Taxes
There is a bit of political theater that plays out in Washington every few years—lawmakers from high-tax states storm the stage to defend the state and local tax (SALT) deduction, as though it were etched in the Constitution. The arguments run the gamut: from its ability to protect middle-class families, to its support for essential services, and the prevention of the dreaded “double taxation.” What they won’t say, however, is that it overwhelmingly benefits wealthy households, distorts federal tax equity, and props up state tax regimes that should have to answer to their own voters. So here is the relevant…
Many investors who prospered from gold’s bull market will be surprised by how profits on their gold investments are taxed. Gold is a collectible in the tax code, giving it less favorable treatment than most other investments. The first unfavorable treatment is that IRAs and other individually-directed retirement accounts (both traditional and Roth versions) aren’t allowed to own collectibles. The purchase of a collectible is treated as a distribution to the IRA owner. There are exceptions for certain types of coins and bullion. I won’t the treatment of collectibles in retirement accounts in detail in this post but discuss some…
The tax plights of U.S. taxpayers living abroad are gaining attention. While on the campaign trail in October 2024, President Trump pledged to eliminate what he called “double taxation” on these individuals. Buoyed by Trump’s reelection, House Ways and Means member Darin LaHood, R-Ill., introduced the Residence-Based Taxation for Americans Abroad Act (H.R. 10468) two months later. LaHood, whose legislation seeks to apply residence-based taxation to U.S. citizens living abroad, made it clear that he wants to work together with Democrats to ease those tax burdens. Republicans on the House Budget Committee are also interested. They are considering a menu…
Mandatory state paid medical and family leave programs (PMFL) have been generating federal tax confusion. In January of 2024, nine governors signed a letter asking the IRS for clarification and guidance. The IRS came through recently with Revenue Ruling 2025-4. There has been enough other coverage of the ruling to discourage me from weighing in, but there is something important that I have not seen in the other coverage. I believe that there is a refund opportunity, which may require prompt action. We’ll get to that, but first I will summarize the key points in the ruling. Background Thirteen states…
Estate and gift taxation in the United States may be on the brink of undergoing significant changes, and these changes may have a notable effect on the estate planning of individuals who have lost a spouse within the last five years. The Tax Cuts and Jobs Act (TCJA) passed in 2017, and under its provisions, the estate and gift tax exemption amount increased substantially—but temporarily. With these provisions set to sunset at the end of 2025, widowed individuals need to take proactive steps to secure their estate planning benefits, particularly through the Deceased Spousal Unused Exclusion Amount (DSUEA) election, also…
Incorrect IRS Forms 1099 are a big tax worry. After all, Forms 1099 generally saddle you with income you have to report. Of course, if you have income, you must report it, whether or not you receive a Form 1099. But think of the Form 1099 as a strong nudge in case you forgot about a payment, or receive many small payments from one source that get aggregated on a Form 1099. Seeing the dollars reported to your Social Security number can be chilling, especially if you think it’s wrong and way more money than you actually received. Information reporting…
Greetings from balmy Anchorage, Alaska! We’re in the middle of a warm spell–so much so that the world-famous Iditarod, which was scheduled to kick off here next week, has been moved to Fairbanks. It promises to be less temperate in the villages–the “real feel” at our first stop in my week of volunteer tax preparation in Alaska is forecast to be -1 degrees Fahrenheit. It’s been an incredible adventure so far. I didn’t, however, leave the news behind. Even as I was on my way (fun fact: it’s over 4,300 miles from Philadelphia to Alaska), there were several developments impacting…
Before moving from a state or establishing a second home, know how the state you currently reside in will react. States with net losses of residents are developing innovative and aggressive ways to capture tax revenue from their expatriates. The most recent innovation is the “exit tax” imposed on departing residents. A proposed wealth tax in California would tax residents and businesses with annual incomes exceeding $30 million ($15 million for married couples filing separately). They would have to pay a tax of 0.4% on their net worth exceeding the trigger amount and could be liable for the tax up…
IRS data from the third week of the tax filing season—the week ending February 14, 2025—continues to suggest that taxpayers are not excited about filing this tax season. Filing statistics are down in every category—from filing to processing to tax refunds. Early filing data reflects a continued downturn in tax returns received compared to the prior year. The dip is 4.9% compared to last year (and 10% down from the same filing period in 2023). The IRS still appears unmoved, claiming on its website that “[h]istorically, filing season numbers even out as more tax returns come in” and noting that…
Earlier this month, Elon Musk’s Department of Government Efficiency (DOGE) raised eyebrows when it requested access to sensitive taxpayer data at the IRS. According to various reports, DOGE is seeking access to the Integrated Data Retrieval System (IDRS). You can think of the IDRS as a master file, which includes tax returns and other taxpayer information, including bank records. Taxpayers and tax professionals alike have expressed concerns about the safety of their data. Some have even suggested that they will not file or pay their taxes until the matter is resolved. In addition to concerns about whether allowing access is…
The Trump Administration’s Department of Government Efficiency (DOGE) has pressed the IRS for permission to access individual tax return information of US households and businesses. While the DOGE team says it needs taxpayer data to search out “waste, fraud, and abuse,” such a move puts at risk deeply personal information on more than 150 million tax filers, with no clear benefit. DOGE staffers already accessed filers’ tax refund information through the database of the Treasury Department’s Bureau of Fiscal Service, the office that processes nearly all federal government payments. For example, that database includes the bank account information of every…