Are you confused by all the recent tax law changes and the effects they may have on your Business or Individual income tax returns that you have no idea how to handle certain situations? Do you want to save on as many Individual and Payroll tax expenses as possible? If so, allow our over eighty years of tax experience to guide you along in a way that will save you income taxes and enable more tax-free money to go into your personal account rather than the IRS. Call us now at 215.550.3636.
The IRS released guidance explaining when the temporary 100% deduction for restaurant meals is available and when the 50% limitation on the deduction for food and beverages continues to apply for Section 274 purposes.
Under Section 274(n)(1), a deduction for any expense for food or beverages is generally limited to 50% of the amount that would otherwise be deductible. However, the Consolidated Appropriations Act, 2021, P.L. 116-260, enacted a temporary exception to the limitation for amounts paid or incurred after December 31, 2020, and before January 1, 2023, for food or beverages provided by a restaurant. This temporary 100% deduction was designed to help restaurants, many of which have been hard-hit by the COVID-19 pandemic.
Under the notice, "restaurant" means a business that prepares and sells food or beverages to retail customers for immediate consumption, regardless of whether the food or beverages are consumed on the business's premises. A restaurant does not include a business that primarily sells prepackaged food or beverages not for immediate consumption, including a grocery store; specialty food store; beer, wine, or liquor store; drug store; convenience store; newsstand; or a vending machine or kiosk. The 50% limitation continues to apply to the amount of any deduction otherwise allowable to the taxpayer for any expense paid or incurred for food or beverages acquired from those types of businesses.
The notice explained that an employer may not treat as a restaurant for Section 274(n)(2)(D) purposes:
Any eating facility located on the employer's business premises and used in furnishing meals excluded from an employee's gross income under Section 119; or
Any employer-operated eating facility treated as a de minimis fringe under Section 132(e)(2), even if that eating facility is operated by a third party under Regulations Section 1.132-7(a)(3).
The notice is effective for amounts paid or incurred after December 31, 2020, and before January 1, 2023.
Call us now at 215.550.3636, Monday through Sunday, should you find yourself in a scramble to figure out what meals are and are not not tax deductible
Tax planning with respect to non-business income may impact the best course for tax purposes by reducing or eliminating the “if less” rule. This is only an income tax deduction and it doesn’t reduce the base for computing the self-employment tax.
Our focus for this article is on the Section 199A deduction that arose with the 2017 Tax Cuts and Jobs Act and the potential impact new legislation may have. Maximizing this deduction is a significant tax planning consideration through 2025.
The deduction is “above the line,” and so available to taxpayers even if they use the standard deduction, which is much more common these days. It can reduce the tax on business income, whether that income arises via sole proprietorship, partnership, S corporations, or an estate or trust.
Estates and trusts may be less likely generally to have qualifying income, but when the deduction does apply, it may apply at the entity or beneficiary level. When the business is that of a partnership or S corporation, the deduction is calculated after flow-through rather than at the entity level.
In the recent literature on our topic, the 20 percent of business income deduction is sometimes termed the “pass-through deduction,” apparently because the deduction most often benefits flow-through entity owners. Under current law, there can be type-of-business limitations plus wage/qualifying property limitations.
There may be more liberal rules at lower income levels as to these groups, which can suggest planning with respect to even charitable donations. Can charitable planning be impacted by the 20 percent of business income deduction? Yes, yet more deductions can also bring into play the “lesser of” rule with its focus on taxable income. The complexities of the planning often emphasize “what if” math.
It is possible that rental real estate income will qualify in certain circumstances. Whether earned income constitutes wages or fees as a contractor is important for reasons such as payroll tax and withholding.
The decision to incorporate and operate as a C corporation forgoes the 20 percent of business income deduction as to income in the entity. This is a major factor to consider in deciding whether to corporate or not.
Our main focus, important to our year-end tax planning, is what the Biden administration might do in terms of this important provision. Senator Wyden of Oregon chairs the Senate Finance Committee. His government web site calls the 2017 Tax Cuts and Jobs Act a “partisan tax scam.”
He goes on to say, “This new tax law is raising taxes on millions of middle-class families and showering hundreds of billions in benefits on multinational corporations that ship jobs overseas.” So, where does the 20 percent of business income deduction fall in terms of this influential senator and others given its origin in the 2017 Tax Cuts and Jobs Act?
