MONEY online shopping

It’ll Probably Be Years Before You’re Forced to Pay Online Sales Tax

man using credit card to make online payment on laptop
Martin Barraud—Getty Images

For that matter, you might never have to pay up.

Two separate bills working their way through Congress could theoretically close the loophole that allows consumers to skip out on paying sales tax on purchases from e-retailers located in different states. Even so, in all likelihood online shoppers won’t be forced into paying sales tax anytime soon.

Over the years, e-retailers and the consumers who shop online to avoid sales taxes have been accused of having a “free ride.” For the most part, the laws stipulate that online sellers must charge sales tax only when the merchant has a physical presence in the state where the purchase is taking place. The net result is that a consumer in state X might not have to automatically pay sales tax when he makes a purchase from an e-retailer based in state Y.

The scenario gives an unfair advantage to the e-retailer over local brick-and-mortar retailers, which obviously have to collect local sales tax. Consumers are supposed to keep track of their online purchases and pay the appropriate sales tax when filing their income taxes, but the number of individuals who do so is approximately … zero. (Well, it’s close to zero anyway.)

Amazon, all-powerful online entity that it is, has come under fire in particular for not universally collecting sales tax on purchases, and it has made agreements with states on a case-by-case basis to charge the appropriate taxes.

Even as the vast majority of Americans now pay sales tax on Amazon purchases regardless of where they live, there are still many e-retailers that aren’t required to collect sales tax on out-of-state purchases. If either the Remote Transaction Parity Act or the Marketplace Fairness Act of 2015 become law, this loophole would be closed and states could start requiring nearly all sellers to collect sales tax.

Yet, as InternetRetailer.com reported, it’s not looking likely that either of the bills will pass in the near future. What’s more, if and when either does manage to become law, in order to allow time for e-retailers to tweak their operations to be in line with new regulations, there will be a delay of at least 12 months before sellers will have to collect sales tax. E-retailers will also be given a reprieve from charging sales tax during the peak winter holiday shopping season in the first year after either bill becomes law.

The upshot for consumers is that even if one of these bills suddenly catches fire in Congress and surprisingly passes soon, “2017 would be the first holiday season it could take effect,” InternetRetailer.com states. Remember, that’s only if one of these bills passes. If neither does, then many online shoppers can continue enjoying their free ride indefinitely.

MONEY Taxes

Why Boston Refused to Host the 2024 Olympics

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Steve Dunwell—Getty Images

“I will not sign a document that puts one penny of taxpayers’ money on the line for Olympics cost overruns,” Boston Mayor Marty Walsh said.

Boston and the U.S. Olympic Committee jointly announced on Monday the ending of the city’s campaign to host the 2024 Olympic and Paralympic Games.

Earlier Monday, Boston mayor Marty Walsh said he would not put taxpayers at risk by signing a contract with the United States Olympic Committee and would drop the city’s bid to host the Summer Games in 2024 if required to sign on Monday.

“I will not sign a document that puts one penny of taxpayers’ money on the line for Olympics cost overruns,” Walsh said at a press conference on Monday.

Olympic organizers set a provision that requires the host city to cover any cost overruns in the lead-up to the Olympics. A $4.6 billion plan was released in late June as part of Boston’s revised bid, in which about half of the originally planned venues were changed or relocated.

Walsh also said he would have “no regrets” about Boston’s Olympic bid being pulled and that he had spoken with Massachusetts governor Charlie Baker about the possibility.

“As we reflected on the timing and the status of our bid in this international competition, we have jointly come to the conclusion that the extensive efforts required in Boston at this stage of the bid process would detract from the U.S.’ ability to compete against strong interest from cities like Rome, Paris, Budapest and Hamburg,” Boston 2024 partnership chairman Steve Pagliuca said in a release. “For this reason, we have jointly decided to withdraw Boston’s bid in order to give the Olympic movement in the United States the best chance to bring the Games back to our country in 2024. In doing so, Boston 2024 Partnership will offer our support and the extensive knowledge we have gained in developing our Bid 2.0 to any American city that may choose to participate in the 2024 bidding process going forward.”

The USOC has expressed interest in working closely with city and state leaders in an effort to help the U.S. secure hosting rights for the first time since the 2002 Salt Lake City Games. New York and Chicago failed in their attempts to secure the 2012 and 2016 Olympics, respectively.

