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Yahoo
3 days ago
- Business
- Yahoo
Trump's plan on overtime taxes, explained
During the 2024 campaign, Donald Trump promised "no tax on overtime" — an exemption for federal income taxes on extra pay for working overtime. So how's that coming along? There is a provision in the "big, beautiful bill" passed by the House in May. The Senate is now considering the legislation. The details remain to be seen, but for now the tax break is much smaller than you might assume and more short-lived, as it would expire when Trump leaves office. Here are answers to some common questions about the "no tax on overtime" proposal: Trump first proposed to end overtime taxes at a campaign rally in Tucson, Arizona, on Sept. 12, about two months before Election Day. It was part of a broader set of proposals thrown out with little detail in the final weeks of the campaign. 'That gives people more of an incentive to work. It gives the companies a lot. It's a lot easier to get the people,' he said. 'You know, I went to some economists, great ones, and I said, 'What do you think?' They said, 'It would be unbelievable. You'll get a whole new workforce by doing that,'' he added. As with all of his campaign proposals, details were scant. The nonpartisan Tax Foundation pegged the cost at somewhere between $227 billion and $1.5 trillion, depending on how it would be implemented. It's now clear that the proposal is on the smaller side, including only a deduction for federal income tax and not any other taxes. The Congressional Budget Office said the current overtime proposal would reduce revenue by only $124 billion. Still, the budget provision lacks a lot of details, which means the provision will likely 'require hundreds of pages of IRS guidance' and send taxpayers 'through a maze of new rules and compliance costs,' according to the Tax Foundation. The Big Beautiful Bill Act, which passed the House, includes an exemption on overtime taxes. But as with the proposed $1,000 baby bonus and exemption for taxes on tips in the bill, the overtime tax break would be temporary, expiring just as Trump leaves office in 2028. That helps Republicans in Congress keep the cost of the bill down while setting up the next president to have to decide whether to spend political capital extending the exemptions or take a hit in the polls by letting them lapse. Under the House bill, only workers making less than $160,000 per year would qualify for the exemption. It would also apply only to the amount workers are paid for overtime over their regular salaries, which employers would be required to include in a new box on your annual W-2 form. There is no cap on how much overtime a worker could claim in a year. The Senate has not voted on its version of the spending bill, which will have to be reconciled with the House version for a final vote before heading to the president's desk. For now, the Senate version of the bill does not include an exemption from overtime taxes. There are several standalone Senate bills to create the exemption, however, and senators could still choose to add it to their bill. Lawmakers plan to vote on the final version of the bill by the end of summer. The White House Council of Economic Advisers — who work for Trump — estimated that the average overtime worker would get a tax break of $1,400 to $1,750 per year until it expired in 2028. But an analysis from the Institute on Taxation and Economic Policy pegged the average tax savings at a much lower $330 per year. What's more, it found that it would benefit higher-income workers more, with the bottom 60% snagging an average of $80 and the top 20% pocketing an average of $940. You would need a Social Security number to claim the deduction, so it would not cover people here on work visas. This was more likely campaign hyperbole, like the "big, strong men" with tears in their eyes whom Trump often describes. In fact, economists have mixed thoughts about the exemption because of the loss of revenue, which would increase the national debt, and the potential for unexpected side effects in the labor market. Under the Fair Labor Standards Act, nonexempt employees working overtime must be paid at 1.5 times their regular rate of pay for all hours they worked past 40 in a workweek. Since that pay would now be tax-free, it's even more lucrative. This could mean more workers volunteer for overtime hours, leading employers to hire fewer new workers. Or employers could decide they're spending too much on overtime and switch to more part-time staffing. Or it might have no effect on either workers or employers, since it's only a temporary tax break. At the macro level, the tax break might boost the economy a little by putting more cash in workers' pockets, but the loss in revenue might increase the national debt, which is starting to hurt the economy. No one knows, and the effects might be so small that they can't be measured, so we may never know. The bottom line is that this was not an idea that economists dreamed up. It was a campaign pitch to some groups of Trump supporters — the Fraternal Order of Police, for one, endorsed the idea — who tend to work a lot of overtime. This article was originally published on
Boston Globe
3 days ago
- Business
- Boston Globe
Maryland's Wes Moore says he's not running for president but high-profile stops keep chatter alive
