In the Black: December 2025
IRS scolded for helping ICE
It’s the holidays, and I know we could all use a little more non-terrible news, so…
Federal Judge Colleen Kollar-Kotelly scolded Acting IRS Commissioner Scott Bessent before Thanksgiving for releasing migrants' addresses to ICE. The judge paused future data sharing between the IRS and ICE.
You may remember that this Spring, several top IRS officials quit over this exact issue. In June, ICE asked for information on 1.3 million taxpayers, and in August, the IRS turned over addresses of 47,000 of them. ICE used this to locate and deport them. Let’s be clear, the only reason they could find them is that they were doing the right thing and reporting their income and paying taxes on it - even though they could not access the very benefits their taxes were paying for (Social Security, Medicare, Unemployment). Folks applying for citizenship are encouraged to file taxes by the IRS to aid their immigration cases.
In 2023, unauthorized immigrant workers paid about $66 BILLION in taxes, with about $43 BILLION of that going to Social Security and Medicare. Make it make sense.
Some Holiday Housekeeping:
If you haven’t yet responded to our Tax email- please do that now!
Our New Year’s card should drop the last week of December - I think you are really going to like this one!
Happy Holidays from all of us here at Liz Is All Biz! Even though the world can be dumb, you are a bright spot for us, and to have a career we enjoy makes everything better, so thank you!!!
I hope you have a restful and relaxing season.
Up to snow good,
Liz & The Team
Featured Staff
If you’ve been with us for a while, then you remember Aysha - she was the original office manager, billing department, and head accountant wrangler for many years here at Liz Is All Biz. Since she left, she’s gone on to study accounting. So when we needed to cover Justine’s maternity leave - (yup - tax baby 2024 is expected this summer) - we knew exactly who to call.
In the words of the immortal Tag Team: I'm takin' it back to the old school. You’ll see her in the Tax Desk email this year - keepin' it all running!
In the Black: November 2025
Skeleton Crews at the IRS and some crypto homework
With the government shut down, the IRS has furloughed more than half of its staff. That’s in addition to the DOGE cuts earlier this year. Last Friday, some of the remaining workers were issued a RIF notice (Reduction In Force), informing them that their last day will be December 9th.
What does this mean? You’ll need to be especially patient if you are trying to call or waiting for a response. Am I worried about the coming tax season? I sure am. Usually, the IRS would spend the next two months completing and testing systems to handle next year's tax-filing season.
1099-DA’s are coming!
If you have a kink for crypto, then you'll likely be getting a new tax form in January. Starting this year, crypto sales, exchanges, or other dispositions will be reported to the IRS and you this new tax form which you’ll receive in January. Here’s the catch (you knew this was coming, right?), the platform/wallet/broker, etc. that issues this to you might not have all your information, especially the amount you PAID to buy that crypto in the first place.
My recommendation: CHECK your wallet/platform and check if you have all your ‘buy’ price or basis listed. If not, work on tracking that down NOW before that form arrives in January and it’s a mad scramble. Why? Because you are only going to pay taxes on your crypto gains (i.e., what you sold it for minus what you bought it for), if you don’t have records to back up your initial purchase, you could end up paying more taxes than you need to. No, thank you.
In the Black: October 2025
I’ve written before about my concerns about the current administration politicizing the IRS, and with some excellent reporting from the NY Times, more has come to light. I’ve told you about all the cuts that have been made to the IRS, especially the new workers Biden had brought on to tackle businesses and the ultra-wealthy cheating on their taxes, where the majority of undercollected taxes are. Some of the strategies were so complicated that the IRS just didn’t have the manpower or the expertise to catch them, and now many of the people hired to do just that are gone. You know who they do have time and expertise to audit? All of us here in the middle, Cool, huh?
Anyway, in this month's episode of Yes, Virginia, the system is rigged, I present to you the Trump administration quietly rolling back enforcement on aggressive tax shelters used by the biggest multinational companies and the wealthiest people. The crackdown was projected to bring in over $100 billion (with a B) over the next 10 years. Maybe you’ve heard about our rolling government funding crisis? Seems like we could use the cash.
Even Larry Gibbs, who served as Reagan’s IRS commissioner, had this to say: “From the standpoint of the integrity of the system, I am concerned about it. It’s politicizing the tax process.” The IRS is also turning on its own - accusing folks working on the initiative of being part of the ‘deep state’ and biased against Republicans. Holly Paz, who was the highest-ranked official working on the initiative to address large-scale business tax evasion, was placed on leave in July. She’s currently suing the agency.
The Nitty Gritty
But HOW do they cheat Liz? I know you only ask out of deep tax law curiosity,and no nefarious intent so here you go: The concept is called “basis shifting”. Let’s say you and I open a nightclub together and we buy a $1 million sound system. We write off that most excellent sound system over a series of years through depreciation. Those depreciation deductions effectively erase $150k in profits every year. Now, 10 years later, there are no more deductions to take on this sound system, or are there? Let’s say through a series of complicated legal transactions, we restructure our partnership and all the assets, including our sound system. Then, these crooked companies would start expensing that sound system all over again, having lost the IRS in the paper trail. Shifty, right?