Los Angeles, host of the 1932 and 1984 Games, may be ready to take the place of Boston as the USOC’s candidate city. National Olympic committees have until Sept. 15 to submit their candidate city selection to the International Olympic Committee.

“When Boston was selected in January of this year, we were excited about the possibility of partnering with Boston’s great universities in a bid that would take advantage of existing college facilities and spur the development of much-needed sport, transportation and residential infrastructure for the City of Boston,” USOC CEO Scott Blackmun said in a release. “The cornerstone idea behind Boston’s bid was sound. We want to compliment and thank Steve Pagliuca and his team at Boston 2024 for the remarkable work they have done in the last two months to transform a powerful idea into a fiscally responsible reality that would have benefited the City of Boston and America’s athletes for decades to come. Because of the good work of Boston 2024, we know that the Boston Games would have been good for Boston, just like the Olympic Games were good for Lake Placid, Los Angeles, Atlanta and Salt Lake City.

“When we made the decision to bid for the 2024 Olympic Games, one of the guiding principles that we adopted was that we would only submit a bid that we believed could win.”

This article originally appeared on Sports Illustrated.

MONEY 2016 Election

What Hillary Clinton’s New Tax Proposal Would Mean

U.S. Democratic presidential candidate Hillary Clinton speaks during an event at the New York University Leonard N. Stern School of Business in New York July 24, 2015.
Shannon Stapleton—Reuters U.S. Democratic presidential candidate Hillary Clinton speaks during an event at the New York University Leonard N. Stern School of Business in New York July 24, 2015.

Here's how the plan would change capital gains tax rates.

On Friday, Democratic Presidential hopeful Hillary Clinton spelled out her new plan to raise tax rates on capital gains — the profits people reap when they sell an asset a like stock, parcel of real estate or even a business.

The capital gains tax rate has been a political football for years, not least because rich people tend to own — and sell — the most stuff. Here are a few key things you need know about capital gains tax in general, and Clinton’s proposal specifically.

How are capital gains currently taxed?

While the tax rate on capital gains has bounced around a lot over the years, the big tax deal reached in the last hours of 2012 pushed up the top rate on long-term capital gains to 20% — still far lower than the 39.6% top rate on income (although top earners also pay a health-care related 3.8% surtax on investment income). For taxpayers in lower brackets, long-term capital gains tax rates max out at 15% or less.

There is an exclusion for profits of up to $250,000 ($500,000 if you are married) on your primary residence, so many homeowners won’t have to worry about a huge tax bill when they move.

That’s all for long-term capital gains, by the way. Short-term capital gains — that is, the profit made on stocks or other assets held less than a year — get taxed at the same rate as income.

Why do capital gains get a tax break?

In the relatively recent past, both Democratic (Bill Clinton) and Republican (George W. Bush) presidents have cut the capital gains rate in hopes that doing so would spur the economy. Since the capital gains tax is really a tax on investment, economists hope that lowering the tax will prompt people to invest more of their money rather than spend it.

The idea is that if more people are looking to invest, it should be easier for start-ups or existing companies that want to develop new products to find funding.

That’s also why short-term gains get taxed as income — because short-term gains benefit people who make their living buying stuff and then quickly reselling, rather than investing for the long term.

So what’s the problem?

In addition to spurring investment, a low long-term capital gains rate also spurs inequality. It’s not hard to see who the biggest beneficiaries are: people who invest in the stock market or who sell businesses that they own.

The low capital gains rate is one reason America’s 400 biggest earners paid a tax rate of less than 17% in 2012, the latest year for which the IRS has released data. There are also questions about whether the low capital gains rate really does boost the economy.

After all, while the economy took off under Bill Clinton, the stock market has also continued to soar since the most recent increase in the long-term gains rate.

What is Hillary Clinton proposing instead?

Hillary Clinton’s proposal would require wealthy taxpayers to hold their investments much longer to get the full long-term capital gains tax benefit. Instead of a single long-term gains rate that kicks in after one year, her plan would create a series of rates ranging from 36% to 24% for those who hold investments for at least two years but less than six years.