The Senator introduced the “Small Business Tax Fairness Act” in July, 2021, the current text of which says it would apply to taxable years beginning after the date of enactment. The proposed bill would not tamper with the current expiration of the Section 199A deduction. The bill has its liberalizing features and can help some.
The bill looks to expand the definition of qualifying trade or business to basically any other than wages as an employee. The Senate Finance Committee “Newsroom” write-up in this regard claims half the benefits go to millionaires, whereas many “Main Street small business owners are excluded.” It goes on to lament benefitting mega-millionaires “while middle-class accountants are cut out.”
The “Newsroom” also states: “Small business owners would no longer have to calculate their deduction using formulas and limitations based on W-2 wages paid and qualified investments.” The bill would also purportedly exclude hedge fund managers and “real estate speculators like former President Trump.”
“Wyden’s bill would aim to simplify the baseline deduction by using an individual’s taxable income as the basis, and allow a 20 percent deduction of their income from that business. The current pass-through benefit involves a more complicated calculation comparing 20 percent of the business income against 20 percent of the owner’s taxable ordinary income, excluding long-term capital gain.”.
Its main delimiting feature focuses on the “threshold amount” defined as $400,000. To this author’s reading, the key is the rule that would look to the taxpayer’s taxable income over $400,000, and basically phase out the deduction gradually as taxable income reaches $500,000.
There would appear to be complete elimination of the deduction at the $500,000 taxable income level. The amount of qualifying business income would appear to be limited to the much publicized $400,000 threshold.
Other aspects of the bill deny the deduction to marrieds filing separately, as well as trusts and estates. The original Section 199A helped a “taxpayer other than a corporation” whereas this bill would limit the deduction to an individual.
There are also proponents arguing for complete repeal of the Section 199A deduction. President Biden’s proposals per se do not appear to repeal or even cut back the 20 percent of business income deduction.
So, we do have prospects of no change to Section 199A, some proponents for repeal, and Senator Wyden’s new proposal expanding the benefits for some while not allowing the deduction to benefit high income taxpayers. Tax planners will be watching for prospects of legislative change because of the provision’s significance to the broad spectrum of taxpayers.
Call us now at 215.550.3636, Monday through Sunday, should you find yourself in a scramble to understand more about the IRS Section 199A business deduction.
A fourth stimulus check from the government could take one of two forms: monthly checks in fairly small amounts, or one-time payments of up to $2,000.
Both options have been put forward by legislators in Congress as follow-ups to the third round of pandemic relief payments, which were made possible by the American Rescue Plan Act of March 2021.
Fourth stimulus check amount — here’s how much it could be
Bill in Congress would guarantee $1,200 monthly checks for Americans
Here's how to make sure you get your next stimulus check
The U.S. economy is still recovering, with slow but steady job growth even as unemployment numbers hold steady. Inflation, however, appears to be on the rise, contributing to fears among economists and lawmakers that further stimulus payments could only fuel more price hikes.
As a result, there's no legislation in Congress that would create a fourth round of stimulus payments, even though some Democratic lawmakers have called on President Joe Biden to consider recurring payments. The White House has passed back the buck, stating that the president would consider whatever Congress comes up with.
In May, seven Democrats on the House Ways and Means Committee sent a letter to President Biden requesting that the administration add a fourth and even a fifth stimulus check to the American Families Plan announced earlier this spring.
But the White House has said little about a fourth stimulus check. In a press conference in June, White House Press Secretary Jen Psaki said, "The president is certainly open to a range of ideas," when asked about the lawmakers pushing President Biden for more stimulus checks. But that doesn't mean a fourth stimulus check is happening.
"We'll see what members of Congress propose," Psaki added, "but those [stimulus checks] are not free."
The most noteworthy economic effort in current legislation is President Biden's $2.25 trillion infrastructure investment proposal, the American Jobs Plan.
That proposal doesn't include a fourth stimulus check or anything like the direct payments that millions of people received over the course of the pandemic. Rather, it's a long-term initiative to rescue, recover and rebuild the country's financial standing.
