Income Tax News

The IRS recently unveiled the new income tax thresholds for capital gains in 2025, reflecting adjustments for inflation.

These changes (which will apply to tax returns you’ll normally file in 2026) could have significant implications for taxpayers, particularly those with investment income.

So, let’s break down the new numbers and compare them to the 2024 thresholds.

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New 2025 capital gains tax thresholds

For 2025 (returns normally filed in early 2026), the long-term capital gains tax rates remain at 0%, 15%, and 20%, but the income thresholds have shifted.

Remember that short-term capital gains (assets held for one year or less) are taxed at ordinary income tax rates, different from those for long-term capital gains.

For more information on capital gains rates, see Capital Gains Tax Rates for 2024 and 2025.

The new brackets are as follows:

0% Rate:

Single filers: Up to $48,350

Married filing jointly: Up to $96,700

Head of household: Up to $64,750

15% Rate:

Single filers: $48,351 to $533,400

Married filing jointly: $96,701 to $600,050

Head of household: $64,751 to $566,700

20% Rate:

Single filers: Over $533,400

Married filing jointly: Over $600,050

Head of household: Over $566,700

Comparison to 2024 thresholds

Compared to 2024, these numbers reflect about a 2.8% increase across all brackets and filing statuses. It’s worth noting that while the percentage increases might not seem significant, they can translate into notable dollar amounts.

For instance, the near 2.8% increase in the 20% rate threshold for married couples filing jointly represents an additional $16,300 of income that can be taxed at the lower 15% rate in 2025 compared to 2024. (2024 threshold: $583,750/2025 threshold: $600,050)

These adjustments also offer a slight advantage for some at the lower end of the bracket thresholds.

For example, married couples filing jointly can now realize up to $2,650 more in capital gains at the 0% rate in 2025 compared to 2024. (2024 threshold: $94,050/2025 threshold: $96,700)

Leveraging the 0% capital gains rate

The new 0% capital gains rate threshold for 2025 creates some opportunities for some investors.

• For example, If your income varies yearly, you might consider realizing long-term capital gains in years when your total taxable income is below the 0% threshold.
• That way, you could take advantage of the lower tax rate.
• Also, depending on your situation, offsetting your capital gains with any losses you may have incurred (tax loss harvesting) could help.

Whatever you do, evaluate all your projected income sources each year, not just capital gains.

Long-term capital gains tax: Bottom line

As Kiplinger has reported, these capital gains tax income threshold adjustments come alongside annual inflation-adjusted changes to the 2025 federal income tax brackets, the standard deduction for 2025, and several other key tax provisions.

The various shifts offer some advantages, like having more income taxed at lower rates, providing some buffer against inflation, and allowing for additional tax planning opportunities in some cases.

But don’t forget state taxes on capital gains, which can impact overall tax liability.

And as always, consult a qualified and trusted tax professional to help manage your capital gains tax liability.

Related

Originally Appeared Here

The IRS just dropped a raft of changes, big and small, to the U.S. tax code that could shift how much you owe — or save — in 2025. From bigger deductions to higher limits on health-related savings accounts, the changes reflect the government’s continued fight to curb inflation and resulting financial strain.

The adjustments, announced by the IRS in late October, are designed to bring some relief to taxpayers through increases in standard deductions, tax bracket thresholds, and other key areas. Some of the changes are related to adoption, commuting, and earning income from outside the country.

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In high-cost cities, the transportation benefit hike may bring some relief, while changes to medical savings options give families more flexibility to manage health-care costs. If you’re in a higher tax bracket or plan to leave an inheritance, it’s worth paying attention to the alternate minimum tax (AMT) and estate tax changes. The standard deduction increase and the earned income tax credit boost will directly benefit middle-income families, while commuters and people living or working abroad will also find things to like.

In all, the IRS announced more than 60 changes for the upcoming tax year. Below, we identify the nine of the biggest. How much they’ll impact you depends on your income, financial health, and tax strategy.

As with any tax updates, it’s smart to consult a tax professional on how to make these changes work for you. And it’s important to remember these changes take effect in the 2025 tax year — they won’t do you much good when it’s time to file your returns this coming spring.

Here’s one change nearly all American tax filers will get to enjoy: the standard deduction is going up. For the 90% or so who don’t choose to itemize their deductions each year, that means a little extra cash to help offset the persistent effects of inflation.

Single taxpayers can now deduct $15,000, a $400 increase from 2024. Married couples filing jointly get a bump to $30,000, while heads of households can claim $22,500. This increase could mean paying less in taxes, especially for those who don’t itemize.

Story Continues

Middle-income earners will be happy to hear that the Alternative Minimum Tax exemption, designed to ensure that high earners pay a minimum tax, has increased to $88,100 for individuals and $137,000 for joint filers.

It’s a modest increase from the previous tax year’s minimum of $85,700, but this adjustment could result in some middle-income earners no longer being subject to the AMT, which could result in tax savings for them.

That might not be the case if you got a raise, but the good news is that the IRS has prepared for that as well. For 2025, the IRS has adjusted income tax brackets to accommodate rising wages. The 37% top tax rate applies to singles earning over $626,350 and married couples earning over $751,600 (an increase from $609,350 the tax year before.)

And other bracket adjustments this year could result in some households falling into lower tax brackets, potentially lowering their tax bills.

Read more: Rich, young Americans are ditching the stormy stock market — here are the alternative assets they’re banking on instead

Are you one of the millions of American workers who are back to commuting to the office a few days a week? For those who receive employer-sponsored benefits, the IRS raised the monthly allowance for transportation and parking to $325. This may be especially helpful in urban areas where transportation costs are steep.

Employees can also now contribute up to $3,300 to health flexible savings accounts, with a carryover maximum of $660. This increase allows workers to set aside pre-tax money for medical expenses, helping ease the burden of health care costs.

And as for those who’ve sought a new life outside of the U.S., Americans working in other countries can exclude up to $130,000 of foreign-earned income in 2025, up from $126,500. This adjustment helps U.S. citizens abroad by minimizing their taxable income and alleviating double taxation.

