taxes

Why unemployed Americans may owe the IRS next year

Millions of Americans have lost their jobs during the coronavirus pandemic – and many who are claiming unemployment benefits may be faced with a surprise tax bill next year. The IRS requires people to report income received in the form of unemployment. Some states tax benefits, too. However, when you receive unemployment there’s typically no withholding, meaning individuals have to choose to have taxes withheld. And even then, it’s usually at a rate of 10 percent, which may not be enough for some people who have been receiving expanded unemployment benefits. “Unemployment withholding may not cover their actual tax liability,” Eric Bronnenkant, Head of Tax at Betterment, told FOX Business. “That $600 essentially allowed people to make more money on unemployment [than working, so] 10 percent is even less likely to cover their actual tax.” Additionally, Bronnenkant noted that people may choose not to have any money withheld because they need as much cash as possible for essential expenses. Others may look at it as a “next year problem,” he added. How prominent this issue will be next tax season depends on the future of the U.S. economy and the extent to which lawmakers decide to renew the expanded unemployment benefits in pending relief legislation. The additional $600, which was a policy under the CARES Act, expired at the end of July. The number of people receiving benefits was about 16 million as of July 25. But the tax issue stands to be problematic for many, especially those who are collecting benefits for the first time. According to a recent survey, 37% of Americans thought unemployment compensation was not considered taxable income. More than half of respondents did not know that they had to request to have taxes withheld from unemployment compensation. If you do not have taxes withheld from your checks, you may have to make quarterly estimated payments to the IRS. These payments are typically required of individuals who expect to owe tax of $1,000 or more when their return is filed.

Federal Taxes and Spending Set Records Through February

The federal government set records for both the amount of taxes it collected and the amount of money it spent in the first five months of fiscal 2020 (October through February), according to data released today in the Monthly Treasury Statement. During the October-February period, the government spent a record $1,991,272,000,000 while it collected a record $1,366,750,000,000 in taxes. Thus, while running up records in taxing and spending for the first five months of the fiscal year, the federal government also ran a deficit of $624,522,000,000. That means the federal deficit so far this year has averaged $124,904,400,000 per month. The previous high for federal taxes collected in the first five months of the fiscal year came in fiscal 2016, when the Treasury collected $1,361,919,580,000 in total taxes in constant February 2020 dollars in the October through February period. The previous high for federal spending in the first five months of the fiscal year came in fiscal 2009, when the Treasury spent $1,981,477,890,000 in constant February 2020 dollars in the October through February period. The Department of Health and Human Services led all federal agencies in spending in the first five months of fiscal 2020 with outlays of $547,736,000,000. It has averaged spending $109,547,200,000 per month so far this fiscal year. It is the only federal agency now spending an average of more than $100 billion per month, although the Social Security Administration comes close. The Social Security Administration had the second highest spending of any federal agency in the first five months of fiscal 2020 with outlays of $476,257,000,000. That averaged $95,251,400,000 per month. The Defense Department ranked third among federal agencies for spending during the first five months of the fiscal year with outlays of $290,323,000,000. Interest on Treasury securities was the next highest expenditure at $228,982,000,000 over the five-month period.

 

America’s largest cities drowning in debt, with Chicago leading the way, study finds

America’s 10 largest cities, largely Democrat strongholds, are drowning in municipal debt, according to a new report from government watchdog Truth in Accounting. The report sought out “to determine what … overlapping financial entities mean for taxpayers’ bottom line.” Truth in Accounting said its purpose was to “calculate the various bills (and surpluses, when available) at the city government level and divide them out to determine a per-Taxpayer Burden.” The two cities with the highest burden: Chicago and New York City; Chicago’s combined taxpayer burden: $119,110; New York City’s combined taxpayer burden: $85,600. Chicago has been a hotbed for such burdens. The Chicago City Council approved $2.4 billion in tax subsidies for two major developments in early April. Protesters gathered at City Hall chanting against the deals. Critics said the projects are in prosperous parts of Chicago and developers should pay for infrastructure improvements, not taxpayers.

Of course these cities are solidly under Democrat control and most have been for decades.  Gee..  What a shocker..  Not.   Anyway, click on the text above to see the top 10 worst cities, and read the rest of the article.