Clinton says she isn’t doing this simply to raise taxes on the rich. Rather it’s to discourage short-termism among big investors. That’s something even many on Wall Street regard as a problem, even if higher taxes might not be their preferred solution. So it looks like good politics.

Is it a good idea?

That, of course, depends on who you ask. Many progressives would simply like to see capital gains taxed as income.

Yet it’s not even clear whether Clinton’s proposal could actually change investor behavior — even if it could pass Congress. “My general impression is deep skepticism,” Leonard Burman, director of the nonpartisan think tank the Tax Policy Center told Reuters earlier this week. “Frankly, I don’t see the logic in trying to encourage people to hold assets for longer than they want to.”

MONEY Shopping

No Taxes on Back-to-School Shopping! (But Only in These 17 States)

2015-tax-map
Tim Barber—Chattanooga Times Free Press/AP

Starting next Friday, these states are offering tax holidays on clothing, computers, school supplies, and more.

The best time to do your back-to-school shopping, or any shopping for that matter, is starting next week. Every summer, a number of states hold sales tax holidays on all sorts of supplies, from notebooks and pencils to clothing and computers.

This year’s round of holidays starts on July 31 (get ready, Georgia and Mississippi!) and ends in late August, with each state’s tax-free period typically lasting one weekend.

As MONEY’s Brad Tuttle noted last year, these tax holidays aren’t exactly Black Friday when it comes to savings: Sales taxes in most participating states ranges from 6% to 9%. That said, with parents spending more than $600 on average for school supplies, according to the National Retail Federation, those savings can certainly add up. And you don’t have to go to the mall to save: the tax break applies to online purchases as well.

Want to see if your state is set to give you a break? Hover over the map below—the sales dates in participating states will pop up, along with the eligible items. Prices listed next to a product category mean you can’t spend more than that amount on any individual item and still get the tax break, although there is no cap on overall spending.

One special case is Massachusetts, where the state legislature has gone down to the wire waiting to approve a 2015 tax holiday. It’s likely to pass so we’ve included it on the map, but be aware that this particular holiday is still unconfirmed.

*Note: Dollar figures are per item. There is no cap on overall spending.

 

MONEY Taxes

7 Ways to Save on Taxes When You’re Between Jobs

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stocknshares—Getty Images

Low-income years are a unique opportunity to take advantage of the 0% capital gains rate, among other savings.

Over your career, you will probably face a year or more with limited income. Believe it or not, these situations present powerful savings opportunities, generally only for a limited time. Here’s what to know to take advantage, especially regarding your taxes.

The tax tips below are several of the most common opportunities if you find yourself off to graduate school or taking time out of the labor market (voluntarily or otherwise).

Exploit the Roth. A Roth individual retirement account is generally a powerful long-term financial opportunity in a year of unusually low income. Because of the tax-free growth, the economics of a Roth IRA contribution or conversion work best when you enjoy a long time for your investments to grow; a low tax rate at the time of the contribution or conversion; or potentially higher personal income tax rates in the future.

To qualify to make Roth contributions, you must earn income during the tax year that includes wages and salaries but not investment earnings. If you’re a student and depending on the financing costs, you might want to borrow an extra $5,500 from student loans for annual Roth contributions.

Roth conversions can be an even better opportunity if you hold existing IRAs or 401(k)s accounts from prior employment, creating taxable income you can offset using deductions and credits or that incurs tax at unusually low rates. Deductions and credits can sometimes allow you, if your income’s low enough, to convert assets to a Roth for free.

Sell your winners. Low-income years also present a unique opportunity to take advantage of the 0% capital gains rate. Taxpayers who use the filing status single and with taxable income below $37,450 and married taxpayers making less than $74,900 qualify for this rate.

If you still hold a stock that’s appreciated significantly since grandma gave you the shares years ago, consider selling it at 0% taxes. You can always buy back the stock later, simply increasing your cost basis (the price you originally pay for a stock).

Cash old Savings Bonds. If you received U.S. Treasury Savings Bonds (Series EE, E or I) as a child and still wonder what to do with them, lean years can mark a great time to cash them in.

In most cases, income on these bonds is not taxed until you redeem the bond or it matures. Realizing this income during a year when don’t make much is generally wise.

