Student loan debt is still on the rise and new developments regarding repayment and forgiveness have unfolded recently. President Biden will announce his plan for student loan forgiveness and repayment by the end of August 2022.
Student Loan Payment Pause
Loan payments are currently paused but are set to begin again on September 1, 2022. Payments have been paused several times since the Cares Act passed in March 2020. However, it seems the pause may be extended again past the August 31st deadline.
Student Loan Forgiveness
On the other hand, President Biden may announce a decision on student loan forgiveness. There has been some speculation that Biden plans to cancel $10,000 for more than 40 million federal student borrowers. Included loans are the Federal Family Education Loan Program (FFELP), Perkins Loans, Grad PLUS Loans, and Parent PLUS Loans, many of which have not been included in recent loan forgiveness initiatives.
Limited Waiver
A limited waiver was instituted in October 2021, allowing borrowers to count payments that were once considered ineligible toward forgiveness. Ineligible payments include late payments, partial payments and payments made under the incorrect payment plan. This one-time exception is due to expire after October 31, 2022. However, President Biden has named an extension of the waiver as another permanent means of loan forgiveness.
Republican Repayment Plan
Three Republican members of Congress introduced a new bill that serves as an alternative to President Biden’s potential plan. The plan does not include any major loan cancellation. It seeks to end the Public Service Loan Forgiveness program set to begin in July 2023 and the payment pause. The bill also introduces a new Income-Based Repayment (IBR) plan that would replace the current income-driven repayment plans. It would also eliminate capitalization of student loan interest. Finally, the bill would limits student loan interest to 10 years, which can save borrowers thousands of dollars.
Tax Debt Relief for Student Borrowers
While student loan forgiveness seems attractive to many, nothing is set in stone yet. That said, borrowers should continue to plan for repayment. Additionally, borrowers should remain mindful of available tax breaks and filing requirements. If you need tax help, give us a call at 800-536-0734 for a free consultation today.
Many taxpayers are hesitant about calling the IRS for several reasons, including the long wait time to speak with a representative. A phone call could take hours that you may not have to spare in your day to get answers to simple questions. The IRS launched what they believe to be the answer to this problem: voice bot options.
How the IRS Voice Bot Works
Generally, voice bots are artificial intelligence that allow callers to interact using verbal responses. Taxpayers with simple questions about payments, notices and other tax related inquiries can now avoid waiting for a live person to become available.
The voice bot offers services in both English and Spanish, aiding a large percentage of Americans.
Which Lines Have a Voice Bot?
While the IRS states that numerous lines now have voice bot options, it seems this feature will best be suited for Automated Collection System toll-free lines, Accounts Management, discussing payment plan options, and frequently asked questions.
So far, the voice bot has answered over 3 million calls. The IRS continues to add functions to help more taxpayers resolve their issues quickly.
Future Voice Bot Enhancements
Upcoming 2022 enhancements for the automated feature includes:
Account and return transcripts
Payment history
Current balance owed
The Economic Impact Payment line will also have responses for frequently asked questions.
Need more assistance?
Optima Tax Relief is the nation’s leading tax resolution firm with over $1 billion in resolved tax liabilities.
There were about 1.5 million taxpayers that didn’t file a return in 2018. The IRS announced that it has $1.5 billion in tax refunds from 2018 and gave taxpayers until the end of the season to claim their money. If you missed out on claiming your refund, there are steps you can take to make sure you claim other refunds from 2019 and on.
How to claim an old tax refund
Taxpayers have a three-year deadline to claim unpaid tax refunds for federal taxes. While there are instances where it may not be required for you to report your income, filing helps the IRS ensure that you receive any refunds you may be eligible for.
The first thing you should do is make sure that you filed for the year in question. If you missed the filing deadline, you should still file as soon as possible to avoid IRS enforcement. To file a return from 2018 and prior years, you’ll have to file by paper. The final page of your current Form 1040 will tell you which IRS center to send your return to, as it may differ based on your state.
Low and moderate-income families could be eligible for larger refunds by qualifying for Earned Income Tax Credit. This credit is based on the number of children in a household and filing status.
Returns for 2019 and on can be e-filed.
What happens to your refund if you owe back taxes?
The refund is generally applied to any amount that you owe to your state or the IRS. It can be used to offset other overdue balances such as child support and student loans as well.
Optima Tax Relief assists clients with large tax liabilities reach a resolution. Give us a call for a free consultation today at (800) 536-0734.
President Joe Biden has discussed a proposal that would target billionaires in his 2023 budget. The proposal calls for a new minimum tax, forwardly named the “Billionaire Minimum Income Tax.”