'I'm not running,' Moore told The Associated Press in an interview Wednesday. He also said, when asked, that he isn't trying to get his name in the conversation for a potential vice presidential candidacy, either. The trip to South Carolina includes meetings with business prospects, Moore said. Advertisement 'And people should get very used to me going all over the country bringing business back to Maryland, because that's exactly what I plan on doing as long as I'm the governor of the state,' Moore said after a dedication in Annapolis for a memorial to former Rep. Parren Mitchell, the state's first Black congressman. Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up In the third year of his first term, Moore plans to run for reelection next year in heavily Democratic Maryland. He says being the state's governor during a challenging time has his full attention. That includes working to navigate the difficulties of dramatic federal downsizing under the Trump administration, which poses an outsized economic impact on Maryland. The state is home to a large number of federal workers toiling in the shadow of the nation's capital — about 256,000 Marylanders received a federal W-2 in 2021, representing about 8% of taxpayers, according to an analysis by the state's comptroller. Advertisement Earlier this month, Maryland lost its triple-A bond rating from the Moody's economic rating agency. State officials had cited the rating for more than 50 years as a sign of strong fiscal stewardship that enabled the state to pay the lowest rates when it sells bonds to pay for infrastructure. Two other rating agencies, Standard & Poor's and Fitch, have recently affirmed the state's triple-A bond rating. Moore and other leading Democrats in the state blamed the Trump administration's downsizing for the Moody's downgrade. The governor just had the most challenging legislative session of his tenure. Facing a $3.3 billion budget deficit, he worked with the legislature, which is controlled by Democrats, to reach a balanced budget that included about $2 billion in spending cuts throughout state government and about $1.6 billion in new revenues through tax and fee increases. Most of the tax increases were imposed on high-income residents, including two new higher tax brackets for people who make more than $500,000 and a new 2% tax on capital gains for people with income over $350,000. The governor has said most Marylanders won't see a tax increase, and some will receive a modest tax cut. Still, Maryland Republicans have been pouncing on the tax increases — an issue sure to be raised often by the GOP's next nominee for governor. Moore, 46, is the state's first Black governor, and the only Black governor currently serving. He is the former CEO of the Robin Hood Foundation, an anti-poverty nonprofit. He also is a Rhodes scholar and a combat veteran who served in Afghanistan. Advertisement The buzz around Moore has persisted since the bestselling author won Maryland's governorship in his first bid for public office in a landslide in 2022, after prevailing in a crowded Democratic primary that included former national party chairman and former U.S. Labor Secretary Tom Perez. In a state that is about 30% Black, Moore was recently criticized by the state's Legislative Black Caucus for vetoing a bill to study potential reparations for slavery. Moore said the idea has been studied enough and now is the time to 'focus on the work itself' of building a better economy for all. That includes narrowing the racial wealth gap, expanding homeownership, uplifting entrepreneurs of color and closing the foundational disparities that lead to inequality — from food insecurity to education. Democrats outnumber Republicans 2-1 in Maryland, making the state largely safe for Democratic incumbents. Still, former Republican Gov. Larry Hogan won the first of his two terms by campaigning heavily against tax increases approved during the tenure of his Democratic predecessor, prompting some to wonder if the popular Hogan might run for governor again. Maryland limits a governor to two consecutive terms, but a former two-term governor could seek another term after sitting out one.
Yahoo
5 days ago
- Business
- Yahoo
‘I just want my tax return I worked for': Holden woman claims she is a fraud victim
LIVINGSTON PARISH, La. (Louisiana First) — A Holden woman claimed nearly all of her tax return is gone after declining to pay exorbitant fees to the preparer for her services. Misty Brown works in Port Allen as a truck stop general manager and has a second job at another truck stop, so she had two W-2 forms to file for her taxes. 'I just want to make sure it's done correctly,' Brown said she thought. Brown reached out to a woman she said she knew from her area named Katyra Selders. Selders had advertised her filing services on social media. 'I've been associated with her for her entire life,' Brown said. In a screenshot of a Facebook message provided to Louisiana First Investigates, Brown asked Selders how much the services would cost. Selders said Jan. 19 it would depend on the total refund. After some deliberation, Selders promised to deliver on a big tax return. Brown said she was surprised, considering she gets an average of less than $10,000 each year in tax return money. 'I can mess around an put the refund to like $30,000,' Selders said in a Facebook audio message provided to Louisiana First Investigates. 'Then I'd charge like $10,000. That's how I'd normally do it.' Brown sent Selders a message sharing her concern. 'Misty, I've been doing big refunds since the pandemic, booboo,' Selders said in a Facebook audio reply. 