Latest news with #EarnedIncomeTaxCredit
Axios
5 days ago
- Business
- Axios
Senators warn big bill would make credit harder to get for low-income families
Buried in the " big, beautiful bill" is a provision that would require low-income Americans to pre-certify to get the Earned Income Tax Credit, a half-century old benefit that keeps millions of families out of poverty. Why it matters: Those hurdles would make the credit harder to get, or potentially even dissuade people from filing, say tax experts and Democrats who oppose the bill. State of play: The provision hasn't gotten a lot of attention, compared to changes to Medicaid and SNAP. Now some Democrats, led by Nevada Sen. Catherine Cortez Masto, are demanding Republicans cut it from the final bill. In a letter Thursday, addressed to Senate Majority Leader John Thune and House Speaker Mike Johnson, the Dems note that 20% of eligible recipients already miss out on the credit because they're unaware it exists or believe it's too complicated. The new changes, "only exacerbate the EITC's existing shortcomings by creating more red tape and complexity for workers hoping to claim the credit," they write. "This will lead to fewer eligible workers claiming the EITC, resulting in an effective tax increase on America's working families." Senators Michael Bennet (Colo.), Cory Booker (NJ), Tim Kaine (Va.) and Ron Wyden (Ore.) and a few others signed on. The big picture: The provision is one of a handful in the bill that would impose more administrative hurdles for low-income Americans. There are new and expanded work requirements for Medicaid and SNAP, and a requirement that some adults re-certify for health insurance under the Affordable Care Act twice a year. Tax breaks for higher-income individuals and businesses do not appear to include any such requirements, which impose what some call a "time tax" on working people that ultimately winds up discouraging them from using benefits. How it works: The bill directs the Treasury Department to establish a process for taxpayers to obtain a "qualifying certificate" for each child they're claiming under the deduction. It's not clear how the IRS — already struggling after staffing cuts under DOGE — would do this. The requirement would take effect in 2028. If taxpayers don't have such a certificate, they'd be denied the refundable portion of the tax credit i.e., the money they get back in their refunds. By the numbers: On average, eligible taxpayers got a $2,743 from the credit in 2023, per IRS data, the most recent available. For tax year 2024, it was worth a maximum of $7,830 for families with three or more children. What they're saying: "The IRS will need to handle potentially tens of millions of qualifying child applications, which will likely trigger a deluge of phone calls and requests for assistance," per a report from the Tax Law Center at NYU. "Taxpayers who fail to navigate the system successfully will not receive their credit, even if eligible." The provision is effectively a "backdoor cut" to the EITC, writes the author of the NYU analysis in a Substack post. "[The] bill would increase scrutiny and burden for low-income taxpayers even as its tax cuts for the wealthy have no similar requirements," writes Greg Leiserson, who previously was a senior economist in the Biden Council of Economic Advisers. The other side:"Basic eligibility checks for government programs are not only a reasonable ask of beneficiaries, but a commonsense check against waste, fraud, and abuse," White House spokesman Kush Desai said in a statement. "It's both condescending and out-of-touch for so-called 'experts' to automatically assume that everyday Americans are either too stupid or too lazy to verify their income – as they do every day for a loan, credit card, or new lease application – when thousands of dollars' worth of government benefits are on the line." Flashback: A provision like this was tried decades ago and was later abandoned because it deterred eligible workers from claiming the credit and was costly to implement relative to any savings.
