Latest news with #taxcode
Wall Street Journal
4 days ago
- Business
- Wall Street Journal
The GOP Gambles on ‘Trump Accounts'
Some of the most expensive parts of the federal budget and tax code started small but eventually grew into monsters. The likeliest candidates for that result in the GOP's tax and budget bill are the new Money Accounts for Growth and Advancement, aka MAGA or Trump accounts. This is one more government tax-preferred investment account like IRAs or 529 plans, albeit with some different rules. Unlike those accounts, the government will make a one-time $1,000 payment to be invested in a stock-market index fund for babies born between 2025 and 2028. Parents could add up to $5,000 a year to the accounts, though without a tax write-off. The funds will grow tax deferred, but no withdrawals are allowed until the child turns 18.
The Sun
24-06-2025
- Business
- The Sun
Three common payslip errors that could cost you £1,000s – how to spot them
EMPLOYEES could be missing out on thousands of pounds every year because of simple payslip mistakes. Wage slips are something most of us barely glance at, but experts are warning that failing to check the small print could leave workers either overpaying tax, losing holiday pay, or facing huge bills from HMRC. 1 One of the biggest errors is being put on the wrong tax code. This might not sound serious, but if you're paying too much tax each month, it adds up fast. Most workers in a single job should be on the 1257L code, which lets you earn £12,570 tax-free each year. But if your employer gives you extras like private health insurance, your allowance could shrink, changing your code to something like 1100L instead. Worse still, if you've recently changed jobs and see a code like C0T, W1, M1 or X, you could be on an emergency tax code, which means you're paying far more tax than you should. If you've been in your new job more than five weeks and still see one of these codes, speak to your payroll department immediately. Another costly mistake is missing or miscalculated annual leave. Many workers wrongly assume their holiday pay is sorted but if you take more days off than you're entitled to and leave partway through the tax year, your employer could demand money back. On the flip side, some employees are short-changed because they've not taken the time off they've earned. It's also common for holiday pay to be miscalculated, especially if you work irregular hours. What Does My Tax Code Mean? A Simple Guide to Your HMRC Letter Keeping track of your own days and comparing them against your payslip could save you hundreds. Finally, bonuses and commission payments can be a major trap. These are classed as taxable income, but in some cases they're added to payslips without the right deductions. If you've been handed a lump sum that hasn't been taxed, it might feel like a win but it could come back to bite you. HMRC may later demand the unpaid tax, potentially with interest and fines. If a big bonus pushes you into a higher tax band, you could also find yourself owing more than expected. Always check that any extra earnings have had tax and National Insurance taken off. It might seem like a headache, but checking your payslip each month can save you serious cash. If something looks off, speak to your payroll team and if you're still unsure, log in to your HMRC tax account online to check what they have on file for you. Expert Marc Crosby at said: 'The majority of payslip errors are genuine mistakes that can be easily fixed. "But without checking every payslip, you could be missing out on money owed to you or - worse - end up owing a lot in repayments or underpaid tax. "Employers may not always realise the full impact of what might seem like a small error, but particularly where Universal Credit and other benefits are involved, it can have a long-lasting knock-on effect which can be time consuming and stressful to fix. Fast action is vital to prevent small errors becoming financial disasters!' How to check your tax code You can check your current tax code by logging into your personal tax account online, using the HMRC app, or digging out your latest payslip. You could have also received a Tax Code Notice from HMRC in the post, so it's always worth checking recent letters too. If the numbers don't add up, contact HMRC directly. You can call them on 0300 200 3300 or write to: Pay As You Earn and Self Assessment, HMRC, BX9 1AS. Those who've overpaid could see a refund land in their bank within five days once their claim is processed or receive a cheque in the post within two weeks. But it's not always good news, some may find they underpaid tax and owe HMRC money. If that's the case, most will be asked to repay it gradually over 12 months. If you're owed money, you may also receive a P800 letter or a simple assessment telling you how much you're due and how to claim it. There's a four-year limit on claiming back overpaid tax, so if you think you've been overcharged, don't delay. Whether you're a full-time employee, working multiple jobs, or have just switched roles, it's worth double checking your code because a five-minute check could leave you hundreds better off.
