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As a U.S. citizen or permanent resident, you incur U.S. income taxes on “worldwide income,” whether you’re making money while working from a ship or in another country. 
Taxes get more complicated if you disembark and work in a different country.
Casino prizes won on board are also subject to federal income tax.

Jenny Hunnicutt poses in front of the Royal Caribbean Ultimate World Cruise, which she’s been on for nearly nine months traveling the world. While on board, she’s working remotely for her writing and consulting business based in Florida.
Courtesy: Jenny Hunnicutt

Income made ‘worldwide’ is taxable

Despite a Bahamas flag flying atop the Serenade of the Seas, American cruise passengers making money while working from the ship are still subject to U.S. federal income taxes, experts say.
As a U.S. citizen or permanent resident, you incur U.S. income taxes on “worldwide income,” whether you’re making money from a ship or another country. 

That means filing taxes was pretty normal for Hunnicutt and her husband.
“My remote work through my consulting business, it’s all through Florida where my business is based,” she said. “It didn’t change for us.”

However, leaving the boat and working remotely could potentially trigger tax issues.  
When you work from another country, “that’s a completely different thing,” said certified financial planner Jane Mepham, founder of Elgon Financial Advisors in Austin, Texas, who specializes in international planning.  
As a U.S. citizen or permanent resident working abroad, you would still incur U.S. income taxes — but could also face tax liability for that country, depending on its laws and how long you worked there, she said.  
Some places could start trying to collect income taxes after day one, which is why you should speak with a cross-border tax professional before leaving for the trip, Mepham said.
To avoid double taxation, some expats qualify for the foreign earned income exclusion or the foreign tax credit. But cruise passengers aren’t likely to meet the requirements, experts say. 

Gifts can become ‘taxable income’

For some self-employed cruise passengers, income could come in different forms. 
Joe Martucci, another passenger on the ship, is a certified public accountant who lived abroad for 16 years. He’s retired now, but offered some tax advice to influencers on board who were monetizing content posted about the trip. 

Retired CPA Joe Martucci poses for a photo in Montenegro, a stop on the Royal Caribbean Ultimate World Cruise.
Courtesy: Joe Martucci

“A company in Australia gave them some gifts. Those gifts are taxable income, because they asked [the influencers], ‘Can you do a TikTok showing this gift we gave you?'” Martucci said. “You have to pay tax on that.”

Passengers ‘surprised’ by taxes on casino winnings

For U.S. citizens and permanent residents, casino prizes won aboard a cruise are also subject to federal income taxes, regardless of where the boat is when you hit the jackpot, experts say.   
“Some people could be a bit surprised” by a future tax bill, said James Border, a Florida-based certified public accountant and attorney, who specializes in maritime tax law. 
Typically, casinos issue a copy of Form W2-G, which must be reported on your tax return. Gambling losses can’t be deducted unless you itemize tax breaks and keep accurate records, according to the IRS.  More

ABLE accounts provide a tax-advantaged way for disabled individuals to save money.
Yet 10 years after Congress first created these accounts, many eligible individuals still aren’t using them.
Several new congressional proposals aim to raise awareness of the accounts and make it easier to put money in them.

Witthaya Prasongsin | Moment | Getty Images

Congress enacted legislation a decade ago to create accounts to help people with disabilities save money.
Yet only a fraction of the 8 million Americans who are eligible for the ABLE accounts — named for the Achieving a Better Life Experience Act — are using them, according to Sen. Bob Casey, D-Pa., who serves as the chairman of the Special Committee on Aging.

The senator on Thursday plans to introduce several new bills that would allow for eligible individuals to accumulate more money in ABLE accounts, while also raising awareness of them as an option to save for the disability community.
ABLE accounts let disabled individuals save money outside of asset limit requirements set by federal-assistance programs while also accessing certain tax advantages.
Funds in ABLE accounts must be used toward expenses to maintain or improve health, independence or quality of life for disabled or blind individuals. Investments in ABLE accounts grow tax deferred, while withdrawals are tax free, as long as they are used for qualified expenses.
An additional 6 million individuals may be eligible for ABLE accounts in 2026, when eligibility requirements for the accounts will move from having a disability before age 26 to before age 46.
To date, more than 171,000 people with disabilities have saved an average of over $11,000 each through ABLE accounts, according to Casey.

