Current Tax Information
Good News for Taxpayers filing amended returns who expect a refund.[1]
Filing an amended return used to mean completing a paper form, regardless of how taxpayers submitted the original return to the Internal Revenue Service. During the pandemic, paper-filed returns presented processing challenges that contributed to a historic backlog at the Internal Revenue Service.
Nearly two years after the IRS first began allowing electronic filing for Forms 1040-X, there is more good news for the roughly 3 million taxpayers expected to amend this year. Last week, the IRS announced that direct deposit is now available for refunds issued to taxpayers who file an amended return.
Biden’s billionaire tax: What is wealth tax?[2]
President Biden, who is set to release his FY 2024 budget proposal, wants to “raise some taxes.” In a recent speech, Biden said that tax increases should focus on the wealthiest taxpayers—an approach that some states have adopted or recently proposed. So, while you’re worrying about the 2023 tax deadline and trying to pay as little tax as possible, the wealth tax debate is heating up again … should billionaires and millionaires pay more?
Whichever side of the wealth tax debate you’re on, it is good to know what a wealth tax is and how Biden’s proposed “billionaire minimum tax” would work.
The billionaire tax in Biden’s budget proposal would be a minimum of 20% for households with net worth exceeding $100 million. For comparison, the wealthiest taxpayers in America reportedly pay an average 8% tax rate, so President Biden is essentially proposing about a 12% tax increase for the wealthiest taxpayers.
IRS Warns of New W-2 Scams[3]
The IRS is urging people to avoid scams currently making the rounds on social media. One of the schemes, according to the IRS, encourages people to use tax software to manually fill out their W-2 form and provide false income information. This scheme suggests people make up a large salary and withholdings from a phony employer in an effort to get a large refund, sometimes as much as five figures.
The IRS is working with states and tax industry companies to be on the lookout for this scheme and others. In addition, the IRS is working with payroll companies and large employers—as well as the Social Security Administration—to verify W-2 information. People who are caught violating the laws face a wide range of penalties, including a frivolous return penalty of $5,000 and run the risk of criminal prosecution.
Average Tax Refund is Down 11% From Last Year, IRS Says[4]
The end of pandemic-era stimulus programs is having an impact on tax refunds.
IRS statistics for the week ending Feb. 17 show the average tax refund is $3,140, down 11.2%, or $396, from last year. The decline is in keeping with previous IRS alerts that said people could see “significantly smaller refunds,” this year.
“Refunds may be smaller in 2023. Taxpayers will not receive an additional stimulus payment with a 2023 tax refund because there were no Economic Impact Payments for 2022. In addition, taxpayers who don’t itemize and take the standard deduction, won’t be able to deduct their charitable contributions,” the IRS said in a statement.
The return to 2019 pre-COVID levels includes reductions in the Earned Income Tax Credit, the Child Tax Credit and Child and Dependent Care Credit.
IRS Processing Tax Returns at a Quicker Rate Than Last Year[5]
The IRS has been processing refunds faster this tax season than last year, but the average refund Americans are receiving is slightly lower, the federal agency recently announced.
As of Feb. 3, the IRS said it has processed more than 16.7 million tax returns—29% more than in 2022, nearly four million more.
Not only has the IRS processed more returns this year, it also received more.
By Feb 4. 2022, the IRS received 16,685,000 returns; it received 18,946,000 as of Feb. 3 this year, an increase of 13.5%, the IRS said.
The refund amount Americans are receiving dropped by 10.8% compared to last year. The average refund in 2023 has been $1,963 compared to $2,201, the IRS said. While the individual return amount is lower so far, more money has been refunded—$15.696 billion in 2023 compared to $9.5333 billion as of Feb. 3.
Tax Topic Information
To wrap things up, I want to give you a link that will take you to “Tax Topics by Category”. This web site provides information on all types of tax information and tax resources. From abandonments to Worthless Securities and all the alphabet in between. https://taxtopics.net So, if you are curious about something you have heard about, try this link.
[1] Drake Software -Taxing Subjects March 15, 2023, by Ryan Norton
[2] CPA Practice Advisor Biden’s Billionaire tax March 14, 2023, by Kelley R. Taylor Kiplinger Consumer News Service
[3] CPA Practice Advisor IRS Warns of New W-2 Scams March 14,2023, by Leada Gore
[4] CPA Practice Advisor Average Tax Refund is Down March 6, 2023, by Leada Gore
[5] CPA Practice Advisor IRS Processing Quicker March 14, 2023, by Kristin F Dalton