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<ul class="summary-list"><li>The IRS's probe into the abuse of a Puerto Rican tax benefit has made little progress, a whistleblower said.</li><li>In a letter reviewed by The New York Times, the insider says that less than 1% of beneficiaries were audited.</li></ul>A whistleblower claims that the Internal Revenue Service has not done enough to stop the exploitation of a Puerto Rico tax break, <a href="https://www.nytimes.com/2024/05/28/business/irs-puerto-rico-tax.html" target="_blank" rel="noopener">The New York Times</a> reported. According to a letter written by an IRS insider, the agency's three-year campaign to uncover abuse of a tax benefit has failed to make much headway. Fewer than 1% of beneficiaries have been audited, yielding no taxes, the whistleblower said."My understanding is that no assessments have been made by any office nationwide for a campaign that has been open for three years," the letter said. The NYT-reviewed document has sparked a Senate investigation, and lawmakers are now urging the enforcement campaign to pick up speed.The IRS' high-profile operation centers on a 2012 tax break that allows new Puerto Rican residents to not pay local taxes on investment income made when residing on the island. <a href="https://www.businessinsider.com/tax-breaks-puerto-rico-wealthy-americans-housing-prices-job-opportunities-2024-3#:~:text=Many%20of%20those%20people%20are,accrued%20while%20on%20the%20island.">Such benefits</a> are common on the island territory, offered to entice wealthier Americans and corporations to move there.While on the surface this benefit would seem easy to apply — it's chiefly determined by where the investor lives — complications arise when an investment made outside of Puerto Rico leads to a profit after the residents move to the island. For instance, if a business was started in the mainland US and sold after its owner settled on the island, the tax benefit should only apply for the years lived in Puerto Rico. However, concerns have risen that investors are ignoring this and exempting the entirety of their profits.The IRS opened its probe into the issue after the 2020 indictment of Gabriel Hernandez, an accountant accused of offering to help wealthy Americans exploit the 2012 tax break, <a href="https://www.bloomberg.com/news/articles/2023-07-12/irs-probes-puerto-rico-tax-breaks-that-lured-crypto-traders-fund-managers" target="_blank" rel="noopener">Bloomberg</a> reported. Hernandez has pleaded not guilty.However, according to the whistleblower's letter, few enforcement actions have actually been taken against those who may be abusing the benefit. For instance, the IRS will typically send out "soft letters" to any scrutinized beneficiaries, encouraging them to voluntarily fix any potential issue with their taxes. Yet, the agency hasn't issued any soft letters, the whistleblower said. "This is completely absurd in light of the amount of tax dollars at issue," the insider wrote.In an interview with NYT, IRS Commissioner Danny Werfel acknowledged that no soft letters were sent, but highlighted the dozens that have been audited. He also said that the campaign was still in an early phase and that momentum is growing after the agency received $80 billion in new funding from the 2022 Inflation Reduction Act."We're still coming out of our period of underinvestment, and we are still building muscle that atrophied," IRS commissioner Danny Werfel told NYT.

The IRS has failed to police the huge tax breaks offered by Puerto Rico, whistleblower claims

<ul class="summary-list"><li>Cities and counties are voting on property and sales tax hikes to fund childcare.</li><li>Other localities already have similar laws in place, with Alaska taxing marijuana sales to fund early childhood programs.</li></ul>Cities and counties across the US are coming up with ways to make <a target="_blank" class="" href="https://www.businessinsider.com/childcare-costs-presidential-election-scenarios-parents-paid-leave-harris-trump-2024-10">childcare</a> more affordable — and many are turning to <a target="_blank" class="" href="https://www.businessinsider.com/tax-cut-tariff-plan-outlook-presidential-election-scenarios-harris-trump-2024-10">taxes</a>.Three localities are voting to increase taxes to boost childcare funding for low-income and middle-class families.Voters in Sonoma County, California, are deciding whether impose a quarter-cent sales taxes to pay for childcare and early childhood education, as well as resources for children experiencing homelessness or abuse.Residents of Travis County, Texas — which includes Austin — will decide on increasing property taxes by 2.5-cents to broaden access to childcare for low-income families.A similar measure in St. Paul, Minnesota, would also hike property taxes to fund citywide childcare initiatives for low-income families.Using tax revenue to fund childcare isn't a new idea. Local taxes <a target="_blank" href="https://www.edweek.org/leadership/property-taxes-fuel-k-12-budgets-how-well-does-that-work/2022/11">already fund K-12 education</a> in most states — a solution that works for public schools, but can leave early childhood education programs underfunded. Here's what some cities, counties, and states are already taxing to fund childcare.<h2 id="bc6f6fc8-4184-4147-8e7a-ca0eda41d38a">Cities are looking at tax solutions to fund childcare</h2>Some cities have already tried allocating tax revenue to care for infants, toddlers, and preschoolers. In 2022, New Orleans voters backed a property tax increase to fund more than 1,000 childcare seats for low-income families. Because of the referendum, <a target="_blank" href="https://www.nola.com/news/politics/new-orleans-voters-back-early-childhood-education-millage-in-single-issue-vote/article_c792ae0c-c730-11ec-ba3f-272ffa6e0774.html">New Orleans' childcare budget </a>increased to $21 million from $3 million annually for 20 years.Whatcom County, Washington also approved a property tax increase in 2022, which boosted funding by <a target="_blank" href="https://childrensfundingproject.org/wp-content/uploads/Whatcom-campaign-case-study_FINAL.pdf">$10 million</a> for childcare and young families' mental health in the county's annual budget. Other areas have taken the sales tax approach, similar to Sonoma County's ballot measure: Anchorage, Alaska approved in 2023 a marijuana sales tax to fund early childhood programs.Colorado has a policy that allows taxpayers who donate to qualifying child care facilities and programs to claim an income tax credit equal to 50% of their contribution.To be sure, local tax revenue cannot replace funding for America's whole childcare system. St. Paul Council Member Rebecca Noecker said that local policies can complement larger state-level and <a target="_blank" href="https://www.whitehouse.gov/cea/written-materials/2023/11/07/child-care-stabilization/">federal funding pools.</a>Win or lose, Noecker said childcare-related ballot measures raise awareness about childcare access."Now people in St. Paul are talking about childcare in a way that they never were before," she said.