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Casey is pushing for Congress to enact more reforms to make it easier to save in ABLE accounts.
Last year, he proposed a bill called the ABLE MATCH Act that would create a federal dollar-for-dollar match to help lower-income disabled individuals save money in those accounts.
“Disability is in everyone’s family, regardless of which side of the aisle you’re on,” said Thomas Foley, executive director of the National Disability Institute.
“We’re hopeful that Senator Casey and his colleagues on both sides of the aisle will recognize that this is just another step to help people with disabilities lead more independent and financially secure lives,” Foley said.
Here’s what the three new bills set to be introduced in Congress on Thursday would do.

Let employers contribute to ABLE accounts

While many employers offer 401(k) plan matches, people with disabilities may not be able to take advantage of the benefit perk without risking that money counting against their asset limits for federal benefits programs.
Casey is proposing a bill, the ABLE Employment Flexibility Act, to make it possible for employers to contribute to an employee’s ABLE account instead of 401(k) accounts.

That way, an employee could be eligible to receive matching contributions without jeopardizing federal benefits. The money could be used toward retirement.
“ABLE accounts are a great way to save for retirement for someone with a disability who qualifies,” Foley said.

Allow direct deposits into ABLE accounts

A second bill, the ABLE Direct Deposit Act, would make it so employers or government programs can make direct deposits to ABLE accounts.
“Including direct deposit for ABLE accounts would make it easier for anyone with a disability to participate” in these accounts, Foley said.

Help inform people about ABLE programs

Because many of the individuals who are eligible to open ABLE accounts have not done so, a third proposal, the ABLE Awareness Act, seeks to educate more people about the accounts.
The bill calls for requiring both federal and state agencies to inform eligible individuals about ABLE accounts when they enroll in certain benefits programs.
In addition, the bill also calls for the creation of a grant program to allow states or groups of states to apply for funds to advertise ABLE programs in the media and on billboards. The grant program would be funded at $50 million per year for four years.

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The Federal Reserve held rates steady at the end of its two-day meeting Wednesday, but took one step closer to the first cut in four years.
For consumers, the days of sky-high borrowing costs may be numbered.

Customer shopping for school supplies with employee restocking shelves, Target store, Queens, New York.
Lindsey Nicholson | UCG | Universal Images Group | Getty Images

Now, as the central bank sets the stage to lower interest rates for the first time in years when it meets again in September, consumers may see their borrowing costs start come down as well — and some already are.
The federal funds rate, which the U.S. central bank sets, is the rate at which banks borrow and lend to one another overnight. Although that’s not the rate consumers pay, the Fed’s moves still affect the borrowing and savings rates they see every day.
“The first cut will not make a meaningful difference to people’s pocketbooks, but it will be the beginning of a series of rate cuts at the end of this year and into next year that will,” House said.
That could bring the the Fed’s benchmark fed funds rate from the current range of 5.25% to 5.50% to below 4% by the end of next year, according to some experts.
From credit cards and mortgage rates to auto loans and student debt, here’s a look at where those monthly interest expenses stand as we move closer to that initial interest rate cut.

Credit cards

Since most credit cards have a variable rate, there’s a direct connection to the Fed’s benchmark. In the wake of the rate hike cycle, the average credit card rate rose from 16.34% in March 2022 to more than 20% today — nearing an all-time high.
At the same time, with households struggling to keep up with the high cost of living, credit card balances are also higher and more cardholders are carrying debt from month to month or falling behind on payments.
A recent report from the Philadelphia Federal Reserve showed a record in credit card delinquencies, according to data going back to 2012. Revolving debt balances also reached a new high even as banks reported tightening credit standards and declining new card originations.
For those paying 20% interest — or more — on a revolving balance, annual percentage rates will start to come down when the Fed cuts rates. But even then they will only ease off extremely high levels, offering little in the way of relief, according to Greg McBride, chief financial analyst at Bankrate.com.
“Rates are not going to fall fast enough to bail you out of a bad situation,” McBride said.
The best move for those with credit card debt is to take matters into their own hands, advised Matt Schulz, chief credit analyst at LendingTree.
“They can do that by getting a 0% balance transfer credit card or a low-interest personal loan or by calling their card issuer and requesting a lower interest rate on a card,” he said. “That works more often that you might think.”

