Personal Finance

Kamala Harris’ tax records reveal ‘fairly basic’ approach, experts say

Published

7 months ago

August 2, 2024

U.S. Vice President Kamala Harris and second gentleman Douglas Emhoff descend from Air Force Two in Wilmington, DE, U.S., July 22, 2024.

Erin Schaff | Via Reuters

Vice President Kamala Harris‘ personal financial records are under fresh scrutiny now that she is running for the highest office in the United States.

Experts say recent tax filings show she and her husband, Second Gentleman Douglas Emhoff, have largely kept their finances simple during her years as vice president.

“Her returns are fairly basic,” said Craig Hausz, a certified financial planner and certified public accountant, who is CEO and managing partner at CMH Advisors in Dallas.

Yet that approach may have cost the couple as they left unclaimed tax savings through additional deductions, as well as other missed financial strategies.

The financial disclosures may raise few red flags in her career in public office. Unlike most other Americans, Harris and Emhoff can afford to avoid to miss those savings.

“Even if she doesn’t win president, as an ex vice president, she’ll always have lots of money coming in,” said Carolyn McClanahan, a CFP and founder of Life Planning Partners in Jacksonville, Florida.

“They will never lack for money, so they don’t really need to worry too much about how [tax] efficient they are, or how much they save,” said McClanahan, who is also a member of the CNBC FA Council.

Harris’ office did not respond to a request for comment by press time.

The couple’s recent tax filings mirror millions of other Americans’, according to Boston-based CFP and enrolled agent Catherine Valega, founder of Green Bee Advisory.

“They took a conservative approach and that’s the right thing to do,” Valega said. “You don’t see them trying to do anything super creative here to reduce their taxes.”

What tax savings Harris may have missed

Overall, Harris’ return could have been more aggressive to reduce tax liability, experts say.

“Somebody in her position could probably take more deductions,” particularly against her book income, Hausz explained.

To that point, Harris reported $7,272 in gross book income in 2023 with a single business deduction of $1,273 for “commissions and fees.” By comparison, her 2021 book earnings were $452,664 with the same deduction worth $65,951.

“If I were advising her, I would say ‘let’s keep this as uncomplicated as possible, so there’s no talking points,'” Hausz said. “She’s done a very good job of that.”

‘A little too conservative’ with cash

Another possible missed opportunity is Harris’ cash allocations, with $50,603 in bank account interest reported for 2023, up from $6,054 in 2022, experts say.

Bank account yields have been higher after a series of interest rate hikes from the Federal Reserve. But Harris’ jump in interest could mean they have significant cash allocations, which may be “a little too conservative,” Hausz said.

“They’ve missed out on growth in the stock market,” he added.

However, the cash allocation could be a good fit, depending on their short-term financial goals and other investments, Valega said.

Kamala Harris' tax proposals focus on social issues

Yields will fall once the Federal Reserve begins cutting interest rates again. In the meantime, earning $50,000 on Federal Insurance Deposit Corporation-protected cash is a “pretty good deal,” she said.

It is possible Harris and Emhoff may not be getting the best returns on their cash, depending on whether that money is locked up in certificates of deposit, or sitting in a lower-yield savings account, according to McClanahan.

Yet having lots of cash on hand may give them the financial flexibility they need, particularly as Emhoff took a big pay cut to become Second Gentleman, McClanahan said.

“It’s good to have lots of cash when you’re a politician, so you could stay out of trouble with meeting your expenses,” McClanahan said.

More money toward retirement

Harris could also put more of her income in tax-deferred retirement accounts to boost her tax savings.

“Even though she could have put money in retirement plans, she didn’t need to,” McClanahan said.

Hopefully, Harris is maxing out a Thrift Savings Plan, a retirement savings and investment plan for federal employees, McClanahan said.

In addition, she could contribute to a simplified employee pension plan, or SEP, a variation of individual retirement accounts, to further boost her retirement savings, she said.

