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Yahoo
11 hours ago
- Business
- Yahoo
US accountancy body supports tax fairness for disaster victims act
The American Institute of CPAs (AICPA) has expressed strong support for the Tax Fairness for Disaster Victims Act, introduced by Representative Timothy Kennedy. Known as HR 3975, the legislation aims to provide permanent relief for individuals affected by federally declared disasters by allowing them to use the prior year's earned income for the Earned Income Tax Credit (EITC). The bill's lookback rule has been included in several legislative packages in recent years but has not been made a permanent form of disaster relief. The AICPA said it has long advocated for the permanent establishment of such measures to aid those impacted by disasters. It explained that the EITC is a refundable tax credit for taxpayers with earned income below a certain threshold, which varies based on filing status and number of children. Natural disasters can disrupt work and reduce earned income, hindering taxpayers from claiming the EITC. AICPA senior manager for tax policy and advocacy Daniel Hauffe said: 'When natural disasters devastate local economies and impact taxpayers' ability to earn income, taxpayers should not lose eligibility for tax credits that would otherwise be available to them if not for their loss of income. 'The AICPA supports this bill because it would make permanent a provision that has been in numerous disaster tax relief legislative packages and, therefore, would offer clarity and certainty to taxpayers and tax practitioners.' A recent AICPA survey found that 37% of Americans have experienced fraudulent activities after being affected by natural disasters. The types of fraud include identity theft (14%), government assistance fraud (11%) and loan scams (11%). The survey also highlighted that residents in the north-east and south (both at 40%) are more susceptible to fraud compared to those in the Midwest (31%). In a separate survey, the AICPA emphasised the need for enhanced tax relief measures for disaster victims. Additionally, the survey indicated a strong public preference for extending Internal Revenue Service tax relief measures beyond initial emergency declarations. More than a third (35%) of respondents valued extended tax filing and payment relief periods post-disaster. "US accountancy body supports tax fairness for disaster victims act " was originally created and published by The Accountant, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Sign in to access your portfolio
Time Business News
5 days ago
- Business
- Time Business News
Tips to Avoid Common Tax Filing Mistakes
Tax season can be stressful, and mistakes on your tax return can lead to delays, penalties, or even audits. Whether you file your taxes yourself or use a professional, avoiding common tax filing mistakes is crucial for a smooth and accurate process. Understanding these pitfalls and how to steer clear of them can save you time, money, and headaches. In this article, we'll cover practical tips to help you avoid the most frequent tax filing errors and ensure your tax return is accurate and complete. One of the biggest mistakes taxpayers make is rushing into filing without having all the required documents. Missing documents can lead to incomplete or incorrect returns. Tips: Collect all income statements such as W-2s, 1099s, and investment income slips. Gather receipts for deductible expenses, charitable donations, and medical expenses. Keep documentation for tax credits you plan to claim, such as education or childcare. Organize your documents in advance to avoid last-minute scrambling. Simple errors like misspelled names, wrong Social Security numbers, or incorrect addresses can cause your tax return to be rejected or delayed. Tips: Verify that your name and Social Security number match your Social Security card. Ensure dependent information is accurate and complete. Update your address if you've moved since the last tax filing. Failing to report all sources of income is a common and costly mistake that can trigger IRS penalties. Tips: Report all wages, interest, dividends, freelance income, rental income, and other earnings. Cross-check your income documents against your employer or bank statements. Remember to include side hustle or gig economy earnings like rideshare or freelance work. Your filing status affects your tax brackets, deductions, and credits. Selecting the wrong status can lead to paying more taxes than necessary or complications with your return. Tips: Understand the differences between single, married filing jointly, married filing separately, head of household, and qualifying widow(er). Use IRS guidelines or tax software to determine the best status for your situation. If you're unsure, consult a tax professional for advice. Many taxpayers miss out on deductions and credits because they're unaware or forget to claim them. Tips: Review common deductions such as mortgage interest, student loan interest , and medical expenses. , and medical expenses. Don't overlook tax credits like the Earned Income Tax Credit (EITC), Child Tax Credit, and education credits. Keep proper documentation to support your claims in case of an audit. Simple arithmetic mistakes can cause discrepancies that delay your refund or trigger an IRS review. Tips: Use tax preparation software that automatically calculates totals and credits. If filing