in service in 2024, depreciation limits are $20,400 for year one, $19,800 for year two, $11,900 for year three and $7,160 for each year after that. This includes passenger cars, SUVs, trucks and vans. The IRS also announced lease inclusion amounts for lessees of passenger vehicles first leased in 2024. [...]

A taxpayer who disputes a past-due tax bill can request a Collection Due Process (CDP) hearing. At a CDP hearing, one taxpayer didn’t dispute his tax bill of $107,410 but he did submit an offer-in-compromise, proposing to make monthly installment payments of $25. He also proposed being granted currently-not-collectible status and asked for penalty abatement. After analyzing the taxpayer’s ability to pay, the IRS Service [...]

If you’re in the market for an electric vehicle and hope to qualify for the new or used clean vehicle tax credit, take note: Deadlines for submitting seller reports to the IRS have been extended. Your seller is required to submit a report to the IRS Energy Credits portal by a specified deadline and provide you with a copy no later than three days after [...]

IRS notice 2024-22 provides anti-abuse guidance to employers that offer the new pension-linked emergency savings accounts (PLESAs). The procedures are intended to prevent participants from manipulating rules to cause excessive matching contributions. According to the IRS, a reasonable policy balances PLESA participants’ interests with the plan sponsor’s interest in preventing manipulation of matching contribution rules. On the other hand, it’s generally unreasonable to forfeit contributions [...]

The IRS is reminding certain disaster victims of a fast-approaching deadline on Feb.15, 2024. Those affected by federally declared disasters that occurred in 2023 between Aug. 8 and Oct. 9 were granted extra time to file their 2022 tax returns, but not extra time to pay taxes due. Among those disasters were Hurricane Lee, Hurricane Idalia and the wildfires in Hawaii. Generally, when the Federal [...]

Coming on the heels of its recent passage of the proposed Tax Relief for American Families and Workers Act, the U.S. House of Representatives may soon vote on another tax-related bill, the SALT Marriage Penalty Elimination Act. It addresses the state and local tax (SALT) deduction, which was capped at $10,000 by the Tax Cuts and Jobs Act. The bill would increase the deduction for [...]

One of the most common misunderstandings about filing an income tax return is the difference between deductions and credits. Deductions reduce the amount of a taxpayer’s income before tax is calculated. For example, on your individual return, you can either take the standard deduction or itemize deductions if it will reduce your taxable income more. Credits, on the other hand, reduce the actual tax due, [...]