Tag: IRS

California Middle Class Tax Refunds

Posted on | by Steve M. Windham, LLM, MBA, EA

The Internal Revenue Service, on February 10, 2023, has issued guidance on state tax payments to help taxpayers:

WASHINGTON — The Internal Revenue Service provided details today clarifying the federal tax status involving special payments made by 21 states in 2022.

The IRS has determined that in the interest of sound tax administration and other factors, taxpayers in many states will not need to report these payments on their 2022 tax returns.

During a review, the IRS determined it will not challenge the taxability of payments related to general welfare and disaster relief. This means that people in the following states do not need to report these state payments on their 2022 tax return: California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Maine, New Jersey, New Mexico, New York, Oregon, Pennsylvania and Rhode Island. Alaska is in this group as well, but please see below for more nuanced information.

Click here to view the complete News Release on the IRS website.

The California Franchise Tax Board has issues significant guidance on the California Middle Class Tax Refunds.

Concerning offsets/withholding:

  • The Middle Class Tax Refund payment is not taxable for California state income tax purposes.
  • The Middle Class Tax Refund payment will not be subject to offset for debts owed to Franchise Tax Board or other government agencies.
  • The Middle Class Tax Refund payments are not subject to garnishment orders, with the exception of orders in connection with child support, spousal support, family support, or a criminal restitution payable to victims. If you believe your Middle Class Tax Refund payment that was deposited with your financial institution has been levied/frozen in error, please contact the phone number provided by your financial institution.

Click here to view the California Franchise Tax Board, Public Service Bulletin on the California Middle Class Tax Refund payments.

Click here to view General Information on the California Franchise Tax Board Middle Class Tax Refund.

IRS Increases the Maximum Educator Expense Deduction in 2022

Posted on | by Steve M. Windham, LLM, MBA, EA

The Internal Revenue Service recently announced that teachers and other educators will be able to deduct up to $300 of out-of-pocket classroom expenses for 2022 when they file their federal income tax return next year.    This deduction can be claimed even if the educator is claiming the standard deduction.  An eligible educator is defined as a teacher, instructor, counselor, principal, or aide who works at least 900 hours during the school year in grades K-12.  This deduction applies to educators at both public and private schools.  Qualified expenses do not include the cost of home schooling or for nonathletic supplies for courses in health or physical education.  The IRS reminds educators claiming this deduction to keep good records, including receipts, cancelled checks, and other documentation.

While the educator expense deduction was enacted in 2002, this is the first time that the annual limit of $250 per year has been increased.  The limit will increase in $50 increments in future years, based on inflation adjustments.  Eligible educators who file a joint return with another eligible educator can deduct $600 ($300 per educator).

Eligible educators can deduct the un-reimbursed cost of:

  • Books, supplies, and other materials used in the classroom;
  • Equipment, including computer equipment, software, and services;
  • COVID-19 protective items to stop the spread of the disease in the classroom, including: face masks, disinfectant for use against COVID-19, hand soap, hand sanitizer, disposable gloves, tape, paint or chalk to guide social distancing, physical barriers, such as clear plexiglass, air purifiers, and other items recommended by the Centers for Disease Control and Prevention; and
  • Professional development courses related to the curriculum they teach or the students they teach.   Note that the IRS cautions that, for these expenses, it may be more beneficial to claim another educational tax benefit, especially the lifetime learning credit. For more information, please see: Publication 970, Tax Benefits for Education, particularly Chapter 3.

For more information, please visit: https://www.irs.gov/newsroom/new-school-year-reminder-to-educators-maximum-educator-expense-deduction-rises-to-300-in-2022#:~:text=For%202022%2C%20an%20eligible%20educator,than%20%24300%20for%20each%20spouse.

 

Taxpayer Bill of Rights

Posted on | by Steve M. Windham, LLM, MBA, EA

The Internal Revenue Service Publication 1 outlines the Taxpayer Bill of Rights.  This important document is derived from Section 7803(a)(3) of the Internal Revenue Code.

There are ten rights that are guaranteed under this law.  They are:

  1. The Right to Be Informed;
  2. The Right to Quality Service;
  3. The Right to Pay No More than the Correct Amount of Tax;
  4. The Right to Challenge the IRS’s Position and Be Heard;
  5. The Right to Appeal an IRS Decision in an Independent Forum;
  6. The Right to Finality;
  7. The Right to Privacy;
  8. The Right to Confidentiality;
  9. The Right to Retain Representation; and
  10. The Right to a Fair and Just Tax System.

For more information, please visit:

https://www.irs.gov/taxpayer-bill-of-rights

https://www.americanbar.org/groups/taxation/publications/abataxtimes_home/18may/18may-pbm-roberson-the-taxpayer-bill-of-rights/

 

IRS Increases Mileage Rate for Last Six Months of 2022

Posted on | by Steve M. Windham, LLM, MBA, EA

The Internal Revenue Service has increased the Optional Standard Mileage Rate by four cents to $0.625 per mile.

Similarly, the Internal Revenue Service has increased the mileage rate for deductible medical or moving expenses (available for active-duty members of the military) by four cents to $0.22 per mile.

The charitable mileage rate remains unchanged at $0.14 per mile.

Citing increased fuel costs, the IRS also noted that other factors figure into the increased mileage rates, including items such as depreciation, insurance, and other fixed and variable costs.

For more information, see:
https://www.irs.gov/newsroom/irs-increases-mileage-rate-for-remainder-of-2022