The 2022 Inflation Reduction Act
October 17, 2022
How Will It Impact You If You Owe Money to the IRS
Working with the IRS has never been easy, and tax settlement agreements are always complicated affairs. If you are currently working to pay off your tax debt, you may wonder what the recently passed 'Inflation Reduction Act of 2022' has in store for you.
There has been a lot of back and forth about the Inflation Reduction Act and what it means to you. While the details of the agreement are still up in the air, there are a few concrete details you need to know about how this act could impact you as an American citizen. Here are some essential things to consider moving forward.
The "Army" of IRS Agents Are Not All Soldiers
A lot has been said of the supposed army of IRS agents who will soon be walking throughout the streets of America. There are some pundits and politicians who say, "the IRS will be hiring 87,000 armed agents to hunt down innocent taxpayers, relieving them of their hard-earned money in escalating waves of harassment."
The reality behind the army of IRS agents is much different and far less troubling than what you may be hearing. Most of the new hires will be administrative personnel, IT workers bent on upgrading old hardware, customer service representatives to answer the endlessly ringing phones, and so on. That does not mean there will not be new agents on the job, but the scope of the new hires is not a reason to panic, even if you currently owe money to the IRS.
Enforcement Efforts Will Ramp Up
Even though only a portion of those new IRS hires will be "on-the-ground agents," the overall goal of this bill for the IRS is to increase the amount of revenue they are collecting from taxpayers. There is reason to believe that the IRS will be more aggressive with its collection efforts because of the Inflation Reduction Act.
The nature of this bill has raised concerns that the IRS will have an increase in audits for small business owners and regular taxpaying citizens across the United States. Our government claims the IRS's efforts are geared more toward citizens in higher tax brackets; however, you can never be too sure since it does not clearly state that they will not target the "everyday" taxpayer. If you think you owe money to the IRS, this is the time to take it seriously to avoid any extra fees or, worst-case scenario, the IRS freezing any of your bank accounts and garnishing your wages.
If You Have an Agreement in Place Nothing Should Change
The IRS has been increasing its efforts against taxpayers even before passing the 'Inflation Reduction Act of 2022'. If you have been targeted by one of these actions, they are still looking for a suitable settlement with you and will not stop until the settlement is resolved.
Hopefully, you are working with a professional as you work with the IRS since the settlement process can get complicated and working with a tax relief specialist ensures you can get the lowest settlement possible for your specific situation under the law.
If you are still working through the details of a settlement, you could find the IRS will try to drive a harder bargain. This could be especially true if the amount owed is over $10,000. Either way, working with a tax resolution professional is crucial since ignoring the situation will only worsen it. The longer you wait, the more expensive your situation will become.
Professional Tax Relief Guidance is More Important Than Ever
The recent passage of the Inflation Reduction Act has introduced a great deal of uncertainty among taxpayers, especially those who owe money to the IRS. If you are not currently working with a professional and relying on their guidance, seeking outside help will become even more critical.
That is why it is vital to work with a professional, so do yourself and your wallet a favor by connecting with a tax resolution specialist like Advantage Tax Relief. We specialize in helping people get their IRS and State tax problems settled and behind them once and for all! Request a complimentary consultation today.
It seems like natural disasters such as hurricanes, floods, earthquakes, wild fires, and tornados are happening all the time and just about everywhere. Climate change also seems to be making these disasters more deadly and more destructive. Many people do step up to help survivors with needed financial donations. The only thing worse than the disasters themselves are the scammers that exploit these situations for financial gain at the expense of hard working and well-i ntentioned survivors and donors. Like yourself! Scams can take the form of fake charities and impostors posing as legitimate organizations or government agencies. Common scams typically entail vague appeals for donations without details, fake websites with names like real charities and caller ID tricks to appear legitimate. Several warnings signs of these scammers are: 1) pressure to give immediately, often preying on your emotions and not logic 2) a thank-you for a previous donation you don’t recall making 3) a request for payment by cash, gift card or wire transfer. The last are scammers’ favored payment methods because the money is easy to access, difficult to trace and almost impossible to cancel. A legitimate charity will welcome your donation whenever you choose to make it and by whatever means you choose. A great way to verify their legitimacy is to use the IRS Tax Exempt Organization Search tool at https://apps.irs.gov/app/eos/. Additionally, clients should always ask for a receipt and then check their bank or credit card statements to ensure the donation amount is accurate. If you think you were a victim of a suspected scam, you can and should report them to the Federal Trade Commission at https://reportfraud.ftc.gov/. How Advantage Tax Relief Can Assist You At Advantage Tax Relief, based in Itasca, IL, we have over a decade of experience helping individuals and businesses resolve tax issues. Our team specializes in offering personalized tax relief and tax resolution solutions tailored to your unique needs. We will work with you to assess your situation and explore your options, whether it’s an Offer in Compromise, installment agreements, or other strategies. Our experience allows us to identify the best path forward to ease your tax burden and guide you toward financial freedom. If you're facing tax debt, don't wait. Advantage Tax Relief is here to assist you with effective, professional help. Call Advantage Tax Relief today at 630-773-3200 to schedule a consultation and take the first step toward resolving your tax issues.