Mint
02-06-2025
- Business
- Mint
Trump's presidency has only seen federal spending rise so far
Amid the layoffs, cancelled programmes and other cutbacks in Washington since Donald Trump moved back into the White House in January, one thing hasn't changed: Federal spending has just kept going up. Spending since 21 January is up 8.7% over the equivalent period in 2024, 7.2% over 2023. Some kinds of federal spending are irregular and intermittent, and any comparison like this can be affected by the timing of payments, but the Congressional Budget Office's latest monthly budget review made adjustments for timing shifts and estimated that spending in the 2025 fiscal year, which began in October, was up 7% through April over the same period a year earlier. Also Read: A trade arrangement that leaves out the US could trump Trump's tariffs The increase appears to be real. What's driving it? The Daily Treasury Statement from which these numbers are derived breaks down what it calls 'withdrawals' into 102 categories, one of which—public debt cash redemptions—is not really spending. Some high-profile cutbacks show up as sharp spending declines at the Department of Education and the US Agency for International Development. Others don't because the affected agencies are folded into larger departments, as with the $1.2 billion, 7.7% decline in spending at the National Institutes of Health, which falls under the Department of Health and Human Services. Also, the full impact of the cutbacks imposed by the Department of Government Efficiency (DOGE), Office of Management and Budget and department heads probably isn't showing up in the numbers yet because firing workers and shutting down programmes costs money up front, plus court orders have halted many cuts, at least temporarily. Also Read: The US should stay away from gimmicks and tackle its real fiscal problem These numbers also reflect a fair amount of what you could call fiscal noise. The sharp decline in spending at the Office of Personnel Management seems to be a timing issue with payments for federal employees' health insurance, not a policy change. The big increase in spending at the Treasury Department seems similarly flukey. As already noted, the overall spending increase appears to be real, driven by familiar forces like the seemingly inexorable growth of Social Security, Medicare and other social insurance programmes, as well a significant new contributor since interest rates went up in 2022—interest payments on the federal debt. The US government is, as the saying goes, 'an insurance company with an army," and by my somewhat idiosyncratic accounting (I've included tax refunds because they encompass the nation's biggest antipoverty program, the Earned Income Tax Credit), social insurance, defence and interest payments have together accounted for 76% of spending since Trump took office and 74% of the increase over 2024. Also Read: Remittance tax: An idea that America should axe The Trump-backed tax and spending bill that passed the House last week takes aim at Medicaid, the health insurance programme for the poor and the Agriculture Department's Supplemental Nutrition Assistance Program—also known as food stamps—in both cases mainly by making it harder to qualify for benefits. Most of the other big spending categories appear to escape largely unscathed, and because the legislation also includes tax cuts, most projections indicate that it will increase the deficit and federal debt. Since Trump took office the deficit has actually been shrinking, though, thanks to a 13% increase in federal revenue. Is that sustainable? Revenue from customs and certain excise taxes—such as tariffs—is up 82%. Last week the Budget Lab at Yale estimated average annual tariff revenue of $280 billion over the next decade, way up from fiscal year 2024's $77 billion. But that's now in doubt after the US Court of International Trade ruled most of President Trump's new tariffs illegal [a decision that has been stayed while it is examined], and is in any case a drop in the bucket next to federal income and payroll tax revenue that totalled $4.6 trillion last year. Also Read: Mint Quick Edit | America's credit rating slip: How serious? Individual income taxes have generated most of this year's revenue gains, the bulk of them in the form of increases in non-withheld taxes that cannot be relied upon to continue. Non-withheld tax revenue tends to jump after financial markets do, with the beneficiaries of capital gains, employee-stock-option exercises and big bonuses often owing large amounts at tax time. The performance of the stock market so far this year points to fewer such happy events in coming months. For all the action in Washington since 21 January, it's a remarkably familiar picture. Federal income tax revenue is volatile, and spending on Social Security, Medicare and other social insurance programmes just keeps going up. ©Bloomberg The author is a Bloomberg Opinion columnist covering business, economics and other topics.
Yahoo
16-05-2025
- Business
- Yahoo
George Kamel: 6 Reasons You Paid More Taxes This Year (and What You Can Do About It)