Forbes
09-06-2025
- Health
- Forbes
IRS Should Treat Lawsuit Settlements For PTSD As Physical & Tax Free
Most lawsuit settlements are taxed, but there's an important exception: compensatory damages for personal physical injuries or physical sickness are tax free under Section 104 of the tax code. However, exactly what qualifies has been hotly debated for decades. Damages for emotional injuries are fully taxable, yet if you have emotional injuries triggered by physical ones, the damages for the emotional injuries are also tax-free. It can make taxing emotional distress and physical sickness a kind of chicken and egg issue. Settlement wording matters, as does the complaint. Adding to the confusion, exactly what is 'physical' is not defined. Traditionally, the IRS likes to see observable bodily harm such as bruises, cuts or broken bones. Yet many injuries are not obvious but can be worse and take longer to heal. What example, where do sexual abuse or sexual assault fit in? It may depend on how severe it is, what evidence you have, and more. For many victims, an award of cash comes with tax worries, can the IRS tax it? Allegations that a defendant caused a plaintiff to develop post-traumatic stress disorder occur in employment cases, wildfire and other disaster cases, personal injury claims, sexual harassment and abuse, defamation, and more. In some cases, the plaintiff claims the defendant caused their PTSD, and in others, that the defendant exacerbated pre-existing PTSD. Is an award for PTSD taxable or tax free as damages for personal physical injuries or physical sickness? There are good arguments that it is, including comments by President Obama about PTSD. However, there is no tax case yet that firmly decides one way or the other. The U.S. Tax Court upheld tax-free treatment where settlement monies are attributable to the exacerbation of a pre-existing physical condition. In one case, the Tax Court concluded that a portion of the plaintiff's settlement was excludable because it was attributable to damages flowing from a cardiac event attributable to emotional distress from an alleged employment-related tort, even though the plaintiff previously had the underlying heart condition. In another case, the Tax Court concluded that settlement monies from the employer were excludable because 'exposure to a hostile and stressful work environment exacerbated her MS symptoms to a point where she was unable to work.' PTSD can be caused or exacerbated by stress, but so can heart attacks and diseases, which are physical even when they are caused or worsened by stress. Cancer, lupus, multiple sclerosis, and many other diseases may also not be apparent, but those conditions are physical and can qualify for exclusion. There is a growing medical consensus that PTSD alters the taxpayer's brain physiology, and in a judgment or settlement, that ought to be sufficient to classify PTSD as physical injury or physical sickness. Fortunately, perhaps will finally feel some pressure on this issue. The National Structured Settlement Trade Association, NSSTA, is the leading representative of the structured settlement industry. They deserve applause for their recent Letter to the IRS that formally requests guidance from the IRS on this issue. Even without express IRS guidance, plaintiffs and defendants are increasingly likely to be able to agree on these issues. In settlement agreements, it is becoming common for defendants to agree that PTSD is physical injury or sickness for tax purposes. But without a published tax case that expressly states that PTSD damages qualify for exclusion, some defendants will not agree. That leaves some plaintiffs out in the cold. In any case, settlement agreement wording does not bind the IRS. A tax opinion is wise and helps protect the plaintiff, but even this is not a guarantee.
The Sun
03-06-2025
- Business
- The Sun
HMRC warning to check codes on letters as workers are owed £700 each – check if you're affected
BRITS are being urged to check their tax codes immediately as thousands could be due a £700 refund from HMRC. It comes as the May 31 deadline has passed for employers to issue P60 forms – a crucial document that confirms how much tax you've paid in the last financial year. 1 But tax experts are warning that many workers could be on the wrong tax code without even knowing it, potentially costing them hundreds of pounds. One in three Brits has been on the wrong tax code at some point, with average overpayments hitting a hefty £689, according to research by Canada Life. The blunder means HMRC could be sitting on billions in overpaid tax and the only way to get it back is to check your details and flag it. Taxpayers should double check the 'final tax code' on their P60 that's the string of letters and numbers near the top of the form. Codes like "BR", "D0", or "D1" should raise a red flag. These mean you may have been taxed at a flat rate with no tax-free allowance. Anyone who stayed with the same employer up to April 5 should have already received their P60, either in the post or digitally. And while it may be tempting to toss it aside, it's an important piece of paperwork. Not only is it used to claim tax rebates, it's also essential for applying for tax credits, benefits, loans, or even a mortgage. If you think your code is wrong, or if something doesn't look right on your payslip, it's time to act. How to check your tax code You can check your current tax code by logging into your personal tax account online, using the HMRC app, or digging out your latest payslip. You may also have received a Tax Code Notice from HMRC in the post, so it's worth checking any recent letters too. If the numbers don't add up, contact HMRC directly. You can call them on 0300 200 3300 or write to: Pay As You Earn and Self Assessment, HMRC, BX9 1AS. Those who've overpaid could see a refund land in their bank within five days once their claim is processed or receive a cheque in the post within two weeks. But it's not always good news, some may find they underpaid tax and owe HMRC money. If that's the case, most will be asked to repay it gradually over 12 months. If you're owed money, you may also receive a P800 letter or a simple assessment telling you how much you're due and how to claim it. There's a four-year limit on claiming back overpaid tax, so if you think you've been overcharged, don't delay. Whether you're a full-time employee, working multiple jobs, or have just switched roles, it's worth double checking your code because a five-minute check could leave you hundreds better off. The Sun has approached HMRC for comment.
