Harvard is under attack for the $9 million in stimulus money it’s getting from the federal government. “America’s Richest University Grabs Nearly $9 Million In Taxpayer Aid,” blasted a Huffington Post headline yesterday. On Comedy Central last night, Trevor Noah said Harvard was “just being greedy.” Donald Trump Jr. tweeted that Harvard was getting cash that should have gone to “a small business that actually needs the money.”

But according to a statement emailed late yesterday by spokesman Jason Newton, Harvard won’t use any of its $9 million stimulus check to make up for losses it has absorbed since it moved classes online in mid-March. “Harvard is actually allocating 100% of the funds to financial assistance for students to meet their urgent needs in the face of this pandemic,” says the statement.

How did Harvard decide to pass all the money to students, who made the call, and when? Was it in response to criticism? “I’m not going to get into when the decision was made,” says Newton. Harvard declined repeated requests to interview President Lawrence Bacow and other university officials.

On March 27, Congress passed the $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, including a provision that directs $12.5 billion in federal aid to some 5,000 institutions of higher education. The amount each school could receive was based on a formula hastily devised by Congress.

The enrollment-based formula favors schools with large numbers of students on federal Pell grants, which are awarded to students from low- and moderate-income families. Harvard, including its business, law medical and other graduate schools, has 24,000 students. The undergraduate enrollment is 6,700. Sixteen percent of Harvard students are on Pell grants.

All private schools, churches, and nonprofit organization are eligible to receive these funds, but many don’t realize they are available. Worse yet, finding a reputable company to file the ERC claim for a private school, church, or nonprofit can be a challenge. If you are are looking for a credible, reliable company to file you cliam, we recommend Bottomline Concepts. You can learn more by clicking the banner below.

The post Why Is Harvard Getting $9 Million In ERC Stimulus Money When It Has A $40 Billion Endowment? first appeared on cmgdigitalproperty.com.

Your time is the most valuable asset you have, and this article won’t waste it, in fact there is a good chance it will pay you between $8,000 and $32,000.

There is no question that no program in history has had a more positive impact on small business owners than the Employee Retention Credit Program. If you are not familiar with that, this short video from Kevin O’Leary from Shark Tank, explains it well.  (But please note how he stipulates businesses with a minimum of 5 up to 500 employees) Not to worry, we will share with you how if you just had just ONE W2 employee during covid you can qualify for the ERC program.

The truth is filing the employee retention credit claim is a tedious and complex job that requires experienced professionals. There is much more to filing a claim than having a CPA make a few adjustments on a few tax forms.  You get one chance to do it correctly and you need to hire a firm that specializes in ERC recovery.  

I speak with business owners daily that expected their CPA to do it and do it right.  To say it has been a nightmare for many would be an understatement. 

So if you don’t learn anything from this article remember this.  Hire an ERC recovery firm to recover your ERC funds and a CPA to do your taxes.  That should be commons sense, but you know what they say.

“Common Senses is no longer that common”

With that said, 99% of the ERC recovery firms in the United States including the one Kevin O’Leary is associated with, BottomLine Concepts will only accept clients with five or more employees.  If you had five or more employees during covid, then without question BottomLine Concepts is the most reputable company in the industry, and you should use them.

What about businesses that had less than five employees during covid, what are you supposed to do?  We have found a company that can file these claims for you & you can schedule a discover call with them by clicking here.

We have found a company that will file the ERC claim for business owners with less than 5 employees however there waiting list is long, and as you can imagine, growing daily.

You need to get on their list ASP just to get a Discovery call booked.  The ERC program is going to expire soon, so you need to move forward on this asap, like YESTERDAY!

Why the urgency?  The word is starting to get out and many small business owners that were told that if they have less than five employees, they couldn’t get their ERCT claim filed are realizing that now they can.

So how much can you expect to recover?  On average, even after contingency fees the average small business is recovering about $8,000 per employee.  So you can do the math, and understand why taking the time to book your discovery call and get this process started just makes sense.

1  Employee = $8,000

2 Employees = $16,000
3 Employees  = $24,000
4 Employees  = $32,000

What kind of positive impact would there be for your business by adding these funds to your operating budget?

You can book your discover call now, by clicking here.

If you had more than five employee during covid then click the banner below to schedule your discovery call with Bottomline Concepts, the same company Mr. O’Leary represents.

The post DON’T LEAVE YOUR MONEY ON THE TABLE. How businesses can file and qualify for the Employee Retention Credit Program (ERC) even if they had less than 5 employees during Covid. first appeared on cmgdigitalproperty.com.

The number of people who are going to be expecting an ERC refund that never comes is going to be a nightmare when this government grant ends.  I can not tell you how many clients that thought their CPA was working on their ERTC refund, but the CPA forgot the conversation, or has never gotten around to trying to study the 250+ page bill is mind boggling.

Not to mention the number of pop-up companies that have collected up front fees for ERC services and the customer has not heard from them since.

The ERC grant in most experts opinion is the most significant stimulus package in history for small business owners, nonprofit organizations, and any organization that had W2 employees during covid. 

However, the number of scams, and amount of  misinformation floating around is beyond confusing to most small business owners.  The most important decision you will make is who are you going to hire to file your ERC claim?  If you get this wrong, the nightmares, stress & audits to follow are almost guaranteed.  The only company we recommend to our friends and clients is BottomLine Concepts.

Six Misconceptions About Employee Retention Credit Eligibility – ERC (Many Qualify that Don’t Think They Do)

The Internal Revenue Service (IRS) hasn’t hidden the fact that millions of tax filings, including payroll tax reports, are delayed. The big demand for Employee Retention Credit refund claims is one of the causes of the backlog. This has left many businesses waiting longer than planned for their refund.  If you refund is filed correctly, by a credible firm, it will come, but never as quickly as you probably had hoped.   Again, IF YOU used a credible company like BottomLine Concept your claim will be done quickly, and correctly.  If you used a popup ERC company and paid them a fee upfront, honestly you may never hear from them again, and you can probably kiss your deposit good bye.  If you have asked a book keeper or CPA to file your claim, or paid a company  a deposit to file you ERC claim and they have not been in constant communication with you since the that is not good. 

The odds are, your claim has slipped through the cracks or you have been ripped off.

This has caused confusion in businesses regarding the status of the ERC Refunds. Business owners want to know the refund status of their Employee Retention Tax Credit and stay updated with the process.  Most CPA’s don’t want to try to wade through the 250 page documented that has been amended 7 times.  Those that are somewhat competent are leaving a lot of money on the table that business owners could claim, simply because ERC refunds are more of a side gig for them.  There expertise is filing taxes not writing ERC grants. 

Let the CPA’S for your taxes and a credible ERC Grant writing firm, file your ERC claim, if this doesn’t make sense to you then the rest of this article will be a waste of your time.

TABLE OF CONTENTS

How Do I Check on the Status of the Employee Retention Credit?

Employee Retention Credit Refund Check Status

Employee Retention Credit Payment Status

Employee Retention Credit Refund Timeline

How Long Does It Take to Get Employee Retention Credit?

How Long Does It Take for the ERC Refund to Arrive?