In the Black: September 2025
Obamacare premiums: big changes coming
What’s happening: The new 900-page monster tax bill contains what’s known as a subsidy cliff. What that means is that if you have ACA/ Obamacare insurance and your income exceeds the allowed limit by even $1, you may lose all subsidies/ tax credits, which, for many Americans, was making this an affordable choice, especially as private insurance prices rise.
How this will work is that if you do nothing, when we file taxes at year's end, you may have to repay any underpaid healthcare premiums.
Who is this going to affect? Many small business owners have insurance through ACA, as it’s easier than taking on a private policy if you don’t have any or very few employees. Also affected will be older adults who don’t qualify yet for Medicare.
What to do:
Find out if you are going to be affected. You should have just received an email from us about your Q3 estimated tax payments, where we are asking about your anticipated income for 2025. It’s important that we figure this out - not just for taxes but so that you can take this number and see if you are going to be one of the people that ‘fall off the cliff”.
Make a plan. If you are very close to the edge, you can use a pre-tax retirement account contribution or an HSA contribution to lower your income and keep your subsidy, so that will be a good move for some. If you can squeak by for 2025, you may still need to make a new plan for 2026 if your premiums are affected. So be sure you know what they are going to be so you can budget//plan accordingly!
Long Story Short: If you are on Obamacare, you’ll need to figure out your estimated income for 2025, contact your Marketplace rep or look up if you’ll be affected and adjust accordingly so there are no nasty surprises at tax time, We can help figure out the income piece but you’ll need to loop in a rep to figure out if you’ll be affected.
Q3 estimates are due 9/15: So be sure to get back to us if you haven’t already, so we can adjust your estimates as needed.
In the Black: August 2025
How the new tax bill might affect you
The Good, The Bad, and The Ugly for 2025
The Good:
Increased SALT Cap: This will be helpful to my clients in CA, NY, and other high-tax states, and also to people who pay property tax on homes they own - we’ll be able to use more of this.
Increased Child Tax Credit: Moves the Child Tax Credit up to $2,200 - still lower than the credit under Biden at $3000 - but more than it was.
Car Loan Interest: Becomes deductible.
The Bad:
EV Tax Credits: ended as of 9/30/2025, and Home Energy Credits (solar) end in 2025.
Obamacare/ACA Funding: is cut, which will increase premiums this fall for many.
The Ugly:
The main parts of the bill lower the tax bills of corporations (lowering their tax %), and wealthy Americans (Estate tax changes for tax-free transfer up to 15 million), among other changes.
These changes are paid for by cutting funding to many programs, notably Medicare and Medicaid.
This bill is 900 pages long - so these are just the highlights of what will change in 2025. There's a lot more that happens in 2026 that we’ll be unpacking and folding into the tax planning that we are doing as we work on your Q3 estimates, and some that we’ll talk about as we work on 2025 taxes.
Speaking of Q3 estimates, they aren’t due until mid-September, but you’ll hear from us in the coming weeks as we start work on them.
Stay cool out there.
In the Black: July 2025
A New Boss at the IRS
The IRS has been cycling through interim heads as they keep resigning in protest over being forced to hand over information to ICE and sharing information with DOGE. In mid-June, the Senate confirmed Billy Long (former GOP Congressman from Missouri) to the post. He’s a controversial choice for a few reasons:
He has previously voted for a policy called ‘The Fair Tax’, which would abolish the IRS. Many wonder, yours truly included, what this means for his tenure.
When Long left Congress, he promoted ERC credits in his work with lawsuit-ridden Commerce Terrace Consulting and Lifetime Advisers. The pandemic ERC Credit program ended because it was riddled with fraud. There are outstanding questions about whether the firm has engaged in large-scale tax fraud.
With the same firm, he promoted the claiming of ‘Tribal Tax Credits’, which do not exist.
That’s just a taste of it. Buckle up, this next tax season is going to be a bumpy ride!
RIP Green Energy Tax Credits
There is a new tax code in the works for 2026 - right now, the Trump’s ‘Big Beautiful Bill’ is stuck in the Senate with the GOP twisting themselves into intellectual pretzels to justify adding a record $3 trillion to the national debt. One thing we can be fairly certain of is that Biden’s green energy tax credits are on the chopping block. That means: if you were thinking about solar panels for your home or buying an EV, 2025 is the year!! This will be the last year for these for the foreseeable future!
Good News!?
It’s SUMMER (sorry, that’s all I have).
In the Black: June 2025
A Big Bummer Bill
Pending Tax Law Changes
I’ve been putting off writing this newsletter because I keep thinking we’ll know more about the upcoming changes soon, but alas… At tax time, I spoke with many of you about the coming changes, and I was HOPING that by the time I was working on Q2 tax estimates, I could also talk with folks about how the changes would affect everyone, but no.
You’ve perhaps heard about the ‘Big Beautiful Bill’. It’s technically the budget, which needs only a simple majority in the Senate to pass, rather than the 60 votes needed to pass other bills (for a good time, you can always learn about how the filibuster has effectively ground legislation to a halt in our closely divided government here). The sitting administration has this one shot to address their tax agenda.
Why are we here? In the first Trump term, they passed the Tax Cuts and Jobs Act (TCJA) of 2017, which made some pretty major changes to the tax code (like lowering the corporate tax rate from 35% to 21%). Most of the provisions of this act sunset in 2026. Will the GOP extend the cuts? Let them lapse? Propose a different tax code? We’d all love to know.