Research when the bonds were purchased, though, since it might make more sense to hold pre-1995 bonds due to rock-bottom interest rate at that time.

Retirement Savings Contributions Credit. This tax credit, rarely publicized because the qualifying income limits are relatively low, is a powerful opportunity. It essentially rewards you for contributing to your IRA or employer-sponsored retirement plan.

In some respects, the credit behaves like an employer-provided retirement plan match of some percentage of your savings – except here the Internal Revenue Service matches the funds. If you are married and have adjusted gross income (AGI) of less than $61,000 a year, you can qualify for the credit ($30,500 AGI for single filers).

Consider shifting dollars from a savings account to a Roth IRA: You qualify for the tax credit – as much as 50% of the IRA contribution – and you get funds into a Roth IRA.

This credit is unavailable to full-time students; a married couple with one spouse in school and the other working does qualify. You can also use it for your final year of graduate school if you earn income for some of the year of income and are no longer a full-time student at the end of the tax year.

The Earned Income Tax Credit (EITC). You must have limited employment income and less than $3,400 in investment income to claim the EITC, which also depends on the number of qualifying children you claim: $53,267 in 2015 for a married couple with three or more children. Taxpayers without qualifying children must be at least 25 years old; taxpayers with children face no minimum age requirement.

What can make the opportunity so valuable if you earn little: The EITC is refundable. This means that you can receive money from credit, which can be as much as a few thousand dollars, even if your income tax is zero.

Make sure you meet all qualifications before taking this credit.

Run expenses through a 529. These pre-payment plans were established to promote long-term saving for college, but state tax rules provide a loophole that encourages using these plans for short-term savings.

Of the 45 states with an income tax (including the District of Columbia), 35 offer tax deductions for 529 Plan contributions. Most of these states do not have a waiting period on withdrawals. You can funnel graduate school expenses through a 529 plan (even proceeds from a student loan), immediately distribute the funds from the plan and claim a state tax deduction up to the state limits.

If you live in such states as South Carolina and Colorado, where there is no limit on the deduction, or in states like New York with high income taxes, this strategy works well. You can’t claim any education tax credits, such as the Lifetime Learning Credit or American Opportunity Tax Credit, with the same dollars that you use for this 529 tactic, but as long as your graduate school costs exceed $10,000, you can employ the strategy.

Claim the Child Tax Credit. If your employment income falls below $75,000 and you file taxes using the single status ($110,000 if you file married filing jointly), you can claim the child tax credit to reduce income tax up to $1,000 per child. The less your income, the bigger the credit.

As with the EITC, you can receive money for the credit even if you owe no income tax.

Savings are great, of course, but always run the numbers or review the nuances of credits to understand what works best for you.

Jason Lina, CFA, CFP, is Lead Advisor at Resource Planning Group Ltd. in Atlanta.

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MONEY Kids and Money

Is it Cheaper to Have a Baby When You’re 26 or 36?

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quavondo—Getty Images

The age when you start a family can have a big impact on how much you spend.

“There’s never a good time to have kids—you just have to go for it.”

If you’re contemplating starting a family, chances are you’ve heard this well-intentioned advice by now.

While it’s true that little is predictable when it comes to having children, there’s no denying it’s as much a financial decision as an emotional one.

After all, the average lifetime cost of raising a child exceeds $245,000, according to the U.S. Department of Agriculture.

That’s a price tag that might leave you wondering: Does it make sense to have a baby in your twenties, so you can tackle child-related costs early—or when you’re in your thirties and, hopefully, more financially stable?

Of course, there’s no blanket answer.

But to help make some educated guesses, we took two hypothetical sets of wannabe parents a decade apart in age and tried to compare how their respective finances would be impacted in four major money areas—taxes, retirement, college costs and child care—by bringing home baby.

Meet the Parents-to-Be …

The younger couple, Emma and Tyler, are both 26—the average age at which women have their first baby, according to the Centers for Disease Control and Prevention.

Emma is an executive assistant. Tyler is a junior accountant. Combined, they make $73,000, and are still chipping away at student loans and credit card balances they accrued in college.

Although they spend nearly every penny of their paychecks, they feel emotionally ready to have a child. They’d rather be young parents—and are confident they can make their budget work with a child.

