Big Beautiful Bill (Part V)
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I am frankly amazed by the comprehensive nature of the Beautiful Bill. Some of it seems unlikely to affect a bunch of people. Some of it, by contrast, affects everyone.
The last provision in the bill, for example, raises the national government’s debt limit by four trillion dollars. That reduces chances of a government shutdown during the four years of the current administration. It also provides some wiggle room for making changes that could potentially either raise or lower the national debt. Increasing defense spending, for example, will certainly raise the debt, while reducing taxes might actually reduce debt by allowing more individuals to prosper and therefore pay taxes.
People visiting abroad, as well as individuals and corporations importing items, will find it significant that the first eight hundred dollars worth of items being imported are no longer exempt from import duties. If you’re bringing something back home with you, be prepared to pay.
The bill also precludes most undocumented aliens from being able to obtain premium tax credits for health insurance. In order to qualify for Medicare, an individual must be a legal permanent resident of the United States or (in some cases) a Cuban who has fled Cuba. It also protects people being held hostage by foreigners from having to pay penalties or interest on U.S. taxes they owe. It also puts policies in place to protect Americans in foreign countries from having to lose money paid in unfair taxes.
The bill limits excess business losses by noncorporate taxpayers. Such losses, however, may be carried over to future years. It also limits charitable business contributions to 10% but allows an additional percentage to be carried over to a future year.
Under current law, importers were allowed to claim a refund of excise taxes on tobacco imports if other items are substituted (even if no excise tax was ever actually paid). The Big Beautiful Bill requires that those excise taxes were actually paid.
The bill also establishes a 5% tax on money remitted by an immigrant to someone living in a foreign country. This is to discourage people coming here to work while sending money home. Legal residents should have the inside track to those jobs.
The bill also adds the requirement that those receiving the Lifetime Learning credit or the American Opportunity Tax Credit must submit their valid Social Security number. In addition it utilizes Artificial Intelligence tools to recoup funds illegally spent under Medicare. The bill also increases penalties for understating tax liability under COVID.
One problem in recent years is that a number of people have claimed earned income tax credit for children that are also claimed by spouses and others. When this occurs, the new bill simply cancels the credit for that child until such time as one or the other individual is able to prove standing.
The bill also does away with direct file and establishes a public/private partnership in which private companies provide free production of tax filing documents to taxpayers who choose to use them.
Last but not least, the new bill dramatically increases penalties for revealing an individual’s tax filings to the public. Five thousand dollars and/or five years now becomes $250,000 and/or 10 years. The government, it seems, really wants to keep your tax information confidential.