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Originally Appeared Here

As the clock ticks toward the tax filing deadline, some people might be desperate enough to turn to a bevy of new AI chatbots to do it all for them.

One word of advice: Don’t. 

There’s a reason we warn kids not to use ChatGPT to write an essay or finish their history homework. And the bot is especially bad at math. Add in the intricate and often ambiguous realm of tax laws that vary by state, and it could be a recipe for disaster − or even worse − an audit. 

This question of whether it’s a good idea to use generative AI for tax help comes at a time when the nation’s most popular tax preparation companies, Intuit’s TurboTax and H&R Block, launched generative AI “assistants.” 

So far, reviews of “Intuit Assist,” specifically in Turbo Tax’s DIY “Self-Help” section, and H&R Block’s “AI Tax Assist,” which is part of their paid packages, underscore why this sort of AI won’t replace human expertise any time soon. 

Not that they’re meant to, Turbo Tax spokeswoman Karen Nolan said on a Zoom call. And it’s important taxpayers understand that. 

How can generative AI help with my taxes?

Intuit Director of Design Jim Fell and Nolan walked me through some of the most common ways people can − and cannot − use the new tool. 

“Our AI is a digital front door to simple help flagging missing information or inconsistencies while also providing access to expert help from a human being,” Nolan explained as Fell showed me specific use-cases on screen. 

The main ways the AI chatbot pops up right now are to flag an accuracy check, such as missed information or potential “clumsy-thumb” typos. It also offers deeper, more detailed explanations of finished returns and can quickly translate between languages for filers who might be overwhelmed trying to figure everything out in English. 

That last part is the most impressive bit of AI magic that’s easy to see firsthand. The rest of the machine learning tools run mainly in the background and have for years. Nolan says it has been checking for tax return accuracy, cutting down on repetitive tasks, and helping find obscure deductions for nearly a decade.

Does H&R Block have a new AI tax tool?

H&R Block’s new “AI Tax Assist” is a more prominent part of its website and similar to what many of us have played around with using ChatGPT, Copilot or Gemini. 

Like Turbo Tax’s Intuit Assist, it’s best to use H&R Block’s AI Tax Assist more for a simple query or as a failsafe for common mistakes. For instance, it does well defining tax terms and explaining something you might not understand (such as the simplest, most easy-to-understand terms in the filing process). 

Is AI just bad at math? 

Remember when I said that AI doesn’t do “facts” very well? It’s abundantly clear that you can’t ask ChatGPT or any other AI conversation bot a critical or confusing tax question and trust its answers. 

That’s largely because different AI assistants are trained on different types of information, kind of like if you raised a child without ever teaching her what colors are called, then asked her what color an apple is. She might try to come up with an answer, but without being taught, a guess is as good as you’re going to get. 

In the case of Intuit Assist, the company says the bot was trained on current tax code as well as the company’s own vast data trove based on its tax prep experience. That information, combined with whatever it learns from your own tax documents along the way, forms its knowledge base and dictates the answers you receive when asking it a question. 

H&R Block’s AI Tax Assist works in a similar way, and the company says it used its own archive of tax laws, with a few tweaks here and there from their own accountants, tax law experts and the like. 

Neither of these bots is trained from information scraped from the internet, which is reassuring, but that doesn’t prevent them from falling victim to AI accuracy issues. All versions of consumer AI currently have a “hallucination” problem. They often spit out information that sounds “right” but is out of date, inaccurate or just plain made up.

Spring cleaning for your finances:12 money moves to make right now

Here’s how not to use AI to do your taxes

In some early reviews of Intuit Assist and AI Tax Assist, a fellow technology columnist asked the tax chatbots a slew of much more specific and nuanced hypothetical questions, and it didn’t go well. 

Both company’s bots responded with vague, misleading or just wrong answers, specifically when his questions were around cryptocurrencies, multi-state returns and other uncommon filing situations. 

For example, when asked a question about where a college student should file taxes when they go to school out of state, the journalist reported that TurboTax’s bot provided “irrelevant advice” and H&R Block’s AI assistant erroneously suggested the student would have to file in both states. The truth is, the person would have to file only in a state where they earned income, but neither AI helper nailed the answer. 

These situations reveal the limitations of artificial intelligence, but those specific shortcomings aren’t necessarily applicable across the board, spokespeople from both companies say. 

“If Turbo Tax is powering the AI, you can trust it,” Nolan said. “We don’t expect our customers to try to manipulate it the way (that journalist did). That wouldn’t really happen if you’re doing your taxes.”

When I asked Nolan about the trouble people might have turning to an AI chatbot in the Self Help section specifically, she explained, “If you have questions like that, a DIY product is probably not what you need.” 

Nolan also reiterated that in the hypothetical instance it gives you bad advice, the company’s system would flag that before it allowed you to finish and file. 

“AI won’t file your taxes for you, even if you’re using our mobile app and not speaking with a human. AI is not filing your actual return. We will absolutely capture inaccuracies before anything gets to the IRS,” Nolan said. 