Holly and Brendan, meanwhile, are both 36 and doing well financially. Their income has grown steadily over the past few years—which isn’t surprising since women’s pay peaks at 39 and men’s at 48, based on data from Payscale.

Between Holly’s job as a project manager and Brendan’s as a human-resources manager, they make $120,000 combined. They’re only a few months shy of paying off their student loans, carry little credit card debt and contribute a portion of each paycheck toward retirement.

They purposely put off having children until they reached six figures—and now feel financially ready for parenthood.

Although Holly considers herself healthy, she knows they may have to contend with in vitro fertilization costs—22% of women aged 35 to 39 deal with infertility. In case this happens, the couple has saved up $15,000—enough to cover a round of IVF, which averages $12,400.

So which couple would fare better, financially speaking, if they had a child? We asked financial pros to weigh in.

Let’s Look at Baby’s Impact on Taxes …

When it comes to paying Uncle Sam, it’s not the couples’ ages that make the difference—it’s their income level, says Gail Rosen, a certified public accountant (CPA) and head of her own accounting firm in Martinsville, N.J.

While both parents can take dependent exemptions for their child, only Emma and Tyler’s income qualifies them to take the full child tax credit—up to $1,000 per child for married couples filing jointly.

Holly and Brendan make too much to take full advantage of the tax break.

The child tax credit starts to phase out at $110,000 for couples filing jointly, so “Holly and Brendan may only get a $500 tax credit,” Rosen says. They’ll also likely phase out of qualifying altogether in a few years as their income rises.

So Who Has the Advantage? Although Emma and Tyler make less, they have the advantage because “it’s all about the tax bracket,” Rosen says.

Since they fall into a lower tax bracket and can take full advantage of the child tax credit, they are potentially taking home a larger percentage of their paychecks than Holly and Brendan.

Let’s Look at Baby’s Impact on Retirement …

When it comes to your nest egg savings, the real key is to start socking away money as early as possible.

To that point, having Junior at 26 is more likely to cut into prime saving years because younger couples tend to have tighter budgets and don’t contribute as much to retirement, says Rebecca Kennedy, a Certified Financial Planner (CFP) and founder of Denver-based Kennedy Financial Planning.

Exacerbating the situation is the fact that most people in their twenties don’t think about retirement—baby or no baby. A Principal Financial Group study found that only 30% of Millennials save at least 10% of their income in an employer-sponsored plan.

By the time you hit your mid-thirties, however, “you’re more aware of all your financial obligations, and most of the folks who come to me [at this age] have a pretty good balance,” Kennedy says.

Indeed, an analysis of Employee Benefit Research Institute data that compared the nest egg savings of people in their early thirties versus their late thirties found that IRA balances jumped by more than 60% in this decade.

So Who Has the Advantage? Holly and Brendan. Being able to contribute aggressively to retirement before a baby comes along leaves them better able to take advantage of compound earnings, says Steve Erchul, a CPA with Smith, Schafer & Associates in Edina, Minn. “Their money could grow astronomically because they started early,” he adds.

Let’s assume Holly and Brendan have been able to save aggressively from age 26 to 36, with each of them putting $500 a month into their own retirement accounts, which return a hypothetical 7% a year. By 36, their combined savings are just shy of $174,000.

Even if they never contributed another penny after baby, compound growth would help them reach a total nest egg of $1.4 million by the time they retired at 67.

Meanwhile, if Emma and Tyler put off saving as aggressively until 48, when their kid heads to college—each contributing $1,000 per month to their individual accounts to catch up—they’d end up with less than $950,000 combined at 67.

That’s about $450,000 less than Holly and Brendan.

Let’s Look at Baby’s Impact on College Costs …

In theory, couples can start saving for college even before having a child, but it’s not usually on their radar until Junior arrives, says Kennedy.

So when it comes to the length of time to save, we’ll assume both couples have about 18 years. But one advantage Emma and Tyler have is their potential eligibility for tuition tax credits.

For example, the American Opportunity Tax Credit (AOTC)—which grants up to $2,500 per eligible student—doesn’t start to phase out for married couples until their modified adjusted gross income reaches $160,000, says Erchul.

So if this credit, or a similar one, still existed by the time Emma and Tyler’s child went to college, they could qualify for it—even if their income more than doubled by the time they reached 44.

