by | ARTICLES, BLOG, BUSINESS, ECONOMY, FED, FREEDOM, GOVERNMENT, POLITICS
Did you even notice that whenever the economy issues good results (a strong jobs report, etc.), the stock market goes DOWN? Logic would seemingly have it be the opposite. If the economy was strong, one would assume the stock market would respond positively. But often that’s not really the case.
For years, I couldn’t understand it — how stupid could the market be? Why would the market do poorly? Wall Street professionals claim to understand it. They point out that the stock market and economy are not necessarily affected the same way. When the economy is strong, the market has often already gone up in anticipation of the improving economy. But with the stronger economy, the Fed is likely to hike interest rates, threatening the strong growth going forward. Also, with interest rates rising, investors have the alternative of earning fixed, safe rates of return by buying bonds.
Though I do follow that logic, I do not agree with it. My strong belief is that as long as the economy is strong, with sound existing economic policies in place, I believe that financial growth and profitability will continue. And I would view downturns caused by positive financial results as a buying opportunity.
The economy has begun the road to renewed growth – finally getting rid of the Obama stagnation caused by increasing taxes, stifling regulation, and anti-business sentiment. It’s unreasonable to believe that the concern of interest rates should have more sway than a growing economy. Even if interest rates rise, does anyone really believe that a business will forego an expansion opportunity just because borrowing costs are 1 or 2 percentage points higher?
Of course, it would make sense for the stock market to become weaker if President Trump goes ahead with his economically ignorant tariff and anti-free-trade policies, as well as his economically stagnating immigration restrictions.
But as for now, the fluctuations are a confirmation of a stronger economy and the multiple opportunities afforded to investors.
by | ARTICLES, BLOG, BUSINESS, ECONOMY, TAXES
The IRS recently announced plans to “close a loophole,” suggesting that hedge-fund managers have been suddenly trying avoid paying higher taxes on carried-interest profits. This issue, however, is really a non-starter, and should not be getting the coverage that it is.
The IRS wrote a rule that exempts carried interest from a longer holding period when it’s paid to a corporation rather than an individual. But it didn’t specify that it applied solely to regular corporations, whose income is subject to double taxation. What some are ridiculously suggesting is that an S-Corp “loophole” exists to allow a hedge fund manager to treat a two- or three -year capital gain as long- term. That is a joke.
When the IRS wrote the rule, they said it applies for all flow-thru, but not corporations. The reason why is because corporations don’t have capital gains rate. So if you have a hedge-fund manager for a corporation, they pay taxes at regular rates. All of a sudden, some people are suggesting that hedge fund managers might make their entity an S-Corp, so they could get the one-year provision instead of the three-year provision.
It should be obvious to anyone that the law would be implemented as applying to non flow-thru entities only. It only affects the one year holding period which was raised to three. This is unimportant anyway, because most (and certainly most substantial) gains usually take more than three years to develop anyway.
Almost every article published on this subject also incorrectly states that carried interests converts ordinary income to capital gain. In fact, it simply allocates to the manager income of the same nature as earned – ordinary, dividend, short or long-term gain.
You could probably fix the law by adding a couple of words of clarification. Every tax law is subject to the Technical Corrections Act, which is page and pages of errors that get changed. Yet all of a sudden, people are writing articles about it the rule being a loophole. It’s not, and it’s nonsense. This issue should not be getting any serious attention.
by | ARTICLES, BLOG, GOVERNMENT, HYPOCRISY, IRS, TAXES
A few years ago, it was revealed that thousand of IRS employees who were in non-compliance with the IRS — or had actually committed tax fraud — had received bonuses from the agency. The IRS had promised to place safeguards or closer scrutiny to ensure that such employees who had not done due diligence with their taxes would not receive bonuses in the future. However, a new Treasury Inspector General for Tax Administration (TIGTA) report reveals that only about a third have been caught by the additional screening. “The IRS is still paying bonuses to nearly 2,000 bad employees, including more than two dozen who were actual tax-cheats themselves.”
From the Washington Times:
“The IRS understands the importance of withholding awards from employees whose conduct is deemed to impact the integrity of the service, and/or who have a tax compliance issue, regardless of the level of discipline imposed,” wrote Katherine M. Coffman, a “human capital officer” at the agency, in the IRS’s official response.
She agreed with all three recommendations for fixing the problem, but said they won’t be done until next January. Among those getting bonuses were two employees who illegally snooped on others’ tax returns.Two other employees sexually assaulted colleagues, yet were paid nearly $1,500 in combined bonuses, the audit found.
