Get or Give Free Stuff With Freecycle

The Freecycle Network has over 5,300 groups and 10.6 million members around the world.  It is a grassroots, nonprofit movement of people who are giving (and getting) stuff for free in their own towns and thus keeping it out of landfills.  Membership is free, and everything posted must be FREE, legal and appropriate for all ages.

More information is available at www.freecycle.org.  There are groups organized and moderated by volunteers in many different locations via use of Yahoo Groups.

Here are the Ventura County area groups as of May 2023:

Thousand Oaks Group (2,500 members)

Simi Valley Group (1,600 members)

Ventura Group (2,000 members)

So check it out!  Somebody may need something that you don't want!

Another source for giving and getting local free stuff is www.craigslist.com.  Here is a link to free stuff in the Ventura County Craiglist and Los Angeles County Craigslist.

All About the New "Clean Vehicle Credit" and "Previously Owned Clean Vehicle Credit" Applicable to Tax Years 2023 through 2032

The Inflation Reduction Act of 2022 brought major changes to incentivize people to purchase electronic vehicles (EVs), plug-in hybrids and hydrogen fuel cell powered vehicles. The credit is now called the “Clean Vehicle Credit.” Here we will highlight aspects of the new laws for clean vehicle purchases in 2023 through 2032.

In the past, the major constraint on these credits has been a 200,000 car phase-out on the credits, which was blown through awhile back for several vehicles. This constraint is now gone.

However here are new requirements for taxpayers to receive clean vehicle credits of $7,500 per vehicle beginning in 2023. These new requirements include final assembly, MSRP and income limitations, and are highlighted below.

FINAL ASSEMBLY REQUIREMENTS

Final assembly of the vehicle must take place in North America. How do you find this out? View the list at https://afdc.energy.gov/laws/electric-vehicles-for-tax-credit and look up the Vehicle Identification Number (VIN) to see if the auto meets the requirements. In future years there will also be specific requirements regarding components of the battery. Your dealer should be able to quickly give you an answer on this.

MSRP REQUIREMENTS

There are manufacturer’s suggested retail price (MSRP) limitations for vehicles to be eligible for the new credits. MSRP includes options, accessories and trim, but not destination charges. The maximum MSRP allowed is $55,000 for passenger vehicles and $80,000 for vans, pick-up trucks and SUVs. What that means is that if the MSRP is greater than those amounts, even by $1, they will not be eligible for any Clean Vehicle Credit. Let’s take a look at some MSRPs as of January 2023 for selected 2023 EVs:

• Audi Q5 55 PHEV MSRP SUV starts at $57,400

• BMW 330e MSRP starts at $44,900

• BMW X5 PHEV SUV MSRP starts at $65,700

• Cadillac LYRIQ SUV MSRP starts at $62,990

• Chevy Bolt MSRP starts at $25,600

• Chevy Bolt EUV SUV MSRP starts at $27,200

• Chrysler Pacifica PHEV MSRP starts at $49,995

• Ford Escape Plug-In Hybrid (SUV) starts at $38,500

• Ford E-Transit Van MSRP starts at $49,575

• Ford F-150 Lightning truck EV MSRP starts at under $40,000

• Ford Mustang Mach-E (SUV) MSRP starts at $46,895

• GMC Hummer EV Pickup MSRP starts at $110,295 (ineligible)

• GMC Hummer EV SUV MSRP starts at $105,595 (ineligible)

• Jeep Grand Cherokee 4xe SUV MSRP starts at $60,260

• Jeep Wrangler 4xe SUV MSRP starts at $54,735

• Lincoln Aviator Plug-In Hybrid SUV starts at $53,340

• Lincoln Aviator Grand Touring SUV starts at $69,190

• Lucid Air MSRP starts at $89,050 (ineligible)

• Mercedes EQS SUV MSRP starts at $104,400 (ineligible)

• Tesla Model 3 MSRP starts at $46,990

• Tesla Model S MSRP starts at $96,820 (ineligible)

• Tesla Model X MSRP starts at $119,200 (ineligible)

• Tesla Model Y SUV MSRP starts at $65,990

• Nissan Leaf MSRP starts at $28,040

• Rivian R1S SUV MSRP starts at $72,500

• Rivian R1T Pickup MSRP starts at $67,500

• VW ID.4 SUV MSRP starts at $37,495

These MSRPs are not adjusted for inflation, which means that over the course of time, it is likely that, unless prices drop, less of these vehicles will be eligible for the credit.