Now, if you remember your Schoolhouse Rock, you know that a bill must start in the House of Representatives and then move to the Senate. This bill has now been passed to the Senate. So why am I not taking it all apart for you here? Because it’s a doozy, plus there is a high likelihood that it will get some pretty major changes in the Senate.
Without even going into what’s in the bill, we can talk about the main issue: even with deep and unpopular cuts to Medicaid and Obamacare which are projected to cause more than 13.7 MILLION people to become uninsured (from the nonpartisan Congressional Budget office), these tax cuts for wealthy Americans and corporations will add more than $3 TRILLION to the national debt in the next 10 years. I guess all that talk about fiscal responsibility was hot air. Taking on massive debt with no way to pay for it, to help your friends, is no way to run a business, much less a country.
Just out here balancing budgets.
Liz
I'm Just a Bill - Schoolhouse Rock
In the Black: May 2025
Why Budget Hawks should be furious at the IRS helping ICE
IRS+ICE= The Math isn’t Mathing.
In early April, as we were head down finishing the tax marathon, the IRS agreed to share information with the Department of Homeland Security and, by default, ICE. If you think that sounds hinky, so did the acting commissioner, Melanie Krause, who resigned in protest.
How exactly will that work? Well, parts of the agreement are redacted, so it’s tricky to know. The terms say ICE will come to the IRS with the names and addresses of taxpayers that they believe have violated federal immigration laws (including overstaying a visa).
For years, the IRS and tax professionals (including yours truly) have encouraged immigrants to file taxes. We were confident that the data was secure and knew that tax documents were often useful in immigration court as a marker of being in good standing. The IRS has allowed undocumented immigrants and folks ineligible for Social Security numbers to file taxes using an ITIN or Individual Taxpayer Identification Number since the mid-nineties!
The Math isn’t Mathing. Undocumented immigrants pay about $100 billion annually in federal, state, and local taxes, according to an estimate released last year by the liberal Institute on Taxation and Economic Policy. That money comes in through payroll withholdings and filed income tax returns. It should be noted here that even as undocumented immigrants pay into the Social Security and Medicare system, they are unable to receive any benefits. The benefits they fund through tax dollars go to American citizens.
The Budget Lab, a nonpartisan research center at Yale University, estimates that the federal government could see a $300 billion revenue drop over the next decade because of this policy. If you read my newsletter last month, you know the current administration is desperately trying to find the money to pay for their corporate tax cuts. Pretty strange move for an administration facing a budget crisis.
One more reason to be mad.
Regular readers will remember that DOGE is gutting the staff at the IRS, definitely by 20%, perhaps 50% of their workforce. So the chances of them answering your call or our letters just got even slimmer now that the remaining staff have to play footsie with ICE.
Liz & The Team
In the Black: The WHY behind DOGE's cuts to government spending
Follow the Money: Why DOGE has to make massive cuts and how defunding the IRS undermines everything
You’d be hard-pressed to find someone who doesn’t think the US government could be run more efficiently, but have you wondered why DOGE is moving so fast? They are on a clock. The tax cuts that Trump passed in 2017 are up for renewal and he hopes to expand the corporate taxes with that renewal. All this has to be paid for somehow when the government sets its budget, so DOGE has to find 4.5 trillion dollars (this is a low estimate- some projections run as high as 11 trillion) to cut spending over the next ten years. A quick look at the US budget will show you the only way to make cuts that big is to cut Social Security and Medicare - it’s the only way to get to those numbers. It’s important to point out that the 2017 tax cuts give the most benefits to Americans in the top 5% and to corporations. So to recap, the only way to pay for tax cuts that disproportionatelyhelp the rich and big companies is to reduce service for the rest of Americans, especially the elderly and needy.
If you weren’t mad already, I’ve got more. With the further cuts that have been mandated at the IRS (see below), the Budget Lab at Yale estimates that those staffing cuts will reduce federal revenue (read tax dollars) by $350 billion over the next ten years. If the IRS was unable to keep up on compliance (audits), and I can’t imagine how they would at half staffing, the estimates run to 2.4 trillion in reduced revenue. You may have already guessed where I’m going with this - but if revenue comes down then spending must as well. Take another look at the budget linked above- the only place where you can find that kind of money to cut is Social Security and Medicare.
More layoffs at the IRS
I know you are thinking, yeah Liz you already told us about this last month. I did but naturally, things have devolved. The Trump administration has mandated a 20-25% reduction in staffing at the IRS. For context, the IRS has around 100,000 workers. Last month we talked about how 6,700 were let go. Another 5,000 took voluntary retirement. That still leaves A LOT of staffing to be cut. There have been memos released that point to more cuts, up to 50% after May.
It’s going to be a total mess. My advice: absolutely DON'T go on extension if you can help it.
In the Black: March 2025
IRS Updates: Layoffs and what DOGE is up to.
The IRS has laid off 6,700 people at the end of February right at the height of tax season. Most of those fired (5,000) were folks working in compliance, who had been hired in the last few years to focus on collecting underpaid taxes from corporations and wealthy individuals. The IRS estimates that over $600 billion in taxes goes uncollected every year.
