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The CFO of the Trump Organization confesses to unlawfully taking over $1.7 million in untaxed benefits as a plea bargain in a highly-publicized tax fraud case. Chief Financial Officer Allen Weisselberg faced 15 charges including receiving unreported fringe benefits such as school tuition for his grandchildren, free rent on a New York City apartment, and lease payments for a luxury vehicle. Former President Donald Trump is expected to be called as a witness in the upcoming trial.
Japan’s National Tax Agency announces a controversial alcohol promotion contest to boost the nation’s plummeting alcohol tax revenue. An online contest called “Sake Viva!” invites people ages 20 to 39 to submit a business plan to increase Japan’s sake, beer, and liquor sales. Alcohol consumption nationwide has steadily declined since the 1990s, in part because of government interventions to lessen societal and health problems linked to alcohol. Now the tax agency is concerned about the decrease in pub business and consumer sales.
President Biden signs the $430 billion Inflation Reduction Act along with its provision for a corporate minimum tax
The economic package received majority Democratic support in both the House and Senate and is expected to reduce the deficit by over $300 billion over the course of the next 10 years. Congressional Republicans unanimously opposed the package but to no avail. This bill is a dramatically revised version of Biden’s original $1.75 trillion Build Back Better plan that was spent over a year stalled by congressional arguments over tax credits, funding, and other key issues.
Included in the Inflation Reduction Act is the much-debated 15% corporate minimum tax, which will mainly apply to large corporations that earn more than $1 billion per year. Most retailers already pay much more than 15% in corporate taxes. Of the 170 companies in the S&P 500 that paid less than 15% in taxes last year, analysts predict that no more than half would see a tax increase. This is in part because the new legislation allows companies to use adjusted earnings. Therefore, some analysts have said, the overall impact of these taxes could be fairly minimal.
Business giants—such as the parent companies for Google and Facebook—will also be subject to a 1% excise tax on stock buybacks. In 2021, S&P 500 companies broke an all-time record by purchasing $881.7 billion of their own stock, motivated by unusually low interest rates.
The new legislation also allocates $369 billion to climate and energy initiatives and $64 billion toward lowering health insurance costs. Missing from the package are Biden’s attempts to introduce universal child care and middle-class tax cuts. Overall, the Inflation Reduction Act is expected to raise $737 billion in revenue over the next decade, largely from the corporate minimum tax and stock buyback tax, as well as Medicare drug price reductions. Around $124 billion of that new revenue would result from increased IRS audits for the nation’s wealthiest.
Indiana residents are anticipating Automatic Taxpayer Refund checks… that are set to arrive by November 1st. Depending on their filing status, “Hoosiers” will receive $325 (single filers) or $650 (joint filers). These rebates are a combination of an original $125 check and a recently-approved $200 increase.
Taxpayers who qualified for the original rebate will automatically receive the additional amount. To qualify for the refund, taxpayers must have filed a state individual income tax return for 2020 by no later than January 3, 2022. Notably, taxpayers who did not qualify for the initial $125 payment could still qualify for the $200 refund if they received Social Security benefits during 2022 and are not claimed as a dependent on a 2022 state income tax return.
Approximately 1.7 million refund checks are already in the process of being issued by paper check or direct deposit. Those who have not received their checks by November 1st can contact the Indiana Department of Revenue to confirm their mailing and banking information.
The state also warns residents to be wary of potential scams. The Department of Revenue will not require taxpayers to respond to texts, emails, or phone calls in order to receive their funds.
Kentucky’s $1 billion revenue surplus spurs a state income tax cut… according to a new bill passed earlier this year. The General Assembly passed House Bill 8 in April, which includes a provision stating that a revenue surplus automatically triggers a 0.5% reduction in income tax. In this case, the tax cut will take effect in January 2023, lowering Kentucky’s tax rate to 4.5%. The bill was one of 200 new laws that went into effect in Kentucky in 2022.
House Bill 8 was introduced as part of Republicans’ goal to ultimately eliminate the state income tax. In addition to the automatic decrease, the bill requires more incremental reductions in subsequent years depending on total receipts for the state’s general fund. The legislation also introduced new taxes on electric vehicles, ride-sharing services, and other select goods and services. State Democrats largely opposed the bill saying that the measures primarily benefited the wealthy and shifted the tax burden to lower-income residents.