But the terms of tax credits are hard to predict (the AOTC, for example, has been extended only through 2017 for now), so the real key here is who can contribute the most to a 529 or another type of college savings account.

“From what I’ve observed [of couples in their 20s], there’s not a lot of excess in their cash flow,” Kennedy says. “They’re more in survival mode.”

Holly and Brendan, meanwhile, may have more wiggle room in their budget to contribute monthly to a college savings account.

So Who Has the Advantage? Holly and Brendan. They’re likely to contribute more toward Junior’s college over the next 18 years.

Let’s assume Emma and Tyler put $50 a month into a 529, returning a hypothetical 7% a year. In 18 years, that would grow to a little more than $21,000.

As for Holly and Brendan, if they contributed $100 a month, their college investment could grow to more than $43,000.

Let’s Look at Baby’s Impact on Child Care Costs …

Child care is, without a doubt, one of the heftiest line items in every new parent’s budget.

According to ChildCare Aware of America, the average cost to send one infant to day care eats up anywhere from 7% to 16% of a couple’s income.

With that in mind, Holly and Brendan seem like they’d be better off—with more income to work with, they should be better able to fit this cost into their budget.

But Emma and Tyler may actually be in a better position when it comes to free child care in the form of family help—Grandma and Grandpa may still be spry enough to run after a toddler.

In fact, Child Care Aware found that grandparents were the second most popular form of child care: 32% of those polled take advantage of their own parents’ help. That can be “huge in helping offset some of the cost,” Kennedy says.

Of course, there’s always the option of having one parent stay home. In this scenario, Holly and Brendan have the advantage, since “they’re at a higher pay level, so if they drop down to one income, it’s [still] a good income,” Kennedy says.

The hitch?

Many successful women (yes, it’s still mostly women who off-ramp to raise kids) like Holly have a hard time re-entering the workforce.

The New York Times, for example, reported last year that only 40% of high-achieving professional women who off-ramped for a time were able to find a good full-time job in their desired industry once they returned to the workforce.

So Who Has the Advantage? It’s a draw. Yes, child care is a huge expense that Holly and Brendan may have more breathing room to cover—but factoring in family help and career opportunity costs could tilt the odds toward Emma and Tyler.

Plus, you shouldn’t count out the younger generation’s scrappiness when it comes to making room in a budget, says Michele Clark, a CFP® and owner of Clark Hourly Financial Planning in Chesterfield, Mo.

“I think because [the Millennial] generation saw their parents struggle with the stock market, they have more of that Great Depression mentality,” Clark says. “They shop at thrift stores, cook, and don’t eat at expensive restaurants.”

Holly and Brendan, meanwhile, are in a demographic that can be susceptible to lifestyle inflation because people their age are used to a comfortable life—and it may only get worse once toddler classes and day camps come into play.

“They’ll have to fight the spending creep of keeping up with the Joneses,” Clark says.

Ultimately, though, having a child isn’t all about pinpointing the opportune time. It’s also about knowing how to prepare yourself in heart, mind and wallet—no matter where you think you are financially.

“I’ve had people come to me because they have six-figure student loan debt from law school, but they want to have their second baby,” Clark says. “Because of that, they look at every penny … and identify for themselves costs to cut [to reach that goal].”

Read next: 37% of Parents Are Making This Financial Mistake

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MONEY Taxes

Clinton’s Capital Gains Tax Plan Focuses on Long-Term Growth

Iowa Democratic Party Hall of Fame Celebration Dinner
Bloomberg via Getty Images Hillary Clinton, former U.S. secretary of state and 2016 Democratic presidential candidate, pauses while speaking during the Iowa Democratic Party Hall of Fame Celebration dinner in Cedar Rapids, Iowa, U.S., on Friday, July 17, 2015.

The plan would create a sliding rate scale based on the length of an investment.

Presidential contender Hillary Clinton’s proposed plan to overhaul capital gains taxes aims to foster long-term growth by taxing some short-term investments at higher rates, an aide for her campaign said on Monday.

Although details of the plan have yet to be finalized, it would create a sliding rate scale based on the length of an investment, an aide with the Democratic candidate’s campaign said.

