Teachers go above and beyond for their students, often buying classroom supplies needed to make learning successful. The educator expense deduction allows eligible teachers and administrators to deduct part of the cost of technology, supplies and training from their taxes. They can only claim this deduction for expenses that weren’t reimbursed by their employer, a grant or other source.
Who is an eligible educator: The taxpayer must be a kindergarten through grade 12 teacher, instructor, counselor, principal or aide. They must also work at least 900 hours a school year in a school that provides elementary or secondary education as determined under state law.
Things to know about this deduction: Starting on tax returns for 2022, educators can deduct up to $300 of trade or business expenses that weren’t reimbursed. If two married educators are filing a joint return, the limit rises to $600. These taxpayers cannot deduct more than $300 each.
For 2021 returns, the limit is $250, or $500 for married educators filing jointly. As teachers prepare for the school year, they should remember to keep receipts after making any purchase to support claiming this deduction.
Qualified expenses are amounts the taxpayer paid themselves during the tax year.
Here are some of the expenses an educator can deduct:
Professional development course fees
Books and supplies
COVID-19 protective items to stop the spread of the disease in the classroom
Computer equipment, including related software and services
Other equipment and materials used in the classroom
Still have tax questions? Call our office at 816-524-4949 or click here to schedule a consultation.
U.S. household debt increased to a record $16.15 trillion in the second quarter, driven mostly by a $207 billion jump in mortgage balances, with credit card and auto loan debt also rising as consumers raised their borrowing to deal with soaring inflation, according to a Federal Reserve report. The New York Fed’s quarterly household debt report indicates that overall delinquency rates rose modestly too for all debt types, with delinquencies for credit cards and auto loans “creeping up,” particularly in lower-income areas. Mortgage debt increased to $11.39 trillion at the end of June. Purchase mortgage originations were up 7% in the second quarter, with much of the increase attributed to higher borrowing amounts.
The U.S. central bank began increasing interest rates in March as it departed from the easy money policies it had kept in place during the worst of the COVID-19 pandemic in an attempt to shield the economy from lockdowns. Since then, persistently high inflation running at four-decade highs has pushed policymakers to raise the Fed’s benchmark overnight lending rate by 225 basis points. That rate is currently in a target range between 2.25% and 2.50%. Further interest rate increases are forecast for the rest of the year as the central bank attempts to quash inflation.
Struggling with debt? You’re not alone. Call our office at 816-524-4949 or click here to schedule a consultation to discuss your options.
A business might pay an independent contractor and an employee for the same or similar work, but there are key legal differences between the two. It is critical for business owners to correctly determine whether the people providing services are employees or independent contractors.
Here’s some information to help business owners avoid problems that can result from misclassifying workers.An employee is generally considered anyone who performs services, if the business can control what will be done and how it will be done. What matters is that the business has the right to control the details of how the worker’s services are performed. Independent contractors are normally people in an independent trade, business or profession in which they offer their services to the public.
Independent contractor vs. employee Whether a worker is an independent contractor, or an employee depends on the relationship between the worker and the business. Generally, there are three categories to consider.
Courtesy of the Internal Revenue Service
Behavioral control − Does the company control or have the right to control what the worker does and how the worker does the job?
Financial control − Does the business direct or control the financial and business aspects of the worker’s job. Are the business aspects of the worker’s job controlled by the payer? Things like how the worker is paid, are expenses reimbursed, who provides tools/supplies, etc.
Relationship of the parties − Are there written contracts or employee type benefits such as pension plan, insurance, vacation pay? Will the relationship continue and is the work performed a key aspect of the business?
Misclassified worker Misclassifying workers as independent contractors adversely affects employees because the employer’s share of taxes is not paid, and the employee’s share is not withheld. If a business misclassified an employee, the business can be held liable for employment taxes for that worker. Generally, an employer must withhold and pay income taxes, Social Security and Medicare taxes, as well as unemployment taxes. Workers who believe they have been improperly classified as independent contractors generally must receive a determination of worker status from the IRS. Then they can use Form 8919, Uncollected Social Security and Medicare Tax on Wages to figure and report their share of uncollected social security and Medicare taxes due on their compensation.
Voluntary Classification Settlement Program The Voluntary Classification Settlement Program is an optional program that provides businesses with an opportunity to reclassify their workers as employees for future employment tax purposes. This program offers partial relief from federal employment taxes for eligible businesses who agree to prospectively treat their workers as employees. Businesses must meet certain eligibility requirements and apply by filing Form 8952, Application for Voluntary Classification Settlement Program, and enter into a closing agreement with the IRS
Who is self-employed? Generally, someone is self-employed if any of the following apply to them.
They are otherwise in business for themselves, including a part-time business.
