There weren’t a lot of tax law changes this year, given the new administration’s record on getting legislation passed. But here is a surprising list of situations that will create a taxable event this year.
Although these weren’t taxable for the last two years under the various CARES Acts, unemployment benefits are again a taxable event.
If you happen to come upon a box of gold doubloons or anything else of value, you must pay tax based on the fair market value of the item. This is also true if you’re walking down the street and happen upon a ten-spot.
In 2022, any gift above $16K per individual is a taxable transaction. This limit increases to $17K in 2023.
Whether you hit the jackpot in Vegas or win at a private game with your buddies, gambling earnings are a taxable event with or without a W-2G.
Whether it’s stolen property or gains from an illegal activity, you must pay tax on the gain. That’s how people like Al Capone and Heidi Fleiss ended up in the slammer.
Scholarship awards are generally non-taxable events if they are used for tuition, fees, and books. But the second they’re used for room, board, or anything else, they become taxable.
Bartered services and goods are treated like any other transaction. You must pick up the income and expenses at a fair market value and report them.
Let me leave you with this.
The markets are currently gearing up for the Federal Reserve announcement today at 3:00 pm CST on interest rates. It’s widely expected that they’ll slow down their interest rate increases by only raising the Fed Funds rate by a quarter of a point to a range of 4.5% – 4.75%.
Spending in our economy has eased over the past six months with the housing market leading the way. Clients are reporting that new loan packages are being quoted with interest rates as high as 12%.
Inflation remains a major problem in the world economy. Eurozone prices have begun decreasing. But this is happening as OPEC ministers have voted to limit their output with the War in Ukraine grinding on. This will again raise the price of energy.
The labor markets remain strong with unemployment rates at record lows. It’s being reported that new job openings are more often demanding that workers again report to the office.
The question is whether or not the economy will have a soft landing. Increasingly economists are expecting another recession.
The problem is, and always has been, the fact that the economy doesn’t do anything fast. It’s always sluggish. It never responds to anything in a timely manner.
As such, the Fed normally overdoes it when raising interest rates to cool down the economy. To say it another way, by the time the economy cools down, getting inflation and the labor markets under control, the Fed has already raised interest rates to a point where the economy can do nothing but recess.
I don’t like writing these articles. This isn’t a good time on a Saturday night. I can’t stand being a Harbinger of Doom. And don’t kid yourselves my Brothers and Sisters, I pray that I’m wrong.
But I’m telling you to be ready. Let’s prepare for something we hope never happens.
We’re all going to get through this. Let’s get through it together.
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