Be sure to read the fine print

Turbo Tax identifies its AI chatbot as a Beta version product, which mean it’s still working out the kinks. It has several disclaimers in the fine print that warn people advice might not be spot-on. Same with H&R Block. 

“Gen-AI for the industry is still in its infancy,” Nolan said. “You won’t see us using AI to do math. We have other things doing the math.”

To TurboTax’s credit, the Intuit Assist bot did help me along the way, even if the standard checks and issue alerts would have accomplished the same thing, albeit a bit later in the process. But the most important thing about these AI tax bots is that they’re designed to get better over time. Fast-forward a few years, and both tax assistants will probably be miles better than they are today, and they learn as they go. 

Big business and taxes:Major companies haven’t paid federal income tax in 5 years. How could that be?

Child tax credit:How much is the child tax credit for 2023? Here’s what you need to know about qualifying.

Your tax return:Here are all the ways to check the status of your 2023 tax return

ACA and taxes:Your ACA plan’s advance premium tax credit may affect your refund or how much you owe.

Will we use AI to do our taxes in the future? 

Future versions of these tax-minded assistants will be smarter and more robust than the versions we have today. That’s the promise of generative AI, and we’ll all grow to expect it as artificial intelligence gradually takes over more of our daily tasks. 

You know those prescription drug commercials on TV? It’s kind of like that right now. Here’s this amazing new tool that can save you time, give you “more confidence” and maybe even save you money. But the list of potential problems using it without guardrails on something as crucial as your taxes comes with a list of potential “side effects” so long it makes you laugh out loud. 

Fortunately, humans at TurboTax and H&R Block are still running the show, and they both guarantee the accuracy of your tax return, regardless of whether you use the available AI features. If you get audited, they’ll give you advice and guide you along the way, but additional safeguards like TurboTax’s Audit Defense or H&R Block’s Peace of Mind Extended Service Plan, where the companies actually deal with the IRS on your behalf, still cost extra. 

Jennifer Jolly is an Emmy Award-winning consumer tech columnist and on-air correspondent. The views and opinions expressed in this column are the author’s and do not necessarily reflect those of USA TODAY. Contact her atJJ@Techish.com. 

Originally Appeared Here

White House highlights cops’ marijuana concerns; Lawmakers on SAFER Banking; PA legalization opportunity; KS medical cannabis bill

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/ TOP THINGS TO KNOW

The Internal Revenue Service said in a new memo that marijuana industry cash is not necessarily “suspicious.”

The White House Office of National Drug Control Policy’s annual budget submission to Congress highlights concerns of law enforcement agencies around the country that claim marijuana legalization has not diminished the illegal cannabis market.

Senate Banking Committee Chairman Sherrod Brown (D-OH) and House Majority Whip Tom Emmer (R-MN) both voiced support for enacting marijuana banking legislation.

The Pennsylvania House Appropriations Committee chairman says it’s “high time” to legalize marijuana and lay the groundwork for businesses in the state to export cannabis to other markets if federal law changes—and he sees a “real opportunity” to do so this session.

The Kansas Senate Federal and State Affairs Committee filed a bill to create a limited medical cannabis pilot program, but advocates say it would put too many restrictions on patient access and create “monopolies” in the market.

A new federally funded study found that legalization of “adult-use sales were not associated with an increase in lifetime or [past 30-day] marijuana use” among middle school students.

/ FEDERAL

The White House tweeted, “President Biden and Vice President Harris believe no one should be jailed just for using or possessing marijuana. That’s why our Administration has pardoned tens of thousands of people for federal marijuana possession. Last week, @VP heard directly from people who have received these pardons for prior marijuana convictions. Our Administration will continue to work to advance long-overdue criminal justice reforms.”

Former President Donald Trump suggested the UK’s Prince Harry might have to be deported if it turns out he lied about prior drug use on his visa application.

Former White House National Drug Control Policy Chief Medical Officer Roneet Lev said it’s an “insult” to use the phrase “medical marijuana.”

Sen. Elizabeth Warren (D-MA) praised Massachusetts Gov. Maura Healey’s (D) mass marijuana pardon move, calling it “a powerfully important step” and saying, “I’ll keep working to legalize marijuana nationwide and repair the harms of an unjust criminal legal system.”

Rep. Morgan Griffith (R-VA) inserted comments into the Congressional Record praising a recently deceased judge who as a college student “was charged with possession of heroin and marijuana, but later had those charges dropped when he agreed to become a police informant.”

/ STATES

A senior advisor to Arkansas Gov. Sarah Huckabeen Sanders (R) is leading a group seeking to defeat proposed ballot initiatives on legalizing marijuana and other issues.

The Connecticut legislature’s Transportation Committee defeated an amendment to make it easier for police to pull over drivers who they suspect are smoking marijuana.

A Tennessee senator discussed his concerns about legalizing marijuana.

A New Jersey appeals court ruled that a town has the right to withhold support from a marijuana business that is seeking a state license.

Rhode Island regulators published guidance on allowable marijuana products.

Colorado regulators published average market rates for retail marijuana.

Michigan regulators published a monthly report on disciplinary actions against marijuana businesses.

Vermont regulators sent a reminder about marijuana business license renewals.