In 2025, the maximum earned income tax credit for low- to moderate-income families with three or more children rises to $8,046, a slight increase from this year. This credit helps support working families, especially as living costs rise, and provides a valuable income boost for qualifying households.

Higher earners, on the other hand, will now be able to pass on more of their money to family, friends and the causes they believe in as the estate tax exclusion jumps to $13.99 million for estates in 2025.

This change could significantly impact high net worth individuals and estate planning, potentially protecting more assets from estate taxes.

As for those looking to start their families, the IRS has introduced a new rule for parents. The maximum adoption credit increased to $17,280, up from $16,810. For adoptive parents, this credit covers qualified expenses, reducing the financial burden associated with adoption.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Originally Appeared Here

BATON ROUGE (Nov. 1, 2024) — In a bold move aimed at reshaping Louisiana’s fiscal landscape, Governor Jeff Landry has announced plans to convene a special legislative session from Tuesday through November 25, focusing on an overhaul of the state’s tax system. With growing concerns about economic competitiveness and revenue stability, Landry’s initiative seeks to simplify the complex web of taxes and exemptions that currently burden residents and businesses alike. As lawmakers prepare to gather, Louisiana residents can expect a comprehensive discussion on potential reforms that could significantly impact their tax obligations and the state’s overall economic health.

“This special session fulfills the promise we made to the people of Louisiana to rebuild our economy and make Louisiana a place where people want to raise a family and create jobs,” said Landry last week. “Throughout this special session, we have the opportunity to give teachers a permanent pay raise, put more money in every worker’s pocket, eliminate the tax on prescription drugs, and provide much needed tax relief for seniors. I am eager to enact this new playbook and finally make Louisiana a beacon of hope—inviting families and businesses back home. It’s time we move Louisiana Forward.”

Landry is calling for a comprehensive examination of several aspects of Louisiana’s tax system as part of his proposed overhaul. Some key areas of focus include:

Individual Income Tax: The governor wants to explore legislation regarding income tax on estates and trusts, including aspects like rates, exemptions, deductions, reductions, credits and incentives. Additionally, there is a proposal to increase the standard deduction for individuals aged 65 and older.

Sales and Use Tax: Landry aims to legislate on both state and local sales and use taxes, addressing rates, exemptions, deductions, reductions, exclusions, credits, rebates and alternative reporting methods.

General Tax Legislation: Landry is interested in broader legislation regarding dedications, collections, revenues and taxes, alongside incentives aimed at economic development.

Digital Taxation: He intends to address the taxation of digital products, digital goods, digital services, and non-digital services.

Government Efficiency: There is a call for legislation concerning expenditure limits and identifying efficiencies and cost savings within state government.

Insurance Funding: Landry wants to legislate regarding the Louisiana Citizens Property Insurance Corporation to provide funding for fortified roof programs for policyholders.

Oilfield Site Restoration Fund: Proposed revisions for fees and administration related to the Oilfield Site Restoration Fund will also be examined.

Vocational Education Funding: Lastly, legislation to secure funding for purchasing instructional materials and supplies for students enrolled in vocational agriculture, agribusiness, or agriscience courses will be considered.

As Landry and lawmakers prepare for this critical session, the proposed reforms could have far-reaching implications for Louisiana’s tax structure and economic future. Residents are encouraged to stay informed and engaged as discussions unfold, as the outcomes may reshape how taxes impact their daily lives and the state’s economic landscape. For those seeking a deeper understanding, a primer on Louisiana’s tax structure (released in July 2024) is available here, providing insights into the key components of the state’s tax system.

 

Originally Appeared Here

Three major IRA changes that the IRS is implementing in 2025 might have a big effect on your retirement funds. A revised 10-year rule for inherited IRAs, higher catch-up contributions for older workers, and Roth catch-up requirements for high incomes are a few examples. Checking for 3 Major Changes to the IRA in 2025 is crucial if you are saving and investing for retirement.

The IRS periodically updates and changes the rules for withdrawals from IRAs, for example, or raises the contribution limitations. Maximize your tax benefits, increase your retirement savings, and prevent unforeseen tax liabilities by being aware of latest regulations governing standard and Roth IRAs.

IRS Announces 3 Major Changes to the IRA in 2025

As part of the SECURE 2.0 Act, which is still changing the retirement savings landscape in the United States, the Internal Revenue Service (IRS) will implement major modifications to Individual Retirement Accounts (IRAs) in 2025. These changes are intended to improve retirement planning, streamline the tax code, and increase savings opportunities. Whether you’re just starting off or nearing retirement, these changes might significantly affect your financial future.

The key to ensuring your retirement finances is to start saving and investing early, frequently, and consistently throughout your working career. Contributions to an IRA or 401(k) offer tax advantages, enabling you to postpone paying taxes on your contributions until you begin taking withdrawals in retirement.

However, you can’t postpone taxes indefinitely. Required minimum distributions (RMDs) are the federal government’s mandate that seniors begin taking withdrawals from tax-deferred retirement accounts in their 70s. Failure to take your RMDs on time may result in a penalty of up to a staggering 25% of the total amount you were intended to withdraw. Additionally, you still have taxes due on your RMDs.

3 Major Changes to the IRA in 2025

New Inherited IRA Rules

The Secure 2.0 Act is going to change the regulations concerning inherited IRAs. Following the implementation of these rule changes, you might be required to pay RMDs on both your own and any IRAs you inherited from someone who died after December 31, 2019. There are very few exceptions to the rule that you have 10 years to exhaust your inherited IRA, rather than being able to spread out withdrawals over your lifetime. A few factors will determine the specifics, but generally speaking, if you inherited an IRA from someone other than your spouse, you should anticipate needing to take all of the account’s assets out within ten years of the original account owner’s passing.

As RMDs are taxed as regular income in the year they are taken out, having to take money out of an IRA after inheriting one can greatly raise your taxable income and, thus, your tax liability. Whether you are prepared to begin your retirement with income from your own IRA or you inherited one, the regulations surrounding required minimum distributions (RMDs) are intricate. Should you fail to withdraw sufficient funds from your eligible retirement account, such as a conventional IRA or 401(k), in the appropriate amounts or on the appropriate timeline, you may be subject to additional taxes. Those who inherit an IRA and may not be prepared for the tax ramifications should pay particular attention to this.