Average tax refund jumps to $3,100, dents Democrat claims of tax cut trickery

The average tax refund so far this filing season is more than $3,100, the Treasury Department reported Thursday, putting things on track and denting Democrats’ claims that the 2017 tax cuts were actually hurting Americans’ wallets. Returns are still coming in more slowly than in 2018, and not as many have been finalized by the IRS. But the average refund is $3,143, topping last year’s $3,103. That’s a major change from just a week ago, when the average refund was about $2,600 — and some prominent Democrats suggested the 2017 tax overhaul had backfired. “The average tax refund is down about $170 compared to last year,” Sen. Kamala D. Harris tweeted Feb. 11, little more than a week into the tax-filing season. “Let’s call the president’s tax cut what it is: a middle-class tax hike to line the pockets of already wealthy corporations and the 1 percent.” News outlets, meanwhile, sought out people whose refunds were smaller and used them as evidence of the tax law’s troubles. The IRS, and GOP lawmakers on Capitol Hill, called the complaints premature. They predicted things would sort out once the filing season was in full swing and people could file tax returns claiming the Earned Income Tax Credit or the Child Tax Credit. Refunds for returns claiming those tax credits must be held until Feb. 15, as a fraud-prevention method. Now that those refunds are being processed, it’s boosted the numbers. “The increase in the weekly data is primarily due to the remainder of the Earned Income Tax Credits and Child Tax Credits being paid out this week,” the Treasury Department said. “Despite the higher refund average, we remind taxpayers that weekly filing season data is variable and will continue to fluctuate. We caution against drawing broad conclusions on refunds overall this early in the filing season.” Treasury officials also said refunds aren’t the same as a tax bill. Most Americans pay taxes throughout the year in withholdings from their paychecks. Refunds are the amount they overpaid during the year. So a smaller refund means they left less of their money in the hands of the IRS throughout the year, according to tax analysts.

Feds Collect Record Taxes in October; Still Run $100B Deficit

The federal government collected record total tax revenues of $252,692,000,000 in October, the first month of fiscal 2019, according to the Monthly Treasury Statement released Tuesday. Despite the record tax collections, the government still ran a deficit of $100,491,000,000 for the month—because it spent $353,183,000,000. This October’s record $252,692,000,000 in total tax collections was $11,414,590,000 more than the $241,277,410,000 (in constant October 2018 dollars) that the federal government collected in October 2017, which was the previous record for federal tax collections in October. Although the total federal taxes collected this October set a record, the individual income taxes that the federal government collected in October did not set a record. This October, the Treasury collected $128,866,000,000 in individual income taxes. In October 2017, the Treasury collected $131,056,520,000 (in constant October 2018 dollars). Corporation income tax receipts, however, were significantly higher this October than they were in October 2017. This year, the Treasury collected $8,000,000,000 in corporation income taxes in October. Last year, it collected $3,823,060,000 (in constant October 2018 dollars). The $8 billion in corporation income tax revenues the Treasury collected this October is the largest amount since October 2015, when the Treasury collected $10,893,630,000 (in constant October 2018 dollars) in corporation income taxes. Excise taxes and customs duties also increased. In October 2017, the Treasury collected $7,651,250,000 (in constant October 2018 dollars) in excise taxes. This October it collected $14,715,000,000. In October 2017, the Treasury collected $3,320,700,000 (in constant October 2018 dollars) in customs duties. This October, it collected $5,551,000,000. Social Security and other payroll taxes also increased slightly rising from $86,137,330,000 (in constant October 2018 dollars) last October to $86,553,000,000 this October.

Congress to take up 10 percent tax cut for the middle class next year: Trump, Brady

President Trump and Rep. Kevin Brady said Wednesday that they intend to pursue an additional 10 percent tax cut for the middle class once the new Congress convenes in January. Mr. Trump had said earlier this month that he’d like to push for the additional tax cut in the coming weeks, and that he wanted Congress to vote on it after the midterm elections. But on Wednesday, the two leaders signaled the additional 10 percent cut won’t be in the cards for the post-election “lame duck” session of Congress. “We are committed to delivering an additional 10 percent tax cut to middle-class workers across the country. And we intend to take swift action on this legislation at the start of the 116th Congress,” said Mr. Trump and Mr. Brady, the House’s top tax-writer. The president and Mr. Brady also credited last year’s $1.5 trillion tax-cut package for juicing the U.S. economy, and pointed out that no Democrats voted for the legislation. “Together, the Trump administration and congressional Republicans are creating more economic opportunity for workers of all walks of life — especially for those hit hardest by the recession, who the previous administration left behind,” they said. The House also passed legislation recently that would make permanent the individual tax rate cuts in the law. The new law permanently lowered the corporate tax rate from 35 percent to 21 percent, but the individual rate cuts were written to expire after 2025 to comply with budget rules. Congressional Democrats have criticized the law as a giveaway to the rich, and have said they could seek to roll back parts of it if they retake control of at least one chamber of Congress.

…which is the #1 reason you need to get out and vote Republican next week (or NOW, if you have a mail-in ballot).  All the Dems want to do is raise your taxes, and waste the rest of their time investigating Trump and every single one of his nominees.  They have no intention of doing the work of the people; just try to be a thorn in Trump’s side.  Remember that.

House votes to repeal ObamaCare’s medical device tax

The House of Representatives on Tuesday voted to repeal the controversial medical device tax created by former President Barack Obama’s 2010 health care law. “The House just voted to repeal Obamacare’s Medical Device Tax,” House Speaker Paul Ryan tweeted. “This bipartisan legislation will make healthcare more affordable and ensure Americans have access to the most innovative life-saving and life-improving medical technology.” The measure passed 283-132. The Senate would need to pass it before it could be signed into law by President Trump, who supports a repeal. The medical device tax was designed to help pay for the health care overhaul, which has expanded coverage for millions of people. It is imposed on equipment like artificial hearts and X-ray machines, but not items used by individuals, like glasses. It went into effect in 2013 but Congress had temporarily suspended it until 2020. Opponents of the repeal effort say taxes the law imposed on many branches of the health care industry were outweighed by the added customers the law has created. Supporters of repeal — including Democrats from states where the devices are made — say the tax drives up companies’ expenses and stifles innovation.