manually, double-check all addition, subtraction, and carryover amounts. Consider professional help if you find the calculations overwhelming. Missing the tax filing deadline can result in penalties and interest on taxes owed. Tips: Know the IRS deadlines, usually April 15th for individual returns. If you cannot file on time, request an extension by filing Form 4868 to avoid late-filing penalties. Remember, an extension to file is not an extension to pay any taxes owed. Forgetting to sign and date your tax return is a surprisingly common mistake that leads to processing delays. Tips: If filing jointly, both spouses must sign the return. For electronic filing, ensure your digital signature is completed. If a third party prepares your return, make sure you review and sign before submission. Choosing direct deposit reduces the chances of your refund being lost or delayed. Tips: Provide accurate bank account and routing numbers. Avoid using prepaid debit cards for deposit as they can sometimes delay access. Double-check your bank information to ensure it matches your bank statements. Having records of your filed tax returns and supporting documents is essential in case of audits or future reference. Tips: Save digital copies and print physical backups. Organize documents by year for easy retrieval. Retain tax records for at least three to seven years, depending on your situation. Avoiding common tax filing mistakes is key to a hassle-free tax season. By staying organized, paying attention to details, and using available resources like tax software or professionals, you can file accurate returns and minimize your risk of errors. Taking the time to double-check your information, claim all eligible deductions and credits, and file on time can help you maximize your refund and reduce stress. If your tax situation is complex, consider consulting a tax professional to ensure your taxes are done correctly. With careful preparation and attention, you can avoid common pitfalls and have confidence that your tax return is accurate and compliant. TIME BUSINESS NEWS
Forbes
13-07-2025
- Business
- Forbes
More On The Tips And Overtime Deductions In One Big Beautiful Bill
Earlier this week I noted a subtle difference in the limitations on the tips and overtime deductions included in the Big Beautiful Bill which can create either a marriage penalty or a marriage bonus. I was so taken by the apparent anomaly that I devoted a whole post to it. Now I am getting back to a fuller discussion. When President Trump first came out with "no tax on tips", I studied the proposals that were floating in Congress and had some concerns. Most notable was the harmful effect one of the proposals would have on Earned Income Tax Credit recipients. And then there was all sorts of commentary on how the provision might be gamed. What ultimately emerged addressed many of the issues. What we have in the final language about tips and overtime illustrates Reilly's Third Law of Tax Planning - "Any clever idea that pops into your head probably has (or will have) a corresponding rule that makes it not work". If you had an idea about how to game the "No tax on tips" of "No tax on overtime", let's see if Congress has already knocked it out even before any regulations have been issued. Deductions Subject To Limitations And Phase Outs First of all, the benefits are only about income tax, not Social Security and Medicare as the "no tax" monikers might imply. Further, the final bill puts limits and phaseouts in place. And the benefits are structured as deductions. It you want to know more about what that means, read the next paragraph, but feel free to skip it. It is worth looking at Form 1040 to understand where the deduction fits in. If you clicked on the link, you will see that your total income is on Line 9. Then on LIne 10, there are adjustments to income. There are a lot of those so they are totaled up on Part II of Schedule 1. Subtracting Line from Line 11 gives you your adjusted gross income (AGI). This is an important number because many thresholds and limitations are keyed to AGI including those of the tips and overtime deductions. Next on line 12 you get either your standard deduction or the total of certain itemized deductions from Schedule A. The tips and overtime will not be among them, so you don't need to be an itemizer. On Line 13 you will see the qualified business income deduction which will be added to the amount on line 12 to arrive at line 14 which is subtracted from AGI to arrive at taxable income. That's where the tips and overtime deductions will go along with the automobile interest deduction included in the bill. I don't know if they will add more lines to the form or give us another schedule. If it is another schedule I hope that they call it Schedule A PLUS. Do you remember all the talk about a postcard tax return in 2017? Still not happening. UNITED STATES - NOVEMBER 14: Speaker of the House Paul Ryan, R-Wisc., holds up a postcard tax return ... More form during the press conference following the House Republican Conference meeting in the Capitol on Tuesday, Nov. 14, 2017. Ryan is flanked from left by House Majority Whip Steve Scalise, R-La., House Majority Leader Kevin McCarthy, R-Calif., Republican Conference Chair Cathy McMorris Rodgers, R-Wash., and Rep. Rob Wittman, R-Va. (Photo By Bill Clark/CQ Roll Call)Both the tip deduction and the overtime deduction require that married taxpayers file joint