Key Takeaways
- IRS issues reminder for December 31 retirement distribution deadline.
- Simplified foreign currency rules go final.
- "Avoid taxes like the rich and famous."
- House-Senate split on 2025 tax bill plans.
- More on IRS Commissioner-designate Billy Long.
- Assistant dean, chief embezzler.
- Noodle Ring Day.
IRS urges many retirees to make required withdrawals from retirement plans by year-end deadline - IRS:
Required minimum distributions (RMDs) are amounts that many retirement plan and IRA account owners must withdraw annually. These withdrawals are considered taxable income and may incur penalties if not taken on time. The IRS.gov retirement plan and IRA required minimum distributions FAQs webpage provides detailed information regarding the new provisions in the law.
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Penalties for missed distributions
If an account owner fails to withdraw the full amount of the RMD by the due date, the owner is subject to a 25% excise tax on the amount not withdrawn. The 25% excise tax rate is reduced to 10% if the error is corrected within two years.
RMD calculations
IRA trustees or plan administrators must either report the RMD amount to the account owner or offer to calculate it. Each IRA plan’s RMD must be calculated separately, however owners can withdraw the total required amount from one or more accounts of their choice as long as the annual requirement is met. An IRA trustee or plan administrator may calculate the RMD, but the account owner is ultimately responsible for ensuring the correct RMD is taken. The IRS provides required minimum distribution worksheets to help calculate the RMD amounts and payout periods.
Treasury Finalizes Simplified Foreign Currency Rules - Natalie Olivo, Law360 Tax Authority ($):
Treasury also proposed regulations Tuesday that are designed to "reduce the compliance burden" regarding certain foreign currency transactions that are disregarded for U.S. tax purposes.
Related: Eide Bailly International Tax Services
Now You Can Avoid Taxes Like the Rich and Famous - Jon Sindreu, Wall Street Journal:
Take Vanguard, which in 2021 bought direct-indexing specialist Just Invest, and is deploying this capability for accounts with as little as $250,000. Two decades ago, replicating an index while assessing the tax situation daily in order to sell and reinvest—all while not violating the wash-sale rule that prevents tax-loss harvesting if a similar security is purchased shortly after—required an unworkable number of staff hours. Now it can be done by a computer algorithm.
Schwab’s direct-indexing strategies have an even lower minimum: $100,000.
The Coming 2025 Tax Battles
House GOP’s top tax writer battles with party leaders on Trump’s border-tax strategy - Benjamin Guggenheim and Jordain Carney, Politico:
Thune, backed by incoming Budget Chair Lindsey Graham and incoming White House deputy chief of staff for policy Stephen Miller, among others, is trying to rally the party behind a two-step plan in which tax fights would be resolved at the end so they don’t hold up other items on the GOP’s wish list.
From Politico's Playbook newsletter this morning:
Senate, House Republicans Split on Tax Bill Timeline for 2025 - Zach Cohen and Chris Cioffi, Bloomberg ($). "Consolidation of support behind Thune’s proposed schedule augurs a later agreement on renewal of expiring pieces of the GOP’s 2017 tax law, spelling uncertainty for taxpayers and preparers in the lead-up to the 2026 filing season."
Tax Bill Should Include Tips; SALT Solution Unclear, Scalise Says - Doug Sword, Tax Notes ($):
“When Trump talked about no tax on tips, we’re going to put that in the bill. We’re going to figure out a way to get this done because we promised we’d do it,” Scalise said.
Regarding changes to the $10,000 cap on itemized deductions for state and local taxes:
All About That Base(line) - Daniel Bunn and Garrett Watson, Tax Policy Blog. "The bottom line is that using the current policy baseline inflates deficits even if it gives lawmakers the rhetorical opportunity to say that legislation extending the Tax Cuts and Jobs Act has no additional cost."
Incoming Tax Personnel
A Miss by Trump: Billy Long as IRS Commissioner - Russ Fox, Taxable Talk (my emphasis):
My reason is different. Mr. Long’s tax background is a bit checkered: He worked for what we in the tax professional community call an “ERC Mill.” These were the companies who had continual radio and television advertising saying everyone qualified for the Employee Retention Credit (ERC), and you can get thousands and thousands of dollars from it. An aside: Our firm had five clients approach us about the ERC. Only two qualified: one qualified for one quarter; the other, who was told by an ERC mill that he qualified for $125,000 in credits, qualified for about 15% of that. The ERC mills left a very bad taste with tax professionals.
But Russ, Billy Long said on a podcast that "virtually everyone" qualifies!
Related: IRS Announces Next Steps for ERC
Crapo Plans to Move Quickly on Bessent Nomination - Welsey Elmore, Tax Notes ($):
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Trump announced the selection of Bessent on November 22. Bessent is the CEO of investment firm Key Square Group and served as an economic adviser for Trump during his reelection campaign.
Outgoing tax personnel
Biden Says Trump’s Tax Cuts and Tariffs Would Be ‘a Major Mistake’ - Zolan Kanno-Youngs, New York Times:
In a last-ditch attempt to salvage his agenda, Mr. Biden also noted that most of the federal investments have benefited districts led by Mr. Trump’s party. That includes the Inflation Reduction Act, Mr. Biden’s clean energy bill that Mr. Trump has threatened to gut.
Blogs & Bits
An RMD to-do list, including ways to use the money - Kay Bell, Don't Mess With Taxes. "When all your retirement money is in various traditional IRAs, the required withdrawal amount for each must be calculated separately. However, you don’t have to take a separate RMD from each IRA. You may add up the total required amount due from all your IRAs and then take that sum from one IRA or a portion from each of your IRAs."
Simple Tips To Maximize The Tax Benefits Of Your Charitable Giving - Kelly Phillips Erb, Forbes. "Choose carefully. Remember, for federal income tax purposes, only donations to qualified charitable organizations are deductible. And even if you don’t plan on the deduction, it’s a good idea to check out the credentials of a potential charitable organization before you donate. If you're looking for a tax break, you can always confirm an organization's charitable status through the IRS website using its Search Tool."
Updated! Federal District Court Pauses Enforcement of Beneficial Ownership Information Reporting - Kristine Tidgren, Ag Docket:
In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.
Those who can't do, teach. Those who can't teach become administrators. Some of them steal.
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“The defendant abused her position of trust as an assistant dean to orchestrate an elaborate embezzlement scheme for more than a decade. In doing so, she and her co-conspirators stole more than $1.3 million intended to benefit the school and its students. My office is committed to relentlessly prosecuting those who commit financial frauds.”
While the IRS didn't disclose the name of the school, a moment's internet research reveals that Seton Hall Law School was the victim. While no tax charges were proffered, I don't assume that the former assistant dean paid taxes on the stolen funds.
Related: Eide Bailly Fraud Prevention & Detection Services.
What day is it?
It's "Noodle Ring Day." Yeah, I didn't know either. Bing Copilot explains:
Here are a couple of popular variations:
1. Classic Noodle Ring: This version typically includes egg noodles, eggs, milk, Worcestershire sauce, ketchup, grated cheese, and sometimes ham, peas, and pearl onions
2. Picture Perfect Noodle Ring: This recipe uses fine egg noodles, cream of mushroom soup, sour cream, melted butter, Worcestershire sauce, beaten eggs, shredded cheddar cheese, chopped broccoli, onion soup mix, and salt
The noodle ring is often served as a side dish and can be filled with various ingredients like vegetables, meats, or sauces to complement the main course. It's a nostalgic comfort food that brings a touch of retro charm to the table.