What exactly is the Billionaire Minimum Income Tax?
This tax would assess a 20% minimum tax rate on US households worth more than $100 million. However, over half the revenue would likely come from households bringing in more than $1 billion of income.
The proposal document states, “This minimum tax would make sure that the wealthiest Americans no longer pay a tax rate lower than teachers and firefighters.”
Wealthy households that already pay 20% on their full income won’t pay any additional tax under the Billionaire Income Tax proposal. However, if they pay less than 20%, they will be expected to meet the new minimum.
What will the Billionaire Minimum Income Tax accomplish?
The proposal was created as part of Biden’s new spending plan, which is expected to reduce the deficit by $1.3 trillion over the next ten years. About $360 billion of that would be due to this new levy proposal.
In 2021, the federal deficit totaled nearly $2.8 trillion. Should this proposal pass through Congress, we could see nearly half of the deficit decrease over the next ten years.
When would the Billionaire Minimum Income Tax be enacted?
There is still uncertainty surrounding Congress moving forward on Biden’s proposal. Last year, Senate Democrats proposed a billionaires’ tax that ultimately didn’t proceed.
As Congress continues to discuss and debate the new billionaire tax proposal, Optima will update our readers and clients accordingly.
For tax debt assistance, call Optima at (800) 536-0734 for a free consultation today.
Due to the COVID-19 pandemic, millions of US workers lost their jobs. While some were able to return to work in 2021, approximately 25 million people received unemployment benefits and didn’t withhold taxes. The IRS is now looking to collect back taxes for the $325 billion in total benefits and mailed millions of large tax bills this season.
Withholding Unemployment Tax
Most states and the federal government consider unemployment benefits taxable income. You should withhold federal taxes on your unemployment in order to avoid a bill the following tax season.
In 2020, there was a tax break that allowed millions of Americans to owe a lesser amount of tax, or not owe tax at all. However, as the IRS has steadily made efforts to return to normal enforcement activity since 2021, there was no such tax break this year.
What happens if you don’t pay taxes on unemployment benefits?
As with any tax liability, you will receive a tax bill from the IRS via mail. Should you not reach out to the IRS or pay the bill by the end of the tax season, you could face enforcement consequences such as a levy or lien, accrue interest, and lose eligibility for a refund after filing a return.
What to do if you owe taxes for unemployment benefits
If you owe taxes on your unemployment benefits and can’t afford to pay it back in full, you have a couple of options. The first option, if your tax bill isn’t too high by your means, you can contact the IRS to set up a payment plan. This option allows you to negotiate how much you will pay monthly until the bill is paid.
Should you find that your liability is too high for you to pay back or you’re facing hardship that doesn’t allow you to afford your payment options, consider seeking professional assistance such as Optima Tax Relief.
At Optima, we assist clients who owe state and federal taxes, including individual, joint filers, and business filers. Give us a call at (800) 536-0734 for a free consultation today.
The inflation is directly affecting drivers and daily commuters alike with skyrocketing gas prices. In California, the average cost for regular gas is now up to $5.82, or $6.21 for premium. Recently, the government has decided to step in on federal and state levels to alleviate costs and provide support to the public. This has led to the creation of a new gas stimulus, which would support households that own vehicles.
Gas Rebate Act of 2022
The Gas Rebate was introduced by Reps Mike Thompson (CA-05), John Larson (CT-01), and Lauren Underwood (IL-14). The bill calls for an energy rebate of $100 per month, plus another $100 for each dependent for the rest of 2022.
“The Putin Price Hike is putting a strain on our economy,” Thompson said, “and I am proud to be working with Reps. Larson and Underwood to introduce this legislation to provide middle-class Americans with monthly payments to ease the financial burden of this global crises.”
The stipulation is that the average gas prices must exceed $4.00 per gallon; meaning, if at any time during the year the gas prices drop to an affordable price, then the stimulus check would not be dispersed that month.
What are the requirements to be eligible for the gas stimulus check?
Single filers earning less than $75,000 and phases out to $80,000
Joint filers earning less than $150,000 and phases out at $160,000
If you earn more than $80,000, you could still be eligible for a smaller amount.
Gavin Newsom’s Gas Proposal
Governor Newsom proposed $400 per vehicle in direct payments for California taxpayers. The maximum is two cars per household. The proposal calls for the use of $9 billion of the state’s budget surplus to provide the $400 rebate.
Optima will continue to follow news on the Gas Rebate Act of 2022 and Governor Newsom’s proposal, and update our readers and client accordingly.
At Optima, we help clients that are facing tax debt in their journey to a resolution. Give us a call at (800)536-0734 for a free consultation today.