returns to claim the deduction. There are dollar limitations. The limitation is $25,000 for the tip deduction and $12,500 for the overtime deduction on a single return and $25,000 for the overtime deduction on a joint return. The phaseout is the same - $100 for every $1,000 that modified adjusted gross income exceeds $150,000 on a single return or $300,000 on a joint return. The modification to adjusted gross income is an add back of income excluded because it was earned while living abroad or in Puerto Rico on one of the U.S. possessions. I have to wonder if the $150,000 threshold is an echo of the proposal to totally eliminate income taxes on those earning less than $150,000. Qualified Tips Unlike earlier proposals, "qualified tips" are not just tips received by employees. The deduction also applies to tips received in the course of a trade or business. The thing that comes to mind there is food delivery people or Uber drivers who are considered independent contractors. I also recall that adult entertainers can be independent contractors. The deduction will be allowed only to the extent that the gross income from the business exceeds the allocable deductions. This could present some planning issue for how capital assets might be written off. The tip deduction will reduce the amount of income counted as qualified business income for that deduction. What exactly are the "tips" that are the subject of the deduction? First of all, they have to be received by an individual in an occupation which "customarily and regularly received tips on or before December 31, 2024". There is a call for a list to be created. Next the amount involved has to be paid voluntarily, without consequence in the event of nonpayment, not the subject of negotiation and determined by the payor. So that amount that large parties have to pay in a restaurant seems to not qualify. There are excluded fields of business- health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, or any trade or business where the principal asset of such trade or business is the reputation or skill of 1 or more of its employees. I have to wonder if the "performing arts" exclusion knocks out the adult entertainers. There is some litigation in the sales tax area that might help them. Overtime For the definition of "qualified overtime compensation" you really need to look at the bill's language and meditate for a while. Here it is "... the term 'qualified overtime compensation' means overtime compensation paid to an individual required under section 7 of the Fair Labor Standards Act of 1938 that is in excess of the regular rate (as used in such section) at which such individual is employed". That language triggered some back and forth in the twitterverse, about whether they mean the total amount paid for overtime or just the premium. If you search for what the median hourly wage for Americans is, there are a variety of answers but they seem to be between $20 and $30 per hour, so let's use $25 for illustrative purposes. With that as the base hourly wage you get $1,000 per week for 40 hours, $52,000 per year. At time and half for overtime the $37.50 premium rate would max out the $12,500 limit at 6.5 hours a week. That is how I think of overtime and how I initially read, probably misread, the statute. The consensus seems to be that the deduction is only for the premium. Tom Gorczynski EA pointed out something from the White House website that supports that interpretation. I found that quite persuasive. Kelly Erb also writes that it is just the premium, which seals the deal for me. It still bugs me though. So if it is just the premium it takes 1,000 hours to max out the benefit if you are single in my example. Call it a 60 hours work week. If you are married and your spouse does not work overtime it would be 2,000 hours. At $50 per hour you will hit the maximum at 500 hours of overtime if you are single or 1,000 hours if you are married with a spouse that does not get overtime. Absent a lot else going on, you won't be having to deal with the phaseout. I won't comment on the equity or sense behind this particular deduction other than to remark that back when I used to work more than forty hours a week mostly without overtime pay, I found it a lot harder when I was doing that by working two jobs rather than longish hours on one job. So I am puzzled as to what makes an overtime premium worthy of special tax treatment. Gaming The Overtime Deduction I don't know much about the Fair Labor Standards Act, which is the key to the deduction. It is clear however that whether people are exempt employees not subject to the overtime premium requirement can be debatable. Employers will generally prefer to not have that requirement. I don't think this deduction will change that, but I can't resist coming up with a way to game it. Here is the idea. I have a bunch of salaried employees and I want to help them out. So what I do is cut everybody's pay to below $684 per week so that I have to pay them time and a half over forty hours. Then I guarantee them overtime hours which will include overtime hours when they are "on-call". That will bring them up to whatever their previous salary was. And a third of that amount will be deductible. This is actually a terrible idea when it comes to actually executing it, but I felt I had to come up with something if I could. I haven't thought of a way to game the tips deduction, but I am sure they will be coming.