Higher catch-up contributions for people aged 60-63

Beyond the typical contribution restrictions, individuals 50 years of age and beyond are permitted to make additional contributions to 401(k)s and IRAs annually. However, beginning in 2025, additional catch-up contributions of $10,000 (or 150% of the standard catch-up contribution maximum, whichever is higher) can be made to 401(k)s and other comparable employment retirement plans by individuals between the ages of 60 and 63. The 2025 IRA catch-up contribution cap may also be raised for those 50 and older. This is because IRS advice for cost of living adjustments allows IRA contribution limits to rise annually and are now tied to inflation.

For people who may not have saved enough money earlier in their careers and are approaching retirement, this shift offers a vital boost. This is a chance for those in this age range to boost their retirement funds during their last years of employment. larger contributions translate into larger tax deductions, which lowers your current taxable income and increases your future savings. In order to help late savers get the most of their retirement funds during the critical pre-retirement period, the government has made this adjustment.

Roth Catch-Up Contributions for High Earners

The year 2025 marks the start of another change for high-income earners, who are defined as those who make over $145,000 annual. Instead of going into conventional IRAs or 401(k)s, catch-up contributions for these people must now go into Roth accounts. The move to Roth contributions is part of a larger government initiative to raise tax income now rather than waiting until retirement withdrawals. High earners face both possibilities and disadvantages as a result of this shift.

Although making contributions to a Roth account can result in tax-free income in retirement, doing so necessitates proper tax planning. Assessing your present and prospective tax brackets and determining the proportion of your income that should go into Roth versus traditional retirement accounts are wise decisions.

Niamh Prescott has a degree in Mass Communication and an MBA in Finance. She has worked for two media houses and is now running her own media company.

Originally Appeared Here

CNN
 — 

Former President Donald Trump said on Joe Rogan’s podcast Friday that he would be open to eliminating income taxes, while pushing his sweeping tariff proposal and praising the economic policies of the late 19th century.

While talking about tariffs, Trump was asked by Rogan, “Did you just float out the idea of getting rid of income taxes and replacing it with tariffs?”

“Well, OK,” Trump said during the interview on “The Joe Rogan Experience.”

Rogan asked, “Were you serious about that?”

“Yeah, sure. Why not?” the former president responded. “Because, we, ready, our country was the richest in the, relatively, in the 1880s and 1890s. A president who was assassinated named McKinley — he was the tariff king. He spoke beautifully of tariffs.”

“And then around in the early 1900s, they switched over stupidly to frankly an income tax. And you know why? Because countries were putting a lot of pressure on America: ‘We don’t want to pay tariffs, please don’t.’ You know they, believe me, they control our politicians,” Trump said.

Trump has repeatedly said he plans to impose an across-the-board tariff of either 10% or 20% on every import coming into the US, as well as a tariff upward of 60% on all Chinese imports, in a bid to encourage American manufacturing.

In the interview, Trump also said he believed what he called “the enemy from within” poses a greater threat to the US than North Korean dictator Kim Jong Un, whom he said he had “no problem with” while president.

“I got to know him very well. We had no problem with him. If you have a smart problem, if you have a smart, really the right president, the smart president, you’re not going to have a problem. And I say it to people, we have a bigger problem, in my opinion, with the enemy from within, and it drives them crazy when I use that term. But we have an enemy from within. We have people that are really bad people that I really think want to make this country unsuccessful,” Trump said.

Trump has repeatedly argued that there are people within the United States — including Democratic Reps. Adam Schiff and Nancy Pelosi as examples — who pose a greater threat than foreign adversaries.

Hear what Trump told Joe Rogan his plans are for RFK Jr.

The interview comes after years of Rogan saying he would not have the former president on his podcast and recent attacks from Trump himself.

“I’m not a Trump supporter in any way, shape or form. I’ve had the opportunity to have him on my show more than once. I’ve said no every time. I don’t want to help him. I’m not interested in helping him,” Rogan said on the Lex Fridman Podcast in 2022.

Trump took a jab at Rogan in August after the podcaster praised former independent presidential candidate Robert F. Kennedy Jr. for being “the only one that makes sense to me.” (Rogan later clarified that his praise did not amount to an endorsement.)

“It will be interesting to see how loudly Joe Rogan gets BOOED the next time he enters the UFC Ring??? MAGA2024,” Trump posted on his Truth Social platform following Rogan’s comments.

Rogan first launched his podcast in 2009. In the past three years, “The Joe Rogan Experience” has consistently been the No. 1 podcast across the globe. The show has attracted its fair share of controversy, too, notably coming under fire during the pandemic for Rogan’s skepticism about Covid-19.

Following the taping of the podcast in Texas, Trump attended a Michigan rally, where he took the stage to speak hours late – a delay that led to hundreds of people leaving the event. Trump said he was late because he had been taping the three-hour podcast with Rogan, which he called “the longest interview I’ve done in my life.”

“I’m so sorry, but I got tied up. … I figured you wouldn’t mind so much because we’re trying to win,” he said.

Trump, during his remarks, accused Vice President Kamala Harris of being “out partying” and ignoring international turmoil Friday, as the Democratic presidential nominee held a rally featuring music superstar Beyoncé in Texas, where she focused her speech on highlighting her defense of reproductive rights.

CNN’s Alayna Treene, DJ Judd and Ali Main contributed to this report.

Originally Appeared Here

Vice President Harris said on 60 Minutes that teachers, nurses and firefighters have higher tax rates than billionaires. Here’s why that’s misleading.

In the final weeks before the presidential election, Vice President and Democratic presidential nominee Kamala Harris has focused much of her messaging on income inequality.

Harris launched a nationwide ad campaign in which she promises she “will make billionaires pay their fair share.”

That topic came up in a recent interview with “60 Minutes,” where Harris pointed to tax reform as a key aspect of her agenda.

“It is not right that teachers and nurses and firefighters are paying a higher tax rate than billionaires,” she said.