The Warm Springs Tribal Council, located within Oregon, is delaying a referendum on allowing a marijuana dispensary until June 5.

Nevada regulators will consider marijuana business issues on Thursday.

—
Marijuana Moment is tracking more than 1,400 cannabis, psychedelics and drug policy bills in state legislatures and Congress this year. Patreon supporters pledging at least $25/month get access to our interactive maps, charts and hearing calendar so they don’t miss any developments.

Learn more about our marijuana bill tracker and become a supporter on Patreon to get access.
—

/ LOCAL

Richmond, Virginia’s mayor tweeted, “While Glenn Youngkin has stifled attempts to legalize the recreational sale of marijuana in VA, the Biden Administration is taking real steps to move our country forward. Let’s keep up the momentum!”

/ INTERNATIONAL

Statistics Canada reported that nearly 72 percent of marijuana consumers buy only from legal sellers.

The Kenyan attorney general’s office is urging a court to reject a lawsuit brought by Rastafarians seeking to overturn cannabis criminalization.

/ SCIENCE & HEALTH

A study found that “when states permitted recreational marijuana use, there was no corresponding change in the number of foster care entries related to drug abuse, relative to control states” and that “for the legalization of medical marijuana, we find a roughly 20 percent decrease in the number of cases associated with parental drug abuse in the second year after legalization, followed by a roughly 30 percent decrease in the third and fourth years.”

A study found that “patients self-reported very good efficacy and tolerability” of medical cannabis.

/ ADVOCACY, OPINION & ANALYSIS

The New York Post editorial board and the New York Daily News editorial board cheered Gov. Kathy Hochul’s (D) move to launch a review into the state’s marijuana business licensing process.

A Show-Me Institute official authored an op-ed arguing that local Missouri marijuana taxes “are an opportunity to improve both the current budgets and the long-term tax environment for cities and counties.”

/ BUSINESS

Curaleaf Holdings, Inc. is acquiring Northern Green Canada.

Meta is reportedly being investigated by federal authorities over its potential role in the illicit sale of drugs on its platforms.

The Cannabist Company Holdings Inc. completed a private placement of $19.5 million aggregate principal amount of senior secured convertible debentures.

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Photo courtesy of Brian Shamblen.

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Originally Appeared Here

Preparing and filing tax returns can cause anxiety and confusion. You have choices to help you timely and accurately meet your 2023 filing requirements for free. Free filing and assistance are available through the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs, IRS Free File programs, IRS Direct File, MilTax, and many private software companies. Each program, discussed below, has different qualifications and features and taxpayers should be comfortable with their choice.

Volunteer Income Tax Assistance and Tax Counseling for the Elderly

You may qualify to obtain free tax return preparation services through one of the IRS partners participating in the VITA or TCE programs. VITA sites offer free tax preparation services to individual taxpayers who make $64,000 or less, persons with disabilities, and taxpayers with limited English proficiency. TCE sites offer free federal and state tax preparation assistance to taxpayers who are 60 years of age and older and often specialize in tax issues unique to seniors, such as pension and retirement-related issues. These sites provide services in different ways including in-person, virtual, or drop-off. However, some sites offering in-person service require an appointment. The sites will tell you what you need to bring and how to get ready for your appointment. You can find out more about these volunteer programs, determine your eligibility, and even find a VITA or TCE site here. Many of the VITA and TCE sites are only available through mid-April while others are open during the extension period through mid-October. Please check the specific location for the available dates and times and whether the site has Spanish-speaking volunteers.

IRS Free File Program

The IRS Free File program is a public-private partnership between the IRS and several trusted brand-name tax preparation and filing software industry companies who provide their online tax preparation and filing for free in English and Spanish. Taxpayers can file their 2023 federal and state tax returns using IRS Free File through early November. Free File helps millions of taxpayers each year to file tax returns for free and this year has seen an increase in usage by about 18 percent. IRS Free File can carry over information from your prior returns when using the same software. It supports simple and complex returns, most individual credits including child and energy credits, income or loss from a business you owned and operated as a sole proprietor, income or loss from rental real estate, royalties, partnerships, S corporation, interest, dividends, and income or loss from the sale of stocks or crypto currency. Free File products are mobile friendly so you can do your taxes on your smart phone or tablet. Taxpayers including active-duty military with income below the threshold can use Free File to prepare and e-file their federal tax return for free. Free File products automatically import your federal tax return information into a state return. You can choose to use Free File to file your state tax return at low or no cost. To be eligible for Free File, your adjusted gross income must be $79,000 or less. Learn more about IRS Free File at IRS.gov/freefile. You can also watch YouTube videos on “What to know about IRS Free File guided tax software” and “How to use the Find Your Trusted Partner Tool.”

What if I don’t meet the income requirement?

If you don’t meet the income requirement for Free File, you can still use the IRS’s fillable forms and file electronically. There’s no guidance and only limited calculations, but you can still fill out the free electronic forms using IRS instructions. However, this option doesn’t include any state tax preparation.