Agreed..  Glad to see this move by the House.  Let’s hope the Senate follows their lead soon.   🙂

Trump could deliver a second tax cut — without having to deal with Congress. Here’s how

What if President Trump had the authority—on his own—to enact a second powerful tax reform? He does. The momentum is building for him to use it. In the halls of Congress, the corridors of the administration, and the nerve centers of activist groups, forces are aligning behind a plan: a White House order to index capital gains for inflation. It’s a long-overdue move—one that would further unleash the economy and boost GOP election prospects. And Mr. Trump could be the president bold enough to make it finally happen. At President Reagan’s behest, Congress in the 1980s indexed much of the federal tax code for inflation. Oddly, capital gains weren’t similarly treated. The result is that businesses and individuals pay taxes on the full nominal amount they earn on investments, even though inflation eats up a good chunk of any gain. It’s not unheard of for taxes to exceed real gains after inflation. The result is significant capital distortion, as companies sit on buildings and property or investors sit on stock—rather than selling and thereby putting both assets and gains to more productive use. Conservatives have understood this problem for decades, yet for decades they have been held hostage to a 1992 government brief. The paper by the Justice Department’s Office of Legal Counsel offered a few faulty arguments as to why the Treasury lacked the authority to make this regulatory change. Neither President Bush questioned it, but others have.

To read the rest of this outstanding op/ed by Wall Street Journal editor Kimberley Strassel, click on the text above.  President Trump really needs to take her great advice.  She’s right.  He’s the only president bold enough to make such a move.  And, it’d be the right one.  Excellent!!     🙂

Feds Collect Record Taxes in First Month Under Tax Cut; Run Surplus in January

The federal government this January ran a surplus while collecting record total tax revenues for that month of the year, according to the Monthly Treasury Statement released today. January was the first month under the new tax law that President Donald Trump signed in December. During January, the Treasury collected approximately $361,038,000,000 in total tax revenues and spent a total of approximately $311,802,000,000 to run a surplus of approximately $49,236,000,000. Despite the monthly surplus of $49,236,000,000, the federal government is still running a deficit of approximately $175,718,000,000 for fiscal year 2018. That is because the government entered the month with a deficit of approximately $224,955,000,000. The $361,038,000,000 in total taxes the Treasury collected this January was $11,747,870,000 more than the $349,290,130,000 that the Treasury collected in January of last year (in December 2017 dollars, adjusted using the Bureau of Labor Statistics inflation calculator). The Treasury not only collected record taxes in the month of January itself, but has now collected record tax revenues for the first four months of a fiscal year (October through January). So far in fiscal 2018, the federal government has collected a record $1,130,550,000,000 in total taxes. However, despite the record tax collections so far this fiscal year, and despite the one-month surplus in January, the federal government is still running a cumulative deficit in this fiscal year of $175,718,000,000. That is because while the Treasury was collecting its record $1,130,550,000,000 in taxes from October through January, it was spending $1,306,268,000,000. The levels of federal taxes and federal spending fluctuate from month to month, and it is not unusual—but not always the case—for the federal government to run a surplus in January. Over the last twenty fiscal years, going back to 1999, the federal government has run surpluses in the month of January 13 times and deficits 7 times.

IMF: Trump Tax Reform Will Accelerate Growth in U.S. and Around the World

The Trump administration’s tax reforms will accelerate global economic growth, according to the latest forecast of the International Monetary Fund (IMF). Total economic output for the world will grow 3.9 percent in 2018 and 2019, after adjusting for inflation. That would be the strongest year for global growth since 2011 and represents an upward revision of 0.2 percent since the IMF’s forecast in October. When the IMF released its Global Economic Outlook in October, it assumed that U.S. tax policies would remain unchanged. In other words, it assumed Republican efforts to pass tax reform would fail. The changes to the U.S. tax code are expected to be responsible for “about half” of the upward revision, the IMF said. Much of that will arise from lower corporate income tax rates. The IMF estimates that lower rates will lead to an acceleration of business investment. As well, a larger federal budget deficit will stimulate the economy and boost U.S. growth, according to the IMF. The boost to U.S. growth will be significant. In the IMF’s previous forecast, it saw the U.S. economy expanding by 2.3 percent in 2018 and 1.9 percent in 2019. Now those figures have been revised up to 2.7 percent in 2018 and 2.5 percent in 2019. A stronger U.S. economy will also boost the economies of America’s trading partners, especially Mexico and Canada. According to the IMF, Mexico’s economy will experience an additional 0.4 percent growth this year and 0.7 percent growth next year, thanks to the changes in U.S. taxes. Canada’s growth will be 0.2 percent higher this year and 0.3 percent higher next year. The IMF says that the economic growth benefits of the tax overhaul will fade after 2022, largely because many of the tax cuts are scheduled to expire. If those tax cuts are extended or made permanent, however, that could extend the period of accelerated growth.

More great news in this Trump economy!!    🙂