INCOME AND OTHER LIMITATIONS

There are now income limitations to obtain the credit. Your “Modified Adjusted Gross Income” (MAGI*) must be $300,000 or less if you use the Married Filing Jointly filing status, $225,000 or less for Head of Household and $150,000 or less for other filing statuses in either the current or prior year to qualify for the credit. MAGI limits are not adjusted for inflation, which means that over time, less people will be eligible for the credits.

(*What is MAGI? For purposes of this credit, MAGI is basically all your taxable income, less various adjustments like IRA contributions, plus any untaxed foreign income. Ask your tax advisor for more specifics.)

The credit is non-refundable and any unused credit does not carryforward to future years. What this means is that if your taxes are less than $7,500 and your credit is $7,500, you will not receive the full amount of the credit.

You claim the credits on Form 8936 (Qualified Plug-In Electric Drive Motor Vehicle Credit) with your tax return.

Starting in 2024, you can apply the Clean Vehicle Credit towards the purchase of the vehicle at the dealership rather than wait and apply for the credit on your tax return. Yay! However, there could be some complications in doing this - what if your MAGI is too high? Will you have to pay the credit back on your return? These things will have to be sorted out.

USED CLEAN VEHICLE CREDITS - SOMETHING NEW

There are now tax credits available for certain used clean vehicles. It is aptly called the Previously Owned Clean Vehicle Credit (POCVC). If you purchase a used "clean vehicle” from an authorized dealer and the sales price is $25,000 or less, you may be able to take a tax credit of 30% of the sales price, up to a maximum credit of $4,000.

The MAGI limits to claim the used car credit are exactly half of the new car credits - $150,000 or less for joint filers, $112,500 for head of household and $75,000 for other filing statuses. So, if you are single and make $75,001 in 2022 and 2023, you will not be able to claim the POCVC for a 2023 purchase.

Tax planning (an example): Let’s say your W-2 wages are $76,000 this year and last year but you want to buy a $25,000 used clean vehicle and obtain a $4,000 POCVC on your 2023 tax return. Consider contributing to your employer’s 401k plan in 2023 enough to reduce your taxable W-2 income to $75,000. Or if your employer does not have a 401k, contribute $1,000 to an IRA to reduce your MAGI down to $75,000. (This is just one simple example; your tax advisor can help you with your particular situation.)

The POCVC, like the Clean Vehicle Credit, is not refundable and cannot be carried forward to future years.

Learn more on the IRS website at www.irs.gov/credits-deductions/credits-for-new-clean-vehicles-purchased-in-2023-or-after.

The state of California has its own array of rebates that can vary from $1,000 to $7,000 currently, increasing to $7,500 starting February 28, 2023. Learn more on the California Clean Vehicle Rebate Project website at cleanvehiclerebate.org/en. Best to apply the California rebates at the time of purchase of the vehicle….otherwise they are considered taxable on your federal returns.

(As with other tax matters, ask your tax advisor for details. The information herein is current as of January 2023.)

Summary of the New Residential Clean Energy Credit Signed Into Law on August 16, 2022

The Inflation Reduction Act was signed into law on August 16, 2022. Among other things, One of the things it changed was the Residential Energy Efficient Property tax credit, which is now called the Residential Clean Energy Credit.

Under the old law, the solar energy credit, which was previously dropped from 30% prior to 2020 to 26% in 2020-2022 and 22% in 2023, was set to expire in 2024.

Under the new law, the credit is retroactively increased back to 30% for residential solar systems installed in 2022 through 2032. Then it will drop to 26% in 2033 and 22% in 2034.