IRS Direct File

Direct File is a new tax tool, available in English and Spanish, you may be able to use to file your federal tax return directly with the IRS using your smartphone, tablet, or computer through April 15, 2024. In the Direct File pilot, taxpayers receive step-by-step guidance and calculations as they add tax information. While using Direct File, taxpayers can connect with IRS customer service representatives through a live chat.

To qualify for Direct File, you must live in one of the twelve qualifying states, file a simple federal tax return, report only certain types of income, claim only certain credits, and take only certain deductions. After completing their federal returns, taxpayers in the four states with a state income tax – Arizona, California, Massachusetts, and New York – will be guided to a state-sponsored tool to complete their state tax returns. To find out if you qualify, visit the IRS Direct File website.

Watch the Direct File video for a preview of what to expect when using this tool.

MilTax

Military personnel who want to file free federal tax returns have several options, including the Department of Defense’s MilTax and the IRS Free File program. These programs offer online tax preparation, electronic filing, and direct deposit of refunds at no cost. The Department of Defense provides MilTax as a free tax resource for the military community. MilTax is a suite of tax services available for members of the military, as well as qualifying veterans and family members. There are no income limits.

MilTax is designed exclusively for the military community. The software was developed specifically to address the unique circumstances of military life that can affect taxes such as combat pay and dealing with multiple moves within the same tax year. Eligible taxpayers can use MilTax to complete and electronically file a federal tax return and up to three state returns for free.

Taxpayers, including active-duty military, with an adjusted gross income (AGI) of $79,000 or less in 2023 can find an offer from an IRS Free File provider that matches their needs. Some providers also offer free state tax return preparation. Those with an AGI over the limit can still file their return for free with Free File Fillable Forms.

Private Company Software

Tax software companies such as Turbo Tax, H&R Block, Cash App, and others also provide free options. You should read the eligibility requirements for the tax software company you choose and understand the software offerings to ensure a no-cost solution. Many of these companies automatically import your federal tax return information into a state return. You can choose to file your state tax return at low or no cost.

Conclusion

While there are many free options to file your returns, many people have complicated finances that require them to pay to prepare or file their taxes. But for those that do qualify, these free preparation and filing services are underutilized by qualifying taxpayers. Approximately 100 million qualifying taxpayers continue to self-prepare or pay a preparer even though they qualify for free services. Utilizing the free services will allow these taxpayers to save costs on preparers and tax preparation software. You should understand the options for each of the various programs and choose wisely.

For the approximately 48 million qualifying taxpayers who self-prepare, the free services can assist to ensure they receive all the credits and deductions for which they qualify, including the Earned Income Tax Credit (EITC). The IRS estimates that millions of taxpayers who qualify for the EITC do not claim the credit, missing out on a benefit potentially worth thousands of dollars. Utilizing one of the free services will help taxpayers save money in correctly calculating and paying their tax or receiving their refunds.

Originally Appeared Here

“I have no words.” That was the comment by U.S. District Court Judge Ana Reyes regarding the Department of Justice charging IRS leaker Charles Littlejohn with one count of unauthorized disclosure of tax information.  

Judge Reyes made that exasperated comment on January 29 at the sentencing hearing for Littlejohn, who had gained notoriety by leaking the tax return information of Donald Trump and then following up with the leaking of tax return information on more than 1,000 individuals to the New York Times and ProPublica.

Justice could have charged Littlejohn with numerous felony counts of unauthorized disclosure and obstruction but charged him with only one felony count with a maximum sentence of five years.  

Judge Reyes, to her credit, sentenced Littlejohn to the full five years. However, Justice has extended every courtesy and break to Littlejohn throughout the case, limiting his exposure.

Like other Americans, I suspect that Judge Reyes does not realize just how corrupt the federal tax system has become. The system has become absolutely corrupt because there is absolutely no accountability.  Specifically, the IRS has become utterly corrupt because there is no check on that agency’s misconduct.

The IRS inspector general (TIGTA), theoretically, serves as a “watchdog,” but in reality protects IRS management with junkyard dog ferocity.

In 2017, I provided TIGTA with the names of nine witnesses to substantiate IRS misconduct and corruption. Not one of those witnesses was ever contacted.  Regarding the collusion between TIGTA and the IRS, I asked five of the witnesses directly if they had ever been contacted by TIGTA. All five laughed because the question was so absurd.

I discussed TIGTA in 2017 and 2018 with the chief investigator for the House Ways and Means Committee. She told me that TIGTA conducts “substandard investigations” and that TIGTA executives “lie to (her) all the time.”

In April 2023, I asked the staff of Rep. Rob Wittman, R-Va., to make a formal inquiry to TIGTA, asking the “watchdog” why it never contacted the nine witnesses. It seemed like a reasonable question. TIGTA has stonewalled Wittman’s staff and, as of recently, has not returned their phone calls. The IRS “watchdog” cannot be bothered to return phone calls from a congressman’s staff.

Justice’s coddling of Littlejohn and the efforts of TIGTA to bury misconduct are two sides of the same problem. There are no safeguards to protect the public from IRS abuse and misconduct.  

The IRS routinely handles routine matters and then congratulates itself on its ethics. However, the second there is a competing interest or pushback, the IRS goes straight to Plan B. It will lie, cheat and break the law with impunity.