The inspector general said the agency only screened for people who were disciplined enough to serve at least a one day suspension. Investigators said the agency didn’t screen people who had tax problems but weren’t suspended. That included three employees who received a combined $7,000 in bonuses despite having $65,000 in outstanding tax balances deemed impossible to collect by the agency. Paying those bonuses broke the law, the investigators said.
In a statement after the report, the IRS said the examples were “unacceptable” but said it’s taken steps to try to get a handle on things since the last audit. “This continues to be a priority for us, and we will continue to make improvements going forward,” the agency said.”
The IRS continues to be an abomination, even five years after the scandal that targeted certain non-profit groups in 2013. It is outrageous that taxpayer money is appropriated to those who have not fulfilled their basic tax obligations.
by | ARTICLES, BLOG, ECONOMY, GOVERNMENT, TAXES
From CNSNews.com, the monthly deficit/surplus roundup:
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. Six of the Januaries in which the federal government ran deficits overlapped President Barack Obama’s time in office—including January 2009, the month Obama was inaugurated, and the Januaries in 2010, 2011, 2012, 2014 and 2016.
The federal government also ran a deficit in January 2004, when President George W. Bush was in office.
According to an analysis published on Dec. 21 by the New York Times, a “majority of provisions” in the tax law President Trump signed in December would “go into effect” in January. However, according to the Times’ analysis, February “is the earliest that most will see changes in their paychecks.”
The Internal Revenue Service released its new withholding tables, based on the tax-cut law, on January 11.
“The Internal Revenue Service today released Notice 1036, which updates the income-tax withholding tables for 2018 reflecting changes made by the tax reform legislation enacted last month,” the IRS said that day in a press release. “This is the first in a series of steps that IRS will take to help improve the accuracy of withholding following major changes made by the new tax law.
“The updated withholding information, posted today on IRS.gov, shows the new rates for employers to use during 2018,” said the IRS release. “Employers should begin using the 2018 withholding tables as soon as possible, but not later than Feb. 15, 2018. They should continue to use the 2017 withholding tables until implementing the 2018 withholding tables.”
The record total federal taxes the Treasury has collected in the first four months of this fiscal year have included $606,726,000,000 in individual income taxes; $75,533,000,000 in corporation income taxes; $371,931,000,000 in Social Security and other payroll taxes; $27,738,000,000 in excise taxes; $7,550,000,000 in estate and gift taxes; $12,634,000,000 in customs duties; and $32,637,000,000 in miscellaneous other receipts.
by | ARTICLES, BUSINESS, ECONOMY, FREEDOM, GOVERNMENT, TAXES
Americans for Tax Reform is keeping a running list of companies who have chosen to make “tax reform bonuses, raises, or 401(k) hikes” as a result of the tax law passed in December by Congress.
The list is sorted both by state and alphabetically; you can read a description of the positive financial choices each company has made as a result of the tax savings incurred by the tax overhaul. It’s worthwhile to see how companies across America are giving back.
You can read the entire list here.
by | ARTICLES, BUSINESS, ECONOMY, FREEDOM, POLITICS, TAXES
The latest example of sin tax stupidity comes from Seattle, Washington. The new tax on sugary drinks began on January 1, 2018, as a means to “discourage consumers from buying sugary drinks while raising revenue for nutrition and education programs.” It’s a tax of 1.75 cents per ounce.
For example, it will now cost $2.14 for a 20-ounce soda, up from $1.79. The tax on a 12-pack of Coke cans will be $2.52. And a 2-liter bottle of Coke which used to sell at $2.79 is now $4. Diet and zero-calorie drinks are exempt.
“In addition to regular sodas like Coke, the tax applies to sport drinks such as Gatorade and energy drinks like Red Bull. The tax will apply to any nonalcoholic beverage or beverage concentrate that lists as an ingredient any caloric-based sweetener. For that reason, many juice-based drinks will be taxed.”
These taxes are absolutely ridiculous. It hurts both consumers and store owners alike. For example, “in Philadelphia, where a sweetened-beverage tax took effect this year, non-chain retailers have passed on 100 percent of the cost, according to preliminary research.” And for store owners who just happen to live on the edge of the city, shoppers are not changing their behavior — just their geography; they’ll shop across the border of Seattle, leaving those store owners now with products more expensive than their nearby counterparts across the city, which hurts their business.
