As the IRS gets ready to open the 2024 tax filing season on January 29, 2024, the Tax Relief for American Families and Workers Act of 2024 has yet to pass the House and Senate. The Act contains retroactive tax provisions that could significantly impact taxpayer’s 2023 income tax return. Below are some key takeaways from The Act: Child Tax Credit – The Act expands the refundable portion of the child tax credit, by increasing from $1,600 to $1,800 starting in the year 2023. The nonrefundable portion of $2,000 will remain the same, along with income phase out ($400,000 for married filing joint f ..read more

Secure Act 2.0 has officially become a law. The Act has some serious consequences for retirement accounts. Below are some key takeaways: Change in RMD Age: The Secure Act of 2019 previously changed the required minimum distribution age from 70 ½ to 72. Secure Act 2.0 changes the age again from 72 to 73 starting in 2023, and then again to 75 starting in 2025. If you turned 72 in 2022 or earlier, you need to keep taking your annual RMD’s. Change in RMD Penalty: Previously, if you failed to take your RMD for the year, you were charged a 50% penalty on the shortfall. The Act has changed the penal ..read more

Biden-Harris Administration Announces Final Student Loan Plans During their campaign, President Biden and Vice President Harris promised to provide student debt relief. On August 24, 2022, the administration announced a plan to forgive a portion of student debt and making changes to the student loan system for current and future borrowers. If you received a Pell Grant, you may be eligible to have up to $20,000 of debt held by the Department of Education forgiven. If you did not receive a Pell Grant, you may be eligible to have up to $10,000 of debt held by the Department of Education forgiven ..read more

In November of 2021, the IRS released Chief Counsel Advice (CCA) 202151005 discussing rental activities and if self-employment tax should be calculated.  CCAs can be thought of as discussions the IRS have internally to state their views on certain items.  They are not precedent and are not IRS code or regulations. Self-employment income is income from performance of service that are not consider wages because an employer/employee relationship is not present.  As it stands right now rental income is excluded from self-employment (SE) tax if the renter is not considered a real est ..read more

New Regulations on Inherited IRAs The SECURE Act of 2019 ushered in a new set of rules for traditional IRA beneficiaries, specifically non-spousal beneficiaries. In the SECURE Act, non-spousal designated beneficiaries that inherited a traditional IRA on or after January 1, 2020, no longer have the option to have a Stretch IRA. On February 28, 2022, the IRS released Publication 590-B, outlining new distribution rules for non-spousal designated beneficiaries. If the original owner of the IRA died on or after starting RMDs (required minimum distributions), then the new owner that is a non-spousal ..read more

Recently, the IRS released an article talking about the 2022 tax season.  In this article they covered several different topics which we will touch on a few here. First off, they have stated they are still processing 2020 returns.  The article discusses several different reasons why they are still working on 2020 returns.  They are making adjustments for individuals who had unemployment compensation so they will not have to file an amended return.  The IRS stated they are correcting more errors on the 2020 returns than they have in previous years.  More than 10 million ..read more

Divorce and Taxes Going through a divorce is difficult and the last thing you want to think about is taxes, but it is important to have taxes mapped out in the divorce decree.  Below are some items to consider when finalizing the decree. Who will claim the children? Usually, the custodial parent will be the one claiming the children. If it is decided and noted in the divorce decree that the non-custodial parent will be the one claiming the children, then Form 8332 needs to be prepared and signed by the custodial parent.  When filing their taxes, the non-custodial parent will include ..read more