When the IRS retaliated against me for being a whistleblower, they invented  phony conversations that never occurred. The IRS backdated signatures when it failed to execute penalty authorizations in easement cases. When the IRS ran into problems in a line of cases, they bullied elderly taxpayers into improper settlements and denigrated World War II veterans as “twits.” When an IRS employee stumbled upon a possible suppression of evidence in tea party cases, IRS management and TIGTA tore her apart.

The IRS engages in such lawless activity for a simple reason: because it can. I was an IRS attorney for 30 years, and I used to be proud to work there. It used to be an honorable job.  However, the agency’s lack of safeguards and accountability has caught up with it, and the corruption and misconduct has metastasized.

I have spoken out for years, but ultimately I’m just a bird dog. Genuine reform of the IRS, instead of just throwing money at it, is a political project, and I fear there is no will or constituency for such action. And that’s a shame.

Originally Appeared Here

Every year brings new people into the workforce. The Taxpayer Advocate Service (TAS) wants to reach individuals filing tax returns for the first time, or for the first time after a gap in filing, to share information to help them meet their federal tax obligations.

Who is a first-time filer?

Many individuals may be filing a federal income tax return for the first time, or for the first time in several years. This includes:

• Students and recent graduates working for the first time
• Gig workers who did not previously need to file
• Adults returning to the workforce after long periods of unemployment
• New military recruits who may be getting their first paychecks
• Retirees returning to work to supplement their income
• People taking on filing responsibilities after a spouse’s death
• People filing only to claim refundable credits

What are some of the challenges for first-time filers?

People who have never filed, and people who have not filed for several years, have similar needs for information and resources. First-time filers may not have experience with taxes in general. The tax law is complex and changes every year. First-time filers may not have a trusted tax professional to rely on, and they may not be able to afford professional help. Free resources are available, and TAS wants to help you find them.

As a first-time filer, you may need help determining:

• If you are required to file
  • Do I Need to File a Tax Return is an interactive tool to help you determine if you need to file. But even if you aren’t required to file, you may be eligible for some refundable tax credits. Who Should File a Tax Return lists many of the benefits of filing a tax return, steps to follow, and other helpful resources.
• What you need to gather to file
• Documentation to support tax credits and deductions. Remember: the standard deduction has been greatly increased, so that itemizing your deductions may not be necessary.
• Prior Year Adjusted Gross Income – first-time filers use zero.
  • Bank account and routing number for direct deposit of a refund.
• How to find tax return preparation help

To avoid common errors when filing a tax return, first-time filers and all taxpayers should:

• Make sure each name and SSN or ITIN are listed exactly as printed on the individual’s Social Security card issued by the Social Security Administration or the ITIN notice issued by the IRS.
• Choose the correct filing status. The Interactive Tax Assistant on IRS.gov can help you choose the correct status, especially if more than one filing status applies. Tax software also helps prevent mistakes with filing status.
• Double check your math. Calculation errors are some of the most common mistakes. They range from simple addition and subtraction to more complex calculations. Check your calculations, or better yet, use tax return preparation software that does it automatically.
• Double check your bank account numbers. Taxpayers who are due a refund should choose direct deposit. This is the fastest way for taxpayers to get their money. It’s important to make sure the correct routing transit number and account number are used.
• Sign your return. An unsigned tax return isn’t valid. In most cases, both spouses must sign a joint return. Exceptions may apply for members of the armed forces or other taxpayers who have executed a valid power of attorney. If you paid someone to prepare your taxes, they are required by law to sign the return and include their preparer tax identification number (PTIN) on it.

Can first-time filers use electronic filing?

Electronic filing, or e-filing, refers to the process of filing one’s tax return electronically, using approved online software. Most first-time filers can use e-file. E-filing is becoming increasingly popular because of its benefits:

• E-filing has brought about increased flexibility in the filing of tax returns and is a lot more convenient because you can file your tax return from the comfort of your home, at any time.
• You sign your return digitally when e-filing, preventing the possibility of sending an unsigned return.
• E-filing saves a huge amount of time and money. When tax returns are e-filed, the data is directly transmitted online from the e-filer’s servers to the tax agency’s servers. You won’t have to print and mail your tax return, or wait for a paper return to be received, opened and input by an IRS employee. Because you’re inputting the data yourself, you can avoid potential input, or transcription, errors.
• Because transcription errors can be avoided by accurately e-filing, the overall tax return filing process is more accurate.
• When you e-file, you will receive notifications throughout the filing process. You will receive confirmation that your return was received. Within 24 hours, you will be notified whether your return can be processed or if it must be returned, or rejected, to correct one or more errors. In most cases, you can correct the error and resubmit a rejected return. You can also check the status of your return online after it’s been accepted for processing. Paper filing is much more ambiguous. Although you can file a paper return by certified or registered mail to confirm when the IRS receives it, status updates after that point are limited.

Are there tax credits available to first-time filers?

If you are a first-time filer, you may not be aware of credits that can reduce your tax or increase your refund.