These sin taxes are merely tax grabs for the government but do little towards changing the actual behavior they intend by the existence of the tax. The real effect is that people will shift their purchase to outside the city, which will eventually cause a tax decline for Seattle — as seen in currently in Philadelphia. Government does not seem to understand that people will actually go out of their way (literally!) to avoid paying illogical, egregious taxes.
by | IRS
IRS Announces 2018 Tax Filing Season Opens with April 17 Deadline; 155 Million Tax Returns Projected, 70 Percent Expect Refunds
IRS YouTube Videos: Claiming EITC or ACTC? Your Refund May Be Delayed— English | Spanish
WASHINGTON — Marking the beginning of the nation’s tax season, the Internal Revenue Service said today that it successfully started accepting and processing 2017 federal individual income tax returns. More than 155 million returns are expected to be filed this year.
People have until Tuesday, April 17, 2018, to file their 2017 returns and pay any taxes due. The filing tax deadline is later this year due to several factors. The usual April 15 deadline falls on Sunday this year, which would normally give taxpayers until at least the following Monday. However, Emancipation Day, a Washington, D.C., holiday, is observed on Monday, April 16, giving taxpayers nationwide an additional day to file. By law, Washington holidays impact tax deadlines for everyone in the same way federal holidays do. Taxpayers requesting an extension will have until Monday, Oct. 15, 2018, to file.
The IRS expects more than 70 percent of taxpayers to get tax refunds this year. Last year, nearly 112 million refunds were issued, with an average refund of $2,895.
“The IRS has a number of ways to help taxpayers this filing season, and we encourage people to look into the many options available,” said Acting IRSCommissioner David Kautter. “The nation’s tax professionals and software community work with the IRS and help make the tax filing process easier for Americans. Today’s filing season kick-off reflects many months of hard work by the nation’s tax community and IRS employees. And we also appreciate the time and attention taxpayers take as they prepare and file their taxes.”
Use e-File and Free File
The IRS expects about 90 percent of returns to be filed electronically. Choosing e-file and direct deposit remains the fastest and safest way to file an accurate income tax return and receive a refund.
The IRS Free File program, available at IRS.gov, gives eligible taxpayers a dozen options for brand-name products. Free File is a partnership with commercial partners offering free brand-name software to about 100 million individuals and families with incomes of $66,000 or less. About 70 percent of the nation’s taxpayers are eligible for IRS Free File. People who earned more than $66,000 may use Free File Fillable Forms, the electronic version of IRSpaper forms.
Refunds in 2018: More than 90 Percent in Less than 21 days; EITC/ACTC Refunds Starting Feb. 27
The IRS issues more than nine out of 10 refunds in less than 21 days. However, it’s possible a tax return may require additional review and take longer. “Where’s My Refund?” has the most up to date information available about refunds. The tool is updated no more than once a day, so taxpayers don’t need to check more often.
The IRS also notes that refunds cannot be issued before mid-February for tax returns that claim the Earned Income Tax Credit or the Additional Child Tax Credit. This applies to the entire refund — even the portion not associated with the EITC and ACTC. While the IRS will process the EITC and ACTC returns when received, these refunds cannot be issued before mid-February. The IRSexpects the earliest EITC/ACTC related refunds to be available in taxpayer bank accounts or on debit cards starting on Feb. 27, 2018, if they chose direct deposit and there are no other issues with the tax return.
“Where’s My Refund?” on IRS.gov and the IRS2Go mobile app remain the best way to check the status of a refund. “Where’s My Refund?” will be updated with projected deposit dates for most early EITC and ACTC refund filers Feb. 17, so those filers will not see a refund date on “Where’s My Refund?” or through their software packages until then. The IRS, tax preparers and tax software will not have additional information on refund dates, so these filers should not contact or call about refunds before the end of February.
This law change gives the IRS more time to detect and prevent fraud. Even with the EITC and ACTC refunds and the additional security safeguards, the IRS still expects to issue more than nine out of 10 refunds in less than 21 days. However, it’s possible a particular tax return may require additional review and take longer. Taxpayers are reminded that state tax agencies have their own refund processing timeframes that vary, and some states may make additional reviews to ensure their refunds are being issued properly. Even so, taxpayers and tax return preparers should file when they’re ready. For those who usually file early in the year and are ready to file a complete and accurate return, there is no need to wait to file.
Free Tax Help
Low- and moderate-income taxpayers can get help filing their tax return for free. More than 90,000 volunteers around the country can help people correctly complete their return.