Mortgage rates

While 15- and 30-year mortgage rates are fixed and mostly tied to Treasury yields and the economy, they are partly influenced by the Fed’s policy. Home loan rates have already started to fall, largely due to the prospect of a Fed-induced economic slowdown.
The average rate for a 30-year, fixed-rate mortgage is now below 7%, according to Bankrate.
“If we continue to get good news on things like inflation, [mortgage rates] could continue trending downward,” said Jacob Channel, senior economist at LendingTree. “We shouldn’t expect any gargantuan drops in the immediate future, but we might see rates trending back to their 2024 lows over the coming weeks and months,” he said.
“If all goes really well, we could even end the year with the average rate on a 30-year, fixed mortgage closer to 6% than 6.5% or 7%.”
At first glance, that might not seem significant, Channel added, but “in mortgage land,” a nearly 50 basis-point drop “is nothing to scoff at.” A basis point is one-hundredth of a percentage point.

Auto loans

Auto loans are fixed. However, payments have been getting bigger because the interest rates on new loans are higher, and along with rising car prices that has resulted in less affordable monthly payments.
The average rate on a five-year new car loan is now just shy of 8%, according to Bankrate.
However, “the financing is one variable, and it’s frankly one of the smaller variables,” McBride said. For example, a quarter percentage point reduction in rates on a $35,000, five-year loan calculates to $4 a month, he said.
Consumers would benefit more from improving their credit scores, which could pave the way to even better loan terms, McBride said.

Student loans

Federal student loan rates are also fixed, so most borrowers aren’t immediately affected by the Fed’s moves. But undergraduate students who took out direct federal student loans for the 2023-24 academic year are paying 5.50%, up from 4.99% in 2022-23 — and the interest rate on federal direct undergraduate loans for the 2024-2025 academic year is 6.53%, the highest rate in at least a decade.
Private student loans tend to have a variable rate tied to the prime rate, Treasury bill or another rate index, which means those borrowers are already paying more in interest. How much more, however, varies with the benchmark.

Savings rates

While the central bank has no direct influence on deposit rates, the yields tend to be correlated to changes in the target federal funds rate.
As a result, top-yielding online savings account rates have made significant moves and are now paying as much as 5.5% — well above the rate of inflation, which is a rare win for anyone building up a cash cushion, according to Bankrate’s McBride.
But those rates will fall once the central bank lowers its benchmark, he added. “If you’ve been considering a certificate of deposit, now is the time to lock it in,” McBride said. “Those yields will not get better, so there is no advantage to waiting.”
Currently, a top-yielding one-year CD pays more than 5.3%, as good as a high-yield savings account.

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Pershing Square withdrew its IPO plans Wednesday afternoon amid low demand.
Bill Ackman said the firm would “report back” when it is ready to go public.
Pershing Square had $18.7 billion in assets under management as of the end of June.

Bill Ackman, CEO of Pershing Square Capital Management, speaks during an interview for an episode of “The David Rubenstein Show: Peer-to-Peer Conversations” in New York on Nov. 28, 2023.
Jeenah Moon | Bloomberg | Getty Images

Bill Ackman’s Pershing Square USA withdrew plans for an initial public offering after investor demand appeared to wane from original expectations.
But the hedge fund titan said he would be back with a revised plan for the offering for his fund, which he had wanted to model after Berkshire Hathaway.

Ackman wrote in a statement:

“While we have received enormous investor interest in PSUS, one principal question has remained: Would investors be better served waiting to invest in the aftermarket than in the IPO? This question has inspired us to reevaluate PSUS’s structure to make the IPO investment decision a straightforward one. We will report back once we are ready to launch a revised transaction.”