Additionally, starting in 2023, the tax credit covers battery storage technology with a capacity of three kilowatt hours.

The tax credit is a non-refundable credit, but can be carried forward to future tax years.

The California "Middle Class Tax Refund" Will Be Paid Out in October 2022 through January 2023

The State of California will be issuing tax refunds totaling about $9.5 billion to approximately 23 million Californians starting mid-October through mid-January 2023. This refund is called the Middle Class Tax Refund and was included in the $308 billion California state budget for the fiscal year July 1, 2022 through June 30, 2023.

The Middle Class Tax Refund payout will be as much as $1,050 per household, based on 2020 California “adjusted gross income” (CA AGI) on your tax return.

Qualifications:

• Must have filed your 2020 tax return by October 15, 2021

• Must have CA AGI that falls below certain parameters (shown below)

• Have been a CA resident for at least 6 months in 2020

• Was not eligible to be claimed as a dependent in 2020

• Must be a CA resident on the date the payment is issued

Payment Amounts on Married Filing Joint Tax Returns:

• CA AGI $150,000 or less: $1050 with dependent; $700 without dependent

• CA AGI $150,001 to $250,000: $750 with dependent; $500 without dependent

• CA AGI $250,001 to $500,000: $600 with dependent; $400 without dependent

(So let me get this straight. Our government is going to cut a check for $400 to a couple without kids who earned $500,000 in 2020. Mastro’s is going to be busy!)

Payment Amounts on Head of Household Tax Returns:

• CA AGI $150,000 or less: $700 with dependent; $350 without dependent

• CA AGI $150,001 to $250,000: $500 with dependent; $250 without dependent

• CA AGI $250,001 to $500,000: $400 with dependent; $200 without dependent

Payment Amounts on Single and Married Filing Separate Tax Returns:

• CA AGI $75,000 or less: $700 with dependent; $350 without dependent

• CA AGI $75,001 to $125,000: $500 with dependent; $250 without dependent

• CA AGI $125,001 to $250,000: $400 with dependent; $200 without dependent

How Payments Will Be Received

• If you filed electrically and used the direct deposit option on your return (assuming you had a refund), your payment will be received by direct deposit.

• Otherwise you’ll be paid via debit card.

For more information, visit the Franchise Tax Board “Middle Class Tax Refund” page at taxrefund.ca.gov.

Questions That Come to Mind (that are not addressed by the Franchise Tax Board):

• What happens if your banking information changed since then? Don’t know for sure but I suspect the payment would bounce and they would send you a debit card.

• What happens if your filing status changed from 2020 to today? For example, I was married in 2020 and filed jointly but am single and available (hint hint) today in 2022? Who gets our $1,050 (married, one dependent)? Me or my ex-spouse? Good question. No idea. The FTB did not provide alternative scenarios, so I’d imagine the primary spouse on the return will receive the payment.. You might have to track down the ex for your half.

• I was single in 2020 but am married today with a toddler. How much do I get? The FTB bases the payment on your filing status in 2020, so both you and your spouse will receive payments, if any, based on that.

• What happens if I lose the gift card? Well, you’ll have to bring that up with the FTB. Good luck! Best advice - don’t lose it.

• I didn’t file a tax return in 2020 because my gross income and CA AGI were less than the filing requirements published by the Franchise Tax Board. Otherwise, I met all the other requirements for the refund. How can I get it? Unless the FTB amends its initial rules to address your situation, it appears you are out of luck. But visit the taxrefund.ca.gov website for possible updates.

• I made $17.50 an hour at The Taco Shack in 2020 and will receive a $350 refund. My brother George pulled down $250,000 in 2020 as VP of Stuff at Bookoo Bucko, Inc. and will receive $200. How is that fair? Does that make any sense? Pretty much no, but let’s look at it in a different way. You’re getting 20 hours’ pay. George is only getting a couple hours’ pay. Feel better now?