Call us now at 215.550.3636, Monday through Sunday, should you find yourself in a scramble to understand more about the fourth stimulus check.
The IRS permitted employers to take immediate advantage of various payroll tax credits enacted in response to theCOVID-19pandemic by retaining an amount of the payroll taxes equal to the amount of qualifying wages that they paid, rather than deposit them with the IRS. Notice2021-24, issued in April, amplifies guidance issued last year (Notice2020-22) and provides for penalty relief under Section 6656 for an employer's failure to timely deposit certain employment taxes with the IRS.
The relief applies to employers who are required to pay qualified sick leave wages and qualified family leave wages, and qualified health plan expenses allocable to these wages, under the Families First Coronavirus Response Act (FFCRA), P.L. 116-127, as amended by the Consolidated Appropriations Act, 2021 (CAA), P.L. 116-260, and the American Rescue Plan Act (ARPA), P.L. 117-2.
This notice also provides relief from Section 6656 for certain employers subject to a full or partial closure order due to COVID-19 or experiencing a statutorily specified decline in business under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136, as amended by the CAA and ARPA.
In addition, the notice provides relief from Section 6656 for certain employers for which COBRA continuation coverage premiums were not paid by assistance-eligible individuals for such coverage by reason of Section 9501(a)(1) of ARPA.
The penalty relief applies to deposits of employment taxes that an employer reduces in anticipation of any of these credits:
Paid sick and family leave credits under the FFCRA, as amended by the CAA, with respect to qualified leave wages paid with respect to the period beginning Jan. 1, 2021, and ending March 31, 2021;
Paid sick and family leave credits under Sections 3131, 3132, and 3133 with respect to qualified leave wages paid with respect to the period beginning April 1, 2021, and ending September 30, 2021;
The employee retention credit under Section 2301 of the CARES Act, as amended by the CAA, with respect to qualified wages paid with respect to the period beginning January 1, 2021, and ending June 30, 2021;
The employee retention credit under Section 3134 with respect to qualified wages paid with respect to the period beginning July 1, 2021, and ending December 31, 2021; and
The credit for continuation coverage premium assistance under Section 6432, for COBRA continuation coverage premiums not paid by assistance-eligible individuals for such coverage by reason of Section 9501(a)(1) of ARPA during the period beginning April 1, 2021, and ending September 30, 2021.
The amount of employment taxes that the employer does not timely deposit must be less than or equal to the amount of the employer's anticipated credits for the calendar quarter as of the time of the required deposit, and the employer must not have sought payment of an advance credit by filing Form 7200, Advance Payment of Employer Credits Due to COVID-19, with respect to the anticipated credits it relied upon to reduce its deposits.
Biden's American Rescue Plan Act, which created the third stimulus checks, did boost tax credits for most parents with children under 18, but only for the year 2021. Most parents and legal guardians will receive a tax credit of $3,600 for children under six, and $3,000 per child aged six through 17.
Half of that credit will come in the form of monthly advance payments to parents beginning July 15 — $300 per month for younger kids, and $250 for older ones. That's similar to the monthly recurring checks that some legislators have called for.
The same law also retroactively exempted a large chunk of unemployment benefits paid out in 2020 from federal income tax. People who collected unemployment in 2020 and paid tax on it are getting thousands of dollars in tax-refund checks.
The American Rescue Plan Act also offers tax credits that cover all or most of the cost of a "Silver" health-insurance plan for six months under the Affordable Care Act, aka Obamacare. You're eligible for this if you filed for unemployment benefits at any time in 2021, and if you don't currently get health insurance through Medicare, Medicaid or someone else's health plan.
Biden's American Families Plan, which is separate from the American Jobs Plan, will seek to extend those tax credits, including the advance payments, through the end of 2025.
The American Families Plan would also mandate up to 12 weeks of paid parental leave and subsidies for childcare.
That's not to say another widespread stimulus check can't be written into the next major economic initiative. Although the consensus is that a fourth stimulus check isn't likely, many lawmakers and economists initially questioned the need for a second and third stimulus check too.
Meanwhile, some people have not received their third stimulus check due to a “programming error,” detailed in a new Fast Company report. The IRS has admitted instances of payment delays, but hasn't provided specific language on why certain taxpayers are facing issues with their payment.