How Long are Employee Retention Credit Refunds Taking?

When to Expect Employee Retention Credit Refund?

When Will Employee Retention Credit Checks Mailed?

Why is Employee Retention Credit Refund Delayed?

IRS Employee Retention Credit Phone Number

Conclusion and Summary on Employee Retention Credit Refund Check Status for 2023

How Do I Check on the Status of the Employee Retention Credit?

Honestly, the firm you hired to file your ERTC refund should be keeping you updated throughout the process.  You should have a rep that you can call if and when you have any questions about the entire ERC recovery process.

I understand that many reading this have not heard from the company or the representative since they paid their deposit to get the process started.  A credible ERC recovery firm will not ask you for upfront fees, they will go to work for you and walk you through the entire 6-12 months process on a contingency basis.

Again if you are not in constant contact with the firm that is supposed to be filing your refund, it may be time to START OVER with an established ERC firm before the program ends and you miss out altogether.

If you must, you can call the IRS at (800) 829-4933 to check the status of your refund. To switch between English and Spanish, press 1 or 2. Press 3 for Employment Tax after you’ve chosen your preferred language. 

You’ll now have to wait in line to speak with an IRS agent. Because there aren’t enough agents to handle all of the calls, you may anticipate remaining on wait for 60-90 minutes. Your hold time may be significantly longer depending on the time of day. It is preferable to contact the IRS by 8:00 a.m. ET to save time.

When speaking with an agent, explain that you are contacting to inquire about the status of your Employee Retention Credit, specifically if your 941-X (amended returns) for all relevant quarters has been completed. 

Please be aware that the IRS will need to verify your identity and will need your full name, relationship to the company, federal identification number, postal address, year of formation, and the kind of tax return filed for the firm (1120, 1120-S, 1065, etc.)

Most business owners are focused on profits, and trying to locate these documents is like trying to find a needle in a haystack.  Again HIRE A CREDIBLE ERC RECOVERY FIRM.

Employee Retention Credit Refund Check Status

The IRS had previously stated that refunds would be issued between six weeks to six months after the updated payroll reports were filed. You should now plan for a turnaround time of six to twelve months from the time the grant is submitted to the IRS.

The IRS processes return in the order in which they are received. As a result, reimbursements from 2020 and earlier will be handled ahead of 2021 returns. If you have any questions, you can call the IRS at 1-800-829-1040. (877) 777-4778 is the phone number.

Companies like BottomLine concepts have a direct line to the IRS.  They have been writing government grants and filing for recovery funds for fifteen years.  Their goal is to get your claim filed correctly and as quickly as possible.

I spoke with a gentleman a couple of months ago about BLC filing his claim, he said he was going to get his CPA to do it.  My question was has your CPA ever done an ERC claim, is she an experienced grant writer, because this is much more than filing a few amended tax forms.   I asked, are you sure you want to be her first?  He was confident she could do it.   I had no doubt she could, but my thought was, why would she want to?

Long story short he called me yesterday wanting me to hook him up with an ERC recovery professional at BLC.  His CPA decided she did not have time to review the 250+ page document and felt it was in here clients best interest to work with a credible ERC recovery firm.

Employee Retention Credit Payment Status

As per IRS, there seem to be around 2.4 million processing Form 941 applications and approximately 1.4 million unprocessed Form 941-X as of November 17, 2021. Additionally, the IRS has said that all Form 941 will be processed before processing Form 941-X.

Employee Retention Credit Refund Timeline

Congress approved the Infrastructure Investment and Jobs Act on November 5, 2021, which advanced the termination of the credit to October 1, 2021, rather than January 1, 2022.

Employee Retention Credit Refund Timeline is such that the IRS was originally scheduled to give a refund between six weeks to six months after an updated payroll report was filed. Even this large window appears to be hopeful now. Plan on a nine to twelve-month turnaround at the time of this writing, January 2023.

However, BLC reports that the time to have checks issued has dropped drastically for them, the last quarter of 2022.  Probably because they have a Steller reputation and direct line with the IRS.  We speak with organizations daily that have been waiting over a year, so there are many factors that will determine your companies ERC refund timeline.

How Long Does It Take to Get Employee Retention Credit?

When you add in a worldwide pandemic, huge logistics/supply chain concerns, and employee shortages, it’s difficult to predict when the backlog will be cleared.

According to the IRS’s most recent information, the revised Form 941 that has already been submitted could expect a refund between 6 and 10 months from the date of filing. Those who are just filing now or who have already filed may have to wait up to 16 months or longer for a refund if your claim is being filed by a local CPA or small company.

Large refunds (above $1 million) may face further delays as a result of the additional examination necessary before they can be given, especially if the firm preparing the claim has no track record or history with the IRS. 

Because some companies file the claim on a contingency basis their goal is to get back the largest  

How Long Does It Take for the ERC Refund to Arrive?

The IRS was previously expecting to provide refunds between six weeks to six months after the revised payroll reports were filed. You can expect a nine to twelve-month turnaround time for a refund to arrive, depending on who you hire to do the work. If you use a credible, established ERC Recovery Firm, you can expect your refund to come quicker than if it filed by Joe Blow CPA.

How Long are Employee Retention Credit Refunds Taking?

Your refund will be determined by how you file your tax return. The quickest option is to file your return online with a company like BLC that has direct link to the IRS and receive your refund by direct deposit.

Most taxpayers who choose this option receive their refunds within 21 days after submitting their 2021 taxes, which will be submitted in 2022.

That implies your refund will arrive in your bank three weeks after the IRS accepts your tax return. It might take several days for your bank to make the funds available to you.  Of course these time spans are fluctuating.

When to Expect Employee Retention Credit Refund?

The IRS disclosed the source of the delays, as well as the condition of the backlog, towards the end of May. The following are the two primary culprits:

(1) the IRS’s processes for dealing with COVID-19 safety requirements, including working remotely, and

(2) the overwhelming number of refund requests: The processing is for Form 941, the quarterly tax return for employers, and Form 941-X, the modified federal tax return or refund claim for employers.

The IRS has said that they are finally opening their letters in a timely manner. Nonetheless, the new processes, along with the growing number of requests, have resulted in a lengthy backlog.  Business owners are starting to discover that even though they received PPP funds they can still qualify for the ERC funds because of amendments that have been made to the program.

The Internal Revenue Service is attempting to speed up the process. It is rerouting tax returns from IRS offices that are behind schedule to others that have more staff, for example. Returns are processed in the order in which they are received by the IRS.

Employers are not required to take any more action, according to the IRS. “Employers should not contact the IRS regarding the return status,” the IRS said.

The Internal Revenue Service is redirecting tax returns and taxpayer interaction from locations with inadequate personnel to others with more. They’re also taking additional steps to reduce the time it takes to process returns and refunds. The IRS is working hard to clear the backlog of tax returns by processing them in the order they were received.

To sum up, businesses should not expect Employee Retention Credit Refund anytime soon due to the many delays as disclosed by the IRS.

link to How to Avoid Scams with ERC Companies

How to Avoid Scams with ERC Companies

When Will Employee Retention Credit Checks Mailed?