• I think this whole thing is stupid. The entire $9.5 billion should be used to fund nine desalinization plants along the California coast. How do I tell them to keep the money as I think this is a waste? I don’t think there’s a mechanism in place to not take the refund. But if it’s burning a hole in your pocket, hit the CVG Tip Jar at bit.ly/SupportCVG!

Donating to Charities Using a Qualified Charitable Distribution

If you are age 72 or older and have an Individual Retirement Account (IRA), you are required to take a “Required Minimum Distribution” (RMD) each year. The RMD is calculated by dividing your IRA account balance as of the last day of the previous year by a distribution period dictated by the IRS.

Distributions from IRAs (except Roth IRAs) are generally taxable income. And depending on your total income, the distribution may cause more of your Social Security benefits to be taxable.

Do you give to charities? One way to reduce the tax bite from RMDs is to give using a “Qualified Charitable Distribution” (QCD).

Using a QCD, you can give to your favorite charities directly from your IRA, up to an annual maximum of $100,000. Doing so helps meet your annual RMD requirement, while reducing your taxable RMD income. Yes, the amount of the QCD is excluded from taxable income.

Let’s look at an example.

Fred and Wilma Flintstone, who live in Bedrock, California, have an IRA with RMDs of $40,000 in 2021. Their only other income is $25,000 apiece in Social Security Income. They gave $5,000 to their favorite charities by writing checks and otherwise do not itemize deductions on their tax returns (their mortgage at 301 Cobblestone Way is full paid and thus no mortgage interest expense).

Based on the above, the Flintstones would owe taxes of $4,603 federal and $35 state on their 2021 tax returns.

Instead, if Fred and Wilma contributed to the charities using QCDs directly from their IRA, their tax liability would be $3,493 federal and nothing for the state. That would save them $1,145 in taxes! That’s a lot of Bronto Burgers!

The higher the tax bracket you’re in, the more these QCDs can save you in taxes.

Learn more about Qualified Charitable Distributions at www.irs.gov/publications/p590b#en_US_2020_publink100041439.

Completing the Free Application for Federal Student Aid (FAFSA)

To apply for federal student aid, such as federal grants, work-study, and loans, you, the student, need to complete the Free Application for Federal Student Aid (FAFSA).

In addition, many states and colleges use your FAFSA information to determine your eligibility for state and school aid, and some private financial aid providers may use your FAFSA information to determine whether you qualify for their aid.

The FAFSA is available in October of the year prior to the year you will be starting college in the fall, so high school seniors and their parents should be prepared to fill them out then.

You can complete and submit the FAFSA at fafsa.ed.gov. While our government encourages us to complete the FAFSA forms online, they still allow you the old fashioned option of completing a form and mailing it in. See studentaid.ed.gov/sa/fafsa/filling-out for a downloadable pdf.

Technically the FAFSA form is the student’s form, but if you are a dependent student, you will need information from your parents in the form. Here are the steps you need to take, and some (but not all) of the information required to fill out the FAFSA form.

1. Create a Federal Student Aid (FSA) ID, which is a user name and password you and your dependent student will use to complete the FAFSA form online. Both the student and the parent must create their own FSA IDs. Your FSA ID serves as your legal electronic signature, so be sure to keep it private like other passwords.

   When creating an FSA ID, keep in mind you cannot use an email address or mobile phone number with more than one FSA ID.

   Create your new FSA ID at fsaid.ed.gov/npas/index.htm.

   And just so you are aware ahead of time, your username must be 6 to 30 characters long and can be any combination of numbers and letters. The username is not case-sensitive. Your password must be 8 to 30 characters and contain at least one number, uppercase letter and lowercase letter. The password is case-sensitive.

2. Start the FAFSA form at fafsa.gov. You can start the process on behalf of your child. Be sure not to sign in at the same time as your child. You can create a “save key,” which is a temporary password that allows you and your child to alternative editing the form.

3. Fill in the Student Demographics section of the form, such as name, date of birth, etc. Be sure to use the same name as on the Social Security card – no nicknames.