Be sure to check yourstimulus check statusor call theIRS stimulus check phone numberwith questions regarding your payment. Read on for everything there is to know about the possibility of another round of payments.
The IRS issued Notice 2021-43 Tuesday providing transition relief for the deadline by which employers must request certification of employees as members of the designated community resident or qualified summer youth employee targeted groups for purposes of the work opportunity tax credit (WOTC). Under the transition relief, certain employers have until November. 8, 2021, to submit required certification requests.
To be certified as a designated community resident or a qualified summer youth employee under the WOTC, an employee must have a principal place of residence within an Empowerment Zone where the employee continuously resides.
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An individual will not be treated as a member of a targeted group unless the employer (1) obtains certification from the designated local agency (DLA) that the individual is a member of a targeted group, on or before the day the individual begins work, or (2) completes a prescreening notice (Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit) on or before the day the individual is offered employment and submits the notice to the DLA to request certification that the individual is a member of a targeted group not later than 28 days after the individual begins work.
The work opportunity credit is temporary, most recently extended for employees beginning work after Dec. 31, 2020, and before Jan. 1, 2026, by the Consolidated Appropriations Act, 2021, P.L. 116-260, on Dec. 27, 2020. The act also generally extended until Dec. 31, 2025, any designation by an appropriate secretary of an empowerment zone.
Under Rev. Proc. 2021-18, a state or local government is generally deemed to have extended an empowerment zone nomination’s expiration until Dec. 31, 2025, unless it declined to do so in writing by May 25, 2021. But, because that automatic extension did not occur until after the opt-out deadline (May 25), employers might not have submitted Form 8850 to the designated local agency within 28 days after an individual began work, the notice states.
Therefore, the notice allows an employer that did not submit Form 8850 to the designated local agency within 28 days after an hiring an individual as a designated community resident or qualified summer youth employee who began work on or after Jan. 1, 2021, and before Oct. 9, 2021, to do so by Nov. 8, 2021.
The notice also acknowledges that some employers may have submitted Form 8850 within 28 days regardless of an empowerment zone nomination’s expiration. Those employers that received a certification denial due to the expiration may also receive relief if they resubmit Form 8850 by Nov. 8. Employers whose Form 8850 was not denied or that were issued a certification despite the expiration do not need to resubmit the form.
An employer that hires an individual who is a designated community resident or a qualified summer youth employee and who begins work for the employer on or after Oct. 9, 2021, is not eligible for the transition relief described in this notice with respect to that new employee.
Tax preparation fees, which fall under miscellaneous fees on Schedule A of Form 1040 (also subject to the 2% floor), have been eliminated for tax years 2018 through 2025.
Tax preparation fees include payments to accountants, tax preparation firms, as well as the cost of tax preparation software.
Fees for investment costs were deductible
as a miscellaneous itemized deduction, to the extent they and other
costs exceeded 2 percent of your adjusted gross income.
For
tax years starting in 2018 and expiring at the end of 2025, miscellaneous unreimbursed
job-related expenses that exceed 2% of adjusted gross income (AGI) are no
longer deductible on Schedule A (Form 1040).
Examples of unreimbursed job-related expenses include union dues, continuing education,
employer-required medical tests, regulatory and license fees (provided the
employee was not reimbursed), and out-of-pocket expenses paid by an employee
for uniforms, tools, and supplies.
Tax preparation fees, which fall under miscellaneous fees on Schedule A of Form 1040(also subject to the 2% floor), have been eliminated for tax years 2018 through 2025.
Call us now at 215.550.3636, Monday through Sunday, should you find yourself in a scramble to figure out what is and what is not tax deductible under miscellaneous fees on schedule a.
Advance Child Tax Credit: How it Will Impact Your Tax Refund
Part of the American Rescue Plan Act is an advanced payment of the Child Tax Credit. Here’s how it will impact your 2021 taxes.
For 2021 only, the Child Tax Credit for children under 17 changes in the following ways:
The $2,000 credit increases to $3,000 for children between 6 and 17
The $2,000 credit increases to $3,600 for children under 6 at the end of 2021
Taxpayers will receive a monthly advance equal to half of their estimated credit during the final six months of 2021. That’s July through December.
The credit includes children who turn 17 during 2021.