Hindustan Times
05-07-2025
- Business
- Hindustan Times
IRS direct deposit refund schedule: Check eligibility and redressal measures
The Internal Revenue Service (IRS) is in the process of issuing tax refunds to those who filed their returns last month. Some filings that required an additional level of scrutiny due to information lapses or need to be rechecked for eligibility may have exceeded the 21-day limit set by the agency. As per Futbolete, this amount is as high as $3,034 in 2025, a 2.5% uptick from last year. How fast you get your refund depends on how you filed and how you asked to receive the money(Pexels) The official website for the IRS states, 'If you paid more through the year than you owe in tax, you may get money back. Even if you didn't pay tax, you may still get a refund if you qualify for a refundable credit. To get your refund, you must file a return. You have 3 years to claim a tax refund.' When will my refund be processed? As per official guidelines, it usually takes 'up to 21 days for an e-filed return, 4 weeks or more for amended returns and returns sent by mail and longer if your return needs corrections or extra review'. This means that the timings of your refund may be delayed if you: · Claim the Earned Income Tax Credit or Child Tax Credit · File a paper return · File an amended return · Request injured spouse relief · File a Form 1040-NR, Nonresident Alien Income Tax Return (can take up to 6 months) · Make an error on your return · File with an individual taxpayer ID number · Have a refund over $2 million Refunds are usually scheduled by direct deposit within 21 days of filing them if there are no errors in filing them. If you have opted for a direct deposit and file your 2024 returns electronically the payment may arrive sooner. Here's a schedule, as chalked out by Futbolete: · Tax returns filed on June 21: IRS direct deposit may be issued on July 1, 2025 · Tax returns filed on June 22: direct deposit may be issued on July 2, 2025 · Tax returns filed on June 23: direct deposit may be issued on July 3, 2025 · Tax returns filed on June 24: direct deposit may be issued on July 4, 2025 · Tax returns filed on June 25: direct deposit may be issued on July 5, 2025 · Tax returns filed on June 26: direct deposit may be issued on July 6, 2025 · Tax returns filed on June 27: direct deposit may be issued on July 7, 2025 · Tax returns filed on June 28: direct deposit may be issued on July 8, 2025 · Tax returns filed on June 29: direct deposit may be issued on July 9, 2025 · Tax returns filed on June 30: IRS direct deposit may be issued on July 10, 2025 Tax refunds can be repaid via direct deposit, paper check, prepaid debit card, mobile payment apps, and traditional, Roth or SEP-IRA. How can I check the status of my payment? Those still in doubt can use the 'Where's My Refund?' tool on the IRS website to check the status of their payment. 'Your refund status will appear around 24 hours after you e-file a current-year return, 3 or 4 days after you e-file a prior-year return and 4 weeks after you file a paper return,' the website states. Here are the different updates you will receive on the portal: · Return Received - Received your return and is being processed. · Refund Approved - Refund approved and is being prepared to be issued by the date shown. · Refund Sent - Refund sent to your bank or to you in the mail. It may take 5 days for it to show in your bank account or several weeks for your check to arrive in the mail. Try to avoid re-submitting your tax returns unless you are due a refund, you filed on paper more than 6 months ago, or if the Where's My Refund? tab shows that your return has been received. The tab will be able to reflect your status 48 hours after filing an e-return. By Stuti Gupta
Politico
27-06-2025
- Business
- Politico
Megabill delay 'possible,' Johnson says
Democrats say the Senate's rules keeper has nixed several tax provisions from Republicans' domestic policy megabill, including a special carveout for religious schools from a proposed hike in a college endowment tax. A separate break for private and religious schools was also dropped, as were regulations pertaining to guns. Parliamentarian Elizabeth MacDonough is also said to be objecting to a section in the sprawling tax, energy, immigration and defense bill aimed at reducing improper payments of the Earned Income Tax Credit, a wage supplement for the working poor. She also struck plans to up penalties for leaking private taxpayer information — a provision inspired by the leak of President Donald Trump's and other wealthy people's tax information to the news media. The deleted items are relatively small, especially compared to the health provisions MacDonough has struck in recent days that have forced Republicans to scramble to shore up the package. But the provisions nevertheless helped win support for the overall plan from individual lawmakers. Dropping a proposed charitable credit benefiting religious schools could save Republicans money. Still on deck, Democrats said, are their challenges to parts of the bill addressing a tax incentive program for economically struggling areas called Opportunity Zones; a section related to foreign entities claiming a clean energy production tax credit; provisions aimed at preventing undocumented workers from claiming refundable tax credits; and a new savings vehicle for children, dubbed Trump accounts. MacDonough has also not yet considered a Democratic bid to kill Republican plans to use a so-called current policy baseline to measure the cost of their tax package, said Sen. Ron Wyden , the ranking Democrat on the Finance Committee, in a statement. The announcement comes as part of a so-called Byrd Bath, a process by which MacDonough goes through lawmakers' legislation, provision by provision, to ensure it abides by the Senate's strict rules about what may be included in the so-called reconciliation bill. They're supposed to be exclusively focused on budgetary matters, though, because they are filibuster-proof, lawmakers frequently try to include other provisions as well. The decisions about which items fail sometimes leave lawmakers scrambling to rewrite them so they'll conform. MacDonough does not comment publicly on her determinations, and it's unclear whether the provisions could still be salvaged if they are rewritten. A spokesperson for Senate Finance Committee Chair Mike Crapo (R-Idaho) did not immediately respond to a request for comment. It's generally easier to include tax provisions in reconciliation bills, because they are so closely tied to revenues, than legislative language dealing with other subjects.