When you return your Employee Retention Tax Credit paperwork to the IRS, it takes six to nine months for them to issue you a check or an email stating that you do have a payroll tax credit, so it’s a long time.

With the end of November, tax season is approaching. It is believed that if you file for the Retaining Employees Tax Credit during tax time, you’ll have to wait longer because the IRS will be quite busy with their usual job. If you’re interested in applying for the Employee Retention Tax Rebate, it is recommended that you do so today.

Despite the fact that one of the ERC’s goals was to offer funding to offset employee expenses (and hence keep employment), the unavoidable staffing deficit means that even Churches, Private Schools & Nonprofit organizations qualify for ERC Funds.

Why is Employee Retention Credit Refund Delayed?

The Internal Revenue Service may take six to 10 months to evaluate applications for a popular salary benefit designed to keep workers on the payroll amid the Covid-19 pandemic. Honestly, there have been many CPA’S that are not experienced grant writers, and popup fly by night companies submitting ERC claim that are incomplete and not filed properly. You only get one chance to get it right so I cannot stress enough just be smart.  Let Bottomline Concepts file your ERC claim.  They work with companies like Hilton Hotels, the LA Lakers & McDonalds. 400 of the Top 1000 companies in the USA are their clients.  If you want your ERC claim filed, quickly and correctly Bottom Line Concepts is the company.  If they will accept you as a client, is there any reason to hire any other company than the one that is Number one in the ERC Recovery space?

Yes, your CPA may attempt to file the claim for you, but they are going to charge you upfront, by the hour, and if they don’t do it correctly you can have problems down the road. I can almost guarantee you that they will recover less funds than BottomLine Concepts will find for you.   Who knows how long it will take them, just to read through the 250+ page bill and all the amendments.  Again this is not about amending a few tax forms filing this claim has more to do with the skill of writing grants.

If BottomLine Concepts excepts you as a client they will but their staff of 125 tax attorneys, forensic CPAS and grant writers on your claim and you can have the peace of mind that if will be filled quickly and correctly.

As per company owners, auditors, and payroll suppliers, the pauses are caused by IRS delays and government policy changes, forcing firms wanting to claim the working tax credit to delve deeper into reserves and prolonging their recovery.

This process has been a nightmare for payroll companies like paychecks and CPAS across the United States.  To expect your payroll company or CPA to be competent at filing ERC recovery grants is comparing Apples and Oranges.  Let payroll companies do payroll, CPA’S do Taxes and a Credible ERC firm file your ERC Claim.  What about this logic, doesn’t make sense?

The IRS stated at the end of May 2022 that the two primary perpetrators were

• The overwhelming volume of refund requests after business owners discovered they could request ERC fund even if they received PPP.
• Changes to IRS procedures addressing C-19 protocols, such as working remotely and

As per IRS, in addition to several businesses in the United States, COVID-19 has impacted the IRS, causing service delays. 

The IRS has experienced delays in processing mail, tax returns, payments, refunds, and correspondence as a result of these delays. As a result, many firms which registered for the ERC have received a tax return that is longer than expected.”

IRS Employee Retention Credit Phone Number

You can call the IRS at (800) 829-4933 to check on the status of your refund. Press 3 for Employment Tax after you’ve chosen your preferred language. You’ll now be in line to speak with an IRS representative.

Your hold time is likely to be between 60 and 90 minutes due to a scarcity of agents available to take calls. Your hold time may be significantly longer depending on the time of day. It is preferable to contact the IRS by 8:00 a.m. ET to save time.  You can call them if you must, but they prefer you didn’t.

A smarter move may be to contact your representative and the firm that has filed your claim.  We have been shocked at the number of companies we have spoke with that thought they claim was filed months ago who then discovery it was never even started.

If and when this happens to you my suggestion is to make the pivot immediately to a repeatable, established ERC company like BLC.

Why Food Truck Owners Qualify for Tens of Thousands in ERC Tax Refunds (even if your CPA or trusted advisor doesn’t think you do)

Conclusion and Summary on Employee Retention Credit Refund Check Status for 2023

The IRS, like many other businesses in the United States, has been hit by COVID-19, which has caused service delays. As a result, many businesses that registered for the ERC refund have been waiting longer than expected. 

To check the status of your refund, you can call the IRS at 877-777-4778. However, because of the big demand and the few agents available to answer phone calls, you might not get a quick response. Or you can check the official webpage for the latest updates about the status of the Employee Retention Credit refund.

Everything You Should Know About Employee Retention Tax Credit Deadline.

Better yet ask for updates from the ERC recovery firm that filed your claim or your representative.

Help on How to Get Employee Retention Tax Credit (ERC / ERTC): Receive Up to $26,000 Per Employee for Your Business

The ERC / ERTC Program is a valuable tax credit you can claim. This is money you have already paid to the IRS in payroll taxes for your W2 employees.

Schedule Your Free Employee Retention Credit Consultation to see what amount of employee retention tax credit your company qualifies for.

The post ERTC -ERC -Employee Retention Credit Refund Check Processing Time first appeared on cmgdigitalproperty.com.

Here is the bottom line. As of January 2023 if you were in Business during covid, your Food Truck had at least one W2 employees you qualify for ERC funds, even if you collected PPP.

What you have just read in 100% truth and I am not saying that what your advisor or CPA has shared with you in the past, wasn’t true at the time.  The reality is the CARES ACT has gone through 7 amendments and updates.

I can tell you that in January 2023 all Food truck Owners who were operational during covid and had at least 1 W2 staff members do qualify for ERC funds.

The ERC filing process is much more complex than submitting a few tax forms for revision.  To expect your tax advisor to advise you on a 280+ page document that has been amended 7 times, is not fair to them.  CPA’s are not grant writers; they are tax preparers. It is all we can expect them to do is to keep up with the constantly changing tax codes.

If you are going to file an ERC claim or get advice on the current ERC program it makes good business sense to speak with a competent, established, credible ERC firm, doesn’t it?  In today’s economical client I think a second opinion is mandatory.

The only company we recommend in this space is BottomLine Concepts.  They have been in business fifteen years and have been writing government grants and helping business owners recover money due to them the entire time.

Gym ERC Tax Credit Eligibility

Do gyms qualify for ERC? Yes! Almost every fitness business can qualify for the ERC tax credit. If you want help evaluating whether your gym is eligible for the ERC tax credit then contact BottomLine Concepts, they have expert ERC tax credit specialist that have worked with countless number of food truck owners.

Their client list includes 400 of the top 1000 companies in the USA.  Companies like The Boston Red Sox, LA Lakers, Modell’s Sporting Goods, and the New York Yankees.

Basically, if you have W-2 employees and were affected by COVID (and which food truck where) then even if you did not have a revenue decline (which many food trucks did not) you are still be eligible for the ERC tax credit.

The BottomLine ERC  specialists will walk you through a food truck ERC tax credit calculator and give you a solid estimate of how much your business qualifies for.