Higher taxes for cheaper childcare? 3 localities are voting on it and we want to hear from you.

<keyword id="19983534" type="General" weightage="100" keywordseo="Hero-MotoCorp" source="keywords" meta.keywordsubtype="org" meta.entityname="Hero MotoCorp" meta.hostid="83" meta.entityid="Hero MotoCorp">Hero MotoCorp</keyword> on Sunday said it has received a <keyword id="19901479" type="General" weightage="20" keywordseo="demand-notice" source="keywords">demand notice</keyword> of over Rs 17 crore from <keyword id="22828708" type="General" weightage="20" keywordseo="Delhi-GST-authorities" source="keywords">Delhi GST authorities</keyword>. The company has received an order for disallowance of <keyword id="19980589" type="General" weightage="20" keywordseo="input-tax-credit" source="keywords">input tax credit</keyword> for FY 2019-20 from the Office of the <keyword id="20263022" type="General" weightage="20" keywordseo="gst-officer" source="keywords">GST Officer</keyword>, <keyword id="22830157" type="General" weightage="20" keywordseo="Government-of-NCT-of-Delhi" source="keywords" meta.keywordsubtype="org" meta.entityname="Government of NCT of Delhi" meta.hostid="83" meta.entityid="Government of NCT of Delhi">Government of NCT of Delhi</keyword>, the two-wheeler major said in a <keyword id="19954258" type="General" weightage="20" keywordseo="regulatory-filing" source="keywords">regulatory filing</keyword>. The company said the tax demand is for Rs 9,38,66,513, interest Rs 7,32,15,880 and penalty Rs 93,86,651 as per the notice. Based on the company's assessment, the tax demand is not maintainable in law, it added. The input tax credit disallowed by the office of the GST Officer, New Delhi, was rightfully claimed by the company as per the provisions of the GST law but disallowed on account of the supplier's non-compliance, which is not attributable to the company, <keyword id="7029" type="General" weightage="20" keywordseo="Hero" source="Orion">Hero</keyword> MotoCorp said. Accordingly, the company shall take appropriate steps, including filing an appeal, it added. There is no material impact on financials, operations or other activities of the company, Hero MotoCorp said.

Hero MotoCorp gets over Rs 17 crore tax notice from Delhi GST authorities

About 6 crore <keyword id="19948101" type="General" weightage="100" keywordseo="income-tax-returns" source="keywords">income tax returns</keyword> have been filed for income earned in 2023-24, of which 70 per cent were filed under the new <keyword id="22442211" type="General" weightage="20" keywordseo="simplified-tax-regime" source="keywords">simplified tax regime</keyword> which offers lower rate of tax, Revenue Secretary Sanjay Malhotra said on Tuesday. Addressing the post-budget session of PHD Chamber of Commerce and Industry, Malhotra said there were apprehensions as to whether people would shift to the simplified tax regime. "About 6 crore filed for last year and 70 per cent is under the new income tax regime. The whole move has been towards simplicity with the ultimate purpose being to reduce the <keyword id="20380188" type="General" weightage="20" keywordseo="compliance-burden" source="keywords">compliance burden</keyword>," Malhotra said. For the 2022-23 fiscal, 8.61 crore ITRs were filed. The idea behind comprehensive income tax review as announced in the <keyword id="19936553" type="General" weightage="20" keywordseo="budget" source="keywords">Budget</keyword> is to make the tax law simpler. "We will come up with a draft and then we will seek suggestions," Malhotra said. Currently, India has two <keyword id="20155151" type="General" weightage="20" keywordseo="personal-income-tax" source="keywords">personal income tax</keyword> regimes. In the old income tax regime, the <keyword id="20452955" type="General" weightage="20" keywordseo="tax-rates" source="keywords">tax rates</keyword> are relatively high but taxpayers can claim several exemptions and <keyword id="20385232" type="General" weightage="20" keywordseo="deductions" source="keywords">deductions</keyword>. However, in the <keyword id="19935168" type="General" weightage="20" keywordseo="new-tax-regime" source="keywords">new tax regime</keyword>, tax rates are lower but fewer deductions.

About 6 cr ITRs filed for FY24; 70% under new tax regime

Union Finance Minister <keyword id="19916618" type="General" weightage="100" keywordseo="Nirmala-Sitharaman" source="keywords">Nirmala Sitharaman</keyword> highlighted India's significant progress in electrification, <keyword id="23692737" type="General" weightage="20" keywordseo="water-accessibility" source="keywords">water accessibility</keyword>, and <keyword id="20879840" type="General" weightage="20" keywordseo="economic-empowerment" source="keywords">economic empowerment</keyword> during a fireside chat with John J Hamre, President and CEO of the Center for Strategic and International Studies (CSIS), in Washington, DC. Highlighting the progress made in <keyword id="23003732" type="General" weightage="20" keywordseo="rural-electrification" source="keywords">rural electrification</keyword>, <keyword id="19916494" type="General" weightage="20" keywordseo="sitharaman" source="keywords">Sitharaman</keyword> highlighted that every village in India now has access to electricity. She noted that in 2014, many villages across India, including those near state capitals, lacked even basic infrastructure for electrification. She said "I don't think any village in India is unelectrified today. Households have received the connections. So, if I remember the situation in 2014, there were still many villages in many parts of India, some even very close to the state capital, provincial headquarters, without even a pole to receive the electric wires. Now, all that has been overcome. Houses have got their electricity." The Finance Minister also discussed the <keyword id="19971121" type="General" weightage="20" keywordseo="Jal-Jeevan-Mission" source="keywords">Jal Jeevan Mission</keyword>, a program initiated by Prime Minister Narendra Modi to provide tap water connections to every household. She explained, "Earlier, one tap water connection was provided to a village, from where everyone would take water to their home. But under the 'Jal Jeevan Mission,' each and every house gets a tap water connection." Sitharaman emphasized the positive impact of this initiative on health, sanitation, and convenience for millions of Indian families. Turning to the economic empowerment of <keyword id="20101496" type="General" weightage="20" keywordseo="municipalities" source="keywords">municipalities</keyword> and urban centers, Sitharaman noted that these local governments are receiving increased autonomy and financial support. She explained that municipalities receive a portion of taxes collected by the central government, along with additional funds based on the Finance Commission's recommendations. "Over and above, today, we are enhancing their capacities to raise resources from the market. Municipalities are a very powerful instrument of economic development and they, on their own, are raising a lot of resources," she added. Sitharaman also expressed confidence in India's economic growth and its appeal to <keyword id="20632552" type="General" weightage="20" keywordseo="global-investors" source="keywords">global investors</keyword>. "The policies are working, reforms are happening, and they shall continue to happen," she stated, adding that "greater liberalisation of the economy will be there and, in a way, we are accessing newer markets and speaking about the <keyword id="19948184" type="General" weightage="20" keywordseo="Indian-economy" source="keywords">Indian economy</keyword> in more avenues and platforms that will attract more investors." With ongoing reforms and increased global engagement, Sitharaman noted, India is solidifying its position as a significant player on the world stage, expanding its economic reach and inviting foreign investment.