Under the new One Big Beautiful Bill Act (OB3), qualified tips are any cash tip received by an individual with a valid Social Security number and in an occupation that 'customarily and regularly' received tips on or before Dec. 31, 2024. They include tips that are paid in cash or charged. The Treasury Department has not yet released the “official” list of occupations that qualify for the No Tax on Tips Regulations. It is expected, though, that the job titles will include but not be limited to those listed below: 1) Food & Beverage : Bartenders, Wait Staff, Servers, Chefs, and Cooks 2) Entertainment: Gambling Dealers, Change Persons, Booth Cashiers, Dancers, Musicians, Singers, Entertainers, and Other Performers 3) Personal Services: Personal Care Workers, Private Event Planners, Photographers, Videographers, Event Officiants, Pet Caretakers, Tutors, Nannies, and Babysitters. 4) Personal Appearance & Wellness: Skincare Specialists, Massage T herapists, Barbers, Hairdressers, Cosmetologists, Manicurists, Exercise Trainers, and Group Fitness Instructors. 5) Recreation : Golf Caddies, and Tour & Travel Guides. 6) Transportation : Ride Share, Taxi, and Food Delivery, Drivers, Porters, and Sky Caps. The final list is expected to be issued in October, 2025. Some implications of the No Tax on Tips Regulations. First , the deduction is for qualified tips of up to $25,000 per year regardless of how many employers you have during the year. The tax savings will be in the form of a tax deduction when you file your Federal tax return the following year. Second , qualified tips must be reported to the individual on one of three forms to be eligible for the deduction; a) Form W-2; b) Form 1099-NEC, Nonemployee Compensation; or c) Form 1099-K, Payment Card and Third-Party Network Transactions. Third , it only applies to Federal income taxes. It does not include State, Local, Social Security or Medicare taxes. Finally, the maximum annual deduction of $25,000 for single filers and $25,000 each for joint or married filing separately filers phases out by $100 for each $1,000 for taxpayers with modified adjusted gross income over $150,000 (or $300,000 for joint filers). How Advantage Tax Relief Can Assist You At Advantage Tax Relief, based in Itasca, IL, we have over a decade of experience helping individuals and businesses resolve tax issues. Our team specializes in offering personalized tax relief and tax resolution solutions tailored to your unique needs. We will work with you to assess your situation and explore your options, whether it’s an Offer in Compromise, installment agreements, or other strategies. Our experience allows us to identify the best path forward to ease your tax burden and guide you toward financial freedom. If you're facing tax debt, don't wait. Advantage Tax Relief is here to assist you with effective, professional help. Call Advantage Tax Relief today at 630-773-3200 to schedule a consultation and take the first step toward resolving your tax issues.
First, working overtime does not mean you are getting an automatic increase in your take-home pay because it is not going to be taxed. That is not what is going to happen. The tax savings will be in the form of a tax deduction when you file your Federal tax return the following year. There will be no immediate impact. Second, it only applies for Federal income taxes. It does not include State, Social Security or Medicare taxes. Third, it also only applies to the overtime premium and within certain deduction and wage limits. You can only deduct the pay that exceeds your regular rate of pay. The 'half' portion of 'time-and-a-half' compensation. For example, say you make $20 per hour and work 5 hours of overtime that week at time-and-a-half. The deduction would the Federal tax on $50 of premium pay. ($20 divided by 2 times 5 hours) Finally, the maximum annual deduction is $12,500 for single filers and $25,000 for joint filers. The deduction phases out for taxpayers with modified adjusted gross income over $150,000 (or $300,000 for joint filers).
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