Stay informed on the latest tax news and developments, including legislation and rule changes, for effective tax planning and compliance.
IRS considers the small company tax credit guidelines. Taxpayer advocate: "People were duped."
The IRS is working on guidance for businesses that incorrectly claimed a pandemic-era tax break, the employee retention credit, intended to aid small businesses. The credit, worth up to $5,000 per employee in 2020 and $28,000 per employee in 2021, saw false claims proliferate, partly due to third-party firms misleading businesses about their eligibility. Over 866,000 companies received over $152.6B in credits as of March. The IRS has a backlog of 537,000 unprocessed claims. Ineligible businesses are encouraged to rectify this situation proactively, as IRS penalties may apply.
For 2023, the following income thresholds will result in 0% capital gains taxes
In 2023, selling investments may have less impact on your tax bill due to IRS inflation adjustments that increase brackets for long-term capital gains, enabling more income before hitting the 15% or 20% brackets. Single filers may qualify for a 0% long-term capital gains rate if their taxable income is $44,625 or less; for married couples filing jointly, the limit is $89,250. Lower tax rates offer an opportunity for investors to sell profitable assets tax-free, which could allow for diversification amid market volatility. However, overall taxable income, including unexpected payouts, should be considered.
Here are some implications for federal wealth tax plans from a recent Supreme Court judgment
The Supreme Court is set to hear Moore v. United States, challenging a levy from Trump's 2017 tax overhaul aimed at U.S. corporations deferring income through foreign subsidiaries. The case questions whether income must be "realized" or received before taxes apply on unrealized gains. Although different from a wealth tax, concerns exist about the case's broader implications for the tax code. The ruling could prompt litigation about Congress' approach to taxing pass-through entities and impact future corporate tax revenue, highlighting the challenges of ensuring corporations pay their due taxes.
This investment income tax is paid by millions of high earners each year. This is how to prevent it
The 3.8% net investment income tax from the Affordable Care Act affects high earners more than before due to inflation and rising incomes. This tax applies to capital gains, interest, dividends, and more when your modified adjusted gross income (MAGI) exceeds $200,000 for single filers and $250,000 for joint filers. Net investment income tax payments rose from $16.5B (2013) to nearly $60B (2021). This tax applies to the lesser of two thresholds: your net investment income or your MAGI minus the net investment income tax threshold. Experts recommend awareness, planning, and strategies like buying municipal bonds or timed Roth IRA conversions.