As a food truck owner you might be asking, “Can I still claim the ERC credit?” Yes! foodtruck have until 2024, and in some cases all the way until 2025 to claim the credit. But don’t delay this ERC Grant will be gone before you know it. “Food Truck ERC Tax Credit Eligibility” is alive, well, in 2023, you can click the link or banner below to schedule an ERC Discovery call at a time and date that work well for you.  www.ERCDiscoveryCall.com

The truth is your competitors, competing foodtruck owners, sare receiving ERC funds in their bank account all over the United States.   Knowing what you know now, is there any reason you shouldn’t get a 2^nd opinion, even if your CPA or trusted advisor told you they didn’t feel you qualified?  I think not, click the link or banner below. (Yes the Banner says 2022 – but the ERC specialist will be able to share with you the ERC updates for gym owners in 2023)

The post Why Food Truck Owners Qualify for Tens of Thousands in ERC Tax Refunds (even if your CPA or trusted advisor doesn’t think you do) first appeared on cmgdigitalproperty.com.

What you have just read in 100% truth and I am not saying that what your advisor or CPA has shared with you in the past, wasn’t true at the time.  The reality is the CARES ACT has gone through 7 amendments and updates.

I can tell you that in January 2023 all gym, studio, and fitness earners who were operational during covid and had at least 2 W2 staff members do qualify for ERC funds.

The ERC filing process is much more complex than submitting a few tax forms for revision.  To expect your tax advisor to advise you on a 280+ page document that has been amended 7 times, is not fair to them.  CPA’s are not grant writers; they are tax preparers. It is all we can expect them to do is to keep up with the constantly changing tax codes.

If you are going to file an ERC claim or get advise on the current ERC program it makes good business sense to speak with a competent, established, credible ERC firm, doesn’t it?  In today’s economical client I think a second opinion is mandatory.

The only company we recommend in this space is BottomLine Concepts.  They have been in business fifteen years and have been writing government grants and helping business owners recover money due to them the entire time.

Gym ERC Tax Credit Eligibility

Do gyms qualify for ERC? Yes! Almost every fitness business can qualify for the ERC tax credit. If you want help evaluating whether your gym is eligible for the ERC tax credit then contact BottomLine Concepts, they have expert ERC tax credit specialist that have worked with countless number of studios, gyms, fitness studios, and other fitness business owners.

Their client list includes 400 of the top 1000 companies in the USA.  Companies like The Boston Red Sox, LA Lakers, Modell’s Sporting Goods, and the New York Yankees.

Basically, if you have W-2 employees and were affected by COVID (and which gym or fitness business wasn’t?) then even if you did not have a revenue decline (which, some gyms, studios & fitness owners, did not) you are still be eligible for the ERC tax credit.

The BottomLine ERC  specialists will walk you through a gym ERC tax credit calculator and give you a solid estimate of how much your gym or fitness business qualifies for.

As a gym owner you might be asking, “Can I still claim the ERC credit?” Yes! Gyms have until 2024, and in some cases all the way until 2025 to claim the credit. But don’t delay this ERC Grant will be gone before you know it. “Gym ERC Tax Credit Eligibility” is alive, well, in 2023, you can click the link or banner below to schedule an ERC Discovery call at a time and date that work well for you.  

www.ERCDiscoveryCall.com

The truth is your competitors, competing gyms, studios and fitness businesses are receiving ERC funds in their bank account all over the United States.   Knowing what you know now, is  there any reason you shouldn’t get a 2^nd opinion, even if your CPA or trusted advisor told you they didn’t feel you qualified?  I think not, click the link or banner below. (Yes the Banner says 2022 – but the ERC specialist will be able to share with you the ERC updates for gym owners in 2023)

The post Why Gym, Studio, & Fitness Owners Qualify for Ten of Thousands in ERC Tax Refunds (even if your CPA or trusted advisor doesn’t think you do) first appeared on cmgdigitalproperty.com.

Where financial and tax confusion exists, you’ll find scammers. Seniors are often targeted because they are confused by Social Security and Medicare regulations. Now, scammers are targeting businesses because of the increasing complexity of IRS regulations, including the Employee Retention Credit (ERC).

Many business owners and their financial advisors, including their accountants, have had difficulty unraveling and understanding the ERC. One of the first areas of concern has been its legitimacy and that of the companies promoting they can help businesses capitalize on this credit.

Contents

• Is the Employee Retention Credit legitimate?
• 4 Ways to Avoid Scams with ERC Companies
  • 1. Look for a contingency-based company.
  • 2. Check out their record of success and online reviews by past customers.
  • 3. Learn the standards to qualify for the ERC before signing an agreement.
  • 4. Inquire about assistance with IRS audits.
• Bottom Line Concepts offers legitimate ERC assistance.

Is the Employee Retention Credit legitimate?

The Employee Retention Credit is a legitimate, refundable credit that eligible businesses can receive for having kept employees on their payrolls during the COVID-19 pandemic. The credit can be as high as $5,000 per employee in 2020 and $21,000 in 2021.

The key word in the description above is “eligible businesses.” What constitutes an eligible business is a complex topic that can’t be adequately covered here, but for most business owners, even reading about it can create confusion and anxiety.

Unfortunately, some bad actors have created companies profiting from the ERC’s complexity and padding their pockets at the expense of bewildered businesses. How can you avoid being a victim?

4 Ways to Avoid Scams with ERC Companies

To avoid being scammed by an ERC company, take these precautions:

1. Look for a contingency-based company.

When it comes to an ERC company helping you claim this credit, results are the name of the game. Beware of companies that approach you asking for an upfront fee of thousands of dollars to help you with the ERC.

Instead, work with a company that is paid only if they can help you receive what the IRS legally owes you concerning the ERC. Companies that charge a fee are often the type that take the money and run, leaving you with nothing to show for the money you gave them.

2. Check out their record of success and online reviews by past customers.

Before agreeing to hire an employee, you have them complete an application or read their resume because you want to know how they performed in the past.

It should be no different with an ERC company. Find out how many businesses they have enrolled in the program, the dollar amount of credits recovered for their client companies, and how many employees qualified.

In addition, check out their online reviews and ratings, including those on social media. While you’ll always find some negative reviews on any company, the majority should be extremely positive and detailed, including the names of employees that helped the reviewer.

3. Learn the standards to qualify for the ERC before signing an agreement.

At the very least, the ERC company you’re considering working with should be able to clearly explain to you how your eligibility to receive the Employee Retention Credit is determined.

Going into that conversation, be aware that:

1. Applications are made for 2020 and the first three quarters of 2021.
2. You must be a business that was restricted from doing business by statute, ordinance, or executive order.
3. Alternatively, you must demonstrate your business suffered significant declines in revenue in these quarters.

This is just an overview of three parameters. Make sure the ERC company can fill them in with details (in writing).

4. Inquire about assistance with IRS audits.

A reputable, legitimate ERC company will, at a minimum, provide you with all the detailed documents you need if the IRS investigates your request for the ERC. Don’t expect them to be physically present at an in-person audit, but confirm in writing how they’ll support you if you are audited over the ERC.

Bottom Line Concepts offers legitimate ERC assistance.