THE QUESTION

Do teachers, nurses, and firefighters pay higher tax rates than billionaires?

THE SOURCES

THE ANSWER

Harris’s claim is misleading. It is not based on numbers from the current tax code. It’s based on a hypothetical formula that seeks to account for wealth that currently goes untaxed for billionaires.

WHAT WE FOUND

To compare how much any two people pay in federal income tax, you need to calculate their effective tax rate, which is not as simple as a set percentage that applies to all income. 

In the American federal income tax system, each time you move up a tax bracket, the tax rate on income that falls in that bracket increases. So for instance, in 2023, that meant your first $11,000 would be taxed at a 10% rate, your next $33,725 would be taxed at a 12% rate, and so on.

The effective tax rate uses these brackets to determine what percentage of your total income actually goes toward federal income tax. It also incorporates capital gains, income made from selling assets like stocks or property, which gets taxed at different, usually lower rates.

Data from the IRS shows that in 2021, the most recent year for which data is available, the average effective tax rate for people making more than $10 million per year was 25.1 percent. Data specifically for billionaires was not available.

Most firefighters, teachers, and nurses make between $50,000 and $100,000 per year, according to the Bureau of Labor Statistics. In that range, the IRS says the average effective tax rate is 7.5 percent.

Various think tanks conducted their own analyses and came up with similar results. They estimate the richest Americans tend to pay around 25 percent, while people making between $50,000-$100,000 per year usually pay between 5 and 15 percent.

Harris, in her claim, is likely referring to an analysis done by White House economists in 2021,  which argues that the current tax math doesn’t show the full picture. The White House argues that income needs to be calculated differently to include something called unrealized gains.

Unrealized gains are when people grow their wealth by letting their assets rise in value without selling them. And when they want cash, they can just use that wealth to get good deals on loans, thus avoiding income and taxes.

If unrealized gains were considered taxable income, the White House says the 400 richest American households would really be paying closer to an 8% tax rate right now. And an investigation by ProPublica similarly found that the 25 richest households pay as little as 3% in taxes under this definition.

But the current tax code does not account for unrealized gains, so this is a purely theoretical definition of “tax rate.”

VERIFY found no examples where tax rates as currently defined were higher for middle-class workers than billionaires. However, when some other kinds of taxes besides federal income tax are accounted for, the gap between the rates shrinks.

For instance, all Americans have money for Social Security and Medicare deducted from their paychecks. These are known as payroll taxes, and unlike income taxes there are no brackets; everyone pays the same rate no matter how much they make. Payroll taxes are not applied to capital gains, which for wealthy people is often a larger source of income than a traditional paycheck. Furthermore, income above a certain level stops being subject to Social Security tax at all.

All this means that payroll taxes affect the bottom lines of lower-income Americans more than wealthy ones. An analysis by the Institute on Taxation and Economic Policy found that people making between $50,000-$100,000 wind up paying closer to 15 or 16 percent of their paycheck in total federal taxes. But incorporating payroll taxes did not change the average rate for the wealthiest Americans; it remained at roughly 25 percent.

The gap narrows even further if you account for state and local taxes. ITEP’s analysis found middle class workers could actually be paying more than 27 percent of their income on average, and the richest taxpayers just below 35 percent.

ProPublica’s investigation also found that the richest of the rich often have tax rates well below the average, even without considering unrealized gains, due largely to their use of deductions and having a higher portion of their income come from capital gains. Including just federal income and payroll taxes, the investigation found the wealthiest 25 households averaged a 16 percent rate.

The VERIFY team works to separate fact from fiction so that you can understand what is true and false. Please consider subscribing to our daily newsletter, text alerts and our YouTube channel. You can also follow us on Snapchat, Instagram, Facebook and TikTok. Learn More »

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Originally Appeared Here

BETHLEHEM, Pa. — After the students obtained arrest warrants, several criminals ended up in handcuffs on the campus of Moravian University on Thursday.

“I have a baby!” shouted one arrestee. Another man tried to escape the room.

In the end, Moravian assistant football coach Nick Sacco ended up with his hands in restraints. Yet, the hectic scene wasn’t real and there were no sirens heard in the background.

Instead, applause for the 35 Moravian and DeSales University students who participated in the IRS Criminal Investigation’s Citizen Academy, run by the IRS criminal investigation, or CI, division filled the room.

Sacco, an alumnus of Moravian University, works as a criminal investigation special agent for the IRS, based in the Lehigh Valley.

IRS citizen academies are an outreach initiative to recruit students from colleges and teach them about the agency’s mission and the types of investigations it conducts.

Sacco, who has worked in the IRS-CI division since 2001 was among a handful of IRS agents who led the day-long academy for the business, criminal justice and sociology students.

In the field, IRS special agents investigate tax, money laundering, and other financial crimes.

“Some of the cases I’ve worked on are what’s called, ‘questionable return prepared cases.’ It’s basically a return preparer who’s done thousands of returns and did them fraudulently,” Sacco said. “The one case I had, the individual was using [social security numbers] of stolen dependents, and putting them on the return in order to get a bigger refund for his clients.”

In other dangerous instances, Sacco and other agents had to ram in a door after obtaining a search warrant — much similar to what occurred that day at the academy.

“I tell the students that conducting a search warrant is like 10 minutes or 15 minutes before a football game, where the adrenaline’s pumping,” he said. “It’s a risky job sometimes.”

Micaela Hood

/

LehighValleyNews.com

Students from Moravian and DeSales University pose with IRS-CI agents after completing a citizen’s academy class.

He began working for the IRS’s CI division shortly after the September 11 terror attacks (following the attacks, the IRS-CI division began participating in federal counter-terrorism training with other federal law enforcement agencies).

During the academy’s simulated investigation, students followed a paper trail that led to those funneling money to terrorists.

“To be able to be part of an agency that goes after the people who committed that crime [on 9/11] is awesome and important to me,” Sacco said. “The day’s never the same. I’ve been working as an agent for 23 years, and I can’t believe it’s been 23 years. It’s gone so fast. The job never gets boring. [We’re] doing different things every day. One day it could be [obtaining] a search warrant, one day an arrest warrant.”