The withdrawal comes a day after the fund said it would be seeking to raise $2 billion, far below the possible $25 billion cited in previous reports. The announcement also comes on the back of a notice on the New York Stock Exchange’s website last Friday, which showed the billionaire investor was delaying his IPO.
Pershing Square had $18.7 billion in assets under management as of the end of June. Most of the money was under Pershing Square Holdings, a closed-end fund that trades in Europe.
On Monday, Bloomberg News reported citing sources that Baupost Group opted against investing in the offering after Ackman had originally touted in a letter to investors that Seth Klarman’s Boston-based hedge fund was participating.
Ackman’s move to publicly list Pershing Square was seen as a way to capitalize on his growing presence among retail investors. Currently, he has more than one million followers on social media platform X. On the platform, he has expressed his views on topics including the U.S. presidential election and antisemitism.

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In a speech Tuesday, Vice President Kamala Harris, the de facto Democratic nominee, positioned herself as a champion for the middle class.  
Here’s a look at how her economic agenda for middle-class families may take shape, based on the policies she advocated for during her first presidential bid in 2020 and as a senator.
One of her signature proposals as a senator was the LIFT the Middle Class Act, which would have provided a tax credit of up to $3,000 per person for low- and middle-income workers.

Vice President and 2024 Democratic presidential candidate Kamala Harris speaks at a campaign event in Atlanta, Georgia, on July 30, 2024.
Elijah Nouvelage | Afp | Getty Images

“Building up the middle class will be a defining goal of my presidency,” Vice President Kamala Harris said at a political event in Atlanta on Tuesday evening.
“When our middle class is strong, America is strong,” the de facto Democratic presidential nominee said to the crowd of more than 10,000 supporters.

“And to keep our middle class strong, families need relief from the high cost of living so that they have a chance, not to just to get by, but to get ahead,” she added.
Here’s a look at how Harris may make that happen, based on the policies she advocated for during her first presidential bid in 2020 and as a senator.
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One of Harris’ signature proposals as senator — the LIFT the Middle Class Act, or Livable Incomes for Families Today — would have provided an annual tax credit of up to $3,000 per person (or $6,000 per couple) for lower- and middle-income workers, on top of the benefits they already receive.
The size of the credit would have amounted to “significant tax relief,” according to the Committee for a Responsible Federal Budget.

The Harris campaign did not immediately respond to CNBC’s request for comment. 

How the LIFT Act could look today

Since the LIFT Act was first proposed in 2018, the cost of living has only skyrocketed, hitting working-class Americans especially hard.
For these households, “real incomes have declined or remained flat due to inflation,” Tomas Philipson, former chair of the White House Council of Economic Advisers, told CNBC. That makes many workers feel less confident about their financial standing — and less satisfied with President Joe Biden’s handling of the economy.
At the same time, the rise of artificial intelligence has stoked fears about long-term job security.
In that context, “there’s a good rationale” for refloating a tax credit for those making under a certain income threshold, according to Laura Veldkamp, a professor of finance and economics at Columbia University Business School.
“A lot of people are asking the question, ‘Will AI take my job?’ There are people whose hard-earned skills could be obsolete,” she said. “One way to deal with that is to have more social insurance.”

But a tax credit like LIFT would also be extremely costly, according to Tax Policy Center estimates from 2018 and 2019.
To help cover the tab for the additional financial support, Harris at the time proposed repealing provisions of the Tax Cuts and Jobs Act for taxpayers earning more than $100,000.
However, funding such a tax credit now could be tough amid growing concerns over the federal budget deficit. Harris will also need to address trillions of expiring tax cuts enacted by former President Donald Trump before 2025.

How the LIFT Act could support renters

A present-day version of the LIFT Act may benefit renters the most, as many are part of the income category the tax credit is targeting, according to Francesco D’Acunto, an associate professor of finance at Georgetown University.
D’Acunto and other experts suggest the LIFT Act might even be a better aid than the 5% rent cap proposal Biden unveiled on July 16. That proposal calls on Congress to cap rent increases from landlords with 50 existing units or more at 5% or risk losing federal tax breaks.
Harris also supported the idea of rent caps at the campaign rally in Atlanta: “We will take on corporate landlords and cap unfair rent increases.”
However economists have found that such policies inadvertently bring down the available supply of rental units. And rent-control policies could further affect an already, relatively short supply, according to a report by the Federal Reserve published in February.
Rental vacancy rates, or the percentage of all units available for rent, measure the tightness of rental markets; the higher the vacancy rate, the easier it is to find housing, per the Fed.
In 2021, the overall vacancy rate slid to 5.6%, the lowest level since 1984, the central bank found. Supply has since rebounded and plateaued at 6.6% in April, per census data via the Fed.