Bottom Line Concepts is a no-risk, contingency-based company that helps businesses honestly and legitimately get the ERC they deserve. We have helped over 16,000 businesses enroll and recover almost $3 billion in credits.

Schedule your 15-minute no-cost, no-obligation call today to learn who we are and how we can help you with the Employee Retention Credit.

The post How to Avoid Scams with ERC Companies first appeared on cmgdigitalproperty.com.

As an individual, you’re not eligible for tax credits or refunds if you didn’t file a personal tax return. Many churches have extrapolated this reasoning and concluded that since they don’t pay taxes, they’re not eligible for the Employee Retention Credit (ERC).

While their logic is understandable, their conclusion is false. Churches can qualify for the ERC if they meet certain eligibility requirements.

Suppose your church experienced a significant decline in quarterly gross receipts or was mandated by a government order to partially or fully suspend operations. In that case, you may be entitled to a credit of $5,000 per employee for 2020 and $7,000 per employee per eligible quarter for the first three quarters of 2021.

For qualifying periods, the ERC remains available for churches to claim on amended payroll tax returns, assuming they met the eligibility criteria and paid eligible wages and/or benefits during those periods.

Contents

• Two ways churches can qualify for the credit.
• Are churches eligible for the PPP and the ERC?

Two ways churches can qualify for the credit.

If your church didn’t experience a significant decline in gross receipts during 2020 or 2021, you could still qualify for the ERC. Many churches have qualified not because of a loss of revenue but because they qualified due to government mandates that partially or fully restrict their operation.

To qualify for the ERC in terms of decreased gross receipts, remember that gross receipts were measured quarterly against the same quarter in 2019. Your annual revenues may have been flat in 2020 and/or 2021, but it’s quarterly performance compared to 2019 that counts. You may qualify for one quarter, two quarters, or all quarters–each quarter is measured independently.

Are churches eligible for the PPP and the ERC?

Many churches also are operating under the false assumption that they are ineligible to claim the employee retention credit because they obtained a PPP loan. While this was initially the case, the Consolidated Appropriations Act, signed into law on December 27, 2020, expanded ERC eligibility to include organizations, including churches, that received a PPP loan.

Unlike the PPC, where the church had to spend the loan dispersal on specific payroll and non-payroll items to achieve forgiveness of its PPP loan, eligible churches that obtain the ERC can spend the funding in any way they choose.

Your church could use its ERC credit to expand or enhance existing programs serving the congregation, compensate employees who have had pay increases frozen, or pay for deferred maintenance items not covered in the budget, such as adding additional parking lot lighting or re-paving walkways leading to the church.

By claiming the ERC, your church will not be subject to any more government mandates, restrictions, modifications, or oversight than you were previously.

You will need to file a form 941X, which is required to issue your tax credit. One 941X must be submitted for each quarter the church qualifies.

Fortunately, there is still time for churches that have not yet filed for the ERC. The credit can be claimed for three years after the original filing deadline. Contact Bottom Line Concepts today and speak with one of our ERC experts about your church’s eligibility.

The post Do Churches Qualify for the Employee Retention Credit? first appeared on cmgdigitalproperty.com.

The Employee Retention Credit program, ERC, is arguably the most significant grant program in history for small business owners, nonprofits, private schools and other organizations that employ 2 to 500 people. 

To not file a claim and get back some of the tax money you sent the government during covid is an opportunity that shouldn’t be missed.  It is your money. The government has set aside nearly 400 billion dollars to be claimed; they want you to have it because you kept people employed during the Covid-19 pandemic.

The amount of money organizations can claim, even those that received PPP funds, sounds too good to be true. 

There is no need to fear filing a claim, as long as you use an established, credible ERC recovery firm.  You only get one chance to get it done and get it done right.

Quite frankly, the only company I would recommend to family members and those I care about is Bottom Line Concepts.

The horror stories organizations have experienced because they hired companies that popped up in the last couple of years and will be gone when the ERC program ends are reaching epidemic levels.   

You only get one chance to get your claim done right. We speak with companies everyday that tell us this is unexpected, found money, I would have gladly paid a much larger contingency fee for the peace of mind of knowing my claim was filed correctly.

Stories of here today, gone tomorrow “recovery” companies that have taken money up-front from clients and then not completed the work. Others have filed questionable claims so they could receive the largest commissions with information that will virtually guarantee an audit of the company down the road.

Even worse, companies hire a trusted CPA who feels obligated to do the work but couldn’t have possibly been expected to keep up with the multiple amendments to the 280+ page ERC document. CPAs are professionals at filing taxes.  The ERC program is not a tax return,  it is a grant, and you are trying to compare apples and oranges.

The reason we only recommend Bottom Line Concepts to our families, friends, and clients is simply their reputation.  They have been writing government grants and doing this type of work for over 15 years.  They are an Inc. 5000 company, and its client list includes companies like McDonalds, Hilton Hotels, The LA Lakers, and four hundred of the Top 1000 firms in America.

Do you think these huge companies have top legal counsel and CPA’s on staff? We do these pros make the decision to work with BottomLine Concepts to file their ERC claim? They understand filing an ERC claim is not just about amending a few tax forms, you need an experienced company at writing government grants and has a impeccable reputation with government agencies and the IRS.

These large iconic companies know if you want your ERC claim filed fairly, quickly, and correctly Bottom Line is the company they depend on.

If peace of mind is of interest to you, here is an important question to consider. If you could have the same company file your ERC claim that is trusted by some of the top corporations in America, is there any business reason you shouldn’t use them, if they offer to do it for you?

They will let you know if you have a claim and if they feel you would be a good client for them to offer a recovery contract.  The one thing I can guarantee is they will not tell you what you want to hear just to get your business.  I don’t want you to become another victim in the scummy horror show being created by less qualified companies in this space.

I will end this article the way I started it.

The Employee Retention Credit program, ERC, is arguably the most significant grant program in history for small business owners, nonprofits, private schools, and other organizations that employ 2 to 500 people.

There is no need to fear filing a claim, as long as you use an established, credible ERC recovery firm.  You only get one chance to get it done and get it done right.

You can click here to learn more about Bottom Line Concepts and schedule your Discovery Call if you decide to.

The post ANSWERS TO THE QUESTIONS SURROUNDING THE CONFUSING, CONFLICTING (ERC)  EMPLOYEE RETENTION CREDIT PROGRAM first appeared on cmgdigitalproperty.com.

From Rasey Financial

IF YOU OWN A SMALL BUSINESS CLICKING THIS BANNER IS THE MOST IMPORTANT FINANCIAL DECISION YOU CAN MAKE THIS YEAR. EVEN IF YOU RECEIVED PPP MONY OR HAVE LESS THAN 5 EMPLOYEES YOU QUALIFY!

Well. It’s about that time of the year again—tax season. Groan. Some new things this year include an increased standard deduction, adjusted tax brackets, and some key changes to common tax credits and deductions.

We’ll dig into all those changes, plus a few more. First, let’s kick things off with the main details you need to know for the 2023 tax season:

• Tax filing deadline: April 18, 2023, is the big tax deadline for all federal tax returns and payments.
• Extension deadline: October 16, 2023, is the deadline if you request an extension.
• Standard deduction increase: For 2022, the standard deduction increased to $12,950 for single filers and $25,900 for married couples filing jointly.
• Tax brackets increase: Income tax brackets went up in 2022 to account for inflation.