To get this help, taxpayers can visit one of the more than 12,000 community-based tax help sites that participate in the Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs. To find the nearest site, use the VITA/TCE Site Locator on IRS.gov or the IRS2Go mobile app.
Filing Assistance
No matter who prepares a federal tax return, by signing the return, the taxpayer becomes legally responsible for the accuracy of all information included. IRS.gov offers a number of tips about selecting a preparer and information about national tax professional groups.
The IRS urges all taxpayers to make sure they have all their year-end statements in hand before filing. This includes Forms W-2 from employers and Forms 1099 from banks and other payers. Doing so will help avoid refund delays and the need to file an amended return.
Online tools
The IRS reminds taxpayers they have a variety of options to get help filing and preparing their tax return on IRS.gov, the official IRS website. Taxpayers can find answers to their tax questions and resolve tax issues online. The Let Us Help You page helps answer most tax questions, and the IRS Services Guidelinks to these and other IRS services.
Taxpayers can go to IRS.gov/account to securely access information about their federal tax account. They can view the amount they owe, pay online or set up an online payment agreement; access their tax records online; review the past 18 months of payment history; and view key tax return information for the current year as filed. Visit IRS.gov/secureaccess to review the required identity authentication process.
The IRS urges taxpayers to take advantage of the many tools and other resources available on IRS.gov. IRS phone lines will be busy again this year, so to save time, people should first visit the IRS website for tax assistance.
The IRS continues to work with state tax authorities and the tax industry to address tax-related identity theft and refund fraud. As part of the Security Summit effort, stronger protections for taxpayers and the nation’s tax system are in effect for the 2018 tax filing season.
The new measures attack tax-related identity theft from multiple sides. Many changes will be invisible to taxpayers but will help the IRS, states and the tax industry provide new protections. New security requirements will better protect tax software accounts and personal information.
Renew ITIN to Avoid Refund Delays
Many Individual Taxpayer Identification Numbers (ITINs) expired on Dec. 31, 2017. This includes any ITIN not used on a tax return at least once in the past three years. Also, any ITIN with middle digits of 70, 71, 72 or 80 (Example: 9NN-70-NNNN or 9NN-80-NNNN) is now expired. ITINs that have middle digits 78 or 79 expired Dec. 31, 2016, but taxpayers can still renew them. Affected taxpayers should act soon to avoid refund delays and possible loss of eligibility for some key tax benefits until the ITIN is renewed. An ITIN is used by anyone who has tax-filing or payment obligations under U.S. tax law but is not eligible for a Social Security number.
It can take up to 11 weeks to process a complete and accurate ITIN renewal application. For that reason, the IRS urges anyone with an expired ITIN needing to file a tax return this tax season to submit their ITIN renewal application soon.
Sign and Validate Electronically Filed Tax Returns
All taxpayers should keep a copy of their tax return. Some taxpayers using a tax filing software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity.
Taxpayers using the same tax software they used last year will not need to enter their prior year information to electronically sign their 2017 tax return. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.
by | ARTICLES, BLOG, BUSINESS, ECONOMY, NEW YORK, POLITICS, TAXES
In a continued tantrum against the “Tax Cuts and Jobs Act,” Governor Cuomo called the tax changes an “economic missile” as he unveiled his new budget proposal for the fiscal year. His solution? Raise more taxes mainly on businesses and restructure certain taxes so that New York gets its share of the pie.
One major change Cuomo has proposed is to eliminate the state income tax on wages for many New Yorkers; it would be replaced by a new payroll tax paid for by employers. This would be an disastrous burden for New York businesses who would conceivably have to cut wages in order to cover the cost of such a tax and deal with an excessive amount of increased paperwork.
Other ridiculous ideas include: a) a 2-cents-per-milligram tax on all opioids produced, paid for by the drug manufacturer; b) expanding the internet sales tax, a measure that has already failed twice; c) a 10-cents-per-milliliter tax on vapor products, paid for by the distributors; and d) a $120 “safety inspection fee” for motor coaches, ambulances, and other for-hire, for-profit cars that carry passengers subject to inspection by the DoT.
Just as egregious is Cuomo’s proposal to go after health insurers who stand to benefit from the tax reform bill. As some insurers could see up to a 40% reduction on their federal corporate taxes, Cuomo wants to pick their pockets by implementing a 14 percent surcharge on those gains in order to close the budget deficits.
For a governor who once emphasized his fiscal restraint, this budget shows how unhinged and out-of-touch with New Yorkers and New York businesses Cuomo has become.