Under her proposal, first reported by the Wall Street Journal, the maximum capital gains tax rate on investments held at least a year, currently 23.8%, would rise to at least the 28% proposed by President Barack Obama, the aide said.

The campaign has not ruled out raising it as high as the regular income tax rate, which can be as high as 39.6% for top earners, the Journal reported.

Details of the plan will be outlined in a speech later this week, the WSJ said.

Investments held for less than a year would still be taxed at regular income tax rates as they are now, the WSJ said. The proposal will also include other rate changes, with the lowest rates given for investments held the longest, it reported.

Clinton’s proposal comes as part of her plan to fight an excessive focus on quick profits in capital markets, including capital gains, which are the profits made on selling capital assets such as shares or real estate.

In a speech last week in New York, the Democratic front-runner blasted Wall Street and took aim at financial institutions, vowing tougher oversight in her first major economic speech of the 2016 election campaign.

Clinton’s plan to revamp such rates appears to be a shift from her position in 2008, when she last sought the party’s nomination and vowed not to raise capital gains tax rates above 20%, if at all.

In 1997, her husband, President Bill Clinton, lowered the maximum taxation rate on capital gains from 28% to 20%. In 2003, it fell to 15 percent under President George W. Bush.

In 2012, the top capital gains taxation rate rose to 20% for the highest earners. In the 1970s, the maximum taxation rate for long-term capital gains reached nearly 40%.

Although Clinton, who along with her husband have deep ties to Wall Street, is the party’s leading presidential candidate, she still faces some pressure from liberal Democrats, such as fellow candidate U.S. Senator Bernie Sanders of Vermont, who want tougher regulations on the financial industry.

Read next: Here’s How Hillary Clinton’s Profit Sharing Plan Could Actually Make Everyone Richer

–Additional reporting by Amanda Becker

TIME Music

Rap Group Insane Clown Posse Owes Over $300K in Taxes

Music Insane Clown Posse
John Carucci—AP This July 29, 2013 photo shows Joseph Utsler, also known as Shaggy 2 Dope, left, and Joseph Bruce, also known as Violent J, from Insane Clown Posse, in New York.

The group's lawyer said they were cooperating with the IRS

The infamous rap duo Insane Clown Posse owes over $300,000 in taxes, according to the Internal Revenue Service.

The Detroit News reports that the IRS is trying to get ahold of founding member Joey “Shaggy 2 Dope” Utsler who, together with group-mate Joe “Violent J” Bruce, owe $379,783 in delinquent federal income taxes. A federal prosecutor told the Detroit news that Utsler is avoiding the IRS.

The timing of the IRS investigation isn’t ideal for Shaggy and Violent J. Utsler’s attorney, Farris Haddad, told The Detroit News that “Shaggy is fully cooperating with the IRS to resolve this matter immediately following next week’s 16th annual Gathering of the Juggalos festival.”

Juggalos are the dedicated, often face-painted followers of Insane Clown Posse, which incorporates horror aesthetics and storylines into its shows. The fans have been called a “gang” by the FBI.

[Detroit News]

MONEY Taxes

IRS Customer Service Is Even Worse Than You Thought

person asleep with phone on desk
Ranald Mackechnie—Getty Images

Fewer than half of taxpayer phone calls were answered.

If you tried to call the IRS for help during the recent tax season but failed to get through to anyone, you are in good company. In fact, you’re in the majority.

According to a new report from the Taxpayer Advocate Service, only 37% of the calls made to IRS customer service from January 1 to April 18, 2015, were actually answered. The average wait time for those who did manage to get through to customer service was 23 minutes.

“This level of service represents a sharp drop-off from the 2014 filing season, when the IRS answered 71 percent of its calls and hold times averaged about 14 minutes,” the report states.

What’s more, the IRS increased the rate at which it automatically hung up on callers to an astonishing degree. “Courtesy disconnects,” the term used for when a call is terminated because the switchboard is overloaded, hit 8.8 million during the 2015 filing season. That’s a rise of more than 1,500% compared to 2014, when there were 544,000 such disconnects.

Taxpayers who had good reason to be concerned about identity theft were treated especially poorly by the IRS, which answered only 17% of the calls from those who had been notified that their returns had been blocked due to suspicion of identity theft. Hold times averaged 28 minutes for those who got through. For three consecutive weeks during the filing season—presumably, during a period soon after many taxpayers were notified of the identity theft concerns—less 10% of these calls were answered.