• Earned Income Tax Credit – This credit is available to taxpayers with low to moderate earned income, with or without a qualifying child.
• Education Credit – This credit is available to taxpayers who incurred qualified education expenses. Some education credits are refundable.
• Premium Tax Credit – This credit helps eligible individuals and families afford premiums for health insurance purchased through the Health Insurance Marketplace.

More information

The Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs offer free basic tax return preparation to qualified individuals. Low Income Taxpayer Clinics (LITCs) are also available to assist low-income individuals who have a tax dispute with the IRS. LITCs also provide education and outreach to individuals who speak English as a second language.

TAS Resources

IRS Resources

Visit the Taxpayer Advocate Service’s Get Help center for a list of tax topics to assist you with resolving many tax related issues.

For more updates from the Taxpayer Advocate Service, visit the news and information center to read the latest tax tips, blogs, alerts and more.

Originally Appeared Here

STATEN ISLAND, N.Y. — The average American is receiving more money back on their annual tax return than they did last year.

Through March 1, the most recent date currently available, the agency has issued 36,288,000 refunds, nearly 14% fewer than the 42,040,000 that had been issued by this time last year, according to the latest Internal Revenue Service (IRS) data.

The reason for the dramatic reduction in refunds issued to date is a simple one; the agency officially began processing tax returns one week later this year than it did in 2023.

“Because the 2023 filing season began on Jan. 23, the IRS had been receiving returns for 40 days by Feb. 23, 2023; compared to only 33 days for the 2024 filing season, which opened on Jan. 29. Considering the loss of 7 days in this comparison, filing season statistics below continue to show a strong start to Filing Season 2024, with all systems running well,” according to the IRS.

The average refund amount through March 1 was $3,182, roughly 5.1% higher than the average refund of $3,028 at that time last year.

Through Feb. 9, the average had been just $1,741, but has increased dramatically now that the IRS has begun issuing refunds to taxpayers who claimed the the Earned Income Tax Credit or Additional Child Tax Credit, the refundable portion of the Child Tax Credit.

Due to the Protecting Americans from Tax Hikes (PATH) Act, which took effect during the 2017 filing season, the IRS legally cannot issue refunds or credits to anyone who claimed an Earned Income Tax Credit or Additional Child Tax Credit before Feb. 15, with the agency expecting those who claimed those credits to receive their direct deposit refunds by Feb. 27.

The policy was implemented “to help prevent revenue loss due to identity theft and refund fraud related to fabricated wages and withholdings,” according to the IRS.

TRACKING YOUR REFUND

If you’re one of the millions of Americans who have already sent in their tax returns, there are online portals that will allow you to monitor the status of your refund.

For federal taxes, residents can use the IRS “Where’s My Refund” tool or the IRS2Go mobile app to see when their refunds have been received, processed and sent.

Refund status will appear roughly 24 hours after you e-file a current-year return, three or four days after you e-file a prior-year return or four weeks after you file a paper return.

To access the information, which is updated overnight each day, residents must provide their Social Security or individual taxpayer ID number (ITIN), filing status and exact refund amount on their return.

Once refunds are sent, those using direct deposit should receive their refund within five days, while those expecting checks in the mail may have to wait several weeks.

For state taxes, New Yorkers can visit the Department of Taxation and Finance website and click “Check refund status.”

This allows residents to see if their return has been received; when it’s being processed; if the return requires additional review; if the state requires additional information; if a requested refund amount has been adjusted and when a refund has been issued.

NEW TAX INCOME BRACKETS

While tax rates have remained the same as last year, the IRS has announced new brackets with adjusted thresholds, boasting upper limits that are 7% higher than last year.

In addition to the new tax brackets, the standard deduction, the amount you can deduct to adjust the amount of income on which you’re taxed, has also increased from $12,950 to $13,850 for single filers and from $25,900 to $27,700 for married couples filing jointly.

Here’s a look at the new tax brackets that will be used when filing in 2024.

MARGINAL TAX BRACKETS FOR SINGLE FILERS

• $11,000 or less in taxable income – 10% of taxable income
• $11,001 to $44,725 in taxable income – $1,100 plus 12% over $11,000
• $44,726 to $95,375 in taxable income – $5,147 plus 22% over $44,725
• $95,376 to $182,100 in taxable income – $16,290 plus 24% over $95,375
• $182,101 to $231,250 in taxable income – $37,104 plus 32% over $182,100
• $231,251 to $578,125 in taxable income – $52,832 plus 35% over $231,250
• $578,126 or more in taxable income – $174,238 plus 37% over $578,125

MARGINAL TAX BRACKETS FOR MARRIED COUPLES FILING JOINTLY

• $22,000 or less in taxable income – 10% of taxable income
• $22,001 to $89,450 in taxable income – $2,200 plus 12% over $22,000
• $89,451-$190,750 in taxable income – $10,294 plus 22% over $89,450
• $190,751-$364,200 in taxable income – $32,580 plus 24% over $190,750
• $364,201 to $462,500 in taxable income –$74,208 plus 32% over $364,200
• $462,501 to $693,759 in taxable income – $105,664 plus 35% over $462,500
• $693,751 or more in taxable income – $186,601 plus 37% over $693,750

Originally Appeared Here

0422 biz jg golombek

By Alex Laurin and Nick Dahir

Looking around the OECD, Canada is an average-tax nation overall but relies far more on income taxes and much less on consumption levies than most other industrialized nations. Leaning so hard on income taxes hurts our economic performance.