You should expect to get the advance the same way as your tax refund or stimulus check. If you don’t get the advance, for example if the IRS thinks you don’t qualify, you can claim the credit when you file your 2021 tax return.
To qualify for the additional amounts and advanced payments, you will need an AGI under $150,000 for joint filers, $112,500 for heads of household, and $75,000 for single filers. Those with incomes slightly above the cutoff may see a reduced payment.
The IRS will use information from your 2020 tax return to determine your eligibility. If they haven’t received and processed your 2020 return, they will use 2019.
If you didn’t previously qualify, for example you had a baby in 2021, you can claim the full credit when you file your tax return.
It is possible for the Child Tax Credit advance to reduce your tax refund. Unlike the stimulus payments, this is not an entirely new tax credit. $2,000 is an existing credit, and $1,000 of that will be advanced.
Let’s say your 2020 and 2021 tax returns will otherwise be identical. In 2020, you got a $2,000 Child Tax Credit which turned into a $2,000 refund. In 2021, we’ll assume your child’s age gets you $3,000.
You will get half of that $3,000, or $1,500, as six monthly payments of $250 during the second half of 2020.
You will get the other half, or $1,500, when you file your tax return.
When you file your tax return, the amount of Child Tax Credit you’re claiming for refund is now $1,500 instead of $2,000. Even though the total credit is bigger this year, you already got part of it.
That means your refund will be $500 smaller than the $2,000 you got in 2020.
Even though you get more total money, you need to remember your 2021 refund may be smaller or you could end up owing money based on the other taxes you owe. It’s similar to having changes in your withholding or estimated tax payments.
To avoid owing taxes or if you like to get a big refund to help your budgeting, the IRS will provide an option to decline the advance payments. They will announce how to do this closer to when the payments start.
Another option is to adjust your income tax withholding at work or to recalculate your estimated tax payments.
The advance payments are not income. They are a tax credit that is being paid early instead of you having to wait until you file your tax return. There is no tax on these payments.
Still have questions on the Advance Child Tax Credit? Call one of our Tax Pros right now at 215.550.3636 from 1000am until 1000pm, Monday through Sunday.
The IRS unveiled a new online feature on Monday known as the “Tax Pro Account,” the purpose of which, for now, is to automate the submission of powers of attorney (POAs) to authorize tax practitioners to represent individual taxpayers and tax information authorizations (TIAs) to view those taxpayers’ accounts. But the IRS ultimately has bigger plans for the Tax Pro Account portal.
“Over time, additional functionality will be added for taxpayers and tax professionals that will increase the options for electronic interactions,” the IRS's announcement about the Tax Pro Account feature said.
The Service quoted Commissioner Chuck Rettig as saying, “This is the first, basic step toward a more fully integrated digital tax system that will benefit taxpayers, tax professionals, and the IRS.”
Tax Pro Account, which is separate from e-Services, is intended to speed the time for obtaining authorizations to represent taxpayers. The digital submissions will go directly to the Centralized Authorization File (CAF) database and will not require manual processing by IRS personnel, the Service said.
The digital POAs and TIAs are simpler versions of Form 2848, Power of Attorney and Declaration of Representative, and Form 8821, Tax Information Authorization.
Tax Pro Account does not replace other options for obtaining third-party authorizations, because POAs and TIAs will still be accepted by fax, mail, or the “Submit Forms 2848 and 8821 Online” portal — although all of these require manual processing, the Service said.
The new automated system has the advantage of being all electronic with real-time processing. The basic steps for using Tax Pro Account to obtain authorizations to represent clients are as follows:
The tax professional initiates the request for a POA or TIA by going to Tax Pro Account on IRS.gov;
The tax professional informs the taxpayer that an authorization request should be pending in his or her IRS online account;
The taxpayer logs in to his or her IRS online account, reviews the authorization request for accuracy, and electronically signs it;
The request is recorded to the CAF database (most will be recorded immediately, but some authorizations may take up to 48 hours, the Service says).
For now, Tax Pro Account can be used to obtain POAs and TIAs only from individual taxpayers, not businesses or other entities. Some tips on using the new automated system include:
The taxpayer must have an IRS online account;
The tax professional’s and taxpayer’s names and addresses must match IRS records exactly;
The tax professional must already have a CAF number and be in good standing with the IRS;
Both the tax professional and the taxpayer must have addresses in the United States.
