- Companies paid top executives more than they paid in US taxes – report The Guardian
- Dozens of big U.S. companies paid top executives more than they paid in federal taxes, report says CBS News
- Tax season surprise: Some firms spend more on executive pay than taxes USA TODAY
- Report Exposes US Corporations That Pay Their Execs More Than They Pay in Taxes Common Dreams
- New Report from Americans for Tax Fairness and Institute for Policy Studies Reveals 35 Big Corporations That Paid Their Top Executives More Than They Paid in Federal Taxes Americans For Tax Fairness
Tag Archives: Taxes
Does Terrence Howard Have a Good Point as To Why He Shouldn’t Pay $1M in Back Taxes? – The Root
- Does Terrence Howard Have a Good Point as To Why He Shouldn’t Pay $1M in Back Taxes? The Root
- Actor Terrence Howard ordered to pay almost $1M in back taxes after saying ‘immoral’ to tax slave descendants Fox News
- Terrence Howard ordered to pay $900,000 judgment after telling DOJ that taxing slave descendants is immoral The Philadelphia Inquirer
- ‘Empire’ star hit with almost $1 million judgment after saying it’s ‘immoral’ to tax descendants of slaves PennLive
- Terrence Howard Hit With Federal Order To Pay Nearly $1M In Tax Case Deadline
Actor Terrence Howard ordered to pay almost $1M in back taxes after saying ‘immoral’ to tax slave descendants – Fox News
- Actor Terrence Howard ordered to pay almost $1M in back taxes after saying ‘immoral’ to tax slave descendants Fox News
- Terrence Howard ordered to pay $900,000 judgment after telling DOJ that taxing slave descendants is immoral The Philadelphia Inquirer
- ‘Empire’ star hit with almost $1 million judgment after saying it’s ‘immoral’ to tax descendants of slaves PennLive
- ‘Empire’ Star Owes Income Tax After Threatening DOJ Atty Law360
- Terrence Howard Ordered to Pay Nearly $1M in Federal Tax Evasion Case Hollywood Reporter
Republicans Effectively Voted to Raise Taxes. They’re Fine With That. – The Wall Street Journal
- Republicans Effectively Voted to Raise Taxes. They’re Fine With That. The Wall Street Journal
- Rep. McHenry supports legislation to raise debt ceiling, limit government spending Iredell Free News
- U.S. Debt Ceiling Crisis Nears: How This Could Create Turmoil In The Financial World | U.S News CNN-News18
- Oklahoma reps laud Republican debt limit bill’s passage Tulsa World
- House Republicans Pass Limit, Save, Grow Act to Rein in Wasteful Spending and Grow the Economy – House Committee on Ways and Means Ways and Means Committee
- View Full Coverage on Google News
Gov. Greg Abbott calls for legislative action on school choice, property taxes and fentanyl in State of the State – The Texas Tribune
- Gov. Greg Abbott calls for legislative action on school choice, property taxes and fentanyl in State of the State The Texas Tribune
- Property tax cuts, school choice among Abbott’s emergency items. How that compares to other Texas leaders KXAN.com
- VERIFY: Fact-checking Gov. Greg Abbott’s State of the State address, Democratic response KHOU.com
- Texas’ Abbott uses televised address to target border, crime Yahoo News
- WATCH: Full State of the State as Abbott announces 7 ’emergency priorities’ KXAN.com
- View Full Coverage on Google News
IRS announces California’s ‘Middle Class Tax Refund’ will not be subject to federal taxes – KABC-TV
- IRS announces California’s ‘Middle Class Tax Refund’ will not be subject to federal taxes KABC-TV
- IRS finally provides late guidance on state stimulus checks Yahoo Finance
- IRS announces it won’t tax CA’s ‘Middle Class Tax Refund’ ABC7 News Bay Area
- IRS says many state rebates aren’t taxable at the federal level. Some may face filing struggle, tax pros warn CNBC
- ‘Unfair to taxpayers’: The IRS leaves millions waiting for answers before they can file — here’s what you need to know before you wade into the ‘mess’ Yahoo Finance
- View Full Coverage on Google News
Here’s how to report Roth IRA conversions on your taxes
If you made a Roth individual retirement account conversion in 2022, you may have a more complicated tax return this season, experts say.