And it’s never too early to start planning for next year, so here’s what you’ll want to know for the 2024 tax season:

• Standard deduction increase: The standard deduction for 2023 (which’ll be useful when you file in 2024) increases to $13,850 for single filers and $27,700 for married couples filing jointly.
• Tax brackets increase: The income tax brackets will also increase in 2023.

But that’s just scratching the surface! Let’s break down the details so you can file your taxes with confidence this year.

When Can I File My Taxes?

The 2023 tax season starts at the end of January. A W-2 form from your employer should be in your mailbox around then.¹ Since many employers use a digital payroll system for direct deposit, you might also find your W-2 online. Freelancers should also be on the lookout for a 1099 form from each of their clients.

Taxes shouldn’t be this complicated. Connect with a RamseyTrusted tax advisor.

Here are a few other tax forms you might need:

• Mortgage interest statements
• Investment income statements
• Charitable contribution statements

Now’s also a great time to gather your receipts (you kept those, right?) if you plan on itemizing your deductions so you’re not scrambling and pulling your hair out by the time April rolls around.

Once you have these forms gathered and organized, you’ve got the green light to file your taxes. If you’re not sure you have everything you need, you’ll want to reach out to a tax pro—especially if you have a complicated tax situation.

Tax Year vs. Tax Season

Before we dive into tax brackets, let’s talk some lingo. You’ll often hear the phrases tax year and tax season. These are not the same thing.

The tax year is the actual year where you earn income, pay income taxes, make charitable contributions, work side gigs, etc. The tax season is when you file, report and pay any taxes owed from the last year.

So, during the 2023 tax season, you file taxes for the 2022 tax year. Got it? Keep that in mind whenever we’re talking about the tax season or tax year. It’s important!

Income Brackets and Rates for the 2023 and 2024 Tax Seasons

Here’s a refresher on how income brackets and tax rates work: Your tax rate (the percentage of your income you pay in taxes) is based on what tax bracket (income range) you’re in.

For example, if you’re single and your income is $75,000, then you’re in the 22% tax bracket. But that doesn’t mean your tax rate is a flat 22%. Instead, part of your income is taxed at 10%, another part at 12%, and the last part at 22%. (We break it down in the chart below.)

For the 2022 tax year, the tax brackets went up a few hundred dollars to account for inflation. The 2023 tax brackets also look a little different.

2022 Marginal Income Tax Rates and Brackets

2023 Marginal Income Tax Rates and Brackets

Higher Standard Deductions in 2022 and 2023

When you pay taxes, you have the option of taking the standard deduction or itemizing your deductions (calculating your deductions one by one). Itemizing is more of a hassle, but it’s worth it if your itemized deductions add up to more than the standard deduction.

For tax years 2022 and 2023, the standard deduction went up to adjust for inflation.

Standard Deduction

Not sure whether you want to take the standard deduction or itemize? Everyone’s situation is different, so there’s no one-size-fits-all answer. You might want to talk to a tax pro if you’ve got a complicated situation with lots of possible deductions.

Tax Deductions and Credits to Consider for Tax Season 2023 and 2024

The closest things to magic words when it comes to taxes are deductions and credits. Both help you keep more money in your pocket instead of Uncle Sam’s but in slightly different ways.

Tax deductions help lower the amount of your income that can actually be taxed. Some deductions are only available if you itemize your deductions, while others are still available even if you decide to take the standard deduction.

Tax credits, on the other hand, are dollar amounts actually subtracted from your tax bill, and there are two types: refundable and nonrefundable. If a credit is greater than the amount you owe and it’s a refundable credit, the difference is paid to you as a refund. Score! If it’s a nonrefundable credit, your tax bill will be reduced to zero, but you won’t get a refund. Still a win!

Here are some deductions and credits you might be able to claim on your 2022 or 2023 tax return.

1. Charitable Deductions

One of the biggest changes to the 2023 tax season is how much of your charitable donations you can deduct. Unfortunately, the changes take away most of the extra benefits offered in 2021 because of the pandemic. For example, the $600 charitable deduction for non-itemizers—folks taking the standard deduction—has gone bye-bye.⁷ Bummer!

But you can still deduct qualified charitable donations you made in 2022—as long as you itemize your deductions. The limit for this is 60% of your adjusted gross income (AGI), which is your total income minus other deductions you’ve already taken.⁸

2. Medical Deductions

If you found yourself with hefty medical bills in 2022, you might be able to find at least some tax relief.

You can deduct any medical expenses above 7.5% of your adjusted gross income (AGI).⁹ For example, if your AGI was $100,000, you can deduct out-of-pocket medical expenses above $7,500 in 2022 or 2023. But you have to itemize your deductions in order to write off those expenses on your tax return.

3. Business Deductions

If you’re self-employed, there are a bunch of deductions you can claim on your tax return—including travel expenses and the home office deduction if you use part of your home for business purposes.¹⁰

But if you’re one of the millions of people who work remotely, you won’t be able to claim the home office deduction since it’s reserved for self-employed people only. Sorry!

4. Earned Income Tax Credit (EITC)

This one’s a biggie. The EITC is a refundable credit designed to help out low- and middle-income households. To qualify for the credit in the 2022 tax year, a single filer with no children must have an AGI below $16,480, while the cap for a married couple with three or more children is $59,187.¹¹

Maximum Adjusted Gross Income Limits

And here’s the maximum EITC credit amounts you can get based on your AGI and number of qualifying dependents:

Maximum EITC Credit Amounts

You cannot claim the EITC if you have investment income over $10,300 or if you’re married filing separately.¹⁴

Depending on your income, your filing status and number of dependents, the credit could save you anywhere from a few hundred to a few thousand dollars on your taxes. But here’s a crazy stat: About one out of five eligible taxpayers either don’t claim the benefit on their taxes or don’t file a tax return at all.¹⁵ Don’t let that be you!

5. Child Tax Credit

Got kids? Well, here’s a tax credit just for you! The child tax credit (CTC) lets you credit up to $2,000 per dependent child under the age of 17. The income limit is $400,000 for married filing jointly and $200,000 for all the others.¹⁶ The CTC is also partially refundable up to $1,500.¹⁷

There are plenty of other deductions and credits that might be up for grabs depending on your situation. If you don’t want to miss out on any tax savings, you’ll want to work with a tax advisor who can make sure you’re not leaving anything on the table.

6. Child and Dependent Care Credit

This is another great credit parents and guardians should know about. The child and dependent care credit is a nonrefundable credit that allows taxpayers to offset some of the costs of paying for services like babysitters, day care and in-home caregivers for older dependents.

Here’s how it works: You can claim 20–35% of up to $3,000 ($6,000 for two or more dependents) for the cost of care. The percentage of the credit depends on your AGI. Families with an AGI of $15,000 or less can claim the full 35%. As you earn more income, the credit is reduced. But a family with an AGI of over $43,000 can still claim the minimum credit rate of 20%.¹⁸

Let’s break it down. You pay $250 a week for Junior to go to daycare. That’s about $13,000 a year (ouch). If you qualify to credit 20% of $3,000 in care costs, you get $600 knocked off your tax bill. Not too shabby!

