taxes
Report Questions why Full Time Union Federal Employees are Paid with Tax Dollars
A new report has found out that several federal employees who work full time as the union employees are being paid from the taxpayers’ money. Experts believe that the report highlights how much control the federal governments have over the federal agencies. They also believe that the report shows that no one wants to change the status quo as everyone is benefitting from it. Some agencies are working hard to change the status quo so that the taxpayers’ money can be put to better uses.
How Many Federal Employees are Benefitting
The report was created through the Freedom of Information Act requests. It discovered that about 490 federal employees who work as full-time union employees are getting paid by using the taxpayers’ money. The report was recently published by the Americans for Limited Government Foundation. The vital report also highlighted the departments which had the most number of such employees. The departments of Education, Commerce, Energy, Homeland Security and Labor are among them. It also includes employees from the U.S. Postal Service and the Federal Aviation Administration.
The Money Spent
The report divulged that this practice has cost about $1 billion over the past 20 years and it was paid through the taxpayers’ money. The amount increased further if the money spent by the local and state government was also counted.
Experts Speak
Jared Labell, who is currently serving as the Executive Director of Chicago-based Taxpayers United of America shared his opinion on the report. He stated that the report clearly shows that unions have a lot of influence on the federal agencies and the agencies don’t seem to have any incentive to change. This practice is benefitting the labor unions, the politicians so no one wants to change it.
The Efforts
Labell stated that this issue of paying the federal employees working full time for the union by using the taxpayers’ dollars is highlighted by his organization at the state level so that some reforms can be enacted that lessen the influence of unions on the taxpayer-funded agencies. He said that by emphasizing the issue, his organization hopes to bring changes at the federal levels as well. He also expressed hope that other organizations would join in the effort so that the issue can get maximum exposure and the speed at which the reforms are expected can be expedited.
Federal Employees May Lose Access to Free Yoga Classes
Federal employees who have been enjoying free yoga and Pilates classes as a fringe benefit of their job may have to lose this benefit soon. A US senator has introduced legislation to stop these classes. He has introduced a bill that wants the government to stop spending money on these classes in order to stop wasting the money of the American taxpayers. The bill was introduced after another senator pointed out a few ways in which the government was wasting taxpayers’ money.
Legislation that Impacts Federal Employees’ Fitness
Republican candidate, Sen. Matt Salmon has recently introduced legislation that aims to stop government agencies to stop spending money on the yoga and related classes of federal employees. He stated that the federal government agencies were spending more than $150,000 on these exercise sessions of employees. The figure was counted since the year 2013. The legislation is H.R. 5242 and it is a part of the Shrink our Spending Initiative taken by Salmon.
Not Competing with Startups
Salmon issued a statement in which he said that startups are offering unique benefits to their employees because they want the employees to play a role in developing the business with a new culture. But the bureaucrats in Washington are paid by the hard-earned money of the taxpayers and these sorts of fringe benefits are a waste of dollars taken away from all the American families. He also pointed out that the government should stop trying to be like Google because it isn’t like any private sector company.
The Spending
A press release from Salmon’s office has recently revealed that the two agencies, Department of Energy and the State Department have spent over $168,000 on Pilates and yoga classes of employees in the last 5 years. Out of the $168,000, the Department of Energy awarded over $30,000 in grants to employees for yoga services since the year 2013. The Energy Department also spent $11,000 to offer Pilates classes just to the employees working in California.
The Data Source
The amount of money spent on yoga and Pilates classes of federal employees was first highlighted in the report presented by Sen. Rand Paul (R-Ky.) that was offered recently. The report declared that the federal government was bending over backward to waste the taxpayers’ money. It is believed that the bill was introduced by Salmon in response to that report only.
Tax Rule Changes for 2016 You Need to Know
Instead of having to wait for last minute extensions to certain tax provisions or having to retroactively adjust your tax return in 2016 you will have the benefit of knowing the tax rule changes before you have to submit your return. Before the end of 2015, Congress enacted several permanent tax extensions on previous provisions and made a number of changes for 2016. Here is a list of the most prominent changes that may affect you.