New York Times
26-05-2025
- Business
- New York Times
House Bill Takes Aim at Tax Break for Sports Owners
Tucked in the domestic policy bill advanced by House Republicans last week is a change to the tax code that could potentially cool the current frenzy among the very wealthy to own professional sports teams. For decades, owners of teams in the N.F.L., N.B.A. and other major leagues have been able to write off the entire value of their team's 'intangible assets,' which include player contracts, media rights and sponsorships, over 15 years. Under the House plan, team owners would be able to deduct from their taxes only half the value of those intangible assets over that period. The tax break, introduced two decades ago, can amount to hundreds of millions of dollars. Intangible assets make up the bulk of a team's worth, and because team values have been steadily rising, the tax breaks have as well. The tax break has turned teams into a kind of tax shelter and has helped fuel the lofty prices that investment firms and billionaires have paid for teams in recent years. While the provision in the House bill would not affect current owners, only future ones, it threatens to have a chilling effect across sports ownership. If demand for teams cools, current owners could be hurt because the value of their investments might not grow as quickly. The congressional Joint Committee on Taxation estimates that cutting the write-offs in half would raise $991 million in revenue over 10 years. Team owners insist the number is far higher, though almost all teams are privately held and do not disclose their financials. Leagues have been doing the math to determine how much the tax bill might hurt them. The prospect of the tax changes could spur sellers — or buyers — to move more quickly ahead of any changes being formalized, said Mark Weinstein, a partner at the law firm Hogan Lovells. N.F.L. owners, who met for two days in Eagan, Minn., last week, were briefed on the provision. According to team executives, the owners were encouraged to call senators in their home states to pressure them not to include a similar provision in the Senate version of the policy bill. One team president, who spoke on the condition of anonymity because he feared potential fallout from the president, said that the provision 'felt punitive.' President Trump, he and others said, wants leverage over the owners. The White House disputed that suggestion. A White House spokesman, Harrison Fields, said the tax measure was about eliminating an advantage for owners at a time when the price of attending sporting events is rising. 'The president is committed to ensuring that sports teams overcharging ticketholders do not receive favorable tax treatment,' Mr. Fields said in a statement. 'His focus is on fairness for fans, not team ownership.' It's unclear whether the provision was aimed at the N.F.L., which Mr. Trump has sparred with over many years, since it affects all major leagues. That could be by design, Mr. Weinstein said. 'If it was just the N.F.L., then it leads to the conclusion it is punitive, right? If it's all sports leagues, maybe there's some wiggle room,' Mr. Weinstein said. 'It's classic Trump, if you think about it, in that he might intend it to be punitive, but he presents it in a way — maybe it is, maybe it is not.' In recent years, Mr. Trump has battled over a number of issues with teams and athletes, including the N.B.A. stars LeBron James and Stephen Curry. But his relationship with the N.F.L. dates back to the 1980s when he began showing an interest in buying a team. Unable to land a franchise, he bought the New Jersey Generals of the United States Football League in 1984 and led an effort to sue the N.F.L. for trying to prevent the U.S.F.L., a spring league, from playing in the fall. The U.S.F.L. won, but was awarded three dollars in damages. The league soon folded. Over the years, Mr. Trump has chided the N.F.L. He played down the severity of concussions and in 2017, he urged owners to fire players who did not stand for the national anthem to protest racial injustice and police brutality. But Mr. Trump remains friendly with several owners, including Woody Johnson of the Jets and Jerry Jones of the Dallas Cowboys. In March, the Patriots owner Robert Kraft reached out to the president to broker a deal with Paul, Weiss, Rifkind, Wharton & Garrison, a law firm that represents the N.F.L. This year, the New Orleans Saints owner Gayle Benson invited Mr. Trump to the Super Bowl, and the title-winning Philadelphia Eagles visited the White House. Two weeks ago, Commissioner Roger Goodell and the Washington Commanders owner Josh Harris went to the Oval Office to announce that the N.F.L. draft would take place in Washington in 2027. Ultimately, Mr. Weinstein said that the allure of teams is so strong that wealthy investors would continue to buy teams, regardless of tax incentives. 'If you're a buyer and you've got that much wealth that you want to join the club, you're going to pay the price,'' he said.