While the rent cap may lead consumers to believe prices will not increase significantly, it could have negative side effects, such as landlords taking their properties off the rental market, said Karl Widerquist, an economist and professor of philosophy at Georgetown University.
Plus, landlords who lose those federal tax breaks will still be able to raise rents, said Jacob Channel, a senior economist at LendingTree.
The advantage of the LIFT tax credit, said D’Acunto, is that it doesn’t create the same market distortions the rent cap would ignite. “But instead now on the side of the renter, we are actually very directly helping them to defray the effects of rent inflation,” he said.
Adds Widerquist: “We very often give tax benefits to all homeowners in the name of making it more affordable for people to become homeowners, and we don’t give a similar tax break to people who are paying rent. Those are the people who are struggling to become owners.”

Child tax credit is a ‘huge priority’ for Democrats

LIFT was first proposed years before Congress temporarily expanded the child tax credit during the Covid-19 pandemic, which could now be a bigger priority, experts say.
The American Rescue Plan boosted the child tax credit to $3,000 from $2,000, with an extra $600 for children under age 6 for 2021, and families received up to half upfront via monthly payments. Harris described the child tax credit changes as one of the “most important” and “most impactful” parts of the legislation in a 2021 speech.
The child poverty rate plunged to a historic low of 5.2% in 2021, largely due to the expansion, a Columbia University analysis found. Then in 2022, the rate more than doubled to 12.4% after pandemic relief expired, according to the U.S. Census Bureau.

“Whereas the last administration gave tax cuts to billionaires, we gave tax cuts to families through the child tax credit, which cut child poverty in America by half,” Harris said at a political event in North Carolina in late July, before Biden left the race.
Biden’s fiscal year 2025 budget aimed to restore the 2021 child tax credit increase and House lawmakers in January passed a bipartisan tax package, which included a child tax credit expansion. The Senate has scheduled a procedural vote for the bill on Thursday, which will force lawmakers to take a stand on the issue ahead of November.
The enhanced tax break is “a huge priority for Democrats,” said Garrett Watson, senior policy analyst and modeling manager at the Tax Foundation. 
Still, it’s unclear whether Harris, now the clear front-runner for the nomination, will renew calls for LIFT or focus on the child tax credit, which has a different design but a similar goal, he said.
“It’s very hard to say whether they would revisit specific policy options from so long ago,” said Columbia Business School economics professor Brett House.
For now, “there are other cultural and political issues that are going to dominate.”

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The Biden administration is again gearing up to try to forgive the student debt of tens of millions of Americans, after the Supreme Court struck down its first effort last year.
Now, the president has directed the U.S. Department of Education to pursue the regulatory process.
In the coming days, the Education Department will begin emailing borrowers who may be eligible for the wide-scale loan cancellation, the department said on Wednesday.

Two federal judges in Kansas and Missouri on Monday at the urging of several Republican-led states blocked President Joe Biden’s administration from further implementing a new student debt relief plan that lowers payments.
Bloomberg | Bloomberg | Getty Images

The Biden administration is gearing up to try to forgive the student debt of tens of millions of Americans again, after the Supreme Court struck down its first effort last year.
In the coming days, the U.S. Department of Education will begin emailing borrowers who may be eligible for the wide-scale loan cancellation, the department said on Wednesday. It hopes to deliver that relief in the fall, possibly weeks before the 2024 presidential election.

“Today, the Biden-Harris administration takes another step forward in our drive to deliver student debt relief to borrowers who’ve been failed by a broken system,” U.S. Secretary of Education Miguel Cardona said in a statement.
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If, for some reason, a borrower wants to opt out of the debt forgiveness, they must do so by Aug. 30 with their loan servicer, the Education Department said.
Borrowers who are likely to qualify for partial or full debt erasure include those who owe more now than they did at the start of repayment and people who have been paying on their loans for decades.

‘Ready to go as soon as the final rule is published’

The same day the Supreme Court blocked President Joe Biden’s first attempt at sweeping student loan forgiveness, he announced that the White House would try to deliver the relief another way.