The firing isn't expected to make a big impact on wait and processing time for the rest of us but the real winners here are big business and the rich. The compliance department that exists untouched will continue to focus on low and median income Americans and small businesses- which are easier to audit. Talk about cutting off your nose to spite your face.
In other deeply stupid news, Elon Musk’s DOGE tried to access the IRS database containing all US taxpayers personal information and tax data. For context , this data is so sensitive that not even the IRS commissioner has direct access. After a few days of wondering whether I should advise clients to lock their credit and file extensions, I was relieved to hear that the Office of Personal Management deemed this beyond their scope and will only allow the 25 year old DOGE engineer to access anonymized data.
BOIR: Will they or won’t they?
About this time last year, I was letting everyone know about a new filing that my LLC, Partnership and SCorp clients had to file: the BOIR. The BOIR stands for Beneficial Ownership Information Report. This is a new filing reporting to the feds showing who owns your business with the idea that it would allow them to more easily track money laundering and tax fraud (see above).
In case of will they or won’t they: a Texas court last January issued a nationwide injunction prohibiting the enforcement of (BOI) reporting rules. THEN last month, the U.S. District Court for the Eastern District of Texas lifted the injunction on February 18, 2025. So as it stands the deadline for filing BOI reports was extended to March 21, 2025 for folks filing their initial or updated report. Not sure if you are compliant? We are helping folks track this and file - so ask us on your tax review call!
In the Black: February 2025
It Begins!!!
Tax season is officially upon us, so I’ll keep it short and sweet. By now you likely know that I’m a reverse procrastinator - I want to get everything done as EARLY as possible.
That’s because:
If the last few years have taught me anything, it’s that you never know what’s coming next so it’s best to be ready early!
If you have your own business or an otherwise complicated tax situation, you likely owe taxes. SO better to know early what that amount is and what can be done about it, than a stressful last-minute scramble.
That being said, you should have most of your forms by now, I’d ask that you upload them to the portal this week so we can get started. Can’t find the link? Email us.
Some Good News: 2024 Recap
One of our clients wrote to me and asked me for a newsletter with some good news, so this is for you and everyone else who needs to hear good stuff!
Here are some of the highlights of 2024 from our team:
Welcomed two beautiful healthy babies into their families.
Were married this summer to their long-term partner.
Bought a home.
Became a beekeeper.
Successfully launched a child to college.
Started snowboarding again with their whole family - kids included.
Friends in LA: a tax extension
Our hearts go out to all those in LA dealing with the aftermath of the fires.
A small solace: the IRS has extended the tax deadline for LA county to Oct 15, 2025 for filing and payment.
In the Black: January 2025
Dealing with the IRS
The story starts, perhaps unsurprisingly with money. You may have noticed, I know I have, that it’s been easier to reach the IRS in the last few years should you call them. That might be coming to an end. The outgoing administration approved $80 million in funding over the next decade for the IRS - to improve customer service, clear the pandemic backlog, and give the IRS the resources it needed to go after big tax cheats.
The customer service part is easy to understand, to answer the phone you need people. Even with all that additional money the IRS’s goal for the end of the decade still has them below staffing levels of the 1980’s and early 1990’s. Spoiler alert, the population is only bigger, hence the issues.
My hobby horse is what funding means about WHO is getting audited. Auditing working and middle-class folks is easier, especially if you have less staff. That’s why this additional funding was targeted to work on audits of taxpayers making over 400k and more complex businesses. The IRS has been outgunned by wealthy individuals and businesses for years. There was a nearly $700 billion gap between taxes owed and taxes paid during 2022, according to the IRS and their projections. The newly funded compliance efforts (i.e. audits) raked back $90 billion.
The incoming administration is looking to cut IRS funding, over objections from Democrats and some Republicans (who are supportive of the customer service improvements). I take exception to this, not only because I prefer to not spend my working days on hold with the IRS, but also because:
Cutting funding will only help the rich and corporations which will now be more likely to get away with tax fraud. AND it will increase audit rates (likely, based on past trends) for middle and working-class Americans, if only because they are easier to audit to maintain the set audit rates with less staff and resources.
If the US walks away from collecting tax revenue, while at the same time looking to cut taxes further for corporations (yup, Trump wants to lower big business taxes EVEN MORE) - how can we pay our bills? Do we just keep adding to the national debt? There are worries over paying for Medicare and so many other other important programs.
Maybe we could just start by collecting the taxes due? It seems pretty simple.
Tax Season is Nigh
If you have engaged for 2024 taxes you’ll be receiving your initial email and organizer soon. If you don’t receive it by 1/15 please check and ensure that you are fully engaged for the season (just email us!)
In the Black: November 2024
Tariffs: A Primer
You’ve likely heard about these in news as a policy the incoming administration is looking to implement but you’d be forgiven if you are a little hazy on the details.
So, let’s do a little refresh on how this works:
1. Goods are produced abroad for the U.S.
2. Goods shipped to U.S. face a proposed 20% tariff (some countries like China may face a higher %, up to 60%)
3. U.S. company importing goods pays 20% to the U.S. Treasury
4. U.S. company goes to sell the goods and has a few choices:
Pass the tariff to the customer, raising the price
Don’t pass it on and make less profit
Split the difference and raise the price some/ make less
OR
1. Find a different supplier, presumably the more expensive than the original option but perhaps less expensive than the imported goods plus tariff
2. U.S. company goes to sell the goods and has a few choices:
Pass higher supply price to the customer raising the price
Don’t pass it on and make less profit
Split the difference and raise the price some/ make less
You’ll see why economists and business leaders hate this plan, either consumers pay more or businesses make less, or both.
