The Social Security Administration (SSA) has announced that for 2025 the maximum earnings subject to Social Security tax will increase $7,500, from $168,600 to $176,100. This is referred to as the "wage base." In addition, the SSA announced that Social Security and Supplemental Security Income (SSI) benefits will increase by 2.5%. These changes reflect cost-of-living adjustments based on inflation. On average, Social Security retirement benefits will increase by about $50 per month starting in Jan. 2025 for nearly 68 million recipients. Increased payments to nearly 7.5 million people receiving SSI will begin on Dec 31, 2024. (Note: Some people receive both Social Security benefits and SSI.)
It's fun to win money, but don't forget, it is also taxable. But a recent report by the Treasury Inspector General for Tax Administration (TIGTA) found many taxpayers with gambling income didn't file tax returns. This occurred even though they received Forms W-2G (Certain Gambling Winnings).
A TIGTA analysis covering three tax years showed that 148,908 persons who were sent Forms W-2G for winning more than $15,000 each failed to file returns. The nonfilers are associated with roughly $13.2 billion in gambling winnings. Among other issues, TIGTA said hundreds of Forms W-2G reviewed were missing a Taxpayer ID Number needed to trace winnings to recipients. Click here to view the report.
Are you familiar with Health Savings Accounts (HSAs)? These are accounts that participants, their family members and employers can contribute to on a tax-advantaged basis. Such contributions are considered employer-provided coverage of medical costs and are therefore excludable from the employer's income.
The 2024 limit for employee and employer contributions combined is $4,150 for individual accounts and $8,300 for family HSAs. These limits will rise in 2025 to $4,300 and $8,550, respectively. Note that a business generally can offer an HSA to an employee covered under a high-deductible health plan but no other health insurance. Contact us for specific details.
It's common for individual and business taxpayers to lose financial records during a natural disaster. Unfortunately, you usually need such records to document losses for your insurance company and to qualify for federal assistance. But if you visit the IRS's website, you can view or obtain copies of your historical tax returns, wage and income statements, and other tax account information. Requesting online access to your records is the fastest method, but even physical transcripts can be expected to arrive in the mail within 10 calendar days. Call your bank, credit card issuers and other financial service providers for copies of other needed documents.
If the IRS contacts you about a specific tax matter, you can authorize a third party to handle it on your behalf. It could be a relative, friend or a tax pro at our firm, as long as you grant formal permission. You can do this by assigning your power of attorney to a person who is authorized to practice before the IRS. In addition, you can appoint an individual using a tax information authorization process for a specific tax issue. You can also name a third-party designee on your tax return when you file it to discuss that return only. Finally, you can give oral permission for someone to join you in a meeting or call with the IRS. Contact us with questions or visit this website for more information.
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