The strategy, which transfers pretax or non-deductible IRA funds to a Roth IRA for future tax-free growth, tends to be more popular during a stock market downturn because you can convert more assets at a lower dollar amount. While the trade-off is upfront taxes, you may have less income by converting lower-value investments.
“You get more bang for your buck,” said Jim Guarino, a certified financial planner and managing director at Baker Newman Noyes in Woburn, Massachusetts. He is also a certified public accountant.
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If you completed a Roth conversion in 2022, you’ll receive Form 1099-R from your custodian, which includes the distribution from your IRA, Guarino said.
You’ll need to report the transfer on Form 8606 to tell the IRS which portion of your Roth conversion is taxable, he said. However, when there’s a mix of pretax and non-deductible IRA contributions over time, the calculation may be trickier than you expect. (You may have non-deductible contributions in your pretax IRA if you don’t qualify for the full or partial tax break due to income and workplace retirement plan participation.)
“I see a lot of people making a mistake here,” Guarino said. The reason is the so-called “pro-rata rule” which requires you to factor your aggregate pretax IRA funds into the calculation.
How the pro-rata rule works
JoAnn May, a CFP and CPA with Forest Asset Management in Berwyn, Illinois, said the pro-rata rule is the equivalent of adding cream to your coffee then finding you can’t remove the cream once it’s poured.
“That’s exactly what happens when you mix pretax and non-deductible IRAs,” she said, meaning you can’t simply convert the after-tax portion.
For example, let’s say you have a pretax IRA of $20,000 and you made a non-deductible IRA contribution of $6,000 in 2022.
If you converted the entire $26,000 balance, you would divide $6,000 by $26,000 to calculate the tax-free portion. This means roughly 23% or about $6,000 is tax-free and $20,000 is taxable.
Alternatively, let’s say you have $1 million across a few IRAs and $100,000, or 10% of the total, is non-deductible contributions. If you converted $30,000, only $3,000 would be non-taxable and $27,000 would be taxable.
Of course, the bigger your pretax IRA balance, the higher percentage of the conversion will be taxable, May said. Alternatively, a larger non-deductible or Roth IRA balance reduces the percentage.
But here’s the kicker: Taxpayers also use the Form 8606 to report non-deductible IRA contributions every year to establish “basis” or your after-tax balance.
However, after several years, it’s easy to lose track of basis, even in professional tax software, warned May. “It’s a big problem,” she said. “If you miss it, then you’re basically paying tax on the same money twice.”
Timing conversions to avoid an ‘unnecessary’ tax bump
With the S&P 500 still down about 14% over the past 12 months as of Jan. 19, you may be eyeing a Roth conversion. But tax experts say you need to know your 2023 income to know the tax consequences, which may be difficult early in the year.
“I recommend waiting until the end of the year,” said Tommy Lucas, a CFP and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida, noting that income can change from factors like selling a home or year-end mutual fund distributions.
Typically, he aims to “fill up a lower tax bracket,” without bumping someone into the next one with Roth conversion income.
For example, if a client is in the 12% bracket, Lucas may limit the conversion to avoid spilling into the 22% tier. Otherwise, they’ll pay more on the taxable income in that higher bracket.
“The last thing we want to do is throw someone into an unnecessary tax bracket,” he said. And boosting income may have other consequences, such as reduced eligibility for certain tax breaks or higher Medicare Part B and D premiums.
Guarino from Baker Newman Noyes also crunches the numbers before making Roth conversion decisions, noting that he’s “essentially performing the Form 8606 calculation during the year” to know how much of the Roth conversion will be taxable income.
Tax the rich? Liberals renew push for state wealth taxes
Supporters of taxes on the very rich contend that people are emerging from the COVID-19 pandemic with a bigger appetite for what they’re calling “tax justice.”
Bills announced Thursday in California, New York, Illinois, Hawaii, Maryland, Minnesota, Washington and Connecticut vary in their approaches to hiking taxes, but all revolve around the idea that the richest Americans need to pay more.
All of the proposals face questionable prospects. Similar legislation has died in state legislatures and Congress. But the new push shows that the political left isn’t ready to give up on the populist argument that government can and should be used as a tool for redistributing wealth.