Affordable Care Act Penalties
Those without health insurance in 2016 will have to pay penalties equivalent to the Bronze Plan in the federal health exchange or $2085 per household or $695 per individual. These are maximum penalty figures for those earning over $40,000. To avoid this hefty penalty, simply sign up for a health care plan before the end of February 2016. If you are enrolled in Medicare or Medicaid you are also exempt from this increased tax.
Tax Bracket Creep
The good news is there were no increases for federal income taxes this year, unfortunately the tax bracket goal posts have moved upwards again. This means if you were at the upper cusp of a tax bracket you may have been automatically moved into a higher tax bracket because of this. As the US tax system is progressive, meaning those that earn more also pay a higher percentage of tax. The tax brackets are pegged to inflationary indexes and this year will increase by about 0.4%. The top statutory tax rate of 39.6% starts at $466,950 for married couples filing jointly and $415,050 for singles. Check your tax bracket before doing your filing to ensure it has not changed.
Investment Bracket Creep
Similar to income taxes, investment capital gains taxes have not changed this year, yet again inflation adjustments have lifted the brackets. The bottom capital gains tax bracket is 0% up to $37,650 for singles and $75,300 for couples and $466,951 is the top bracket start for a 20% tax.
If you have a significant investment portfolio this could mean a higher tax bill. If your adjusted gross income before expense deductions, is greater than $250,000 or $200,000 for singles you will also have to pay a 3.8% surtax on your capital gains. The thresholds for this surtax are not indexed for inflation and could catch more filers every year.
Estate and Gift Taxes
The dreaded Estate Tax actually rose this year to $5.45 million per person, allowing a couple a whopping $11 million exemption for their estate. According to estimates with this increase only about 4000 estates in the US this year will owe this death tax.
The annual gift exemption from one person to another is not changing and remains at $14,000 per recipient. A person in a married couple can claim the exemption for both people making it possible for a $28,000 gift exemption.
Other Small Changes
You should note that if you have a HSA (Health Savings Account) the max contribution limit was increased by $100 to $6,750 for families but remains the same for individuals. Also the Earned Income Credit is also increasing, but by paltry amounts including $27 for 3 children, $24 for 2 children, $14 for one child and only $3 if you have no children.
Probably the best news for some people is that the deadline for filing your tax return is delayed because it falls on a Federal holiday this year so it falls to the next business day, offering 3 extra days of filing time. The new tax filing deadline is April 18th for 2016.
Save around $1000 Dollars On Your Tax Bill
2015 might have come and gone and you might have spent more than you wanted to and you might think that there isn’t much that you can do to reduce the spending effect but if it’s your tax bill that you are worried about, know that there is still time.
Save on your tax bill:
If you are an employee who likes to save for your retirement through a government funded account, then you can put your money in there and save a lot of money on your tax bill. It does differ on the basis of tax rate, but an IRA contribution made at the last minute can help you in saving thousands. Here’s how:
The bigger your tax bracket is, the more you will save. You can contribute up to 5500 dollars to an IRA and can defer the payment of income tax. You will be able to either make your tax bill lower or get an increase the refund that you are owed. Another thing to remember is that if you are over 50 then you can get an even better deal. If you contribute around 1000 dollars or more to an IRA, it will get you a bigger deduction. For example, if you are 55 and you fall in the 25 percent tax bracket; your 6500 dollar contribution is going to help you reduce 1625 dollars.
Another way to get a tax break is via your spouse’s IRA. All you have to do is open two accounts, each on the name of one spouse.
An important thing to note in this regard is that the deadlines differ in every state. So if you are planning to save some money, make sure that you act late but not too late because you don’t want the deadline to end.
Retiring in 2016; These Tax Traps Are To Be Avoided
2016 promises to be a year during which state and federal income taxes are not going to stay constant. If you are planning to retire during this year, then there are some tax traps for you to avoid. If you plan well enough then you can easily avoid them. All the three retirement income sources can cause you troubles in this regard. Let’s take a look at each of the three:
Tax traps to avoid:
When you are filling the forms for your retirement application, you will get your hands on a W4-P among all the paperwork. You need to stay calm, put in the withholding level that you want to and you are good to go. If you are liable to get the FERS pension and are retiring before 62, your W4-P will also encompass the payments that the Special Retirement supplement guarantees for employees.