This year’s surplus is the second highest in Kentucky’s history, falling just short of the state’s $1.1 billion surplus in fiscal year 2021.
Taxpayers who earn more than $10 in interest from a savings account are required to pay income tax—with a few exceptions. Unearned income is taxed at your regular federal tax rate, ranging from 10% to 37% depending on your overall income. Fortunately, taxpayers should be alerted to the need to report these earnings when they receive a form 1099-INT from their bank or financial institution.
Keep in mind that this applies to any bank account that earns interest, including checking accounts, money market accounts, and certificates of deposit. Dividends from credit unions, cooperative banks, savings and loans, and mutual savings banks are also taxable. However, unearned income does escape payroll taxes, such as Social Security and Medicare deductions—although some states may charge their own tax in addition to the federal levy.
Not every savings account is subject to income tax. Individual Retirement Accounts (IRA) allow taxpayers to transfer part of their income directly into a savings account. These funds can accrue interest without taxation until the holder makes a withdrawal. Several types of educational savings accounts, such as Coverdell savings accounts and 529 plans, can also earn tax-free interest as long as the funds are only used for educational purposes. Lastly, health savings accounts (HSA) and flexible spending accounts (FSA) are both tax-exempt, but the funds must be used for healthcare expenses.
At least 21 states are currently offering residents economic support through hero pay, stimulus checks, or automatic rebates. With inflation on the rise, many state governments are leveraging recent revenue surpluses to provide relief to taxpayers. Below are the highlights of how some states are responding.
Alaska tops the list by offering an impressive $3,200 per person starting in September to offset fuel costs in particular. The second highest comes from Maryland, although these checks are specifically allocated to low-income households to assist with water bills.
Direct refunds for all taxpayers have been approved in California (up to $1,050 per person), Colorado ($750 per person), Delaware ($300 per person), Georgia ($500 per person), Hawaii (up to $300 per person), Idaho (either $75 or 12% of their 2020 state taxes), Indiana ($325 per person), Massachusetts (an estimated 7% of their 2021 state income tax payment), South Carolina (up to $800 per person), and Virginia (up to $500 per person). For most of these refunds, the criteria is simply that your most recent tax returns were filed on time.
Other states are allotting refunds only to lower-income taxpayers. Maine offers $850 per person making under $100,000 (for single filers), while Illinois is issuing $50 rebates to residents who make less than $200,000 a year. Oregon and New Mexico also implemented their own variation. Additionally, Connecticut, Florida, Illinois, New Jersey, and Vermont have introduced credits for children and dependents that may also vary based on income. In Minnesota, front-line workers will receive $750 bonus checks for their work during the pandemic.
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The only thing scarier than owing Uncle Sam a lot in taxes is being unable to pay the bill. Luckily, the Internal Revenue Service has ways for you to whittle what you owe. Just make sure which method works for you, depending on such factors as the size of your tax debt and what you can afford to pay and when. Don’t panic. Here’s how individual taxpayers can proceed – and what to watch out for.
Client acquisition is crucial for business growth in the fast-paced accounting world. However, retaining existing clients is equally important, if not more so. Servicing long-term client relationships is a testament to your firm’s reliability and is critical to sustained success. My first client is still with me, now more than seven years. Our relationship has grown and changed over time but has also strengthened.
Loyalty and commitment are two of my core values. I’m always looking to provide value to my prospects and clients to attract and retain them long-term. However, some clients do not fit those values, and I have decided to forgo working with them.
I believe that attracting and retaining the right clients starts with your mission, vision, and core values. However, it is also essential to have effective client retention strategies to ensure clients remain loyal and satisfied for the long haul.
With the rising cost of healthcare, our clients are looking to save money where they can, especially if they can save money on their healthcare costs and taxes at the same time. As their trusted advisor, you can offer them a basic understanding of what savings tools are available to your clients. Some of the tools available will come in handy if there is a minor unexpected tax bill this spring.
That is why today we’re going to look at the triple tax advantaged health savings account (HSA) and the health flexible spending account (FSA). We’ll look at what they are, who is eligible to open one, and how they can save your clients money each year.