Al Capone, fake guns

During the academy, the class learned various methods agents use such as how to conduct background checks, analyze tax returns and bank accounts, lead interviews and conduct surveillance against subjects.

Since IRS-CI agents make arrests, there was also a training session on defensive tactics where each student was equipped with a fake gun, IRS-CI vest, and a holster.

Daniel O’Connor, associate professor of practice in accounting and co-director of the accounting program, admired the tax returns of the notorious gangster, Al Capone, which agents showed the class earlier in the day.

In 1931, the infamous mobster was indicted on 22 counts of tax evasion after the IRS built a case.

“I knew there was an analytical side to the job. They were doing tax returns, they were doing data analysis. I didn’t realize the extent of the actual force that they used too,” O’Connor said. “They have tactical gear on, they have search warrants. they’re acting similar to what an FBI agent would do.”

The professors were equally impressed with some stories from the field; One officer divulged he put Vick’s vapor rub under his nose when sniffing through garbage dumpsters, especially when it’s hot outside.

“I think just watching the student interaction and seeing how much the students are learning and they all have their head down and they’re working so hard and they’re asking these amazing questions and just their enthusiasm and just to see they’re just getting more out of it than just the accounting or just the criminal justice,” Elizabeth Felten, assistant professor in DeSales’s Division of Business, said.

“This is a once-in-a-lifetime opportunity for many of them and I think it will stay with them for a very long time. I can guarantee it’s going to change some of their career trajectories.”

The perks of the job

IRS-CI agents can make $55,562 – $99,522 per year, according to a job posting on USA.Jobs.gov.

After retirement, they can collect a pension, which typically equals 14 to 34% of their salary.

Applicants must be 37 years or younger, have a bachelor’s degree and have taken at least five accounting courses and three business classes.

Training, which takes about six months, is conducted at The Federal Law Enforcement Training Center in Glynco, Georgia.

“We all arrest people the same way, we all use a firearm, we all defend ourselves, so you can be in class with ATF, Secret Service because we all do that the same [tasks]. The add on class for our specific job is where you learn how to actually be an IRS agent. And they give you mock investigations, you get your laptop, computer, you basically do everything down there as if you were in the office back home,” Robert Glantz, a public information officer for the IRS-CI’s Newark, New Jersey, office said.

The biggest misconception he hears from students is that the job requires previous law enforcement experience.

“I’m a perfect example of that being wrong. I never picked up a gun in my entire life. I probably never would have picked up a gun in my life if I didn’t take this job,” he said. “They teach you everything [in Glynco] that agents need to know and we get constant on-the-job training.”

He began his career with the IRS’ CI division in 1991.

As the academy wrapped up for the day, Glantz shook the hands of students and faculty and appeared enthusiastic at the prospect of students’ interest in joining the agency.

“It’s not the same as like a local law enforcement job or like a SWAT team, but we’re protecting the nation’s tax system from people who intentionally cheat, so you feel good at the end of the day,” Glantz said. “There’s so many different things you can do with this job, you can’t get bored. I wake up every day looking forward to going to work because I know it’s going to be something different. It’s not monotonous. And I love interviewing people, which we do a lot of.”

Arly Hernandez, a junior at Moravian, is considering applying.

“I didn’t realize that [agents] could go out in the field. I thought it was just like a regular job that you would be in a cubicle the whole day,” she said. “I learned a lot and enjoyed it. I am definitely considering working for the IRS now.”

Originally Appeared Here

More than half of all Americans—55%—are concerned that they won’t be able to achieve a financially secure retirement, according to a study from the National Institute on Retirement Security. Furthermore, a 2024 AARP survey found that 20% of adults aged 50+ have no retirement savings at all.

These studies support what many Americans already know: Most of us are financially unprepared for retirement. Some future retirees consider moving to an area with a lower cost of living and access to affordable healthcare.

But where to go? We looked at data from Bankrate’s “Best and Worst States to Retire” 2024 list and combined it with the Tax Foundation’s state tax burden ranking for 2022 to determine which states are the most expensive. We considered each state’s cost-of-living rank and tax-rate rank. From our analysis, we found six states that appeared in the top ten in both categories, making them the priciest options for retirement overall. Here’s the roster, starting with the most expensive state.

Key Takeaways

• The most expensive states to retire in shared low relative affordability rankings and high tax rates.
• Some of the most expensive states levy taxes on (or don’t offer tax credits for) Social Security and retirement income.
• Retirees who move to some of these states may also be on the hook for estate tax.

New York

• Affordability rank: 49
• Tax rate rank: 50
• State individual income tax: 4.0% to 10.9%
• State sales tax: 4.0% (average combined state and local sales tax of 4.53%)
• Estate/inheritance tax: Yes/No

Although New York doesn’t have the highest cost of living in the U.S., the state’s 15.9% total tax burden for 2022 is well above the national average. In fact, it’s the highest in the country.

The state collected $3,573 per capita in state and local taxes in 2022 (the highest amount in the country), and state and local governments collected about $3,359 per capita in property taxes.

California

• Affordability rank: 50
• Tax rate rank: 46
• State individual income tax: 1.0% to 13.3%
• State sales tax: 7.25%
• Estate/inheritance tax: No/No

California has the highest cost of living and ranks fourth in tax rates. The top tax rate for individual income is 13.3%, the highest among states that impose an individual income tax. Its 2022 tax burden is 13.5%, and the state collected $3,743 per capita in state and local taxes (the first on the list).

State and local governments collect about $2,100 per person for property taxes. The state sales tax is 7.25% (the highest among the states mentioned here), and the combined rate in special city/county taxing districts can be as high as 8.85%. Although Social Security and Railroad Retirement benefits are exempt from taxes in California, all other sources of retirement income are fully taxed.

Connecticut

• Affordability rank: 43
• Tax rate rank: 49
• State individual income tax: 2.0% to 6.99%
• State sales tax: 6.35% (7.75% for certain luxury items)
• Estate/inheritance tax: Yes/No

Connecticut is the seventh most expensive state in terms of cost of living. Its 2022 tax burden of 15.4% ranks the second highest in the nation, and the state collected $2,845 per capita in state and local taxes. Property tax collections amount to about $3,292 per capita (the fourth highest in the country).