The blame for the abysmal performance can be credited to factors including budget cuts that decreased staffing and increased calls from taxpayers—both of which led to longer wait times, which in turn probably led to more callers hanging up.

In a released statement, National Taxpayer Advocate Nina Olson described the filing season as “generally successful” for “the majority of taxpayers who filed their returns and did not require IRS assistance.” But it was a very different story for anyone hoping to ask the IRS a question or two: “For the segment of taxpayers who required help from the IRS, the filing season was by far the worst in memory.”

MONEY Ask the Expert

Can You Write Off Your Vacation Home?

Ask the Expert – Everyday Money illustration pulling cash out of wallet
Robert A. Di Ieso, Jr.

Q: I own a vacation home on the beach. I want to rent it out for part of the year and use it myself the rest of the time. Can I write off my expenses?

A: The answer depends on how much you use the home yourself. If your property is rented most or all of the time, you should be able to deduct your rental expenses, although you’ll also be declaring the rental income. But when you also use a rental property as a home, deductions may be limited.

One key thing to know: The IRS defines personal-use days broadly, including days a property is being used by relatives — even if they pay market-rate rent — as well as time the property is being used by non-family members who do not pay market-rate rent. Any days you fully devote to repairing or maintaining the property are not counted as personal use days, however — no matter how relaxing you find rewiring the bathroom.

Taxpayers tend to fall into three different categories, say CPAs, depending on how often they rent the space and their level of personal use.

Limited Rental Use

If the property is rented for fewer than 15 days a year, or less than 10% of the total number of days you could rent it to others at a fair rental price — whichever is greater — you do not have to report or pay taxes on any of the rental income you receive, says Jerry Love, a CPA in Abilene, Texas.

Love calls this the Masters Golf loophole, as it can be a huge boon for owners of properties located near events like the Masters Golf Tournament, the Super Bowl or Mardi Gras that tend to drive up rental rates for a short period of time.

You will not be eligible for a Schedule E deduction for any expenses associated with renting the property. You can, however, deduct qualified residential interest expense and real estate taxes as itemized expenses on Schedule A, as you would with your primary residence or other property used for personal needs.

Hybrid Rental and Personal Use

When you both occupy the property and rent it out for 15 days or more per year, you must report the rental income you receive to the IRS, and you can deduct part of your rental expenses and depreciation.

To determine your deduction, you would need to divide your expenses between personal use days and rental days, says Love. If you plan on renting out the home half the year, for instance, 50% of the property use is rental, meaning you can allocate 50% of your maintenance, utilities and insurance costs to the rental, as well as 50% of your depreciation allowance, interest, and taxes for the property.

Note that your deductions cannot exceed the amount of income you received. “You can’t claim a loss, but you can offset the rental income,” says CPA and financial planner Ted Sarenski in Syracuse, N.Y.

The IRS recommends that for the rental portion of expenses, you use the deduction for interest and taxes first, followed by operating costs and then depreciation. Any expenses you were unable to deduct because of the limit can be carried forward for possible future use against rental income.

You can also take separate deductions — although not the depreciation — against the portion of personal use days. So in the example above, the remaining 50% of the interest you paid could be deducted on Schedule A.

Limited Personal Use

Use your rental property fewer than 15 days a year, or less than 10% of possible rental days? In that case, the property won’t be considered a residence and so your rental expense deductions are not limited to the property’s rental income, meaning you can claim the loss.

However, you still must prorate expenses to eliminate any period of personal use. Let’s say you stayed in your beach house 10 days a year, and rented it out the other 355 days. In that case, 10/365 (or 2.7%) of each expense you incurred could not be taken as a deduction on Schedule E as a rental property expense.

You do not have to prorate deductions that are directly related to renting it out, such as advertising or listing fees, says Love. You can still deduct any property taxes attributable to the personal portion on Schedule A, but not your mortgage interest, since the property isn’t a residence.

You can also deduct travel costs to your vacation home as a business deduction, says Love, as long as the reason for the trip is related to maintenance needs — like winterizing a ski condo in Colorado before renters arrive — and is not for your own family vacation.

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