Concise step-by-step instructions on how to use Tax Pro Account to obtain authorizations to represent taxpayers can be found in IRS Publication 5533-A,How to Submit Authorizations Using Tax Pro Account and Online Account. Additional information is available on the “Use Tax Pro Account” page of IRS.gov.
You should call our firm now at 215.550.3636, Monday through Sunday should you have any questions or concerns related to this new "Tax Pro Account".
The Internal Revenue Service and the Treasury Department allowed eligible employers Thursday to claim tax credits equivalent to the wages paid for providing paid time-off to employees to take a family or household member or other individuals to get vaccinated for COVID-19, or to take care of a family or household member or other individuals recovering from a vaccination.
Comparable tax credits are also available for self-employed individuals. The announcement Thursday expands a tax break that was announced last spring.
The Biden administration has been trying to encourage more people to get COVID-19 vaccinations as the highly transmissible Delta variant continues to spread around the U.S., upending plans for reopening the country for business and normal activities this summer. This week, the Centers for Disease Control and Prevention once again reversed their recommendations for wearing masks, encouraging even vaccinated people to wear their masks indoors to prevent further spread of this dangerous strain of the coronavirus.
The administration also announced Thursday that federal employees and contract workers would be required to be vaccinated or else submit to regular COVID-19 tests, while urging states and cities to pay Americans $100 to get vaccinated. Thursday’s expanded guidance on the paid leave tax credit aims to give employers more opportunity to protect the health and safety of their employees’ families and communities by vaccinating them.
The Treasury and the IRS said back in April that eligible employers, such as businesses and tax-exempt organizations with fewer than 500 employees and certain governmental employers, could receive paid leave tax credits available under the American Rescue Plan Act of 2021 for providing leave for each employee receiving the vaccine and for any time needed to recover from the vaccine.
The Internal Revenue Service posted an updated set of frequently asked questions Thursday on the expansion of the paid sick and family leave tax credits. The updates clarify that eligible employers can claim the credits for providing leave to employees to accompany a family or household member or certain other individuals to obtain immunization relating to COVID-19 or to care for a family or household member or certain other individuals recovering from the immunization.
“The paid sick and family leave credits reimburse eligible employers for the cost of providing paid sick and family leave for reasons related to COVID-19,” said the IRS. “The revised FAQs make clear this includes leave taken by employees to care for certain individuals to obtain immunization relating to COVID-19 or to recover from immunization relating to COVID-19. This new reason for paid sick or family leave also applies for the comparable credits for self-employed individuals.”
The IRS pointed out that the paid sick and family leave tax credits under the American Rescue Plan are similar to those put in place by the Families First Coronavirus Response Act (FFCRA), as amended and extended by the COVID-related Tax Relief Act of 2020, under which certain employers could receive tax credits for providing paid sick or family leave that met the requirements of the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act (as added by FFCRA). The tax credits under the FFCRA, as amended and extended by the Tax Relief Act, covered leave taken beginning April 1, 2020, through March 31, 2021. The ARP amends and extends these credits to leave taken beginning April 1, 2021, through Sept. 30, 2021.
The FAQs include information on how employers can claim the paid sick and family leave credits, with details on how to file for and calculate the relevant credit amounts, along with how to receive advance payments for and refunds of the credits. Under the American Rescue Plan, eligible employers, including businesses and tax-exempt organizations with fewer than 500 employees and certain governmental employers, can claim tax credits for qualified leave wages and certain other wage-related expenses (such as health plan expenses and certain collectively bargained benefits). Self-employed individuals can claim similar credits when they file their Form 1040.
New reports indicate 497 high-income taxpayers had over $150 million in their individual retirement accounts, and nearly 25,000 taxpayers had aggregate IRA account balances of $5 million or more.
Senate Finance Committee chairman Ron Wyden, D-Oregon, and House Ways and Means Committee chairman Richard Neal, D-Massachusetts, released new data they had requested from Congress’s Joint Committee on Taxation on the prevalence of mega-IRA accounts. The numbers are based on tax year 2019 data.