Connecticut offers no exemptions or tax credits for most pensions or other retirement income—including Social Security benefits (unless the taxpayers have a federal adjusted gross income of less than $75,000 or less than $100,000 for married taxpayers filing jointly). The exceptions are Railroad Retirement benefits and military pensions, which are both excluded from taxes.

Vermont

• Affordability rank: 42
• Tax rate rank: 47
• State individual income tax: 3.35% to 8.75%
• State sales tax: 6.0% (average combined state and local sales taxes of 6.36%)
• Estate/inheritance tax: Yes/No

Vermont has the eighth-highest cost of living and the third-highest tax rate. Its 2022 tax burden is 13.6%, and it collected $1,906 per capita in state and local taxes (12th in the rank). Property tax collections amount to about $2,991 per capita (fifth in the rank).

Vermont taxes most retirement income at ordinary income tax rates, including Social Security benefits, which are taxed up to 85% (in sync with the federal rate) of benefits. Railroad Retirement benefits are exempt.

New Jersey

• Affordability rank: 40
• Tax rate rank: 45
• State individual income tax: 1.4% to 10.75%
• State sales tax: 6.625%
• Estate/inheritance tax: No/Yes

New Jersey has the tenth-highest cost of living and a tax burden of 13.2% as of 2022. The state collected $1,817 per capita in state and local taxes, while property tax collections are about $3,539 per person, the highest on our list.

Until 2018, New Jersey imposed both an inheritance tax and an estate tax. While close relatives are generally excluded from the inheritance tax, other beneficiaries face tax rates ranging from 11% to 16% on inheritances over $500.

Note

New Jersey no longer imposes an estate tax for individuals who died on or after Jan. 1, 2018.

Maine

• Affordability rank: 35
• Tax rate rank: 41
• State individual income tax: 5.8% to 7.15%
• State sales tax: 5.5%
• Estate/inheritance tax: Yes/No

Maine is the fifteenth most expensive state to live in, with the ninth-highest tax rate (a tax burden of 12.4% as of 2022). The state collected $1,499 per capita in state and local taxes (24th in the rank), while property tax collections amounted to $2,821 per capita (sixth in the rank).

While there is no inheritance tax, the estate tax rates in Maine range from 8% to 12%. The tax applies to estates worth more than $6.8 million as of the 2024 tax year. While Maine does not tax Social Security income, other forms of retirement income are taxed at rates as high as 7.15%.

Frequently Asked Questions

What Is the Most Cost-Effective State To Retire In?

Considering affordability rankings and state-local tax burdens, some of the most cost-effective states for retirement include Georgia, Tennessee, and Wyoming. However, your individual circumstances will impact how the cost of living affects your budget.

What Is the No. 1 Retirement State?

Where Can I Retire in the U.S. on $2,000 per Month?

Although options are limited for retirees on limited budgets, there are places in the U.S. where you can retire and live on $2,000 per month. According to 2024 research from SeniorLiving.org, these areas include Uniontown, PA., Cedar Rapids, IA, and Freeport, IL.

The Bottom Line

Several states have tried to make their tax systems more appealing to retirees. Maine, for example, boosted the amount of pension income you can exclude from state taxes, and Nebraska has phased out taxation of Social Security income. The federal exclusion for estate tax is $13.61 million in 2024.

Whether you are concerned with making your money last longer during retirement or leaving more assets to your children, the local cost of living and tax rate may be an important consideration during retirement. Not that non-financial factors—your interests, hobbies, comfort, health, and proximity to friends and family—aren’t important when choosing a retirement destination. Just bear in mind that wherever you retire (be it in place, in another state, or abroad) can have a considerable impact on your finances.

Originally Appeared Here

In the wake of two more hurricanes and the destruction they wrought, the Internal Revenue Service is giving individuals and businesses in 51 Florida counties some leeway to file their returns and pay their taxes.

The IRS, in an announcement last Friday,  said storm-afflicted taxpayers have until May 1, 2025, “to file various federal individual and business tax returns and make tax payments.”

It was made possible by a disaster declaration issued last week by the Federal Emergency Management Agency and covers individuals and households that reside or operate a business in one of the storm-impacted counties.

Wide coverage

In South Florida, the declaration covers Broward, Palm Beach and Miami-Dade counties.

The other counties include: Alachua, Baker, Bradford, Brevard, Charlotte, Citrus, Clay, Collier, Columbia, DeSoto, Dixie, Duval, Flagler, Gilchrist, Glades, Hamilton, Hardee, Hendry, Hernando, Highlands, Hillsborough, Indian River, Lafayette, Lake, Lee, Levy, Madison, Manatee, Marion, Martin,  Monroe, Nassau, Okeechobee, Orange, Osceola, Pasco, Pinellas, Polk, Putman, Sarasota, Seminole, St. Johns, St. Lucie, Sumter, Suwannee, Taylor, Union, and Volusia.

“Combined with earlier tax relief provided for taxpayers in counties affected by Hurricane Debby and Hurricane Helene, affected taxpayers in all of Florida now have until May 1, 2025, to file various federal individual and business tax returns and make tax payments, including 2024 individual and business returns normally due during March and April 2025, and 2023 individual and corporate returns with valid extensions and quarterly estimated tax payments,” the IRS statement says.

The Internal Revenue Service is helping Florida storm victims by extending deadlines for both individual and business tax return filings, as well as the payment of taxes owed. (Patrick Semansky/AP file)

For example, filing and payment deadlines falling on or after Oct. 5, 2024, and before May 1, 2025, are granted additional time to file through May 1, 2025.