No village in India left without access to electricity, claims FM Nirmala Sitharaman

<ul class="summary-list"><li>Electric cars are expensive, but tax credits might be able to help.</li><li>Federal tax incentives are crucial for EV buyers. State rebates help, too.</li></ul>While electric-vehicle prices have come down in the past year, affordability is still an issue for US buyers.According to Cox Automotive, new EVs sold for an average of $56,328 in September, while the average price paid for any new car was $48,397.Such high pricing is making it harder for <a href="https://www.businessinsider.com/electric-vehicle-misconceptions-about-the-ev-transition-market-sales-2024-5">a new wave of shoppers</a> to commit to an electric car, but federal and state tax credits that give you money back for buying an EV could mean you're in luck if you're looking to plug in. You just need to know how to cash in.New requirements for a $7,500 federal tax credit under the <a href="https://www.businessinsider.com/how-to-get-electric-vehicle-tax-credit-ira-biden-2022-12">Inflation Reduction Act</a> went into effect at the start of this year. The revised rules <a href="https://www.businessinsider.com/list-evs-electric-cars-qualify-for-federal-tax-credit-2024-1">limited the number of EVs</a> on the market that qualify for the credit, but more vehicles are expected to qualify as automakers adjust. In the meantime, <a href="https://www.businessinsider.com/electric-vehicle-lease-payments-cheaper-affordability-hack-2024-9">a leasing loophole</a> is helping more buyers access the full $7,500 credit.Here's what to know about claiming tax credits and rebates on electric-car purchases.<div type="image" title="Tesla cars on the production line in a warehouse." height="3857" width="5142" msid="115030133" hostid="261" sizebytes="1143850"></div><h2>Federal EV tax credits</h2>The <a href="https://fueleconomy.gov/feg/tax2023.shtml">federal EV tax credit</a> is split: You can get $3,750 if the vehicle meets either the critical-minerals requirements or the battery-component requirements. If it meets both sets of requirements, it qualifies for the full $7,500 credit.Here's a closer look at those requirements:<ul><li>The vehicle must have a battery capacity of 7 kilowatt-hours or more.</li><li>The gross vehicle weight rating must be less than 14,000 pounds. (For context, the gargantuan Hummer EV weighs about 9,000 pounds.)</li><li>Final assembly of the vehicle must take place in North America.</li><li>At least 50% of minerals for the vehicle and battery components must be extracted, processed, or recycled in the US or countries with which the US has a free-trade agreement.</li><li>The manufacturer's suggested retail price can't top $80,000 for vans, SUVs, and pickup trucks, or $55,000 for all other vehicles.</li></ul><div type="image" title="A charger hanging out the side of a car." height="2673" width="3565" msid="115030135" hostid="261" sizebytes="227186"></div>The leasing loophole:<ul><li><a href="https://www.businessinsider.com/electric-vehicle-lease-payments-cheaper-affordability-hack-2024-9">Leased electric vehicles</a> are categorized under the "qualified commercial clean vehicles" tax credit, which has fewer restrictions than the "new clean vehicle" credit outlined above.</li><li>Under these rules, dealers are afforded $7,500 for all-electric vehicles and are not held to the individual buyer standards of income caps, MSRP limits, or mineral and component requirements. Dealers are taking advantage of this by passing along their $7,500 credit to lessees who may not otherwise qualify for the credit if they purchase the vehicle.</li></ul>If you're buying used:<ul><li>The used-EV credit took effect last year.</li><li>The vehicle must be at least two years old, under $25,000, and sold by a licensed dealership.</li><li>Your income can't exceed $150,000 if you're a joint filer or surviving spouse, $112,500 if you're a head of household, or $75,000 if you're a single filer.</li><li>Taxpayers are eligible for a credit of 30% of the vehicle price, up to $4,000.</li><li>The purchaser cannot be the same person who bought it new.</li><li>There can only be one credit taken per vehicle.</li><li>Taxpayers can use this credit once every three years.</li></ul><h2><div type="image" title="Three Ford Mustang Mach-E electric vehicles on a dealer lot." height="1665" width="2220" msid="115030136" hostid="261" sizebytes="198372"></div></h2><h2>State credits</h2>Some states have incentives for EVs in addition to the federal tax credits. Here are just a few examples.Colorado: <ul><li>Residents can get <a href="https://afdc.energy.gov/laws/11702">a tax credit</a> of up to $5,000 for buying or leasing a light-duty EV or truck or a plug-in hybrid EV.</li></ul>Illinois:<ul><li>The state offers <a href="https://www2.illinois.gov/epa/topics/ceja/Pages/default.aspx">rebates</a> of up to $4,000 for residents who buy or lease a new or used EV.</li></ul>New York: <ul><li>Residents can get a $2,000 rebate for EVs with an EPA-rated range greater than 200 miles, $1,000 for EVs rated 40 to 199 miles, and $500 for EVs with a range under 40 miles or with a sticker price under $42,000.</li></ul>Rhode Island:<ul><li>The state offers residents up to $1,500 for the purchase or lease of a new battery-electric vehicle or $1,000 for a used one. It also offers up to $1,000 for the purchase of a new plug-in hybrid vehicle or $750 for a used one.</li></ul>