Every tax creates economic distortions but some overused taxes are more damaging than others. By raising more of our revenue from the less damaging taxes we could improve economic performance without reducing public services.

The latest C.D. Howe Institute Shadow Budget proposes a simple change in the federal tax mix: raise the GST rate by two percentage points — back to its original rate of seven per cent. At the same time, cut the federal corporate rate by two percentage points and the rate in the second personal income tax bracket by 5.5 points, from 20.5 to 15 per cent. That’s the bracket ranging from $55,867 to $111,733.

Finally, to cover any harm to lower-income Canadians from the increase in GST and also any political blowback from the fact that in the very lowest bracket the income tax rate doesn’t move: double the base amounts for the GST Tax Credit.

Revenue forecasts are always difficult, but our best estimate is that an extra two points on the GST will bring in $26.1 billion next fiscal year, while the corporate rate cut will cost $6.3 billion, the income tax rate cut, $14.9 billion, and the increase in the GST credit, $5.8 billion. Sum those four changes and the federal government ends up short $900 million. In a more than $500-billion budget that’s not a lot.

What are the benefits of this revenue-neutral tax switch?

The corporate tax cut would increase the expected after-tax return on potential business investments, making more opportunities desirable and thus increasing the capital stock and economic activity. It may also shift some multinationals’ profits back into Canada.

Lower personal income taxes would reduce tax avoidance and stimulate greater work effort and participation. Reduced personal taxes would also encourage risk-taking and entrepreneurial activity. And, in a nice feedback loop, the increase in income generated by these effects will result in a roughly three per cent rise in GST revenues.

Story continues

As mentioned, we would cut personal income taxes only in the second bracket. Families in the lower-income quartiles would see their relative net tax burden remain relatively unchanged, however, because of our doubling of the GST tax credit.

So why shift taxes around if there’s no gain in revenue? Because raising the same revenue with taxes that harm the economy less makes Canadians better off. Drawing on estimates of the marginal cost of public funds by Bev Dahlby of the University of Calgary and Ergete Ferede of MacEwan University, we figure a tax shift like the one we propose would result in a long-term economic improvement of $4.5 billion annually.

Innovative policy design can boost economic activity and incomes without cutting public services or hurting the most disadvantaged. Business investment in Canada has been lacklustre since 2015, leading to a decline in capital per worker, which is one reason real GDP per person is stagnating. Recent tax reforms have been motivated mainly by a perceived need for redistribution. We now need to tackle the tax system’s adverse impacts on Canada’s economic performance. Federal tax policy can help. Next month’s budget would be a good place to start.

Alex Laurin is director of research at the C.D. Howe Institute, where Nick Dahir is a research officer. This article reflects ideas discussed during the C.D. Howe Institute’s recent two-day conference on tax policy.

Bookmark our website and support our journalism: Don’t miss the business news you need to know — add financialpost.com to your bookmarks and sign up for our newsletters here.

Originally Appeared Here

In the tax filing process, there are few tasks that feel as daunting as talking to a human at the Internal Revenue Service.

Taxpayers who contact the IRS continue to experience long wait times, according to the 2023 annual report published by the Taxpayer Advocate Service, an independent organization housed by the IRS.

But in some cases, you must reach an agent with a complex question about your filing, or to get more information in order to successfully complete your return.

SEE ALSO:

Watch out for these common tax scams

The good news is that much of what you may need is online, via the IRS’ website or its app IRS2Go. The IRS’ interactive tax assistant search tool can answer anonymous questions about several tax laws that are specific to your circumstances.

The IRS’ refund tracker also tells taxpayers what phase their return is in once it’s been filed and 24 hours have elapsed. If there’s a problem with your refund that requires you to contact the IRS, the refund status checker will let you know to do so.

If you can’t find the answer to your question via the IRS website or app, you can call the agency directly or visit a local IRS office. Here is a step-by-step guide to doing both:

1. Call the IRS.

You can contact the IRS via phone about your personal return by calling 1-800-829-1040. This phone line is staffed from 7 a.m. to 7 p.m. local time.

According to the IRS, wait times can average four minutes, though some callers may experience longer wait times, particularly on Monday and Tuesday and around the April deadline to file your taxes. (When Mashable called on a recent Wednesday afternoon, the wait time was an estimated 15 to 30 minutes.)

In your search for information about how to speak to a human at the IRS, you may encounter websites unaffiliated with the IRS that present a phone tree with detailed directions on which prompts to select.

Mashable is not offering similar directions because the phone tree selections may change over time. However, it’s crucial to listen closely to each prompt as there are several based on your needs.

For example, asking about a refund is a separate prompt from questions related to your personal taxes. The same is true if you have questions about taxes related to health care law.