Self-employed individuals, including those who earn money from gig economy work, are generally required to file an tax return and make estimated quarterly tax payments. They also generally must pay self-employment tax which is social security and Medicare tax as well as income tax. These taxpayers may qualify for the home office deduction if they use part of a home for business.
Still need tax help? Call our office at 816-524-4949 or click here to schedule a consultation.
Coinbase Global Inc. is facing a U.S. probe into whether it improperly let Americans trade digital assets that should have been registered as securities. The company’s shares fell as much as 9.2%. The U.S. Securities and Exchange Commission’s scrutiny of Coinbase has deepened since the company’s platform broadened the number of tokens in which it offers trading, according to two people, who asked to remain anonymous since the inquiry has not been disclosed publicly. The probe by the SEC’s enforcement unit predates the agency’s investigation into an alleged insider trading plot that led the regulator to sue a former Coinbase manager and two others. The push for U.S. regulators to do more to oversee cryptocurrencies has strengthened as digital currencies have dropped from all-time highs, wiping out hundred of billions of dollars in market value.
Struggling financially? Call our office at 816-524-4949 or click here to schedule a free consultation.
The CEO of two Hollywood production companies that specialize in reality-television programming was sentenced to 12 months and one day in federal prison for fraudulently obtaining a $2 million business loan using fabricated documents and by misrepresenting his companies’ financial circumstances, according to a DOJ press release. Jonathan Lee Smith was also ordered to pay $2 million in restitution. Smith managed and owned two production companies, Hoplite Entertainment Inc. and Hoplite Inc. Smith falsely represented that his companies had accounts receivable of $3,348,000. He also submitted falsified license agreements and other forgeries in order to convince a private lender to fund a $2 million loan in 2020. In an attempt to convince the lender to give him additional time to repay the loan, Smith claimed that payment was imminent, emailing a false record showing a $100,000 wire payment. The loan, however, was never repaid. Smith filed for chapter 7 bankruptcy relief in March of 2021.
Considering bankruptcy? Call our office at 816-524-4949 or click here to schedule a consultation to discuss your options.
Federal authorities filed criminal and civil charges against a former Coinbase employee and two other men in an insider-trading case involving confidential information about cryptocurrency assets that were about to be posted on Coinbase’s exchange. All three of the men were involved in trades over nearly a year using information about 14 listings on Coinbase and generated about $1.5 million in illegal profits. The men were charged criminally with three counts of wire fraud and conspiracy to commit wire fraud. This case is the first time authorities have filed criminal insider-trading charges involving cryptocurrency.
The prosecutors and SEC claim Ishan Wahi, who at the time was part of a Coinbase team that listed assets on the exchange, shared confidential information about when some cryptocurrency assets would be listed with his brother, Nikhil Wahi, and his brother’s friend Sammer Ramani. Authorities say Nikhil Wahi and Mr. Ramani then used that information to buy the assets before Coinbase announced they would be listed. After the announcement, the men sold the assets for a profit. This alleged ploy was discovered after an internal investigation at Coinbase in April following a Twitter post about unusual trading.
Need to speak with an attorney? Call our office at 816-524-4949 or click here to schedule a consultation.
Federal authorities filed criminal and civil charges against a former Coinbase employee and two other men in an insider-trading case involving confidential information about cryptocurrency assets that were about to be posted on Coinbase’s exchange. The three men were involved in trades over 10 months using information about 14 listings on Coinbase that generated about $1.5 million in illegal profits. The men were charged criminally with three counts of wire fraud and conspiracy to commit wire fraud.
The case is the first time the authorities have filed criminal insider-trading charges involving cryptocurrency assets. The prosecutors, as well as the Securities and Exchange Commission in civil charging documents, said Ishan Wahi, who at the time was part of a Coinbase team that listed assets on the exchange, passed on confidential information about when some cryptocurrency assets would be listed to his brother, Nikhil Wahi, and his brother’s friend Sammer Ramani. Nikhil Wahi and Mr. Ramani used that information to buy the assets before Coinbase announced they’d be listed, the authorities said. After the announcement, the men sold the assets for a profit. The alleged scheme came to light after Coinbase began an internal investigation in April in response to a post on Twitter about unusual trading.
Need to speak to an attorney? Call our office at 816-524-4949 or click here to schedule a consultation.
The Department of Justice (DOJ) was able to restore the funds of hospitals in Kansas and Colorado that had recently been victims of ransomware attacks. The agency seized and returned nearly half a million dollars from North Korean hackers to two hospitals in Kansas and Colorado after they were targeted by the hackers. The hospitals were attached in May 2021 and April 2022 and paid their ransoms in bitcoin. In May 2021 and April 2022, state-sponsored North Korean hackers deployed a new strain of ransomware called “Maui” to lock the servers of two medical centers in Kansas and Colorado.