'I'm not getting in trouble. You're not either.' The Internal Revenue Service (IRS) rejected that larger request, Brown said, ultimately accepting one for $4,690. Selders let Brown know she would charge half that amount. 'Half and half, that's how I do it when refunds are reduced,' Selders said in the message. The accountant group FinancialCPA reports tax preparation generally costs in the lower hundreds, averaging between $100-$200 on average. Brown said she offered to pay Selders $300, which Selders declined. The IRS then let Brown know nearly the entire tax return—more than $4,700—had been deposited into an account. 'When I called that account it went to, they told me it was sent to her for her fees,' Brown said. Brown said when she confronted Selders, she was met with denials. In a response to a request for comment from Louisiana First Investigates, Selders denied any wrongdoing. 'Thank you for reaching out regarding the recent inquiry involving a former client's complaint about her tax filing. I want to clarify that I conducted a thorough and accurate review of the client's tax information and provided her with the correct estimated refund amount based on the documentation she submitted. However, the client declined to proceed with the filing using that amount. At no point did I file her taxes without her consent or against her wishes. My standard practice is to ensure clients fully understand and approve their filings before submission, and I have documentation to support this process,' Selders said. At the time of publication, Selders had not yet provided that documentation or receipts from her service charge. 'From my standpoint, everyone is presumed innocent,' said David Gunn, a Board Certified Tax Attorney who agreed to discuss the case with Louisiana First Investigates. Gunn said tax fraud is relatively common in Louisiana, and some people found guilty have paid thousands in fines. Gunn said he knew a man who fled the state when faced with charges, only to be found by the IRS in Seattle, Washington. 'The IRS is coming after tax preparers who aren't doing the right thing,' Gunn said. Gunn said the IRS does not audit every return, but if there is evidence someone gamed the system, that person could face fines or prison time. 'They are going after these people who play games and are unethical,' Gunn said. Brown filed a report through the Livingston Parish Sheriff's Office, but said she was told the IRS would handle any investigation if wrongdoing is found. Gunn said people in Brown's situation should file a 14157 and 14157-A form. The first is an official complaint, while the second is a fraud affidavit. Gunn said the IRS does not audit every return, but if there's evidence someone gamed the system, that person could face fines or prison time. 'They are going after tax preparers who aren't doing the right thing,' Gunn said. Selders publicly denied any unethical behavior in Facebook comments. She commented about Brown's refusal to pay the $2,500 fee. 'You refuse the refund fee boo tell that,' Selders commented. Brown said she considers the situation a personal affront. 'Above anything else, I'm a mom,' Brown said. 'Her taking from me took from my kids.' Brown said she wants her money back. 'I just want my tax return I'm owed, I worked for,' Brown said. 'I just want my tax return I worked for': Holden woman claims she is a fraud victim Community near LSU speaks out after loss of Caruso's grocery store in fire Additional arrests made in Tangipahoa Parish jailbreak case This Louisiana city ranks among top five cities for musicians in 2025 Top 10 cities for recent college grads in 2025 Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Yahoo
23-05-2025
- Business
- Yahoo
Hartford tax preparer pleads guilty to federal tax charge
HARTFORD, Conn. (WTNH) — A Hartford tax preparer pleaded guilty Friday to a federal tax charge, according to police. East Lyme woman pleads guilty to tax offenses, will pay over $300,000 in restitution From around 2015 until 2024, Clyde Gibson, jr., 43, operated as a tax return preparer under the name Build Understand Destroys LLC and charged clients a fee for their preparation of tax returns. Gibson allegedly prepared thousands of federal tax returns, many of which claimed false deductions. During the investigation, an undercover agent posing as a customer met with Gibson and provided a W-2 form. Gibson allegedly put fraudulent information on the Schedules C and D. During the 2016 through 2022 tax years, Gibson prepared at least 135 tax returns containing fraudulent information, causing the IRS a loss of at least $125,197, according to documents read in court. He pleaded guilty to one count of aiding and assisting in the preparation of false and fraudulent income tax returns and is facing a maximum sentence of three years. He was released on a $25,000 bond. He has agreed to pay $125,197 in restitution. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Yahoo
23-05-2025
- Business
- Yahoo
How GOP bill's new tax rules for tips and overtime could impact you