The May 1, 2025, filing deadline, the IRS says, now applies to:

• Any individual or business that has a 2024 return normally due during March or April 2025.
• Any individual, C corporation or tax-exempt organization that has a valid extension to file their calendar-year 2023 federal return. (However, tax payments on those returns are not eligible for the extra time because they were due last spring before the hurricane occurred.)
• Quarterly estimated tax payments for 2024 normally due on Jan. 15, 2025, and 2025 estimated tax payments normally due on April 15, 2025.
• Quarterly payroll and excise tax returns normally due on Oct. 31, 2024, Jan. 31, 2025, and April 30, 2025.

Make no mistake, the IRS intends to collect what it is due no matter what the deadline. Over the summer, the agency announced it had reached the $1 billion mark from a series of initiatives designed to collect bills that were considered “past due.”

For many taxpayers currently on extension from the standard mid-April filing deadline, the reprieve was scheduled to end Tuesday.

“Tomorrow is the extended deadline due date for individual returns and for calendar year corporations,” said Cesar Estrada, regional tax and business service partner in charge at the Fort Lauderdale office of Marcum, the national business advisory firm based in New York.

Easing the pain

Estrada said many of Marcum’s clients are not taking advantage of the new round of extensions. “A lot of people just want to get it out of the way,” he said.

But the storms clearly have made more time a necessity.

“We have offices in Tampa, and what I am finding is that there are a lot more taxpayers in that area affected because of the back-to-back hurricanes,” he told the South Florida Sun Sentinel on Monday. “There is a larger number of clients in Tampa than there are here in the South Florida area.”

Those clients who are taking advantage are doing so for a variety of reasons. They needed to evacuate their neighborhoods, assess damages, find new housing, call insurance companies, and retrieve and/or restore lost or damaged records — though the use of electronic record-keeping has cut down on those instances.

The people hired to prepare tax returns have also seen their lives disrupted, Estrada said.

“We did have personnel experience significant flooding in their homes,” he said. “Our team came together and we’re trying to help those who incurred damage on a personal level.”

Originally Published: October 14, 2024 at 4:00 p.m.

Originally Appeared Here

A group of whistleblowers has secured the second largest recovery in Internal Revenue Service (IRS) whistleblower program history.

Neil Getnick

Getnick Law and SEC Whistleblower Advocates PLLC led the representation of the lead whistleblower in an historic $263 million tax fraud recovery from an individual taxpayer, the award for which was recently finalized by the IRS.

Getnick Law and SEC Whistleblower Advocates represented the whistleblower along with Outten & Golden LLP. 

The whistleblower, whose identity remains protected, was the primary whistleblower in the case, which involved two additional whistleblowers. 

One of the other whistleblowers was represented by Whistleblower Partners LLP, and one did not have legal representation.

The three whistleblowers will receive 30 percent of the government’s recovery – $74 million – the maximum possible award, a reflection of the importance of the information and assistance provided to the government. 

The whistleblower represented by Getnick Law provided particularly valuable information and assistance, meeting with government officials from multiple agencies on many occasions over a five-year period.

The IRS is not identifying the taxpayer who committed the fraud.

The $263 million settlement concludes one of the largest tax whistleblower cases ever.

By comparison, the IRS collected a total of $338 million from whistleblower cases resulting in 121 awards in fiscal year 2023.

The settlement resolved a matter that was unusually complex due to the size and nature of the fraud and the involvement of three distinct whistleblowers.  

Getnick Law proposed a way to overcome obstacles that often impede the resolution of cases with multiple whistleblowers. 

The IRS Whistleblower Office, under the leadership of Director John Hinman, facilitated and supported the whistleblowers in coming together, enabling them to reach a resolution regarding the allocation of the award, thereby avoiding the possibility of years of litigation in Tax Court.

Getnick Law partner Margaret Finerty led the Getnick Law team, which included Neil Getnick, the firm’s managing partner, partner Richard Dircks and counsel Stuart Altschuler.

Jordan Thomas of SEC Whistleblower Advocates co-led, and partners Jennifer Schwartz and Tammy Marzigliano co-counseled the matter from Outten & Golden. 

The team worked closely with Whistleblower Partners, the unrepresented whistleblower, the IRS Whistleblower Office and its director John Hinman to resolve the matter.

“Together we have demonstrated that when the IRS Whistleblower Program functions as a public-private partnership embracing mutually supportive cooperation, it can produce a win-win-win resolution for the Whistleblower Office, whistleblowers and their counsel, and most importantly, the public,” Getnick said.

Is there anything at all that you can say about the whistleblower or the person or corporation the whistleblower blew the whistle on?

“This much I can say – the taxpayer is an individual, which in and of itself is dramatic,” Getnick told Corporate Crime Reporter in an interview last week. “It’s a $263 million recovery. And the tax evasion scheme was an offshore tax evasion scheme that resulted in this recovery.”

Was it an individual tax evader or a corporate tax evader?

“Let’s simply say that there’s a blurred line there, but the actual tax recovery was from the individual.”

We’ve written in past issues about the IRS whistleblower program historically lagging behind other whistleblower programs, including the SEC’s program and the Justice Department’s False Claims Act whistleblower program. Has that been the case in recent years? And what does this settlement signal in terms of the state of the IRS whistleblower program?

“This case is a breakthrough and may very well be a harbinger of the future. There was an extraordinary degree of cooperation among the whistleblowers’ counsel and the IRS whistleblower’s office. Getnick Law represented the primary whistleblower in the case. But the case involved two additional whistleblowers. One was represented by Whistleblower Partners LLP. And the other whistleblower did not have legal representation.”

“The case required a coming together, which was greatly assisted by the IRS whistleblower office. And the communication that took place led to an agreed upon consolidation of claim forms by the three unrelated whistleblowers into one joint form. That in turn led to an agreed upon proportional division of the IRS whistleblower award among the three whistleblowers.”

“That laid the foundation for a relatively quick resolution of the granting of the award. When the IRS whistleblower office considered the consolidated claim, it took into account the contributions of all three whistleblowers in setting the award percentages according to the three alternatives that exist in that program – 15 percent, 22 percent or 30 percent.” 

“The IRS whistleblower office evaluated the claim and the supporting activity as qualifying for its highest percentage award of 30 percent.” 

“All of that is very, very positive. But I should point out that the foundation for that cooperation and communication was laid by a transformative improvement of the program that was already underway in the IRS whistleblower office since the appointment of John Hinman as its director in mid-2022.”