Once again, things are not that difficult to implement. Your SS will not keep any federal income taxes away from your benefits unless you make the explicit request. IF you miss this request making, then you will end up losing a lot of money. This is pertaining to the fact that most of the federal retired officials have to pay income tax on almost 85 percent of their SS retirement benefits. So whenever you apply, make sure you have a W4-V form with you and fill it to make your benefits impervious to tax.
It gets a little tricky here. TSP extracts taxes depending on your withdrawal habits. The TSP will not tax your money unless you withdraw more than 1500 dollars per month though. Otherwise you are going to have to pay serious amount of tax withholding money.
Tax Season for the Federal and Postal Employee
Federal and Postal Employees during Tax Season
The tax season is upon us and federal and postal workers – active and retired – might want to take a very careful look at all of the tax savings options available to them. Many of us get very excited around tax season because we think about big, fat, juicy refunds.
If you have ever worked in retail sales, it is very cyclical with tax season being one of the high points. The Retail Sales industry enjoys those refunds because they boost sales like crazy not to mention how they make commission checks look. As a very young woman I sold furniture part-time. I knew during the months of February through August I would make enough money to cover my tuition for the entire year with some left over to put away in my rainy-day fund.
A good scenario for retail sales, but a scenario that requires a strong evaluation for tax filers. Receiving a big refund, barring some extenuating circumstances, is not a good tax management strategy. It is nothing short of giving your money to the IRS without the ability to charge the IRS for using your money.
When you take out a loan you must pay the lender for the use of the money through interest and sometimes other fees. So why would you give your money away for free? The big refund may look good when you receive it, but in most cases, it is just the IRS returning your money they have used free-of-charge, with you gaining not a single cent in interest.
The IRS is not to blame; not understanding the refund myth is just one more important way to build wealth most of us missed out on. People have been celebrating tax refunds for years, because we did not have our hands on the pulse of managing our money wisely. Your refund is money that could have been working for you to increase your personal wealth.
You might say, that refund money whether I get it or not won’t make me wealthy. Perhaps not, but giving your money away just to get it back after a year with no interest being added will not increase your bottom line. If you are getting big refunds consider going to a financial advisor or tax professional to evaluate your tax situation. You might need to adjust your exemptions or you filing status. Maybe things have changed since you last filled out your W-4 (tax withholding form) at work. Your financial advisor or tax professional can help you review your papers and tax situation and suggest ways to make necessary adjustments to protect your earnings.
Ideally, the tax situation you want is to break-even. You don’t want to owe the IRS and you certainly don’t want them to owe you. When you can reach that balance, then you are making your money work for you. The IRS is not a savings depository, they are charged with collecting taxes from the nation’s citizens and businesses as a source of revenue to take care of the nation’s business. The free money you are giving away earns interests for the IRS.
Make the adjustments you need so that your money can earn interest for you.
Instead of setting your heart on a big refund, consider contributing more to your Traditional Thrift Savings Plan.
Imagine the impact that would have; If, for example, you are due to receive $3,000 as a refund from the IRS and instead chose to use those funds as TSP contributions.
- That would amount to roughly $250.00 per month that you could have saved in your TSP.gov account.
- If you changed your Thrift Savings Plan contribution and added an additional $250.00 per month to your contributions you would also have $3,000 LESS in taxable income, because your Thrift Savings Plan contributions are not taxable in the year you make the contribution.
- That would also mean you would likely be eligible to receive an additional refund at the end of the year based on the contributions you made (and reduced income and therefore taxes owed).
- Moreover, if you are not yet taking full advantage of your employer’s TSP.gov account matching contribution then this is essentially giving yourself a raise.
You can’t go back in time and change last year’s Thrift Savings Plan contributions, but you can effect a change this year. If you are owed money from the IRS, think about giving yourself even more money next year in the form of additional TSP savings. You’d be amazed at how much of an impact that small amount can have on your future retirement comfort.
Because of the complexity of this topic we highly recommend that you work with a FERS, CSRS & TSP expert so that you can make sure whatever plan you are implementing is best for your individual circumstances.
P. S. Always Remember to Share What You Know.
