When Bourke Accounting moved to our current and lovely location, changes were made. Accent walls were painted, pictures were hung and knick knacks were strategically placed around the office. Management transformed impersonal Suite 102 into the welcoming Home of Bourke Accounting that it is today. Whether it’s hanging fuzzy dice from the rearview or putting up a mailbox, we humans tend to mark our territory – thankfully, this is usually done with throw pillows and not bodily fluids like our four-legged pals. However, decorating is not the only way in which we announce ownership of a specific environment; we change tax laws, too.
Every time a new president parks the Presidential toothbrush in the Presidential john, changes to our tax laws follow soon after. Are these modifications used to herald in the new boss in an obvious way? Are these changes part of an agenda near and dear to the prez’s heart? While the motivation is immaterial, the new rules are not.
When looking at President Biden’s proposals, it’s pretty clear that not everyone is going to be happy. Just as the former administration’s plan gave free prizes to the rich, Biden’s plan seems to favor the working masses. For example, in an attempt to protect Social Security, Biden wants to make more “income from wealthier Americans subject to the Social Security payroll tax” (Kiplinger.com). For this year, wages above $142,800 aren’t subject to it, but Biden would like to add those making above $400,000 into the Social Security mix (Kiplinger.com). According to economically inclined Negative Nancies, Social Security will run out by 2035 if we don’t change things up (Investopedia.com). It might not be comfortable for certain segments of the population, but I vote that we change things up.
Besides including the wealthy in Social Security taxes, Biden is also proposing increasing the corporate tax rate from 21% to 28%. In addition, and to stop successful companies from paying no tax, all corporations will be “subject to a 15% alternative minimum tax on book profits of $100 million or more.” These companies would then have to pay whatever is bigger – the regular tax or the AMT (Investopedia.com). For those of us here on the ground, making big business pay a little more doesn’t seem so terrible. It’s not all bad news, though. Corporations will also be offered new tax credits, from “benefits to deal with workforce layoffs to small business incentives to provide retirement savings plans” (Investopedia.com).
In order to help struggling families, there’s chatter about temporarily increasing the child tax credit to $3,000 per child aged 6-17 and to $3,600 for kids under 6. There’s further talk about “expanding the childcare credit to 50% of a family’s childcare costs for children under age 13” (Kiplinger.com). These credits would phase out for folks making between $125,000 and $400,000. Finally, there are about a million permutations regarding student loan debt. Rumors abound from simply forgiving interest and penalties all the way to forgiving total student loans and “excluding the forgiven amount from taxation” (Kiplinger.com). Oddly, there is very little discussion regarding how professors and security guards will be paid if all of this forgiveness happens. Perhaps good, ol’ prof will just take one for the team?
Everyone wants to a make a mark. Some of these marks are nice, like planting a vegetable garden. Some of these aren’t so nice, like encouraging unbalanced people to do illegal things. While some of Biden’s new tax proposals might actually help our country, there is no sense in getting invested until the IRS releases their guidance. They are, after all, the ones we taxpayers have to impress.
Bourke Accounting’s tax preparers are paying attention. Although IRS laws change as quickly as the weather in Kentucky, Bourke’s experts will be prepared. When you have a return done by a Bourke Accounting pro, you know that your return will be completed with the most up-to-date knowledge and care. IRS laws are ever changing, the perfectionism and dedication of a Bourke Accounting tax preparer is not.
Written by Sue H.