Using tax credits and rebates to your advantage could save you thousands on a new electric vehicle

<ul class="summary-list"><li>Trump announced a new tax proposal to appeal to car buyers and the auto industry.</li><li>It took him a while to get to that. Along the way, he denigrated Detroit, where he was speaking.</li></ul>On Thursday, former President Donald Trump traveled to Michigan to announce a new tax cut proposal designed to appeal to both car buyers and the auto industry.Trump told the Detroit Economic Club that under the new proposal, interest on car loans would be fully tax-deductible, as is the case with <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/mortgages/mortgage-interest-deduction">home mortgage loans</a>.The proposal, which would require Congress's approval and is part of a broader <a target="_blank" href="https://www.businessinsider.com/trump-tax-plan-tarriffs-benefits-top-earners-study-2024-10">array of tax cuts</a> that the former president would seek next year, aims to make it easier to buy a car and stimulate the auto manufacturing industry."It's like the paper clip," Trump mused, claiming he'd spoken to a person who worked in the auto industry who was dumbstruck by the proposal. "Somebody comes up with the paper clip, and everybody asks 'Why the hell didn't I think of that, right?'"By that point, Trump was roughly two hours into his address.Prior to that, the former president offered various musings on topics ranging from the ongoing presidential election, to his occasional <a target="_blank" href="https://www.businessinsider.com/trump-suffers-teleprompter-trauma-at-a-rally-in-ohio-2024-3">trouble with faulty teleprompter</a> systems, to the state of the economy."The word 'grocery,' yeah, it's a sort of simple word, but it sort of means like everything you eat," Trump said at one point. "The stomach is speaking, it always does." At one point, Trump casually noted that he had another grandchild on the way: His youngest daughter, Tiffany, is pregnant."She's gonna have a baby. So that's nice," Trump said.Trump also said that "companies outside of our world, big companies, powerful companies" had been allowed to "come in and raid and rape our country.""Oooh, he used the word 'rape'," Trump said mockingly. "That's right I used the word 'rape.' They raped our country." And when discussing the impact of a potential victory by Vice President Kamala Harris, Trump denigrated the city of Detroit, where he was speaking."The whole country's going to be like — you want to know the truth? It'll be like Detroit," Trump said. "Our whole country will end up being like Detroit if she's your president."

In rambling, hours-long speech, Trump introduces new car loan tax proposal

<keyword id="19896016" type="General" weightage="20" keywordseo="New-Delhi" source="keywords">New Delhi</keyword>: The 54th Meeting of the <keyword id="21275205" type="General" weightage="20" keywordseo="Goods-and-Services-Tax-Council" source="keywords" meta.keywordsubtype="org" meta.entityname="Goods and Services Tax Council" meta.hostid="261" meta.entityid="Goods and Services Tax Council">Goods and Services Tax Council</keyword> or GST Council, will be held on 9th September 2024 in New Delhi, the GST Council said in a post on social media platform "X" on Tuesday. On June 22, <keyword id="19956758" type="General" weightage="20" keywordseo="Finance-Minister" source="keywords">Finance Minister</keyword> Nirmala Sitharaman said that the next meeting of the GST Council will take place in mid to late August. The aim of this meeting will be to discuss the pending issues of the last meeting. The council is expected to discuss rate rationalisation and compliance, among others. The GST Council, consisting of the Union Finance Minister and representatives from all States and Union Territories, was established to make decisions on various aspects of GST, including <keyword id="20452955" type="General" weightage="20" keywordseo="tax-rates" source="keywords">tax rates</keyword>, exemptions, and administrative procedures. It played a crucial role in shaping the GST framework in India. The last meeting of the GST Council was held on 22 June 2024 this year. During the meeting, the council recommended relaxation to taxation, Input Tax Credit (ITC) claims and demand notices. The GST Council proposes exemptions for specific services offered by Indian Railways to the general public, as well as for intra-railway transactions. During the 53rd meeting of the council, it proposed an exemption for specific services offered by Indian Railways to the general public, as well as for intra-railway transactions. The sale of platform tickets and services such as retiring rooms, waiting rooms, cloakroom facilities, and battery-operated car services are now exempt from GST. The 53rd council meeting was marked by several key decisions aimed at easing the compliance burden and providing relief to taxpayers. "Today's <keyword id="20115983" type="General" weightage="100" keywordseo="GST-Council-meeting" source="keywords">GST Council meeting</keyword> has taken a lot of decisions on trade facilitation, easing compliance burden and relief to taxpayers in terms of compliance easing out," the Finance Minister had said. The GST Council recommended waiving interest penalties on demand notices issued under Section 73 of the GST Act for fiscal years 2017-18, 2018-19, and 2019-20. The Council, in its June 22 meeting, approved an extension for availing input tax credit (ITC) on any invoice or debit note. To curb government litigation, the Council has recommended setting monetary thresholds for filing appeals by departments: Rs 20 lakh for the GST appellate tribunal, Rs 1 crore for high courts, and Rs 2 crore for the Supreme Court. In a move to assist small taxpayers, the Council, in its last meeting, extended the deadline for furnishing returns from April 30 to June 30 for the fiscal year 2024-25 and subsequent years. The Council, in its last meeting, recommended the phased rollout of biometric-based Aadhaar authentication for GST registration applicants across India. The Council recommended a uniform GST rate of 12 per cent on all milk cans, regardless of their material (steel, iron, or aluminium), to eliminate disputes. The Finance Minister, during the last GST meeting, reiterated the central government's intent to bring petrol and diesel under the Goods and Services Tax (GST) framework. She highlighted that the groundwork for this inclusion was laid during the initial implementation of GST and emphasized that the decision now lies with the state governments. The central government has long maintained that incorporating petrol and diesel into GST would streamline tax rates and potentially reduce prices for consumers.