The medical centers had to respectively pay ransoms of approximately $100,000 and $120,000 in bitcoin to the cybercriminals to regain the use of their computers. The Kansas hospital contacted the FBI, which was then able to trace the cryptocurrency ransom to money-launderers in China. The FBI managed to gain access to the receiving accounts, seize the funds, and eventually return the money to the victim institutions In May 2022. It is not clear where the extra $280,000 seized came from, nor is it clear how bitcoin’s price changes affected the overall amount seized. The statement also did not mention any arrests.
Need to speak with an attorney? Call our office at 816-524-4949 or click here to schedule a consultation.
According to court documents and statements that were made in court, starting in 2010, Lance Ashley was the sole owner and operator of Ashley Home Care Services, a home health care business providing daily living services. Ashley was responsible for all financial matters relating to AHCS, including handling payroll and collecting and paying over employment taxes to the IRS. However, between 2013 and 2016, AHCS did not pay all the employee withholdings it collected to the IRS, according to court documents. Ashley used some of the funds to pay corporate expenses and even some of his personal expenses.
After the IRS began collecting AHCS’s unpaid taxes in 2016, Ashley provided fraudulent bank records to the IRS. Ashley’s conduct caused approximately $321,000 of tax loss to the IRS. In addition to imprisonment, Ashley was ordered to serve two years of supervised release and pay approx. $321,000 in restitution to the U.S.
Need to speak to an attorney? Call our office at 816-524-4949 or click here to schedule a consultation.
Some people may choose not to file a tax return because they didn’t earn enough money to be required to file but may miss getting a refund if they don’t file. While the filing deadline is October 17, 2022 to file 2021 tax returns, the IRS strongly encourages individuals to consider filing electronically sooner, rather than later, especially if they’re due a refund.
Courtesy of the Internal Revenue Service
In most cases, income, filing status and age determine if a taxpayer must file a tax return. Other rules may apply if the taxpayer is self-employed or can be claimed as a dependent of someone else. The Interactive Tax Assistant can help people determine if they need to file a tax return.
Look at tax withheld or paid. Excess tax withholdings are only returned in the form of a refund when someone files a tax return. This can affect students and part-time workers where the tax withheld from their wages is at a rate that is too high. Seniors and retirees who make estimated tax payments or have money withheld from their retirement fund and Social Security disbursements may also be eligible for a refund.
Individuals who answer yes to any of these questions, may be due a refund and must file a tax return to get their money.
Did the taxpayer’s employer withhold federal income tax from their pay?
Did the taxpayer make estimated tax payments during the tax year?
Did they overpay last year on their taxes and have it applied to their 2021 tax?
Here are some valuable credits taxpayers may be able to claim. While most tax credits can be used to reduce the tax owed, there are credits that allow individuals to receive money beyond what they owe.
Recovery rebate credit. Individuals who didn’t qualify for a third Economic Impact Payment or got less than the full amount, may be eligible to claim the 2021 recovery rebate credit and will need to file a 2021 tax return even if they don’t usually file a tax return. The credit will reduce any tax owed for 2021 or be included in the tax refund.
Earned income tax credit. A working taxpayer who earned $57,414 or less last year could receive the EITC as a tax refund. For the 2021 tax year, the tax return taxpayers file in 2022, the earned income credit ranges from $1,502 to $6,728 depending on their filing status and how many children they claim on their tax return. Taxpayers who did not file a return for tax year 2020 or 2021 or who did not claim the earned income tax credit on their 2020 or 2021 return because they had no earned income in those years may file an original or amended return to claim the credit using their 2019 earned income if they are otherwise eligible to do so.
Taxpayers can also use their 2019 earned income to figure their 2021 earned income credit if their 2019 earned income is more than their 2021 earned income. They can check eligibility by using the EITC Assistant on IRS.gov, which is available in eight different languages.
Child tax credit or credit for other dependents. Taxpayers can claim the child tax credit if they have a qualifying child under the age of 18 and meet other qualifications. Other taxpayers may be eligible for the credit for other dependents. This includes people who have:
Dependents who are age 17 or older.
Dependents who have individual taxpayer identification numbers.
Dependent parents or other qualifying relatives supported by the taxpayer.
Dependents living with the taxpayer who aren’t related to the taxpayer.
This Interactive Tax Assistant tool on IRS.gov can help people determine if they qualify for these two credits.
Education credits. There are two higher education credits that can reduce the amount of tax someone owes on their tax return. One is the American opportunity tax credit and the other is the lifetime learning credit. The taxpayer, their spouse or their dependent must have been a student enrolled at least half time for one academic period to qualify. The taxpayer may qualify for one of these credits even if they don’t owe any taxes. Form 8863, Education Credits is used to claim the credit when filing the tax return.
Need tax help? Call our office at 816-524-4949 or click here to schedule a consultation.