When listening to the selections, be sure you’re not multitasking; it’ll be easy to miss your prompt or get confused. Also, set aside uninterrupted time and prepare for a longer waiting period. You don’t want to go through the trouble of calling and navigating the phone tree only to realize you don’t have enough time to wait for an agent.

2. Visit a local IRS office.

The IRS has local offices across the country where you can speak directly to an agent. You can find the nearest location to you by searching the IRS’ Taxpayer Assistance Center Office Locator tool.

The number of offices varies from state to state. In Arkansas, for example, there are three offices, one each in Fayetteville, Jonesboro, and Little Rock. In California, however, there are 28 locations, including a few in the Los Angeles area.

Services typically provided at local offices include account inquiries, basic individual tax law assistance, and payment arrangements. Call the location closest to you in advance to schedule an appointment. Be sure you arrive to the appointment prepared with documents, including a current government-issued photo ID, a taxpayer identification number (like a Social Security number), and any tax documents.

While an in-person visit to a local IRS office may not be possible for every taxpayer, it may be the right solution for those who can access a location and want to talk face-to-face with someone who can answer their questions.

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Money
Tax Season with Mashable

Originally Appeared Here

SPRINGFIELD — The Springfield Partners for Community Action is deep into its 22nd year of preparing free tax returns for low-income earners, the elderly and earners with limited English language skills — just about anyone in Hampden County who is earning less than $64,000 a year, regardless of family size.

The agency is among the IRS’s top five preparers nationally under its Volunteer Income Tax Assistance Program, or VITA. But that begs the question, why is the IRS so concerned about poor people filing their taxes?

“The IRS wants to make sure that everybody takes advantage of all the tax credits that are available to them,” said Tabitha Desplaines, the director of community services at the local agency. “What happens is the IRS has us train volunteers to become certified to prepare tax returns for low-income residents. If you make less than $64,000 a year, you qualify to get your taxes done for free and the taxes filed.”

That IRS training is specifically designed to have preparers look for credits and programs open to low-income and disabled filers.

Springfield Partners for Community Action

Desplaines estimates the agency works with 1,200 filers each year. That means it prepares 2,400 returns, both federal and state, and sees about $1.7 million in refunds for its clients.

“Both the IRS and the state want to make sure people get that money in their pockets,” she said, “and that they don’t have to pay to get it. We want to see that low-income people get the entire amount of money back. I had a nice young mom who was getting $10,000 back, and we had a whole conversation about how she could go sign up for first-time homebuyers’ classes … (to) have her put it toward something good.”

Desplaines said there are a wide variety of credits and programs available, including the venerable Earned Income Credit for low- and moderate-income earners.

“That really puts money into people’s pockets,” she said. “Follow that up with the new Massachusetts Family and Child Tax Credit that returns $310 per child regardless of your income. Then, there is the Senior Circuit Breakers that gives a percentage of a filer’s rent or mortgage, a percentage of sewer and water fees, and a return on a percentage of property taxes.”

One of the volunteers ready to prepare a return is Springfield College senior Noah Wagnblas, who majors in accounting and is also No. 14 on the Springfield Pride, a wide receiver taking advantage of a fifth year of eligibility to play football because of the pandemic.

“This is a great fit for me,” he said of the VITA program. “It is all-volunteer, and I like giving back to the community. I thought this is a great way to get my foot into the accounting world.”

Wagnblas said the work with low-income filers at the agency is multifaceted, and in some cases even more complex than his tax class in college.

“I had taken an income tax class, and I was familiar with it, but this is just more advanced with stuff like pensions and retirement,” he said. “We start with an intake form with all the basic information, source of income and health insurance. I like to ask a lot of questions to get people’s stories. Then we use the software to help us make sure we get it all.”

The software Wagnblas mentioned is “TaxSlayer,” an IRS package that helps preparers take advantage of all deductions and credits available.

And, if in doubt, there is always the IRS tax code book.

“When I did this in the ‘70s, it was about half an inch thick,” said volunteer preparer Charles E. Knight. “Now, it’s about 3 inches thick.”

Knight prefers to be called “Charlie” as he works. He has been an assistant newspaper editor, a pastor, a VISTA volunteer, a public access TV visionary and a board member of Springfield Partners for Community Action, among many careers.

At nearly 80, Knight noted how his volunteerism, in some small way, helps balance the scales for his low-income neighbors in Western Massachusetts. It also gives him some personal satisfaction.

Charles “Charlie” Knight has worn many hits in his nearly 80 years. Today, he is a volunteer tax preparer and board member with Springfield Partners for Community Action. (Steve Smith / Special to The Republican)

“I just want to make sure they don’t lose out on something. The rich guys have got lawyers to do their returns and get all their deductions,” said Knight. “So, if I can help someone in some way so that their life is a little bit easier, then I have a valid reason to keep breathing.”

To make an appointment for free tax services, call 413-263-6500, and dial 2. To become a volunteer or intern, contact Terryl Wilson at 413-263-6500, ext. 6609, or email terryw@springfieldpartnersinc.com, or call Desplaines at 413-265-6500, ext. 6564, or email tabithad@springfieldpartnersinc.com.

Visit Springfield Partners’ employment page to learn more.

Originally Appeared Here