Originally, the president attempted to cancel the debt through an executive action. This time he has directed the Education Department to pursue the regulatory process, which experts say should increase its chances of surviving the inevitable next round of legal challenges.
The Education Department is expected to publish its final rule on the debt relief sometime in October.
Wednesday’s announcement suggests the agency plans to act swiftly once the rule is in effect, said higher education expert Mark Kantrowitz.
“Undoubtedly the Biden Administration will be ready to go as soon as the final rule is published, but Republicans may also be ready to file a lawsuit,” Kantrowitz said.

It was a lawsuit brought by six GOP-led states — Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina — that eventually led to the demise of Biden’s first loan forgiveness plan.
The emails may also be a strategy by the Biden team to show millions of Americans that the loan forgiveness is at stake in the election, Kantrowitz said.
“It shows the borrowers what they stand to lose if Republicans win,” he said.
Rep. Virginia Foxx, R-N.C., criticized the latest development.
“The Biden-Harris administration continues to dangle loan ‘forgiveness’ in front of millions of borrowers across the nation,” Foxx said in a statement. “This is just another illegal scheme intended to buy votes in November.”
This is breaking news. Please check back for updates.

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It is difficult to predict future cryptocurrency prices amid political and economic uncertainty, but you can still make some smart tax moves, experts say.
Lower earnings could be a chance to harvest gains or reset your original purchase prices.
Plus, crypto investors can still leverage the crypto wash sale loophole while harvesting losses, experts say.

CFOTO | Future Publishing | Getty Images

It is nearly impossible to predict future cryptocurrency prices amid political and economic uncertainty, but you can still make some smart tax moves, experts say.
As investors brace for interest rate news from the Federal Reserve and weigh policy proposals from former President Donald Trump, the price of bitcoin was at $65,856 around midday Tuesday, while ether bitcoin was trading at $3,310.97, according to Coin Metrics. 

The price of bitcoin dipped to a two-month low in early July after the Fed indicated it was not yet ready to cut interest rates.
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Whether prices move up or down, here are some key crypto tax strategies to consider, according to experts.  

1. Weigh ‘tax-gain harvesting’

Despite recent dips, many longtime crypto investors could have significant gains. The price of bitcoin was still up about 49% year to date, while the price of ether has grown about 40%, as of midday on July 30.
If you are expecting a lower-income year for 2024, it could be a chance for tax-gain harvesting, or strategically selling profitable crypto while in the 0% long-term capital gains bracket. Long-term capital gains rates apply to assets owned for more than one year.

These rates apply to your “taxable income,” which you calculate by subtracting the greater of the standard or itemized deductions from your adjusted gross income.

“Tax gain harvesting is one of the best strategies,” to spread earnings across multiple years, according to Andrew Gordon, a tax attorney, certified public accountant and president of Gordon Law Group.
Of course, you will need to weigh the tax consequences of boosting your adjusted gross income with crypto gains, which can affect other tax breaks.

2. Reset your purchase price

Harvesting gains and then immediately repurchasing could also be a chance to reset your “basis,” or the original purchase price of an asset, to reduce future taxes, experts say.
The strategy could make sense even at the 15% long-term capital gains bracket if you are expecting higher income in the future and want to maintain your position, said Adam Markowitz, an enrolled agent at Luminary Tax Advisors in Windermere, Florida.
On top of capital gains, some investors also incur an extra 3.8% levy, which kicks in once modified adjusted gross income, or MAGI, exceeds $200,000 for single filers or $250,000 for married couples filing together.

3. Consider the crypto wash sale ‘loophole’

If you are sitting on crypto losses, you could consider tax-loss harvesting, which allows you to offset other investing profits. Once losses exceed gains, you can use the excess to reduce regular income by up to $3,000 per year.
Although tax-loss harvesting often happens at year-end, it is better to harvest crypto losses over time because “those losses may no longer exist” by year-end, Gordon explained.

Typically, investors are subject to the wash sale rule, which blocks you from claiming the tax break if you repurchase a “substantially identical” asset within a 30-day window before or after the sale.
However, the wash-sale rule currently does not apply to cryptocurrency, meaning you could harvest losses and immediately repurchase to maintain your position.