54th GST Council meeting to take place on September 9 in New Delhi

The deadline to file your <keyword id="19948101" type="General" weightage="20" keywordseo="income-tax-returns" source="keywords">income tax returns</keyword> is approaching fast, and Sana is perplexed. All of 23, she's just started earning and working at an MNC, earning Rs 7,00,000 per annum, and can't figure out which <keyword id="20301439" type="General" weightage="20" keywordseo="tax-regime" source="keywords">tax regime</keyword> would work best for her. If you're having the same concerns and can't seem to wrap your head around the <keyword id="19935168" type="General" weightage="20" keywordseo="new-tax-regime" source="keywords">new tax regime</keyword>, here's a ready reckoner for you: When should I choose new tax regime? Think of choosing a tax regime as having to choose a friend in office. The <keyword id="8706677" type="General" weightage="20" keywordseo="old-tax-regime" source="Orion">old tax regime</keyword> is that aged, wise senior who has answers and hacks for everything. Want to get over with a boring project quickly? They will certainly have a trick up their sleeve! On the other hand, the new regime is far more chilled out, lax and is a no-nonsense person who wants nothing to do with long documents and longer meetings. The new regime was introduced in budget 2020 to simplify taxation, and offer lower rate of taxes as compared to the old regime. However, there's a catch. You cannot claim the 70+ exemptions and deductions that help bring down your taxable income and hence, reduce your tax liability. This option is exclusively available under the old tax regime. The main USP of this tax regime? Lower tax rates, and fuss of deductions! Consider this. If your income is within the range of Rs 5,00,000-Rs 12,00,000, and you have no investments, <keyword id="99916" type="General" weightage="20" keywordseo="house-rent-allowance" source="Orion">house rent allowance</keyword> (<keyword id="19944588" type="General" weightage="20" keywordseo="hra" source="keywords">HRA</keyword>), health/life insurance premiums or other such deductions to claim, the new tax regime would obviously make more sense to you, given the significant difference in tax liabilities (just 5% under new regime, and a whopping 20% in old regime for those in the Rs 5-6 lakh bracket!) <div type="image" title="Tax rates under old and new regime" msid="111685908" hostid="261"></div> So, if you're someone who hates complex tax calculations, wants minimal tax deductions, the new regime might just be for you! But remember, there are two conditions under which this new regime will be automatically chosen for calculating your taxes: <ul><li>If you keep procrastinating and don't file your <keyword id="6374875" type="General" weightage="20" keywordseo="ITR" source="Orion">ITR</keyword> till July 31, 2024</li><li>If you do not specifically opt for the old tax regime on your employer's HR portal</li></ul>Also, if you earn less than Rs 3,00,000 per annum, you are completely exempted from paying any tax at all. In the old regime, this basic limit is slightly lower at Rs 2,50,000. Also read: <a href="https://www.businessinsider.in/personal-finance/income-tax/all-you-need-to-know-about-the-new-tax-regime/articleshow/111578840.cms" data-type="tilCustomLink">All you need to know about the new tax regime</a> So, what do I get under this regime? Thanks to a rebate under Section 87A, if you earn up to Rs 7 lakh per annum, your tax liability (and Sana's as well) will effectively be zero. This is limited to Rs 5 lakh under the old regime. While a <keyword id="20429578" type="General" weightage="20" keywordseo="standard-deduction" source="keywords">standard deduction</keyword> of Rs 50,000 is available under both of them (so you can directly deduct Rs 50,000 from your total income before even beginning to calculate your tax liability), there are a lot more deductions and exemptions that this regime DOES NOT allow you to avail: <ul><li>Leave Travel Allowance (LTA)</li><li>House Rent Allowance (HRA) (Comes in handy if you're paying hefty rents in metros)</li><li>Interest on housing loan (on self-occupied property or vacant property)</li><li>Own contribution to NPS (If there's any)</li><li>Interest earned on savings bank A/Cs </li><li>Investments made in ELSS, PPF</li><li>Premiums paid towards life, health insurance policies</li></ul>As for the deductions that are allowed, that makes for a pretty small list: <ul><li>Transport allowances (only if you are specially abled)</li><li>Gifts of up to Rs 50,000</li><li>Employer’s contribution to your NPS account</li><li>Interest paid on home loan only on let-out property</li></ul>But that's the trade-off. You get to pay taxes at low rates, yes, but you also don't get to claim a whole lot other deductions. Notes CA Nitesh Buddhadev, "Which regime is beneficial for you depends upon the allowances and deduction available to you during a relevant financial year. So, if your total income from salary is Rs 10.5 lakh and if the aggregate of any of the deductions / allowances you can claim is less than Rs. 3.15 lakh, you should opt for the new tax regime. If you have not invested in multiple tax-savings scheme, the new regime will work better. So, don't make this decision in any haste. You can choose your tax regime only once in a financial year. And if your income from business or other professions, be even more careful, because this will then become a once in a lifetime choice for you (quite literally!). So, take a good hard look at your finances, and then decide what works best for you!

