On March 6, the IRS issued proposed regulations addressing Trump Accounts (TAs), which were created under the One Big Beautiful Bill Act. TAs provide families with a new way to build savings for eligible children. Contributions of up to $5,000 per year can be made beginning July 4. Contributions aren't deductible, but the accounts can grow tax-deferred.
The proposed regs detail the requirements for opening TAs and define key terms. They also explain who can open the accounts and who'll manage them. In addition, they describe how the U.S. Treasury Secretary will administer the one-time $1,000 pilot program contribution for eligible children and related rules. Contact your tax advisor with questions.
The IRS warns taxpayers about a rising scam involving false claims of undistributed long-term capital gains using Form 2439. This year, it has been added to the IRS's annual "Dirty Dozen" list of tax scams.
Form 2439 allows shareholders of certain investment funds or real estate trusts to claim a refundable credit for taxes paid on undistributed capital gains. The IRS has identified schemes involving overstated or fake claims, including claims related to organizations that aren't legitimate funds or trusts or are falsely linked to well-known organizations. Improper claims can lead to refund delays, audits, penalties or enforcement actions. Report suspicious activity to the IRS.
Received an IRS letter or notice after filing your tax return? Don't panic, but don't ignore it. The IRS often sends letters or notices to request information, notify a taxpayer of changes, verify a taxpayer's identity or seek payment.
If action is needed, follow the instructions and respond by the specified due date. If a notice informs you that you owe taxes, pay as much as possible by the due date to reduce interest and penalties. Or you can dispute a balance due by following the instructions in the letter and including any supporting documents. If you have concerns, your Porte Brown tax advisor can review the notice and advise you on the next steps.
Retirees and soon-to-be retirees should understand Medicare's Income-Related Monthly Adjustment Amounts (IRMAAs). These surcharges increase Part B and Part D premiums for beneficiaries whose income exceeds certain thresholds. Because IRMAAs are based on modified adjusted gross income from two years earlier, people who recently retired (or soon will) may be charged higher premiums based on income earned while they were still working.
Fortunately, Medicare allows beneficiaries to appeal these charges if they've experienced certain "life-changing events," including retirement. With proper documentation, the surcharge may be reduced or eliminated. Your tax advisor can provide more information.
Spring usually marks the beginning of natural disaster season in the U.S. Disasters such as tornadoes and floods, in turn, typically trigger solicitations by fake charities. Fraud perpetrators may, for example, call, text or email, claiming to represent a nonprofit that provides relief services. Or they may set up bogus websites similar to those of reputable organizations.
Before donating to any charity, use the IRS's Tax Exempt Organization Search online tool to help verify its legitimacy. Don't provide financial information to unsolicited callers or senders, or donate to door-to-door solicitors you don't know.
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