“Under the pandemic, while people struggled to put food on the table, we saw billionaires double their wealth,” said California Assembly Member Alex Lee, a Democrat.
The Tax Foundation, a conservative-leaning policy organization, called wealth taxes — which levy taxes not just on new income, but on a person’s total assets — “economically destructive.”
It also said in a statement that such taxes create “perverse incentives” for the rich to avoid taxes, including simply moving to states with a lower tax burden.
“Very few taxpayers would remit wealth taxes — but many more would pay the price,” the group said in a statement. Progressive Democrats, however, argue they are not seeing wealthy taxpayers leaving their states due to higher taxes.
California already taxes the wealthy more than most states. The top 1% of earners account for about half of the state’s income tax collections. But this week, Lee proposed a “wealth tax,” similar to one promoted for years by U.S. Sen. Elizabeth Warren, a Massachusetts Democrat.
It would impose an annual tax of 1.5% on assets of more than $1 billion and 1% on assets of $50 million or more. The new tax on wealth, not annual income, would affect an estimated 23,000 “ultra-millionaire” and 160 billionaire households, or the top 0.1% of California households, Lee said.
In Connecticut, progressive lawmakers are proposing more traditional hikes: a higher tax rate on capital gains earnings for wealthy taxpayers and higher personal income tax rates for millionaires,
“We need to ensure that the wealthiest in our state truly pay what they owe and not expect working families across our state to continue to subsidize their share,” said state Rep. Kate Farrar, a deputy majority leader in the Democrat-controlled House of Representatives.
One obstacle to such proposals is that some states where the idea might be popular are currently running budget surpluses, meaning there is little pressure to raise revenue.
Connecticut is expected to end its fiscal year with a $3 billion surplus. Hawaii is projecting a budget surplus of $1.9 billion going into the new legislative session.
But Hawaii state Rep. Jeanne Kapela, a Democrat, said a proposal there to increase the state’s capital gains tax is more about economic equity than raising money.
“If you look at our tax code now, it’s really the definition of economic inequality,” Kapela said.
The lowest-paid workers in many states often see a far bigger percentage of their income go to pay taxes every year than the very rich, particularly in states that don’t have a graduated income tax.
Voters in Massachusetts, which had a flat income tax, approved an amendment to the state constitution in November that sets a higher rate for those earning more than $1 million a year.
Despite optimism expressed by liberal lawmakers that 2023 could be the year, many of these proposals face an uphill battle, even in blue states with Democratic governors.
“This ‘tax the rich’ has been around before and it’s present again. And quite frankly, it never got traction before and I seriously doubt there’s an appetite for it now,” said Gary Rose, professor of political science at Sacred Heart University in Fairfield, Connecticut.
A lot of people, he said, don’t resent the rich as much as some progressive Democrats.
“I think if you polled the American people, a lot of people want to get rich themselves and it’s part of, if you will, the American Dream,” Rose said. “We’ve never really had in this country a tremendous appetite for taxing the rich because getting rich … is really part of who we are and what separates this country from many Democratic socialist countries.”
A wealth tax bill in California never even got a public hearing last year. Gov. Gavin Newsom, a Democrat who was just elected to a second term in a landslide, has actively campaigned against efforts to increase taxes on the rich.
His opposition helped sink a 2022 ballot initiative that would have raised taxes on the rich to pay for electric vehicle charging stations and wildfire prevention.
In Connecticut, Democratic Gov. Ned Lamont, a multimillionaire, says he wants to focus his second term on reducing taxes rather than raising them.
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Associated Press Writer Audrey McAvoy in Honolulu, Hawaii and Adam Beam in Sacramento, Calif. contributed to this report.
Call for new taxes on super-rich after 1% pocket two-thirds of all new wealth | Inequality
Oxfam has called for immediate action to tackle a post-Covid widening in global inequality after revealing that almost two-thirds of the new wealth amassed since the start of the pandemic has gone to the richest 1%.
In report to coincide with the annual gathering of the global elite at the World Economic Forum in Davos, the charity said the best-off had pocketed $26tn (£21tn) in new wealth up to the end of 2021. That represented 63% of the total new wealth, with the rest going to the remaining 99% of people.