While those contributions may help Harris save on taxes, she already has retirement security through pensions from her time as vice president, senator and attorney general of California, McClanahan noted. In addition, she stands to receive Social Security benefits based on her payroll tax contributions to the program.

Personal Finance

There’s still time to lower your 2024 taxes or boost your refund

Published

3 hours ago

February 27, 2025

Business Finance News

Pra-chid | Istock | Getty Images

With tax season well underway, you may be eager for strategies to reduce your 2024 taxes or boost your refund. However, there are limited options, especially for so-called “W-2 employees” who earn wages, experts say.

After Dec. 31, there are “very few” tax moves left for the previous year, according to Boston-area certified financial planner and enrolled agent Catherine Valega, founder of Green Bee Advisory.

Once the calendar year ends, it’s too late to claim a tax break by boosting 401(k) plan deferrals, donating to charity or tax-loss harvesting.

But there are a few opportunities left before the April 15 tax deadline, experts say. Here are three options for taxpayers to consider.

1. Contribute to your health savings account

If you haven’t maxed out your health savings account for 2024, you have until April 15 to deposit money and score a tax break, experts say.

For 2024, the HSA contribution limit is $4,150 for individual coverage or $8,300 for family plans. However, you must have an eligible high-deductible health insurance plan to qualify for contributions.

“The HSA is easy,” said CFP Thomas Scanlon at Raymond James in Manchester, Connecticut. “If you are eligible, fund it and take the deduction.”

2. Make a pre-tax IRA deposit

The April 15 deadline also applies to individual retirement account contributions for 2024. You can save up to $7,000, plus an extra $1,000 for investors age 50 and older.

You can claim a deduction for pre-tax IRA contributions, depending on your earnings and workplace retirement plan.

The strategy lowers your adjusted gross income for 2024, but the account is subject to regular income taxes and required withdrawals later, said CFP Andrew Herzog, associate wealth manager at The Watchman Group in Plano, Texas.

“A traditional IRA simply delays taxation,” he added.

A traditional IRA simply delays taxation.

Andrew Herzog

Associate wealth manager at The Watchman Group

3. Leverage a spousal IRA

If you’re a married couple filing jointly, there’s also a lesser-known option, known as a spousal IRA, which is a separate Roth or traditional IRA for nonworking spouses.

Married couples can max out a pre-tax IRA for both spouses, assuming the working spouse has at least that much income. It’s possible to claim a deduction for both deposits.

But whether you’re making a single pre-tax IRA contribution or one for each spouse, it’s important to weigh long-term financial and tax planning goals, experts say.

Personal Finance

Student loan applications down from Education Dept. website

Published

3 hours ago

February 27, 2025

Business Finance News

Students walk through the University of Texas at Austin on February 22, 2024 in Austin, Texas.

Brandon Bell | Getty Images

The Trump administration has taken down the applications for popular student loan repayments plans from the U.S. Department of Education‘s website, leaving millions of borrowers with fewer options for now.

Borrowers are unable to access the applications for income-driven repayment plans, as well as the online application to consolidate their loans.

Both applications are critical for borrowers pursuing lower monthly payments and loan forgiveness through an IDR plan, as well as the related Public Service Loan Forgiveness program.

The disruption is due to a recent decision by the 8th Circuit Court of Appeals that blocked the Biden administration’s new IDR plan, known as SAVE, or Saving on a Valuable Education, as well as the loan forgiveness component under other IDR plans.

Congress created IDR plans in the 1990s to make borrowers’ bills more affordable. The plans cap borrower’s monthly payments at a share of their discretionary income, and cancel any remaining debt after a certain period, typically 20 years or 25 years.

More than 12 million people were enrolled in the plans as of September 2024, according to higher education expert Mark Kantrowitz.

Here’s what to know about the changes.

Applications could be down for ‘a few months’

The IDR plan applications shouldn’t be down for too long, Kantrowitz said.

“I expect it will be temporary, lasting a few months while they make changes,” he said.