Are you someone who sells THINGS?
Why should you think about this and what to do? If your business relies on imported goods or goods created from imported materials (time to check where everything is made!), then this is going to impact you. Depending on how soon this gets rolled out, I expect prices to begin to rise by the end of Q1 2025.
If you are able to bulk order goods now to get them at a lower cost-you should. Either way, you need to consider if you are going to pass these prices on to YOUR customers and/or how to handle decreased profit. Can you look at sourcing these items elsewhere?
Didn’t we do this before? Some folks will remember that this is not the first time that Trump has implemented tariffs, so what’s the difference with this new proposed round. Previously, tariffs were levied on 14% of SOME imported goods- the proposed next round would be a blanket tariff of ALL imported goods.
How much will they be? The number we keep hearing is 20% as an across the board with a higher rate for imports from China and Mexico of 60-100%!!!!
How soon will this go into effect? It’s difficult to know but the President-elect does not need to put this to a vote, so it could be anytime.
Scrooge McDuck explains Inflation
Liz & The Team
In the Black: October 2024
Kamala Vs The Economy
Grab a cup of coffee and settle in, it’s going to be a long one this month. The economy is on everyone's mind and as our nation gears up to vote, this complicated subject is top of mind for so many of us.
Voters keep telling pollsters that they want to know more about Kamala’s policy positions. For a candidate that entered the race at the 11th hour, she has a remarkably robust agenda. Now, have people had time to learn about them? No. But hey, I read the whitepapers and every issue of the Economist so you don’t have to. Here’s the things you need to know:
Small Business: As someone who's spent my adult life supporting small businesses and growing one myself, I agree with Vice President Harris that Small Businesses are the backbone of the economy.
Did you know that?
Small businesses employ 61.7 million Americans, totaling 46.4% of private sector employees.
From 1995 to 2021, small businesses created 17.3 million net new jobs, accounting for 62.7% of net jobs created since 1995. (Source: US SBA)
Which is to say that prioritizing small businesses over large multinational firms can have an outsize impact on the economy. Harris’s goal is to have 25 million NEW small businesses in her first term. So how’s she going to do that? With some tweaks to the tax code which could make it simpler to file but the real star of the show is this:
Expanded Startup Tax Deduction (from $5k to $50k). It’s expensive to start a small business costing an average of $40k, which won’t surprise you dear reader. The maximum tax write off for start up expenses right now is only $5k. Moving it to up to a maximum of $50k and giving taxpayers flexibility on when and how they can claim it will go a long way to even the playing field with big corporate interests.
Home Sweet Home: Have you tried to find a new place to live lately? Whether you are renting or buying - prices are crazy high and supply is low. It’s most households' biggest expense.
How’d we get here?
1. Homeownership costs skyrocketed in 2022 with the pandemic, pricing out 2.4 million renters out of the market.
2. Housing cost burdens (spending more that 30% of your income on housing) reached their highest levels in years.
3. The supply of homes for sale remains at near-record lows.
(Source: JCGS: The State of the Nation's Housing 2023 report)
Vice President Harris is proposing a veritable arsenal of strategies:
-$25,000 in downpayment assistance for first-time homebuyers
-Streamlining permitting processes and reviews to reduce red tape and bring down housing costs, (Democrats for less regulation? Up is Down now, friends)
-Tax incentives for home builders who build starter homes sold to first-time homebuyers
-Hold corporate landlords accountable for rent-price fixing
There’s even more deep cuts like programs to expand rental assistance for veterans and expanding the Low-Income Housing Tax Credit (LIHTC) for builders.
While both candidates support reducing regulation and potentially opening up surplus federal land to build affordable housing, Trump’s central policy to address the housing shortage is mass deportations. He said he will lower housing costs by “stop[ing] the unstainable [sic] invasion of illegal aliens which is driving up housing costs,”
Stuck in the middle: Harris has some ideas for the middle class, too. She’d revive the Child Tax Credit (refundable up to $3k) and bump that number up to $5k for the newborns in the first year of life, because children are expensive! The first round of the child tax credit, which Biden had put forward (now expired) reduced child poverty rates for the lowest numbers on record (2021 stats).
For those without kiddos, she’d like to permanently extend the Earned Income Tax Credit for those without qualifying children. Right now low and middle income Americans must have children to claim this tax credit, with so many young folks skipping or delaying having children this will open it up to a wider swath of working Americans.
Trump Taxes and Tariffs
Tax cuts for Corporations: Further reduce corporate tax rates to 20% and in some cases 15%. Which for comparison, is a lower effective tax rate for corporations than an American worker earning $47k a year who pays 22% (2024 brackets).
Tariffs: Trump has proposed a 10% tariffs on all foreign goods and 60% tariff on Chinese goods,
First off: what is a tariff? A tariff is a tax paid by someone importing goods into a country- it’s not paid by the end consumer (in this case you or me) BUT here's a big BUT it will likely increase the cost we pay. Because manufacturers still need to make their money- so those increases will be passed along to us. Initial estimates show this will mean an American household spending increase between $1,800 and $4,000 a year.