The information updates an earlier report from the Government Accountability Office in 2014 that Wyden had requested. The 2014 GAO report, which used 2011 tax data, showed nearly 8,000 taxpayers had aggregate IRA account balances of $5 million or more. The latest numbers reveal a spike in the use of mega-IRAs. As of tax year 2019, nearly 25,000 taxpayers had aggregate IRA account balances of $5 million or more, a threefold increase since 2011.
The latest reports come in response to a series of articles by the investigative news site ProPublica, which got access to confidential IRS information and found that ultra-high net worth taxpayers were plowing millions and even billions of dollars into IRAs as a way to reduce their taxes. The reports also provoked a backlash among some Republican lawmakers, however, who are seeking the source of the leaks of private tax returns.
“It is shocking, but not surprising, to see how the use of mega-IRA accounts by mega-millionaires and billionaires has exploded,” Wyden said in a statement Wednesday. “IRAs were designed to provide retirement security to middle-class families, not allow the super wealthy to avoid paying taxes. This is the perfect example of what I’ve long called the tale of two tax codes. On one hand, there are 100 million Americans with no benefits in retirement plans or savings in retirement accounts like IRAs. On the other hand, the top 497 IRA owners have an average aggregate account balance of more than $150 million each.”
He said the Senate Finance Committee is developing proposals to make the Tax Code fairer, and he planned to make ending the tax break a top priority.
The tax-writing House Ways and Means Committee is working on similar legislation. “This data indicates that the exploitation of IRAs is a growing problem,” Neal said. “IRAs are intended to help Americans achieve long-term financial security, not to enable those who already have extraordinary wealth to avoid paying their fair share in taxes and deepen existing inequalities in our nation. The Ways and Means Committee is already looking at strategies to ensure that this retirement savings tool isn’t misused as a tax shelter for folks at the very top.”
Not sure where you are going towards retirement and are concerned you will not have enough funds to live past your 70s and beyond? Call us now at 215.550.3636 for prompt answers and suggestions. We are available 7 days a week from 1000am until 1000pm and on the weekends. We are not stockbrokers, do not earn commissions and will only give you suggestive opinions.
The irs issued its annual replace friday of unique per-diem fees for substantiating everyday and important commercial enterprise charges incurred at the same time as journeying far from domestic (word 2021-52).
The new prices are in impact from oct. 1, 2021, to sept. 30, 2022. Mainly, they may be the unique per-diem rates, consisting of the transportation industry meal and incidental expenses quotes; the charge for the incidental-fees-only deduction; and the fees and listing of excessive-fee localities for purposes of the high-low substantiation technique.
The up to date costs are powerful for according to-diem allowances paid to any employee on or after oct. 1, 2021, for travel away from domestic on or after that date, and supersede the quotes in be aware 2020-seventy one, which supplied the charges for oct. 1, 2020, via sept. 30, 2021.
Rev. Proc. 2019-forty eight furnished trendy regulations for using a federal in line with-diem charge to confirm the amount of regular and essential prices for accommodations, meals, and incidental charges paid or incurred for commercial enterprise-related tour far from domestic.
High-low substantiation method
For functions of the excessive-low substantiation technique, the in line with-diem prices are $296 for travel to any high-price locality and $202 for travel to another locality in the continental u.S. (conus), both barely better than ultimate 12 months.
The amount of these charges this is treated as paid for food for functions of sec. 274(n) is $seventy four for travel to a high-price locality and $64 for journey to another locality inside conus, both additionally barely higher than remaining 12 months.
The awareness carries a listing of the localities which can be excessive-fee localities (localities that have a federal in line with-diem price of $249 or extra, $4 better than final yr) for all or a part of the calendar yr.
Incidental prices
On account that 2012, incidental costs have protected simplest costs and guidelines given to porters, bags vendors, resort personnel, and group of workers on ships. The per-diem price for the incidental-expenses-most effective deduction stays unchanged at $five consistent with day for any locality of journey.
The unique meals and incidental prices rates for taxpayers in the transportation industry are $sixty nine for any locality of journey inside conus and $seventy four for any locality of tour outside conus, each $three greater than remaining year.
Your Tax Pro On Demand
R Clyde Olivieri
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there is always more than one, so should you be in this situation, call us anytime
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