The Education Department is likely tweaking the applications to make sure all their plans comply with the new court order, as well as removing the SAVE plan all together.

The Education Department did not immediately respond to CNBC’s request for comment.

Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit, also didn’t expect a long wait time before the applications return.

“I get the sense the ED is working hard to get the changes made,” Mayotte said.

Impacts of the plans going dark

Unfortunately, there’s nothing federal student loan borrowers who want to sign up for an IDR plan or switch between the plans can do right now, Kantrowitz said.

Borrowers who are due to recertify their IDR plans will also have to sit tight for the time being, Mayotte said. (Those enrolled in IDR plans typically have to submit their income information annually.)

While the legal challenges against SAVE were playing out, the Biden administration put enrollees into an interest-free forbearance. That payment pause is likely to end soon, experts said. By then, borrowers should be able to access other IDR plans, though.

Those who graduate in the spring are typically entitled to a six-month grace period before their first bill is due, Kantrowitz pointed out.

As a result, they won’t need to sign up for a repayment plan until Novemember or December. The plans should be available again by then.

Options if you can’t afford your student loan bill

The disruption to IDR plans will be especially difficult for borrowers who can’t afford their current student loan bill and now can’t access a more affordable option, Mayotte said.

These borrowers can call their loan servicer and explain their situation.

You should first see if you qualify for a deferment, experts say. That’s because your loans may not accrue interest under that option, whereas they almost always do in a forbearance.

Personal Finance

Skipping your tax return amid IRS cutbacks? Penalties can be costly

Published

5 hours ago

February 27, 2025

Business Finance News

Valentinrussanov | E+ | Getty Images

As the IRS faces cutbacks, some taxpayers are weighing whether to file returns this season.

But skipping your federal filing can be costly, experts say.

Josh Youngblood, an enrolled agent and owner of The Youngblood Group, a Dallas-based tax firm, said he’s had a few clients ask whether they need to file this year.

“I’m concerned we’re going to see more of this” amid IRS layoffs and calls to eliminate the agency, he said.

Last week, the IRS faced mass layoffs as Elon Musk’s Department of Government Efficiency, or DOGE, continued to seek federal spending cuts. Meanwhile, Commerce Secretary Howard Lutnick told Fox News that President Donald Trump wants to “abolish” the agency and replace it with tariffs.

The uncertainty could contribute to taxpayers’ filing delays.

As of Feb. 14, the IRS received about 5% fewer individual returns compared to about the same point last season, according to the agency’s latest filing statistics.

Penalties for ‘tax protestors’ can be hefty

There are various reasons why some taxpayers don’t file returns, according to Syracuse University law professor Robert Nassau, director of the school’s low-income tax clinic.

In some cases, they may think “[the IRS is] never going to find me” or “they’re frightened and overwhelmed by the prospect of owing money,” he said.

Another category of non-filers or filers who deliberately underpay, known as “tax protestors,” argue federal taxes are unconstitutional or don’t apply to them, said certified public accountant Mark Kohler.

“There’s this whole laundry list of weird arguments that never work,” he said.

Tax protestors issues can lead to tax court and penalties can be hefty, experts say.

If you file a return without enough information to calculate the correct tax liability, you could be subject to a $5,000 civil penalty for filing a “frivolous tax return,” according to the Internal Revenue Code.

“Like moths to a flame, some people find themselves irresistibly drawn to the tax protester movement’s illusory claim that there is no legal requirement to pay federal income tax. And, like moths, these people sometimes get burned,” a circuit judge wrote in United States v. Sloan.

Avoid the ‘failure to file’ penalty

Whether you’re protesting the government or avoiding taxes owed, non-filers can expect IRS penalties, experts say.

The “failure to file” penalty is 5% of your taxes owed per month or partial month the filing is late, capped at 25%, according to the IRS.

That’s “ten times worse” than the “failure to pay” penalty, which is levied at 0.5% of your tax balance per month or partial month, also limited to 25%, Nassau explained.