Confused about the new tax regime? Here's when you should opt for it

<ul class="summary-list"><li>Americans living abroad shouldn't owe taxes on the same income in two countries, Donald Trump said.</li><li>"I support ending the double taxation of overseas Americans," he told The Wall Street Journal.</li></ul>Americans living abroad shouldn't be taxed twice on the same income by two different countries, <a target="_blank" class="" href="https://www.businessinsider.com/donald-trump">Donald Trump</a> said."I support ending the double taxation of overseas Americans," the former president<a target="_blank" class="" href="https://www.wsj.com/politics/policy/donald-trump-tax-plan-americans-abroad-a74bfbdd"> told The Wall Street Journal</a> in a statement.The Republican presidential candidate appeared to endorse residence-based taxation over citizenship-based taxation. The US lays claim to its citizens' global income even if they <a target="_blank" class="" href="https://www.businessinsider.com/digital-nomad-visa-tax-rules-for-traveling-working-remotely-internationally-2023-1">live and work in another country</a>, whereas most developed countries tax income depending on where it's earned.The unusual policy dates back to the 1860s, when lawmakers introduced it to fund the Civil War.Trump has dangled a variety of tax changes to drum up votes as he vies to secure a second term in office by winning the November 5 election. He's<a target="_blank" class="" href="https://www.businessinsider.com/tax-tips-overtime-trump-proposals-income-money-election-2024-10"> suggested</a> eliminating taxes on tips, overtime pay, and Social Security benefits. He already plans to <a target="_blank" class="" href="https://www.businessinsider.com/trump-tax-plan-tarriffs-benefits-top-earners-study-2024-10">extend</a> his 2017 tax cuts, many of which are set to expire in 2025.US tax policy is an annoyance for many Americans living overseas, who can wind up owing US taxes in addition to those they pay in their country of residence. It's worth noting people don't owe anything to the IRS on the first $126,500 they earn abroad, and can receive tax credits for some payments they make overseas. They also have the option of <a target="_blank" class="" href="https://www.businessinsider.com/how-to-renounce-us-citizenship-2018-8">renouncing their citizenship</a>.A shift to taxing Americans based on where they live could spur some <a target="_blank" class="" href="https://www.businessinsider.com/us-millionaires-going-abroad-look-for-american-dream-report-2023-2">wealthy citizens to move</a> to low-tax countries — similar to British and other European expats relocating to places like Dubai or Monaco.Tax policy has become a key talking point in the presidential race, with Vice President Kamala Harris, Trump's Democratic rival, <a target="_blank" class="" href="https://www.businessinsider.com/what-you-need-to-know-about-kamala-harris-opportunity-economy-2024-9">promising tax credits</a> for new parents and first-time home buyers.There were about 4.4 million US citizens living overseas in 2022, and about 2.8 million of those were eligible to vote, according to the latest figures from the Federal Voting Assistance Program."Fellow Americans living abroad, your vote is more important than ever," Trump told the Journal.

Americans living overseas face being taxed twice. Donald Trump wants to change that.

<ul class="summary-list"><li>Presidential hopeful Donald Trump has proposed getting rid of taxes on tips and overtime.</li><li>Trump said he intends for those proposals to help low earners and incentivize work.</li></ul>If former President Donald Trump gets his way, workers who collect <a target="_blank" class="" href="https://www.businessinsider.com/you-might-be-eligible-for-overtime-pay-2023-8">overtime pay</a> or <a target="_blank" class="" href="https://www.businessinsider.com/drivers-and-servers-share-how-they-earn-extra-money">tips</a> could stop paying taxes on them.During remarks in Arizona earlier in September, he <a target="_blank" class="" href="https://www.cbsnews.com/news/trump-unveils-new-no-tax-on-overtime-pay-policy-in-arizona-remarks/">said</a> that ditching taxes on overtime would give "people more of an incentive to work."The current system treats overtime and tips just like any other income; they're taxed as part of a worker's normal wages. But if Trump's proposal goes into place, it could save hospitality workers a significant amount each year.There were around 4 million workers in tipped occupations in 2023, according to an analysis from <a target="_blank" class="" href="https://budgetlab.yale.edu/news/240624/no-tax-tips-act-background-tipped-workers">The Budget Lab at Yale</a>. And while part of the group had incomes low enough that they paid no income tax, there's a pool of more than 2 million workers that stand to benefit.It's a policy that has broad appeal: an Ipsos <a target="_blank" class="" href="https://www.ipsos.com/en-us/proposed-policy-end-federal-income-tax-tips-has-bipartisan-support">poll</a> from August found that the majority of Americans support ending federal taxes on tips. It's also a rare topic Trump and Kamala Harris can agree on. In mid-August, the vice president and Oval Office hopeful <a target="_blank" class="" href="https://www.businessinsider.com/harris-agrees-trump-tips-service-workers-not-taxed-2024-8">jumped on board</a> with her own proposal for making some tips tax-exempt.Millions more workers — specifically those paid hourly, as well as salaried workers who make under about $44,000 a year — are eligible for overtime, typically receiving 150% of their usual pay for going over 40 hours a week.These measures, if enacted, could fundamentally alter the structure of income across America, especially since both employees and companies are expected to quickly optimize their tax strategies.<h2 id="925f2f99-c64e-4f6e-aec9-6923725b85e3">Tax-strategy adjustments</h2>The first question is when exactly the new changes would go into place. For starters, Trump has to win the election, something that's currently a coin flip, according to <a target="_blank" class="" href="https://projects.fivethirtyeight.com/polls/president-general/2024/national/">polling averages</a> that have Trump and Harris roughly tied in battleground states.If Trump does emerge victorious, implementing these changes would require congressional approval. Given that the former president's 2017 tax laws are set to expire in 2025, lawmakers may seize the opportunity to include these proposals in a new set of laws.As soon as that law is signed, it's likely that employees would quickly look for ways to navigate and optimize the new system in an attempt to lower their tax burdens.Employers would be no different, and shifts to current pay structures should be expected. Heidi Shierholz, senior economist at EPI Action — a left-leaning nonpartisan organization advocating for economic justice — told Business Insider that businesses could pay their workers slightly less to allow employees to have the financial benefit of not having their overtime pay or tips taxed."Their employer can pay less to keep them but the worker is not worse off because now they don't have to pay taxes on that," Shierholz said.It could also result in service-industry businesses further shifting the burden of paying workers a living wage onto customers, and reducing the amount of tax paid into <a target="_blank" class="" href="https://www.businessinsider.com/when-will-social-security-benefits-run-out-retirement-crisis-boomers-2024-5">Social Security</a>.Multiple other experts told BI that such tax-optimization tactics would also be used by both workers and employers outside the service industry.It could mean, for example, that some businesses claim that the fees they charge are actually tips. Or it could mean some salaried workers switch to hourly wages in order to qualify for a higher rate of untaxed overtime pay.Joe Hughes, a senior analyst on federal tax policy at the Institute on Taxation and Economic Policy, told BI that "you would need a lot of safeguards in place to keep this from being just another avenue for tax avoidance."He continued: "It's at least applaudable that Trump says that he wants to help low-income workers. But I think that there are much better avenues to do that than exempting very specific types of income."Alex Muresianu, a senior policy analyst at the Tax Foundation, told BI that a tip has a specific definition: it has to be a voluntary payment given to a worker by a customer that has not been negotiated beforehand. In an extreme case, Muresianu said, some workers could stretch that."Introducing that as the norm in response to the policy would effectively shift some compensation that is normally small business income or something into tax-exempt tips," he said.Hughes said that workers could take a similar approach with the overtime proposal — they might choose to reclassify themselves as wage earners instead of salaried earners so they could earn tax-exempt overtime pay."A lot of lawyers are working 60, 70 hours a week, right? So why not reclassify yourself as a wage employee, then you get to take advantage of overtime rules and not pay taxes on it," he said.Shierholz said that the US already has a complicated tax code, and there are more efficient ways to better help low-income workers, like increasing overtime pay and raising the minimum wage so workers do not have to rely on tips from customers to stay afloat."A problem through this absolutely Rube Goldberg approach is that it has all of these unintended distortionary consequences that you could just address directly," she said.The Trump campaign did not respond to a request for comment on the potential for the tax proposals to lead to avoidance. But Karoline Leavitt, the Trump campaign's national press secretary, told BI that "Trump proudly passed the largest tax cuts for hardworking Americans in history.""When President Trump is back in the White House, he will make the Trump tax cuts permanent and end taxes on tips for service workers, end taxes on overtime pay, and end tax on Social Security," she added.Do you collect tips or overtime pay? What are your thoughts on eliminating taxes on tips and overtime? Share your story with this reporter at <a target="_blank" href="mailto:asheffey@businessinsider.com">asheffey@businessinsider.com</a>.