If we are talking about thirty percent, we are talking $74 million that will go to the three whistleblowers. 

Can you say anything about how that was divided among the three whistleblowers?

“No, other than to say that the three whistleblowers were able to communicate with each other and came to what all of us considered to be a fair and appropriate division. And the reason that that’s very important is that, more typically, the IRS in a multi-whistleblower matter will form its own conclusion – and that does not necessarily sit right with each of the whistleblowers. That, in turn, gives rise to litigation in tax court.” 

“So the most important aspect of this was to come up with a methodology that avoided our need to go into tax court, because everyone – the whistleblowers, the counsel, the IRS whistleblower office – would agree that once you go into tax court, you’re going to be bogged down in years and years of litigation. It’s not unusual to be involved for a decade in that litigation.” 

“The ability to cut through that process and get right to a resolution is what made all the difference here. And at the end of the day, no one is complaining about the allocated percentage to each individual whistleblower because they’ve all come to agree that that’s an appropriate and fair decision.”

And it’s not unheard of in whistleblower cases, where the whistleblower is unhappy with the amount of the award and sues the agency to get just compensation.

“That’s true even when there are not multiple whistleblowers. But again, what was particularly helpful here is that the methodology that we applied in the first instance allowed all of us to communicate with each other. That took some convincing that, in fact, could be done in conformity with the IRS rules and regulations.” 

“At times, the IRS finds itself frustrated by its own rules and regulations. And out of a desire to protect whistleblower anonymity, it becomes difficult to foster communication. But we were able to propose a methodology to the IRS that addressed this concern within the existing rules and regulations. And upon review by the IRS counsel, that was permitted to go forward.”

“That became the foundation for everything that followed. The way the IRS views a consolidated claim is that each contribution of each whistleblower is looked upon as an added contribution to the whole. It’s a rising tide lifts all ships situation. And when you look at the contribution of the whistleblowers together, it was so overwhelming that the IRS itself agreed that it gave rise to the 30 percent award.”

“In addition to co-counseling this with SEC Whistleblower Advocates, we were also involved co-counseling with the law firm of Outten & Golden.” 

“The second represented whistleblower was represented by Whistleblower Partners, and that played a very significant role in allowing us to get this done.”

The IRS brings only a handful of these cases every year, settles only a handful every year. I’m not sure what the exact numbers are, but I’ve read that there is a backlog of 30,000 whistleblower complaints at the IRS. 

That’s a remarkable number. What can be done about that? 

“That’s a very troubling aspect of the situation. Looking backward, there are at least a couple of things that are going on currently to address that.” 

“The first is that the IRS whistleblower office has received a significant increase in their funding so that they will be able to double their staff size. In terms of return on investment, the money spent on the whistleblower office more than pays for itself in terms of the money recovered.”

The staff doubled from what to what?

“As a result of additional funding to the IRS provided by the 2022 Inflation Reduction Act, the 48-person whistleblower office will soon double.”

“The other aspect that goes along with that is that when you have those additional resources, it will help the office to discern high value whistleblower information effectively, and then to prioritize those cases. You need to get through the incoming submissions to select those which have the greatest promise of being successful, and then to prioritize your resources towards them.” 

“If you’re running a private law firm, that’s exactly what you do. And we need some of that same approach in the public sector as well, so that we can look upon this as a return on investment with the program operating as a profit center within the agency.”

Won’t these IRS whistleblower cases eventually become public, because the IRS will publicly pursue in court the alleged tax evaders?

“If it comes down to a court fight, then the answer is yes. If it comes down to a case that’s resolved by mutual agreement, then not necessarily.”

Was that the case here?

“Yes, this case was resolved by mutual agreement.”

How many whistleblower law firms like Getnick Law have some expertise with the IRS whistleblower program?

“I feel I’m on a slippery slope here. As you may know, I’m a former chair of Taxpayers Against Fraud, now The Anti-Fraud Coalition. If I begin to list them, I’m going to miss someone and feel badly about it. So, I’m going to take a pass. But yes, there are a number of firms with expertise in this area. And again, I’ll point out that John Hinman, the director of the IRS whistleblower office, has been very wise in gathering a brain trust of sorts for roundtable discussions involving these lawyers in order to improve the program.” 

Are those sessions in person or by zoom?

“Both.”

But it’s overall a smaller plaintiffs bar than say the SEC whistleblower bar or the False Claims Act bar, right?

“It’s a smaller bar. And up until now at least, it’s been a shrinking bar because it’s been so difficult to crack the program. But the result in this case and the transformative program under John Hinman and his staff are a harbinger of the future. I believe that will create a renewed interest in the program among whistleblower lawyers.”

“I should add that Senator Charles Grassley (R-Iowa) and Senator Ron Wyden (D-

Oregon) have a pending piece of legislation – The IRS Whistleblower Program Improvement Act.” 

“That bill has six specific provisions. I’m not going to go into all of them, but two are particularly worth highlighting. The first would exempt whistleblower awards from reductions due to budget sequestration.” 

“The IRS, as far as I know, is the only whistleblower program that is still applying sequestration to whistleblower awards. The awards get reduced by 5.7% as a result of that policy and practice. This bill would change that.” 

“And then the second would be to require the IRS to pay interest on whistleblower awards if they’re not paid within one year of receipt of proceeds collected from the whistleblower disclosures.” 

“When there’s a dispute between the IRS and the whistleblower, it can take years and years to resolve. In the meantime, the IRS has the benefit of the collected proceeds, and there’s no interest accrual for the benefit of the whistleblowers. That would change under this legislation. Those are two key provisions.”

In this most recent case, was the award reduced by 5.7 percent?

“Yes, that’s why in the reporting to date on this case, the reward has been reported as either $79 million or $74 million. The reality is that the award was for $79 million, but by law it is reduced by 5.7 percent and it becomes $74 million.”

[For the complete q/a format Interview with Neil Getnick, see 38 Corporate Crime Reporter 38(12), September 21, 2024, print edition only.]

Originally Appeared Here