4. Select the schools that you want the FAFSA information sent to.

5. Answer the dependency status questions. Answering yes to any of the questions means you will not have to provide parental information. For example, if you were born before January 1, 1999 or the 2022-2023 academic period, you are considered independent for FAFSA purposes. Or if you are married, are on active military duty, will be working on a master’s degree, etc., you are considered independent.

6. Fill out the parent demographics section – there is a series of questions here regarding your parents’ status that drive what information is required for the form.

7. Financial information must be provided. There is a link to the IRS Data Retrieval Tool (DRT) that allows you to import your tax information to the FAFSA form. Your child will also need to do this if he or she files taxes.

   In addition to your tax return(s), the FAFSA form will require information about untaxed income, such as child support received and interest income. You will also be asked to provide information about cash, bank balances, investments and business assets. Investments also include real estate held for sale (excluding principal residence), 529 college savings plans, etc. You do not need to include the value of 401k, IRA and other retirement plans.

8. Sign the form.

There’s a handy FAFSA worksheet for the 2022-2023 school year at studentaid.gov/sites/default/files/2022-23-fafsa-worksheet.pdf for those looking to review what is required in advance of completing the form.

Additionally, a pdf of the 10 page form (with notes) for the 2022-2023 academic year is at studentaid.gov/sites/default/files/2022-23-fafsa.pdf.

Eligibility for California Golden State Stimulus I and II Payments

A friend of mine who is in his 80s called me the other day asking if I knew why he received a check in the mail from the State of California. It was a check for $600 as part of the Golden State Stimulus II program. Here are the details.

Golden State Stimulus I Payments

First off, earlier in the year, many Californians received the Golden State Stimulus 1 payment, which was either $600 or $1200. Qualifications for GSS I were as follows:

• Must have filed your 2020 taxes,

• Must be either a CalEITC recipient or an ITIN filer who made $75,000 or less in California Adjusted Gross Income (AGI) in 2020.

  • A CalEITC (or California Earned Income Tax Credit) recipient is someone who in 2020 had California AGI of $30,000 or less and does not use the married filing separately filing status.

  • An ITIN (or Individual Taxpayer Identification Number) filer is a taxpayer who is not eligible to obtain a Social Security Number.

• Must have lived in California at least half of 2020 and are a California resident the date the payment is issued.

• Cannot be claimed as a dependent by another taxpayer.

GSS I recipients received $600 if they were either 1) an CalEITC recipient or 2) were an ITIN filer and made $75,000 or less in 2020 CA AGI (if filing jointly at least one taxpayer must use an ITIN).

GSS I recipients received $1,200 if they 1) were both a CalEITC recipient and an ITIN filer and made $75,000 CA AGI or less in 2020 or 2) filed a joint return, were CalEITC recipients, at least one was an ITIN filer and made $75,000 or less in 2020 CA AGI.

More information about GSS I on the Franchise Tax Board website at www.ftb.ca.gov/about-ftb/newsroom/golden-state-stimulus/gss-i.html.

Golden State Stimulus II

The state expanded the program and started paying out additional stimulus payments in October, continuing through mid-January. The amount of these payments is either $500, $600, $1,000 or $1,100. Qualifications for GSS II are as follows:

• Must have filed your 2020 tax return by October 15, 2021.

• Have CA AGI of $1 to $75,000 and wages of $0 to $75,000 in 2020.

• Must have lived in California at least half of 2020 and are a California resident the date the payment is issued.

• Cannot be claimed as a dependent by another taxpayer.

Here’s what you get if you qualify and have a SSN:

• $500 if you also qualified for GSS I and claimed a credit for 1 or more dependents.

• $600 if you did not qualify for GSS I and did not claim any dependents.

• $1,100 if you did not qualify for GSS I and claimed 1 or more dependents.

• $0 if you qualified for GSS I and did not claim any dependents.

Here’s what you get if you qualify and have an ITIN:

• $1,000 if you did qualify for GSS I and claimed 1 or more dependents.

• $0 if you did qualify for GSS I but did not claim and dependents.

More information about GSS II on the FTB website at www.ftb.ca.gov/about-ftb/newsroom/golden-state-stimulus/gss-ii.html.