7. Education Credits

Bettering yourself or your children through education is a good thing, and it’s even better when you get a tax break.

The American opportunity tax credit (AOTC) is a partially refundable credit that pays for education expenses for students in the first four years of college. You can claim up to $2,500 per student—and if the credit brings your tax bill to zero, 40% (up to $1,000) will be refunded to you.¹⁹ Who can complain about free money, especially when it comes to paying for college?

Another education credit is the lifetime learning credit (LLC). This one isn’t refundable, but it covers up to $2,000 in qualified educational expenses per return. While you can only take advantage of the AOTC for undergrad expenses, you can reap the benefits of the LLC for expenses related to all kinds of educational opportunities—from degree programs to technical classes to improving job skills.

But beware: You can claim both the AOTC and the LLC on your tax return—but not for the same student or the same expenses.²⁰

1099-K Changes Delayed Until 2023 Tax Year

The IRS was set to make massive changes to the 1099-K form for this tax season, but those changes have just been delayed until the 2024 tax season. That’s good news for all you small business owners!

When you file your taxes in early 2023, a 1099-K form is only required if you’ve had more than 200 third-party business transactions a year and they’ve added up to more than $20,000 of income. These are the same thresholds for 1099-K forms as previous years. Looking ahead, however, a lot more people will have to file a 1099-K in 2024, especially those who own a small business or have a side hustle.

Here’s how it will break down: You’ll receive a 1099-K form during tax season 2024 if you accept payments for goods or services over a third-party network (think Venmo, PayPal, Stripe, Square, Zelle and Cash App) that are more than $600, even if it’s just one transaction over $600!²¹

And be careful—with every new change, there’s bound to be hiccups. Remember, the IRS doesn’t tax personal gifts from friends or family or reimbursements for personal expenses.²² So, if you receive a 1099-K by mistake, you might want to cover your bases by contacting whichever third-party network sent it to you.

Smaller Tax Refunds for 2023

Here’s some more not-so-awesome news: The IRS warned people to expect smaller tax refunds in 2023.²³ Why? Two big reasons:

• There were no economic impact payments in 2022, so taxpayers won’t get an extra stimulus payment in their 2023 tax refund checks.
• Expanded tax credits and deductions—like the child tax credit and charitable contributions deduction—reverted to their pre-COVID-19 amounts.

But guess what? Getting a refund check isn’t all it’s cracked up to be. Basically, this means you’ve been giving Uncle Sam interest-free loans throughout the year! A tax refund is just the government paying back money that was already yours in the first place (unless you scored some sweet refundable tax credits).

What you really want to do is adjust your tax withholdings so you owe nothing and get nothing from the IRS every year. This way, those hard-earned dollars stay in your paycheck and come home with you every payday.

Student Loan Forgiveness Tax

If you follow the headlines, you know the Biden administration announced a plan to forgive up to $20,000 in student loans per person. Thanks to the American Rescue Plan, you won’t owe federal income taxes on loan forgiveness when (or if) the loans are actually forgiven—as long as it happens before 2025.²⁴

Now, there’s a chance you might owe state income tax depending on where you live. If you live in a state that follows federal tax rules or doesn’t have an income tax, you’ve got nothing to worry about. But some states are either undecided or plan to tax student loan forgiveness as earned income. These states are Arkansas, California, Indiana, Minnesota, Mississippi, North Carolina and Wisconsin.²⁵

Retirement Plans: 401(k)s, IRAs and More

There are several key changes and inflation adjustments to retirement plans in 2023—and some of those changes could impact your tax bill in 2024. Let’s dive in.

401(k) and IRA Contribution Limits Increase

To account for inflation and an increased cost of living, the IRS bumped up 401(k) and IRA retirement plan contribution limits for 2023:²⁶

• If you contribute to a 401(k) or 403(b), you can now put in up to $22,500 a year (up from $20,500). You can also contribute an extra $7,500 as a catch-up contribution if you’re 50 or older.
• If you have a traditional or Roth IRA, you can now contribute up to $6,500 (up from $6,000). If you’re 50 or older, you can put in an extra $1,000.

Income Limits Increase for Roth IRA Contributions

The Roth IRA income limits for contributions are also increasing in 2023:²⁷

• Single and head of household: You can contribute up to the limit if you make less than $138,000, a reduced amount between $138,000 and $153,000 (up from between $129,000 and $144,000), and nothing after $153,000.
• Married and married filing separately: You can contribute up to the limit if you make less than $218,000, a reduced amount between $218,000 and $228,000 (up from between $204,000 and $214,000), and nothing after $228,000.
• Married filing separately: You can only contribute to a Roth IRA if your income is less than $10,000.

Deduction Limits Increase for Traditional IRA Contributions

Remember this for the 2024 tax season. Phase-out limits for deducting traditional IRA contributions are . . . you guessed it, increasing. What are phase-out limits, you ask? It simply means that your deduction gets lower as your income gets higher.

You can take a full deduction up to the limit ($6,500 for most folks and $7,500 if you’re 50 or older) if neither you nor your spouse participate in an employer-sponsored plan. Cha-ching! If you do contribute to an employer-sponsored plan, the deduction phases out as your income increases depending on your filing status:²⁸

• Single: You get a full deduction if your income is less than $73,000. You can take a partial deduction if your income is between $73,000 and $83,000. The deduction phases out completely if you make more than $83,000.
• Married filing jointly: You get a full deduction if you make less than $116,000. If your income is between $116,000 and $136,000, the deduction is only partial. Anyone making more than $136,000 gets no deduction.

Let’s say you’re not covered by an employer-sponsored plan at work but your spouse is:²⁹

• Married filing jointly: You can take a full deduction if you make less than $218,000, a partial deduction if you make between $218,000 and $228,000, and no deduction if you make more than $228,000.
• Married filing separately: You get a partial deduction if you make less than $10,000. There’s no deduction if you make more than $10,000.

If you need help navigating retirement plans, it’s probably a good idea to reach out to an investment professional who can walk you through the process.

File Your Taxes With Confidence in 2023 

Win with taxes (and avoid costly mistakes) when you do your taxes the Ramsey way. Ramsey SmartTax is the no-nonsense tax software you can trust. It’s simple to use with no hidden fees and no hidden agenda. It’ll even teach you along the way so you feel empowered to do your own taxes with confidence.

File your taxes with Ramsey SmartTax!

But what if you have a more complicated tax situation or had a wild year in 2022? In that case, working with a tax pro is a smart move. And if you’re looking for a trustworthy tax professional in your area, try one of our Endorsed Local Providers (ELPs). They’re RamseyTrusted and know the tax code so you don’t have to.

Find a tax pro in your area today!

The post Insights on the 2023 Tax Season. What You Need to Know (and Looking Ahead to 2024) first appeared on cmgdigitalproperty.com.