Trump's plan to scrap taxes on tips and overtime could reshape how millions of Americans get paid

July's here, and as we inch closer to the budget, which is set to be presented around the latter half of July, there is much talk about how it will affect our pockets. Reports suggest the government is considering raising the <keyword id="20429578" type="General" weightage="20" keywordseo="standard-deduction" source="keywords">standard deduction</keyword> threshold from existing Rs 50,000 to Rs 1,00,000, amidst other things. The most common wish for a salaried employee is to reduce the income tax rates across all slabs, but at the moment, this seems unlikely. That aside, we decode the common man's wish list and what they look forward to in terms of <keyword id="22225988" type="General" weightage="20" keywordseo="income-taxes" source="keywords">income taxes</keyword> as the Finance Minister <keyword id="19916618" type="General" weightage="20" keywordseo="nirmala-sitharaman" source="keywords">Nirmala Sitharaman</keyword> drafts the budget. <h2>Wish 1: Raise the standard deduction to Rs 1 lakh</h2>A standard deduction is a fixed amount that you can deduct from your taxable income right away, to reduce your overall tax liability. You do not need to furnish any proofs for this amount. Currently, this stands at Rs 50,000, under both old and new tax regimes. Raising this threshold to Rs 1,00,000 will mean more disposable income in your hands. And as per the policy experts, this is the most likely change that we can expect under the new budget. <h2>Wish 2: Increase the <keyword id="20228341" type="General" weightage="20" keywordseo="basic-exemption-limit" source="keywords">basic exemption limit</keyword> in new tax regime</h2>As per EY's pre-budget expectation report, an increase in the basic exemption limit from the present Rs 3,00,000 to Rs 5,00,000 would immensely benefit the common man. Earlier, this limit was set at Rs 2,50,000. Note that unless you specifically opt for the old regime, the new tax regime is considered as your default choice starting 2023. If your annual income is equal to, or falls below this basic exemption limit, you do not have to pay any income tax. <h2>Wish 3: Increase tax-free limit of LTCG gains </h2>At present, if you sell any equity mutual fund unit or share after more than 12 months of holding it, you'll have to pay a 10% long-term capital gains (LTCG) tax. However, within one financial year, long-term capital gains below Rs 1,00,000 are tax-exempt. As EY's report notes, raising this extant tax-free limit to Rs 2 lakh would be beneficial, especially in boosting long-term investing sentiment in the country. But will this come true? Only Nirmala Sitharaman knows! <h2>Wish 4: Consider some tier-2 cities as metros for HRA exemption </h2>Residents of Gurugram, Noida, Bengaluru, listen up! HRA, or House rent allowance is a crucial component of our salary, and hence, our tax planning as well. You can get HRA exemption on the lowest amount amidst these 3: 1. Actual HRA received 2. 50% of salary for metro cities (Delhi, Mumbai, Kolkata, Chennai) 3. 40% of salary for non-metro cities 4. Rent paid- 10% of salary But its no secret that residents of nearby cities like Noida, Gurugram, Faridabad, or rapidly developing urban hubs like Pune, Ahmedabad, Ghaziabad, Hyderabad, Bengaluru, Thane bear the brunt of sky-high residential rents that takes a huge toll on their monthly income. Yet, they cannot claim 50% of their salary for HRA exemption. Since these cities has been classified as a non-metro, residents can claim a maximum of 40% of their salary as exemption. In case rent exceeds Rs 1,00,000 annually, you are also required to furnish the PAN details of landlord, along with a formal rental agreement. Consider this. You live in Delhi, and have an annual income of Rs 10,00,000. For HRA purposes, you can claim exemption of up to Rs 5,00,000, since Delhi is considered a metro. But, if you live in Ghaziabad, or Noida, the limit available to you sharply falls down to Rs 4,00,000. This budget, as reports note, considering these cities as metros for tax purposes would provide some relief to the common man's pocket. Per a recent report by ANAROCK research, the top 7 cities in the country (Mumbai metropolitan region, Hyderabad, Bengaluru, Pune, Delhi NCR, Chennai and Kolkata) saw an average price rise between 13-39% on a yearly basis. In fact, it was Hyderabad recorded the highest yearly price rise in residential property last quarter, jumping by as much as 39%. <h2>Wish 5 : Enhance exemption limits under the old regime</h2>The list is endless, but so are our wishes! Experts are also suggesting an enhancement in the existing limit for deduction towards interest on housing loan for self-occupied house. From its present limit of Rs 2 lakh, it should be taken to Rs 3 lakh. Also, the Rs 2-lakh cap on set off of house property loss against other heads in the same year should be done away with. For senior citizens, there should also be greater clarity on how funds received from <keyword id="19919089" type="General" weightage="20" keywordseo="nps" source="keywords">NPS</keyword> (National Pension System) via the systematic lumpsum withdrawal plan should be taxed. Well, we can only hope some, if not all of these wishes come true when finance minister presents the union budget in the parliament this month.