Oxfam said for the first time in a quarter of a century the rise in extreme wealth was being accompanied by an increase in extreme poverty, and called for new taxes to be levied on the super-rich.
Policies introduced to combat the economic impact of Covid 19 – such as cuts in interest rates and the money creation process known as quantitative easing – boosted the value of property and shares, which tend to be owned by richer people.
The report said that for every $1 of new global wealth earned by a person in the bottom 90%in the past two years, each billionaire gained roughly $1.7m. Despite small falls in 2022, the combined fortune of billionaires had increased by $2.7bn a day. Pandemic gains came after a decade when both the number and wealth of billionaires had doubled.
Danny Sriskandarajah, the chief executive of Oxfam GB: “The current economic reality is an affront to basic human values. Extreme poverty is increasing for the first time in 25 years and close to a billion people are going hungry but for billionaires, every day is a bonanza.
“Multiple crises have pushed millions to the brink while our leaders fail to grasp the nettle – governments must stop acting for the vested interests of the few.
“How can we accept a system where the poorest people in many countries pay much higher tax rates than the super-rich? Governments must introduce higher taxes on the super-rich now.”
Oxfam said extreme concentrations of wealth led to weaker growth, corrupted politics and the media, corroded democracy and led to political polarisation. The super-rich were key contributors to the climate crisis, the charity added, with a billionaire emitting a million times more carbon than the average person. They were also twice as likely to invest in polluting industries, compared with the average investor.
The report called on governments to introduce immediate one-off wealth levies on the richest 1%, together with windfall taxes to clamp down on profiteering during the global cost of living crisis. Subsequently, there should be a permanent increase in taxes on rich, with higher rates for multimillionaires and billionaires.
In support of its call for redistribution of wealth, Oxfam said:
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Food and energy companies had more than doubled their profits in 2022, paying out $257bn to wealthy shareholders at a time when more than 800 million people were going hungry.
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Only 4 cents in every dollar of tax revenue came from wealth taxes, and half the world’s billionaires lived in countries with no inheritance tax on money they give to their children.
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A tax of up to 5% on the world’s multimillionaires and billionaires could raise $1.7tn a year, enough to lift 2 billion people out of poverty, and fund a global plan to end hunger.
In a foreword to the report, Colombia’s finance minister, José Antonio Ocampo, said: “Taxing the wealthiest is no longer an option – it’s a must. Global inequality has exploded, and there is no better way to tackle inequality than by redistributing wealth.”
He added: “Fairness is at the heart of Colombia’s tax reforms. Concretely, this means a new wealth tax, higher taxes for high-income earners and large corporations reaping extraordinary profits in international markets, and ending tax incentives that exist without clear social or environmental justification.
“We are also implementing digital services taxes and adopting a corporate minimum tax rate, building on the international tax deal,.”
Mega Millions jackpot is $785 million. Here’s the tax bill
Anadolu Agency | Anadolu Agency | Getty Images
Of course, the advertised amount is only what you’d get if you were to choose to take your winnings as an annuity spread over three decades. The lump-sum cash option — which most winners choose — for this jackpot is $403.8 million, as of midday Tuesday.
Regardless of how you’d decide to receive your windfall, taxes would take a bite out of it.
$96.9 million in taxes would be shaved off cash option
Assuming you’re like most winners and were to choose the cash option, a mandatory 24% federal tax withholding would reduce the $403.8 million by $96.9 million. That would cut your take to $306.9 million.
However, you could expect to owe more to the IRS at tax time. The top federal income tax rate is 37% and applies to income above $578,125 for individual tax filers and $693,750 for married couples who file a joint tax return.
This means that unless you were able to reduce your taxable income by, say, making large tax-deductible charitable contributions, you would owe another 13% — or about $52.5 million — at tax time. That would bring your winnings down to $254.4 million.
There also could be state or local taxes depending on where the ticket was purchased and where you live. Those levies range from zero to more than 10%.
Most Mega Millions players, though, won’t have to worry about paying millions of dollars to the IRS or state coffers: The odds of a single ticket matching all six numbers to land the jackpot is about 1 in 302.6 million.
Meanwhile, the Powerball jackpot is $291 million (with a cash option of $147.9 million) for Wednesday night’s drawing. The chance of hitting the motherlode in that game is slightly better: 1 in 292 million.