The IRS gives us this loophole. We may as well take it.

Adam Markowitz
Enrolled agent at Luminary Tax Advisors

“The IRS gives us this loophole,” Markowitz said. “We may as well take it.” 
While previous Congressional efforts to repeal the crypto wash sale rule have failed, changes could still happen.
Without action from Congress, trillions of tax breaks enacted by Trump will expire after 2025. The crypto wash sale rule could be revisited as lawmakers seek funding to extend key provisions, experts say.
“It may make sense to utilize it now before it goes away,” Gordon added.

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Unrelenting summer heat has made it challenging for households to stay cool.
That trend of higher temperatures is only expected to continue in coming years.
Experts say policies are needed to help families who cannot afford cooling costs.

Visitors walk during a long-duration heat wave impacting much of California on July 9 in Death Valley National Park, California. 
Mario Tama | Getty Images News | Getty Images

Amid surging summer heat, the earth reached a new hottest day on record on July 22.
That day, the global average temperature was almost 63 degrees Fahrenheit, and was surrounded by similar high temperature days.

Across the U.S. this summer, many areas have experienced unrelenting heat waves.
As a result, many Americans face a tough tradeoff between paying higher cooling costs or suffering in the heat to save money, research finds.
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This year, extreme heat is projected to lead home cooling to cost an average of $719 from June through September — up nearly 8% from $661 for the same period in 2023 — the National Energy Assistance Directors Association and the Center for Energy, Poverty and Climate estimate.
Home cooling costs have risen in the past decade as higher temperatures require more electricity.

And those higher temperatures are expected to get worse, with the U.S. by the end of the century projected to have at least 50 days per year with maximum temperatures above 95 degrees, according to new research from the JPMorgan Chase Institute.
“We’re seeing more and more high heat days and the impact of climate change,” said Heather Higginbottom, head of research, policy and insights for corporate responsibility at JPMorgan Chase. “That’s another expense that families and households have to manage.”

Some must ‘just go without cooling their homes’

Low-income households may be poised to suffer most amid rising temperatures.
During hot days, low-income households tend to go without cooling to save money. They spend 37% to 45% less on air conditioning than high-income households, JPMorgan Chase Institute found, based on an analysis of anonymized firm data.

A man walks near the Las Vegas strip during a heatwave in Las Vegas on July 7.
Robyn Beck | Afp | Getty Images

For most households, the higher electricity bills have limited effects on other spending. In Houston, an extra 95-degree day contributes to less than $1 in foregone spending for the average family, according to the JPMorgan Chase Institute’s research.
In two other cities the research evaluated — Los Angeles and Chicago — there was no statistically detectable effect.
“Lower-income households will spend less on air conditioning than middle- or higher-income households on high heat days, and essentially just go without cooling their homes as effectively for financial reasons,” Higginbottom said.
Rising energy prices have a greater impact on lower-income families because those increases take up a larger share of their budgets, according to Mark Wolfe, executive director of the National Energy Assistance Directors Association.

For a high-income family, higher energy bills may push those costs from 3% to 3.1% of their budgets, a difference that likely won’t substantially impact their lives, Wolfe said.
But for low-income families, the share of those costs in their budgets may go from 8.3% to 11%, and substantially limit their discretionary income, he said.
Those low-income families tend to disproportionately include young children, elderly or disabled individuals, which means higher heat also poses a significant health risk, Wolfe said.

‘There’s no inexpensive solution’

While policies can help those vulnerable populations, it is a race against time, as temperatures rise faster than expected, he said.
“We’re having extended periods of very high temperatures, and we’re not prepared for it,” Wolfe said.
Two policy approaches can help, according to Wolfe — immediate help for people pay their cooling bills and long-term efforts to retrofit housing for low-income families so they can access affordable and modern cooling systems.

In the meantime, many families may be at risk of shut offs if they can’t pay their bills.
Turning up the temperature on the thermostat — say from 72 degrees to 78 degrees — can help reduce cooling costs. Installing more insulation can also result in savings, according to experts.
But this summer is a “wake up call” that bigger changes need to happen, Wolfe said.
“This is going to be expensive to adapt,” Wolfe said. “There’s no inexpensive solution.” More