During tax season, you probably expect to owe nothing extra or even receive a nice refund that helps you catch up financially. But if you were unlucky when you filed your 2024 tax return, you might have gotten a surprise IRS tax bill that left you wondering what happened. Read Next: Explore More: In a recent YouTube video, George Kamel discussed six reasons you might have owed more taxes this year. He also spoke with tax lawyer Jasmine DiLucci about ways to avoid shortages next time. A bigger tax bill often comes from changes to your income. A raise or promotion may have led to a higher tax rate. Or you might have joined the roughly 8.9 million Americans who worked multiple jobs, as reported by the U.S. Bureau of Labor Statistics. These situations can lead to your employer not taking enough taxes out of your pay. Both Kamel and DiLucci recommended going to your employee portal or asking HR about updating your Form W-4, which asks questions about your tax situation and lets you adjust how much money is withheld. You can also use the IRS tax withholding estimator to figure out the right amount. When you update your Form W-4, keep in mind that Kamel advised aiming to have a tax balance of zero. While they're a nice surprise, refunds aren't necessarily a good thing for your money. 'If you're getting a refund, it's because you've been overpaying and essentially loaning your money to the government interest-free,' he said. Be Aware: Losing tax breaks or qualifying for lower amounts can cut into your refund or leave you owing money. Kamel gave the example of Child Tax Credit, which was $3,600 for children under 5 in 2021 compared with $2,000 in 2024. Other scenarios include losing education credits if you completed school, getting a smaller Earned Income Tax Credit because your income went up or not qualifying for the Saver's Credit if you didn't contribute to your retirement account. While you can't do much about some lost or reduced tax perks, Kamel and DiLucci discussed how deciding between an itemized and standard deduction is important for saving money. DiLucci said the standard deduction is usually better unless you've got high mortgage interest and/or high charitable deductions. 'If you got married or divorced, both of those things can change your filing status and your taxable income, and if you sold your home, you may owe taxes depending on how long you lived in the house, your profit from the sale and your filing status,' Kamel said. If you stop qualifying for the married filing jointly status, your standard deduction is smaller, and you could find yourself in a higher tax bracket. But if you have a qualifying child, check if you can file as head of household since this is more favorable than filing single. Before future property sales, check the IRS rules on capital gains taxes. Meeting certain requirements can exempt up to $500,000 of your house's profit from those taxes. DiLucci said some people aren't aware that there's a $400 threshold for self-employment taxes or that this type of income is reportable. Since it's your job to pay taxes on self-employment earnings, a big tax bill is possible if you don't follow the rules. 'To avoid any potential penalties and fees, it's best to just pay it quarterly through the IRS website,' Kamel said. Even if it's just a small side hustle, track all your earnings and expenses and use Form 1040-ES to figure out what to pay the IRS each quarter. According to Kamel, taking money out of a traditional retirement account could also cause a larger tax bill. 'This would be now taxed as income,' he said. And if you have a regular brokerage account, taxes on gains might have increased your 2024 tax bill. The impact can be bigger if those investments were less than a year old; normal income tax rates rather than lower long-term capital gains rates would apply. It's smart to speak to a tax expert or investment advisor who can help you time withdrawals and sales and find other ways to lower your investment taxes. Tax mistakes do legitimately happen. Maybe you typed the wrong income amount or forgot an eligible tax credit or deduction. DiLucci also mentioned that transactions on platforms like Venmo can lead to a 1099-K issuance and an unexpected tax bills if the money is assumed to be income. DiLucci explained that if it's not income, you'll need to disclose that. 'You actually need to typically report it on your return, reverse it out and disclose that it's not income. Otherwise, the IRS will put it on your return as income,' she said. Looking into tax rules, double-checking everything and working with a tax professional can help you avoid costly troubles. More From GOBankingRates What $1 Million in Retirement Savings Looks Like in Monthly Spending Mark Cuban Tells Americans To Stock Up on Consumables as Trump's Tariffs Hit -- Here's What To Buy 5 Little-Known Ways to Make Summer Travel More Affordable 5 Types of Vehicles Retirees Should Stay Away From Buying Sources George Kamel, 'Why You Paid More Taxes This Year (And What To Do About It)' U.S. Bureau of Labor Statistics, 'The Employment Situation — April 2025.' This article originally appeared on George Kamel: 6 Reasons You Paid More Taxes This Year (and What You Can Do About It) Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
09-05-2025
- Yahoo
Athens tax preparer sentenced to 8 years for $3.5M fraud scheme