“Trump sometimes claims his tariffs would replace income taxes as a source of federal revenue. But they’d replace only about 8 percent of the $34 trillion in federal income tax revenue the Congressional Budget Office expects the Treasury to collect over the next decade.“ (Source; Tax Policy Center)
Rock the Vote
In the Black: September 2024
Kamala’s Plan for Tax Policy and the Economy
Now that we have a new candidate on the scene, let’s dig into changes she’d like to make to the tax code. Kamala Harris’s focus is on family and cost of living issues. Trump’s proposed changes focus more on corporate tax rates and a trickle down approach. She’s revived and expanded some of Biden proposals (the Child Tax Credit and limits on prescription drug prices) with a focus on affordable housing. Voters keep bringing up rising housing prices in poll after poll, and she’s the first candidate to roll out policies to address the issue.
Summary below, Full policy here.
First the tax policy:
Restoring the Child Tax Credit that provided $3,600 per child aimed at middle and working class families; and adding an additional $6,000 tax credit for families with children less than one year (KIDS ARE EXPENSIVE and babies especially so);
Cutting taxes to help Americans afford health insurance on the Affordable Care Act marketplace (details not available); and
Providing $25,000 in down-payment support for first generation homeowners and a $10,000 tax credit
Other proposed policies:
Capping the cost of insulin at $35 and out-of-pocket expenses for prescription drugs at $2,000 for everyone;
Calling for the construction of three million new homes to end the housing shortage in four years (this is the most exciting in my book); and
Lowering grocery costs with a federal ban on price gouging on food and groceries.
Summer camps are crazy expensive, but you might be able to write them off.
The Child and Dependent Care tax credit can help offset summer day camp expenses. Save those receipts because we may be able to use those overpriced soccer camps on your taxes this winter. We’ll need the name, address and EIN of the camp.
You’ll need earned income to claim this credit. The credit is calculated based on income and a percentage of expenses incurred for the care while parents or caregivers are at work, looking for work or attending school. Depending on your income, you can get a credit worth up to 35% of qualifying child care expenses. At a minimum, it’s 20% of those expenses.
For 2024, the maximum eligible expense for this credit is $3,000 for one child and $6,000 for two or more.
Time’s up!
If you are on extension, time’s up! 2023 Partnership and Scorp returns final deadline is September 16th. And personal returns are due October 15th. We’ll need everything at least two weeks before this deadline so we can get them finished and have a review call. If you don’t have everything in, consider this your invitation to get started!
In the Black: August 2024
Where the hell is my ERTC check????
If you are one of many business owners that applied for the pandemic era Employee Retention Tax Credit, you may be still waiting on receiving that check. You are not alone.
So, what’s the hold up???? It should not surprise you to learn that there has been massive fraud, with taxpayers trying to claim credits/checks that they aren’t entitled to receive. In September of 2023, the IRS placed a moratorium on processing new claims as they spent time looking more closely at the huge number of claims received. If you submitted a claim AFTER September 2023, they are not yet processing your paperwork.
Here’s the official advice to taxpayers who submitted a claim before the moratorium who haven’t heard back:
For those currently awaiting an ERC claim. For those who currently have an ERC claim on file, the IRS will continue processing these claims during the moratorium period but at a greatly reduced speed due to the complex nature of these filings and the need to protect businesses from being improperly paid. Normal processing times could easily stretch to 180 days or longer. The IRS cautions that many applications will be facing additional compliance scrutiny, which means the payments could take even longer to be processed. While the IRS works on compliance measures during this period, the agency cautions businesses to expect extended wait times due to the large volume of claims and the complexity of the applications.
1099-DA, and an end to the tax time crypto scramble.
If you have crypto, then you are familiar with the end of year headache where we try to round up the paperwork needed to file your taxes. Why is it such a mess? Until now there has been no requirement for platforms/wallets like Coinbase, etc. to supply consumers with any kind of paperwork at year end to help prepare their taxes. There are often paid services that you can opt into to get that information but, for most people, it’s meant that reporting their crypto trades means sorting through massive spreadsheets and hoping that you’ve found the right numbers.
The IRS is stepping in to help clean up this wild west. Starting in 2024 we’ll start seeing 1099-DA forms issued by folks like Coinbase. It should make tax time MUCH less painful for those who trade/hold crypto to do their taxes, so that’s a win! A warning though, to those of you who may not have been as scrupulous with your tax crypto tax reporting, the IRS is now watching.
Liz is All Babies
The LIAB team would like to give a special welcome to Ace, the newest addition of senior Bookkeeper Nikole’s family. So cute, right?
In the Black: July 2024
The Tricky Politics of Taxing Tips
The Politics of Taxing Tips
At a speech last month, convicted felon former president Trump floated the idea of excluding tips from taxable income. While in contrast, Biden’s proposed tax plan includes raising the tipped minimum wage. Let's dig in to understand both these proposals and each candidate's economic point of view.
For those unfamiliar with tipped work, the situation is this: tipped workers are paid a lower minimum wage (varies by place, some as low as $2 an hour). They are required to report their tips and pay payroll taxes on them. For most people, the low minimum wage they earn barely covers the payroll taxes.