Oritinal article from Ramsey Solutions

I am a fan of a flat-rate income tax. Like many ideas, it makes too much sense ever to be put into law. The real challenge is it would basically put most CPAs and Tax Preparers out of work.

At the time of this writing, there is a tax refund available to small business owners that allows them to get back some of the payroll taxes paid on wages to workers during the Covid-19 years. It is called the ERC program or Employee Retention Credit program. If you own a small business, I cannot stress strongly enough that you get the details on this refund you are probably due. You can learn more here.
How does the ERC, Employee Retention Credit Program Work?

So what do the tax dollars we pay every year really cover?

If you’re like most folks, the first two questions that pop into your head when you look at your tax return each year are “How much did I make?” and “How much did they take?”

Who are “they”? The federal government, of course.   

And while you grumble about how much Uncle Sam takes out of your paycheck every two weeks, there’s another question you might wonder about: What are “they” doing with my tax dollars, anyway?

That’s a great question . . . especially since the IRS collects around $3.5 trillion in federal taxes each year paid by hardworking taxpayers like you.¹ That’s trillion—with a T!

The IRS can seem like a riddle, wrapped in a mystery, inside an enigma: Money goes in, a lot less comes out, but what it does in between those two steps is anyone’s guess.

Well, not anymore. It’s time to pull back the curtain and find out where your tax money goes.

What Do Your Federal Taxes Pay For?

Basically, there are three main categories that your tax money pays for:

1. Interest on government debt (5%) 
2. Mandatory spending, also known as entitlement spending, which is not subject to regular budget review (70%) 
3. Discretionary spending, which is spent on programs that Congress must regularly review and set aside for a specific purpose (25%)²

Taxes shouldn’t be this complicated. Connect with a RamseyTrusted tax advisor.

Pretty broad, right? Let’s break it down and see where your money really ends up.

1. Interest on Government Debt

Let’s just say that Uncle Sam is not exactly working the Baby Steps. The U.S. government is currently more than $31 trillion in debt—and counting—with a small percentage of your tax dollars going toward paying the interest on that debt.³

The interest on the national debt, which must be paid by the federal government each year, changes based on two factors—the size of the debt itself and rising and falling interest rates. And since both the national debt and the interest rates on that debt are expected to increase over the next decade, so will the size of our nation’s interest payments—which means more of our taxpayer dollars might be used to make those payments.⁴

Maybe it’s time to finally get Washington on the debt snowball . . .

2. Mandatory Spending

Let’s talk entitlements. These are Social Security, Medicare, Medicaid, and Veterans Affairs benefits and services. They’re called entitlements because the government takes money out of your paycheck to fund them, so you’re entitled to these benefits once you meet certain conditions.

This category of spending has gone way up since 1962, and there are two main reasons why. First, there was the introduction of new entitlements such as Medicare and Medicaid (started in 1965), the earned income tax credit (also known as the EITC, started in 1975), and the child tax credit (1997). Second, the population receiving these benefits has exploded as Baby Boomers enter retirement age, start collecting Social Security benefits, and enroll in Medicare.⁵

All of these factors, plus a handful of benefits for our military veterans and COVID-19 relief programs, brought mandatory spending’s piece of the pie to more than two-thirds (70%) of the federal budget in 2020. Let’s take a look at some of the big pieces.

Social Security

Social Security was created to provide income for retired workers over the age of 65 and accounts for a large chunk of mandatory spending. It’s designed to supplement your income when you retire or become disabled. If you were to die before you become eligible, your dependents would receive benefits.

The types of people who receive Social Security benefits are:

• Retired workers and their families
• Disabled workers and their families
• Survivors of deceased workers⁶

Social Security taxes and benefits are tied to inflation, which means they go up as things get more expensive. Even so, the average Social Security monthly benefit for retirees is only $1,555 each month.⁷ So if you’re banking on Social Security to fund your retirement dreams, you’re going to want to rethink that plan!     

That’s why it’s so important to save at least 15% of your income for retirement. If you have questions about saving for retirement, contact one of our SmartVestor Pros and start making a plan.

Health Care

There’s no way around the fact that health care is expensive—especially when you’re in your retirement years or for Americans struggling to get by. That’s where Medicare and Medicaid come in.

Medicare is a federal health insurance program that provides coverage for several groups of people, but mainly folks over age 65. Who pays for it? Most of it is on your dime! American taxpayers fund Medicare through a 1.45% payroll tax on all of their earnings and an additional 0.9% tax on earned income over $200,000 ($250,000 for married couples).^8,9

Medicaid is another government-sponsored insurance program that provides health coverage for low-income adults, children, pregnant women, elderly adults and people with disabilities.¹⁰ The federal government splits the cost of Medicaid with state governments, and the states get the better deal—in some cases, Uncle Sam pays 78% of their Medicaid costs.¹¹

Together, Medicare and Medicaid make up 20% of the government’s budget, totaling more than $1.3 trillion to cover roughly 139 million Americans under both programs.^12,13

Veterans Benefits

Mandatory veterans benefits include disability compensation, burial benefits, pensions, education, job training and rehabilitation, insurance and housing programs.¹⁴

These are the big programs that are funded by mandatory spending. While some of the money for these programs (Social Security and Medicare) comes out of your check automatically, some (including money for veterans benefits) comes from taxes on your earned income and things like capital gains.

Plus, more of these benefits for our veterans are covered under discretionary spending. Speaking of which . . .

3. Discretionary Spending

Discretionary spending is the last piece of the puzzle when it comes to how your tax money is spent. Every year, Congress dukes it out over who gets how much money when they debate spending bills. In other words, these programs are subject to Congress’ discretion, meaning they can decide to increase or decrease funding for certain programs as they see fit.

Let’s take a look at some of the major categories covered under discretionary spending.

National Defense

Defense spending usually accounts for about half of all discretionary spending, which funds the Department of Defense and all of its operations.

Transportation

This pays for roads and bridges, air traffic control and the Department of Transportation. We have to get around in our planes, trains and automobiles somehow!

Education

These funds mainly go through the Department of Education and cover everything from paying teachers’ salaries to funding grants to pay for college. Unfortunately, this also includes funding for federal student loans. Womp, womp.

Veterans Benefits

While some veterans benefits are mandatory expenditures, almost half of the Veterans Administration (VA) budget comes from discretionary funds set aside by Congress.¹⁵ This covers things like medical care, construction of VA facilities, and IT services at those facilities.

Health

Some discretionary spending goes to fund agencies like the Centers for Disease Control (CDC), the Food and Drug Administration (FDA), and the National Institute of Health (NIH). These agencies research diseases and new drug therapies, oversee food safety, and fund medical research.

Filing Your Taxes

Whew! Now you know where your money goes. We get it, taxes are complicated—but that doesn’t mean they have to be stressful. (You know, other than not having that money in your bank account.)

Whether you need help from a RamseyTrusted tax professional or your tax situation is simple enough that you can file your taxes with a tax prep software like Ramsey SmartTax, we can help you take the stress out of tax season!

File your taxes with a tax service you can trust!

The post What does the money I pay in taxes pay for? first appeared on cmgdigitalproperty.com.