Budget 2024: Increase standard deduction, exemptions and more, an aam aadmi's wishlist

<ul class="summary-list"><li>Former president and GOP nominee Donald Trump has proposed a slew of tax changes.</li><li>His tariff and tax-cut plans will benefit America's top 5% and hit lower-income workers, says a left-leaning think tank.</li></ul>As the election creeps closer, everybody's least favorite April activity is <a target="_blank" href="https://www.businessinsider.com/election-impact-on-stock-market-tax-tariff-filibuster-harris-trump-2024-9">taking the spotlight</a>: Figuring out how much they'll need to pay in <a target="_blank" href="https://www.businessinsider.com/tax-tips-overtime-trump-proposals-income-money-election-2024-10">taxes</a>.Former president and current GOP nominee Donald Trump has proposed a slew of changes to taxes and tariffs — but there are concerns his plan will have an uneven impact on Americans of different income levels.According to a new <a target="_blank" href="https://itep.org/a-distributional-analysis-of-donald-trumps-tax-plan-2024/">analysis</a> from the Institute on Taxation and Economic Policy — a left-leaning think tank — Trump's <a target="_blank" href="https://www.businessinsider.com/mark-cuban-trump-new-tax-cut-tariff-every-city-visit-2024-9">tax and tariff proposals</a> could spur an average tax cut of about $36,300 for the richest 1% of Americans, or those with incomes of $914,900 and above. Beyond that, ITEP expects the next-richest 4% to receive an average tax cut of about $7,200.On the other side, the lowest-income quintile of Americans could see a tax increase of roughly $800 when factoring in how the tariffs would affect household costs, ITEP data show."It would be a dramatic shift of the burden from the top down to the middle and the bottom," Ernie Tedeschi, the director of economics at the Yale Budget Lab and former chief economist at the White House Council of Economic Advisers, said of Trump's plan.The looming expiration of former President Trump's 2017 TCJA <a target="_blank" href="https://www.businessinsider.com/trumps-tax-law-sinema-big-winner-bidens-social-spending-bill-2021-11">tax law</a> sets up a big fight next year over whether or not to extend those tax cuts in part or in full. Trump's proposals include eliminating taxes on tips and overtime, extending the 2017 tax cuts for individuals, implementing higher tariffs on imported goods, and reducing the corporate tax rate.While the tariffs would likely hit households across the income spectrum, ITEP's analysis suggests that extending and even increasing the 2017 tax cuts for the highest earners would more than offset those costs, leading to a net boon for the top 5%.Matthew Gardner, a senior fellow at ITEP, explained how the think tank estimated the effects of tax and tariff changes on US taxpayers during a Monday call with reporters. Gardner said that the analysis used a computer model based on actual federal tax returns from the IRS to make estimates. Since some of Trump's proposals, like tariffs, have no direct connection to income tax, Gardner said ITEP's team worked extensively with data from other governmental sources, like the Bureau of Economic Analysis, using similar techniques to other analyses of how tariffs affect households.Notably, the analysis assumes the 2017 tax cuts will be extended — but Trump has previously claimed he would reverse the $10,000 cap on deducting state and local taxes, so ITEP's analysis included that reversal in their estimates, which further skews the benefits of the tax proposals to the top of the income ladder.Other studies have found similar potential impacts from the proposed tariffs on US families. An <a target="_blank" class="" href="https://www.americanprogressaction.org/article/trumps-tariff-would-cost-the-typical-american-household-roughly-1500-each-year/">analysis</a> from the left-leaning Center for American Progress found that Trump's proposals to impose tariffs across all imports could result in a $1,500 tax increase for the typical American household, something that would disproportionately impact those with lower incomes.Casey B. Mulligan, the former chief economist for the White House Council of Economic Advisers under Trump and a current adviser at the right-leaning America First Policy Institute, estimated to the <a target="_blank" class="" href="https://www.washingtonpost.com/business/2024/01/07/trump-economy-inflation-biden-campaign/">Washington Post</a> that a 10% tariff proposal could lead to an additional percentage point in inflation. Meanwhile, the <a target="_blank" class="" href="https://taxpolicycenter.org/taxvox/tpc-trump-tariffs-would-raise-household-taxes-and-slow-imports">Tax Policy Center has found</a> that the policies would bring down post-tax incomes by $1,800 in 2025.Trump has still maintained that tariffs would not harm US consumers but rather raise prices for other countries. He <a target="_blank" class="" href="https://x.com/acyn/status/1827139464906600538?s=46">said</a> during a speech in August that "I am going to put tariffs on other countries coming into our country, and that has nothing to do with taxes to us. That is a tax on another country,"When it comes to Trump's other tax proposals, like <a target="_blank" href="https://www.businessinsider.com/tax-tips-overtime-trump-proposals-income-money-election-2024-10">eliminating taxes on tips and overtime pay</a>, the ITEP analysis found the proposal would help higher-income Americans over those who are lower-income, largely because a significant number of tipped workers don't make enough money to pay income tax and would not benefit from changes to the payment structure. Joe Hughes, a senior analyst on federal tax policy at ITEP, previously told BI that high-wage workers could take advantage of Trump's proposals to make more money."A lot of lawyers are working 60, 70 hours a week, right? So why not reclassify yourself as a wage employee, then you get to take advantage of overtime rules and not pay taxes on it," Hughes said.Brian Hughes, the Trump campaign's senior advisor, told BI in a statement that "President Trump's historic tax cuts laid the foundation for robust, non-inflationary growth that fueled more revenue for the federal government, not less."Ultimately, though, any tax proposals would need buy-in from the House and Senate. As with the top-line presidential race, the fate of both chambers of Congress is uncertain, and should Trump face a Democratic House or Senate, he may have trouble pushing an aggressive tax agenda through.

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