So why does removing tips from income matter? Because lower reported income makes it difficult to qualify for major things, like buying a car or renting (or buying) a home. Not to mention that it lowers their future social security, unemployment, and disability benefits. Not paying taxes on tips can be helpful in the short term, but the long term consequences are pretty dire.
How did we even get to this problem? As Americans we take a tipping culture for granted, but it’s not the norm worldwide. It started as a standard practice after the Civil War. It’s actually pretty wild if you reflect on it. Instead of charging prices that allow the business to pay their workers a fair wage (see Biden's proposal), we rely on the customers to pay the business employees directly (at least partially). If you are ready to get even more mad about economics and the history of tipping, read this NYT opinion piece.
Trump proposes more tax cuts for big corporations, and you are going to love how he’s going to pay for it.
The Tax Cut and Jobs Act is up for renewal in 2025 and whoever is in the White House will steer US tax policy going forward. Which is why I’ve kept a really close eye on both candidates' proposals, and also I'm a big nerd. In 2017, Trump PERMANENTLY cut Corporate tax rates from 28% to 21%. The budget shortfall this caused is a story for another day but….
Recently Trump said he’d like to cut rates further for big corporations to 20%. Woof.
He has started to address how we would propose to pay for all this: a 10% Tariff on all imported goods.
He's expressed that importing countries would pay the tax and that's true, BUT the important part he's not talking about it that the only way to do that is to raise the prices. Aren't we trying to LOWER inflation???
Welcome to Tax Baby Reena!!
We are so pleased to announce the arrival of Reena, the cherished daughter of Justine, our long time tax manager. She had the good grace to wait until after the 2023 tax deadline to make her debut, and we are very grateful for that!!!
In the Black: June 2024
Your Estimated Tax Era
I know it feels like we just finished 2023 taxes, but here we are already talking about 2024. For those folks that work for themselves, our second quarterly tax payment is coming due soon (6/15). By now you’ve already received an email checking in about any changes to your 2024 financials. If you haven’t written us back - please do that NOW!!!
We make a plan at tax time for the next year, but if the last few years have taught me anything it’s that THINGS CHANGE. So in that spirit, I want to make sure you are sending in the right amount quarterly and the only way to do that is to revisit the estimates. Now some of you may not want to pay estimates or not want to work on updating them, if that’s you there are some things you should know.
A) Estimated taxes are not optional if you‘ll owe at the end of the year, so if you skip them expect to pay interest (8%) and fees.
B) If you overpay, you’ll get it refunded at tax time (but why give the government a loan???).
C) If you underpay, you may be subject to interest and fees. But more largely, it makes tax time in the spring unnecessarily stressful.
D) If you are an SCorp or a Partnership and we’ve talked about the AMAZING tax advantages of the PTE tax (you will have gotten an email on this if this applies), and you MISS the 6/15 deadline - you’ve missed the boat. There is zero flexibility.
We are working hard over here, but do know we figure estimates based on when we get replies - so if you send us your much later than Monday - we’ll do our best, but there’s no guarantee we’ll get to you in time. Moral of the story: send us your updates now 🙂.
Trump’s new tax woes
Not sure if you clocked this last month, but being the tax and political nerd that I am- I’ve been obsessed with the detail of this turn of events. You may remember in 2016, Trump was the first candidate to not release his tax returns. He explained that he was under audit from the IRS. Now, some details have come out on that audit that may result in an IRS bill of over $100 million.
So what’s the deal? In 2008, Trump started building a fancy retail and apartment tower in Chicago. Like many building projects, they came in way over costs. And then 2009 happens and the market falls apart. No one wants fancy condos. On his 2008 tax returns, Trump writes off the whole thing as worthless and takes $697 million in deductions. A few things to note here, he still owns the tower, so while it’s likely not worth the money he put in - it’s not worthless. Also, it’s borrowed money he’s used to build this. The IRS doesn’t challenge this in time and so this ship has sailed. (This makes me glad they upped the staffing at the IRS in the last few years).
But Trump isn't done, in 2010 he moved the Chicago property to another company that also holds all his entertainment (Apprentice) earnings. Then, he starts double dipping. He declared the property worthless BUT from 2011-2020 he wrote off another $169 million on the property to offset the Apprentice earnings. This is where the IRS has nailed him and the $100 million tax bill comes in.
Now audits take forever and you’ll be sure he’ll fight this BUTTTTTT I gotta say, I love it when cheaters get caught. The nerds will get you every time.
Liz is All Liz’s?????
Did you know that there are actually THREE Liz’s? Eveliz and Elizabeth W go by their full names at work to make it less confusing. Here’s a throwback shot to us all in the office in the before times together - you can imagine how confusing it was!!!!
In the Black: May 2024
Please Forgive Me: Student Loan Edition
How to get in on the action
Most people can get their student loan payment reduced, through the SAVE plan – which cuts undergraduate loan payments in half or to zero, ensures balances don't grow from unpaid interest, and cancels debt for low-balance borrowers more quickly.
The SAVE Plan is an Income Driven Repayment (IDR) plan, so it bases your monthly payment on your income and family size.
The SAVE Plan lowers payments for almost all people compared to other IDR plans because your payments are based on a smaller portion of your adjusted gross income (AGI).
The SAVE Plan can also help with interest: If you make your full monthly payment, but it is not enough to cover the accrued monthly interest, the government covers the rest of the interest that accrued that month.