The Brief Jessica Crawford was sentenced to eight years in federal prison for filing over $3.5 million in fraudulent tax returns linked to a pandemic-era unemployment scheme. Crawford operated through her business, filing false Pandemic Unemployment Assistance claims and receiving a portion of the benefits, with over $3 million in fraudulent claims identified by the IRS. Federal law enforcement emphasized the impact of Crawford's actions on taxpayers and highlighted the ongoing commitment to prosecuting such fraud cases. MACON, Ga. - A tax preparer from Athens has been sentenced to eight years in federal prison for filing more than $3.5 million in fraudulent tax returns, many connected to a pandemic-era unemployment scheme in which she received a share of the illegal proceeds. What we know Jessica Crawford, 34, was sentenced on Thursday by U.S. District Judge Tilman E. "Tripp" Self III to 96 months in prison followed by five years of supervised release. She pleaded guilty in November 2024 to one count of wire fraud and one count of aiding and assisting in the preparation of false tax returns. Federal prisoners are not eligible for parole. The backstory According to court records, the FBI began investigating a multi-state fraud involving Pandemic Unemployment Assistance (PUA) claims when they discovered Crawford's connection through text messages exchanged with others involved in the scheme. Operating through her business, Crawford Tax Services in Athens, she filed PUA applications on behalf of clients who submitted false information or fabricated businesses. In return, she received a portion of the benefits. The case also involved an undercover IRS-Criminal Investigation agent who met with Crawford in April 2022. During the meeting, Crawford fabricated a landscaping business based on a casual mention by the agent that he mowed his aunt's lawn. Without any documentation, she filed a Schedule C loss of \$19,373 and submitted a tax return electronically that falsely claimed a refund of $12,359. The return included improper claims for the Earned Income Tax Credit, Child Tax Credit, and a Qualified Business Income deduction. A statistical review by the IRS of 1,261 returns filed by Crawford for tax years 2020 and 2021 found more than $3 million in fraudulent claims, including false credits for sick leave, family leave, and dependent care. What they're saying "Federal law enforcement uncovered a large-scale tax return scheme during the pandemic that was costing taxpayers while benefiting fraudsters," said Acting U.S. Attorney C. Shanelle Booker. "Alongside our law enforcement partners, federal prosecutors will continue to uphold the law and pursue justice in these cases." Paul Brown, Special Agent in Charge of FBI Atlanta, said Crawford "lied and took advantage of funds designed to help those who were truly in need during the pandemic." "Jessica Crawford used her position as a tax preparer to defraud the U.S. government through a CARES Act program intended for those unemployed because of the COVID-19 pandemic," said Lisa Fontanette, Assistant Special Agent in Charge of the IRS Criminal Investigation's Atlanta Field Office. "The sentencing Crawford received should serve notice to unscrupulous tax preparers." The Source The details in this article were provided by the U.S. Attorney's Office, Middle District of Georgia.
Hindustan Times
06-05-2025
- Business
- Hindustan Times
IRS tax refund update: Who's getting their check this week?
As the US tax season enters its final stretch, millions of Americans are closely watching their mailboxes and bank accounts for one reason: tax refunds. For those who filed their federal income tax returns in late April, the Internal Revenue Service (IRS) is expected to issue a new round of payments this week, as reported by New York Tax Concept. Also read: IRS tax refund schedule: Will your deposit arrive this week? Find out Between May 5 and May 11, many eligible taxpayers could see their refunds land in their accounts—especially those who filed electronically and requested direct deposit, as reported by Marca. Refunds expected this week are largely tied to returns processed around the week of April 14–20. Based on the standard IRS processing timeline, which typically runs up to 21 days for e-filed returns with no errors, individuals in that filing window fall directly within the May 5–11 payout range. *Filed electronically *Selected direct deposit *Submitted returns free of errors or unusual claims are the most likely to receive refunds this week. In many cases, direct deposits begin appearing in bank accounts on Mondays or Tuesdays, with physical checks arriving slightly later for those who opted for mail delivery, as reported by New York Tax Concept. Not all taxpayers will see their refunds arrive within this window. Several factors may result in delays: *Errors or omissions in tax returns (such as incorrect banking details or mismatched personal information) *Paper filings, which typically take 6 to 8 weeks or longer to process *Claims involving credits like the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC), which require additional verification *Outstanding federal debts, such as unpaid student loans or tax liabilities, which may result in partial or full refund offsets The IRS encourages taxpayers to use the 'Where's My Refund?' tool on its official website or via the IRS2Go mobile app. Updates are provided once the return is received, the refund is approved, and the payment is sent. For the most accurate results, users need their Social Security number, filing status, and exact refund amount, as reported by Marca. For those still awaiting refunds or planning ahead for next year, here are some useful practices: File early: Submitting returns as soon as possible shortens wait times. Double-check entries: Ensuring all personal and financial details are accurate helps avoid red flags during processing. Choose e-filing and direct deposit: These options consistently provide the fastest turnaround for refunds. Also read: CBDT to closely monitor top taxpayers, crack down on bogus deductions The week of May 5 to 11 marks a significant payout period in the 2025 IRS refund calendar, especially for taxpayers who filed in mid-to-late April. While many can expect refunds this week, others may face delays due to various filing or processing issues. Staying informed and using official IRS tracking tools remain the best ways to monitor refund status and avoid unnecessary worry during tax season.