The massive Republican-backed budget bill — called "one big, beautiful bill" by President Trump — includes several new tax rules that could have a big financial impact on millions of workers who earn tips or overtime pay. While the heart of the bill is an extension of Mr. Trump's 2017 tax cuts, the legislation also includes several provisions that were part of the president's campaign last year, such as his vow to eliminate taxes on tipped income. The bill could deliver savings of about $1,700 for each tipped worker as well as employees who earn overtime, the House Ways and Means Committee said on May 20. But there are some restrictions in the bill that could limit the financial boon for these workers, with some policy experts saying that the tax breaks may not be as useful as they first appear. For instance, almost 4 in 10 tipped workers earn so little that they pay no federal income tax, according to the Brookings Institution. Consequently, the tax break is likely to provide a bigger helping hand to higher-paid tipped workers, while leaving some low-income workers behind. "If your goal is to help the poorest service workers, this is probably not the way to do it," said Michael Lynn, a professor of services marketing at Cornell University whose research largely focuses on tipping and other consumer behavior. The 1,100-page bill, which squeaked through the House on Thursday by a single vote, will now go to the Senate, where more changes are likely. Here's what to know about the provisions as they now stand. How would the "No Tax on Tips" provision work? Called the "No Tax on Tips" provision within the House bill, the rule would create a new tax deduction that eliminates federal income taxes on tips for people who work in jobs that have traditionally received them. There are about 4 million people in the U.S. who work in tipped occupations, or about 2.5% of all U.S. workers, according to the Yale Budget Lab. The tax break includes some restrictions: Only those who earn less than $160,000 in 2025 would qualify. Only workers with Social Security numbers can qualify, and if they are married, their spouse must also have a Social Security must be reported to the employer and included on the worker's W-2 tax provision would go into effect in 2025, but expire after 2028, making it a short-term tax break. The deduction would only apply to certain jobs: The Trump administration must publish a list of occupations that qualify for the provision within 90 days of the bill's passage. "The tip exemption will significantly increase take-home pay for most tipped workers, many of whom are low- to middle-income taxpayers," the White House's Council of Economic Advisers (CEA), a group that advises the president on economic issues, said in a report published earlier this month. The CEA's report estimates that the average take-home pay for tipped workers would increase by $1,675 per year under the provision. Would it help all tipped workers? No, because 4 in 10 tipped workers earn too little to pay federal income taxes, which means they wouldn't see any benefit. There's also a concern that some employers could reclassify some workers as tipped workers by arguing they would receive a tax break, according to Brookings. The minimum wage for tipped workers is $2.13 per hour, versus $7.25 an hour for non-tipped workers. One Fair Wage, an advocacy group representing service workers, criticized the measure, noting that the GOP bill also includes cuts to social safety net programs that many tipped workers rely on. "It also slashes Medicaid, putting 1.2 million restaurant workers at risk of losing health care," One Fair Wage posted on social media. What about the Senate's No Tax on Tips Act? A separate, standalone bill called the No Tax on Tips Act, which is solely focused on giving a tax break to tipped workers, was passed by the Senate on May 20, with bipartisan support. That bill will now move to the House for a vote. The Senate bill offers similar benefits and restrictions as the "one big, beautiful bill" when it comes to taxes and tips, but with one major difference: The bigger GOP bill requires workers, as well as their spouses, to have a Social Security number. That requirement appears to be aimed at excluding some immigrants from tapping the tax break, while the Senate bill doesn't stipulate that taxpayers who claim this break, or their spouses, must have a Social Security number. Senator Jackie Rosen, a Democrat from Nevada, urged lawmakers to pass the Not Tax on Tips Act arguing in a statement that the bigger GOP bill combines the tax break with cuts to vital programs like Medicaid and food stamps. "We shouldn't be forcing working families to choose between keeping their health care or keeping their tips, which is why we want this bipartisan bill on its own — on its own — not part of a harmful, extreme budget bill," Rosen said on the Senate floor on Wednesday. How does the "No Tax on Overtime" provision work? The GOP bill includes a tax break for workers who receive overtime, another one of Mr. Trump's campaign promises. About 8% of hourly workers and 4% of salaried workers receive overtime pay on a regular basis, according to the Yale Budget Lab. About 70% of salaried workers don't qualify for overtime pay, it noted. The legislation would enable workers to claim a deduction on their taxes for the amount they earned in overtime pay during the tax year, although there are some restrictions: Workers would need a Social Security number to claim the tax break, and if married, their spouses would also need a Social Security tax break would go into effect in 2025 but expire after the 2028 tax year. But more guidelines about the provision would still need to be determined by the Treasury Department, according to tax firm Wolters Kluwer in a May 22 publication about the tax bill. The average overtime worker would see a tax cut between $1,400 to $1,750 per year through the new break, according to the Council of Economic Advisers. Here's how much Qatar's plane gifted to Trump administration will cost to retrofit Biggest takeaways from RFK Jr.'s MAHA report Trump signs new executive orders, comments on tariffs threats for EU, Apple