Beginning in February 2024, the SAVE Plan will give borrowers who originally borrowed $12,000 or less forgiveness after as few as 10 years.
More elements of SAVE will go into effect in summer 2024 and will lower payments even more for borrowers with undergraduate loans.
Now on FORGIVENESS. You’ve likely heard talk in the news about student loan forgiveness. So how does it really work and who’s it for? I’ve attached specifics below but you’ll likely qualify IF you work for the government or not-for-profit organization, through the PSLF Program.
The PSLF Program forgives the remaining balance on your Direct Loans
after you’ve made the equivalent of 120 qualifying monthly payments under an accepted repayment plan, andWhile working full-time for an eligible employer.
WHO?: Teachers, https://studentaid.gov/manage-loans/forgiveness-cancellation/teacher
WHO?: Government employees, folks who work for nonprofits, doctors/nurses/ medical professionals, folks who’ve been repaying for 20/25 years https://studentaid.gov/pslf/
WHO?: Folks who went to schools that closed https://studentaid.gov/manage-loans/forgiveness-cancellation/closed-school or misled them https://studentaid.gov/borrower-defense/
WHO?: Folks with disabilities, https://studentaid.gov/manage-loans/forgiveness-cancellation/disability-discharge
HOW?: Apply https://studentaid.gov/pslf/ https://studentaid.gov/manage-loans/forgiveness-cancellation
Taxes and Student Loans
A great number of folks had their student loan on pause for the last few years, and now payments have resumed. To that end, here’s some reminders about how taxes and these payments are interrelated:
Graduated repayments and filing separately: If you are on graduated repayments and you are married and filing jointly, your payments will be based on household income. Even though it usually saves money on taxes to file together, you may want to consider filing separately to bring those payments down.
Max student loan interest deduction : We can write off up to $2500 in student loans interest each year. You CAN’T write off the principal payments.
The New FASFA and Self Employed Parents: how to answer the Businessvaluation question
If you have a child applying for college (or currently enrolled in college) this year then you have likely already encountered the new FASFA form. For parents who are self employed, you may have been puzzled by the question regarding your small business valuation. I was also puzzled!!!! Here’s some guidance on this from the feds:
If you own/control less than 50% and or have more than 100 Full Time employees, the value of the business should include the market value of land, buildings, machinery, equipment, inventory, etc. Please reach out to us if this applies to you, and you need help with this calculation.
If you or your family own/control more than 50% and the business has less than 100 full time employees - you don’t need to enter anything (that’s most folks!).
PURE TRANS JOY
Speaking of college, our middle daughter is graduating this year and about to head off to an engineering program in the Midwest and I couldn't be more proud. In case you don’t remember, high school is a real sh*tshow… Add to that a global pandemic and coming out as trans – it’s a lot. And here she is on the other side: beautiful, radiant, and headed off to pursue her dreams.
In the Black: April 2024
The sunsetting of TCJA in 2025
You may know by now that I'm a political junkie, and I especially follow news of tax policy. My friends and family have high hopes that one day I may read less white papers and Senate economic reports - but until then here's a breakdown of some of the ways the next presidential election may impact your taxes.
The first thing to start with is the Trump tax bill of 2017, the Tax Cut and Jobs Act. This is set to expire at the end of the next presidential term (2025). Changes you may have noticed in your taxes:
State, Property and Local (SALT) tax deductions were capped at 10k, if you live in CA, NY or NJ - this meant your tax bill likely went up (coincidence it affected predominantly blue states? I'll leave you to judge).
QBI deduction I'll be real, this one was a boon to small businesses (sole props , partnerships and scorps), giving them an additional 20% deduction based on net business income (income limits applying). Here's hoping that Congress can extend this and the Biden child tax credit with the bill that’s on their desks now.
This is the one you likely didn't notice and it's WREAKING HAVOC on the federal government's budget (have you noticed budgets issues in the news all the time?). Trump cut the tax rate on corporations (C corps) from 35% to 21%. So the biggest US companies saw a massive lowering of their tax bill. With a lot less income to fund the government, what's Trump's plan to make up the difference? Look to Social Security - he proposed it in every budget he put forward while president
Biden’s Proposed Budget: Tax Policy
Some highlights:
Add a $10k tax credit for first-time homebuyers and a one-time $10k credit for sellers of "starter homes" to increase market inventory.
Expand Child tax credits
Raise the corporate tax rate to 28% (helpful for that budget shortfall)
End Fossil Fuel tax breaks (again will help the budget)
Add a 25% billionaire tax, as well as limit loopholes for the wealthy on estate transfers (you guessed it, budget friendly)
Disallow companies to expense compensation over 1 million for executives
More funding for the IRS for audits of large businesses and wealthy individuals
It’s unlikely that all of these proposals will pass both houses of Congress, but it’s a good measure to see how each candidate thinks about tax policy.
All this leave you feeling dizzy? Check out the nonpartisan Tax Foundation tracker here:
https://taxfoundation.org/research/federal-tax/2024-tax-plans/
The end is nigh!
For tax season that is. The tax team including myself will be clocking out after the tax deadline on April 15th until May for a well needed break. We’ll be responding to urgent items, but we appreciate your understanding as we catch up on sleep and re-introduce ourselves to our families!