The Positive Impact of the Child Tax Credit

Best way to help children? Give their families money. Farhad Manjoo for the New York Times Opinion discusses this idea and references recent studies that show how the Child Tax Credit helped by decreasing the child poverty rate in the US by 25%. The early payments also led to a reduction in the rates of food insufficiency in low-income households. Read more here, Biden Has Helped the Quiet Revolution of Giving People Money.

Should Crypto Currency Fall Under Securities Laws?

Gary Gensler, SEC Chair is proposing that those managing crypto entities register under the current securities laws. He points to the fact that,  “Investor protection is just as relevant, regardless of underlying technologies,’ and that the purpose of the securities laws enacted by Congress was to oversee investments in any form. Read More here: SEC chair seeks increased regulation of cryptoassets, in the Journal of Accountancy.

College Tax Credits and Deductions

Are you a college student or parent of a college student? You may qualify for certain tax breaks, including the American Opportunity Tax Credit, the Lifetime Learning Credit, or the Student Loan Interest Deduction. Education savings accounts like Coverdell or 529 plans may also help manage college expenses. For a complete list of tax benefits for college students and parents visit: IRS Tax Benefits for Education Information Center.  To learn more about these credits and how they may contribute to your tax savings, read: What to Know About Tax Breaks for College Students and Parents

Tax Increase to Ease Inflation?

The idea of raising taxes on the extremely wealthy and large businesses to help control inflation has been proposed. Would this really help and is controlling inflation the business of Congress or the Fed? Howard Gleckman for Forbes.com suggests that a tax increase on middle income would provide the most benefit but would not be seen as favorable. He also points to the fact that an inflation busting tax increase imposed on working families could add to their hardship and would be opposed by lawmakers on both sides.

Read more here: Should Congress Raise Taxes To Fight Inflation?

IRS Tax Scams

Named to the “Dirty Dozen” list of scams, “Spear Phishing,” has been highlighted in a press release issued by the IRS on June 9th. The agency warns that tax preparers and accountants may fall prey to these bogus emails that appear to be from tax preparation services alerting the recipient to unusual activity on an account. As stated in the article, they advise individuals to enjoy a well deserved break now that filing season is over but not to let down your, “IT defenses.” The article also offers this detailed list of further reading to help protect yourself and your business.

From the article, “For tips on cybersecurity for CPA tax practices, see Rood, “Professional Liability Spotlight: Don’t Get Victimized by a Cybercriminal,” JofA, October 2021; Odom, “Tax Clinic: Keeping Client Data Secure: How’s Your Cybersecurity Immunity?” The Tax Adviser, December 2021; and “Professional Responsibilities in Data Security for Tax Professionals,” AICPA Resources.”

‘Dirty Dozen’: Spear phishing targets tax pros

Another Look at the IRS

Tax season is fast approaching and tax payers are finding that the IRS customer service is lacking. Michael Hiltzik for the Los Angeles Times suggests that the blame may not be on the organization itself but on the federal government who has repeatedly cut funding for the agency. In the last thirty years the tax payer base has grown from 254 million people, collecting $1.1 trillion in revenue to 330 million people now dealing with over $3.5 trillion. During this time, the staff at the IRS has been cut by almost 30,000 and over the last decade, “the agency’s budget has declined by 20% in inflation-adjusted terms.” According to  statistics published by the IRS National Taxpayer Advocate, last year only 11% of calls to the agency were answered. What does this mean for the IRS and the general taxpayer? Read more here: Don’t blame the IRS for its lousy service. Blame Congress

Handling Tax Season Stress

Start Early
Break It Up
Know Your Options
Think Ahead

Sounds simple, right? A large percentage of tax payers wait until the last minute which leads to increased stress and lack of time to adequately review tax documents. If you need help, you should always ask a professional. We are here for you at Newby CPA. Call us today! 512 484 8016

Checkout more tips for a smooth tax season here:
Tips to Tackle Tax Season Costs and Stress

Advanced Child Tax Credit

Did you qualify for the Advanced Child Tax Credit? If so, did you accept the payments or opt-out? When it’s time to file your taxes, what is the best way to record or claim the Advanced/Child Tax Credit? This short video offers basic instructions on filing your forms and better understanding the Advanced/Child Tax Credit.

Tax Payer Relief

Following our last blog about the budget cuts at the IRS and what that means for tax payers this season, we offer this article from The Tax Advisor: Taxpayers need relief now, AICPA and other organizations say. The consortium known as the AICPA comprised of many different accounting bodies has made the following recommendations.

The group recommends that the IRS:

  • Discontinue automated compliance actions until the IRS is prepared to devote the necessary resources for a proper and timely resolution of the matter;
  • Align requests for account holds with the time it takes the IRS to process any penalty abatement requests;
  • Offer a reasonable-cause penalty waiver, similar to the procedures of a first-time abatement (FTA) administrative waiver, without affecting the taxpayer’s eligibility for FTA in future tax years; and
  • Provide taxpayers with targeted relief from both the underpayment-of-estimated-tax penalty and the late-payment penalty for the 2020 and 2021 tax years.

Read more from the AICPA here: Taxpayers need relief now, AICPA and other organizations say