We are about to be blasted with endless advertisements that will seek to help you stop smoking and lose weight as it is the time of year for resolutions to be made. It is easy to be cynical about this and their chances of sticking, but it is also easy to see that these resolutions come from a good place and are from people who want to make genuine changes in their lives.

The key to making them work is taking action and doing it quickly. The longer that you put something off, the easier it is to keep putting it off.

Recently, I have talked in this space about how it is more difficult to make financial moves that affect your tax picture as the calendar year winds down. It is really easy to make those plans once the calendar turns, though, and they can feel less dramatic with greater results because they have more time to play out.

But again, you must take action.

I don’t want to spend a lot of time going over any specific plans this week – we will have enough time to do that in the new year, and I know most people are still mentally checked out until all the holidays have passed. But let this be the seed of an idea that can grow.

So think - what is one thing that you would like to change in your financial picture to make 2019 feel better than 2018? It could be as simple and front-of-mind as putting away enough money to make gift buying next holiday season stress-free.  It could be as huge and potentially complicated as increasing your business’s profitability.

Either way, here is to you staying committed to making it happen. But remember you must take action, so make an appointment with us now to start keeping yourself accountable and starting the path to success as soon as possible.

Happy New Year!

It feels difficult to believe that 2018 is almost over. I know everyone says that toward the end of every year, but that feeling has definitely increased around here this time around.

The biggest reason has been the amount of tax changes that have been coming since the passage of the Tax Cuts and Jobs Act. This even continued over the past week or so when we finally saw the final version of the new 1040 form.  And that coming just about a month before you can start to really use it.

So we started the year with many questions, and along the way we got many answers. As we go into the filing season, we are bound to find many more questions, and we will hope that we are given answers.

In such a time of change and upheaval, it is always heartening to have so many clients we work with so closely that trust us to travel the path together. So to all of you out there, thank you.

In such times, as well, it can be even more important to trust in your family and friends. They are the ones who give you the energy to travel that work path. So to all of you out there, thank you.

At this time of year, we celebrate different holidays in different ways. No matter what you do or how you do it, though, let this be a wish that you take the time to embrace who you’re doing it with. Let this be a time when you get to relax and reenergize.

Happy Holidays!

It happens to all of us, even me, as earlier this week, I got click baited.  No one wants to face a tax audit, right? So why wouldn’t you click on an ad that says it will lead you to a list of red flags that could cause the IRS to give your tax return an extra look and potentially trigger an audit.

And I’ll even allow you the chance to give into this impulse by providing you a link to the article here.

This article is from Kiplinger, and although its eye-catching title and slideshow presentation are very clickbait-y, it is not as if the article is full of bad information.  Some of it is even very good, as people should know that the IRS receives copies of your W2s and 1099s, so if you try to not report all of your income, the agency can figure that out without much work.

At the same time, though, I find the idea of red flags that can to an audit kind of misleading.

For instance, another entry on the list is owning your own business, because of how it can open up a sea of potential deductions of which the IRS may want proof. And sure, your business transactions could potentially lead the agency to want to look deeper into your return, but does that mean you should not take deductions to which you’re entitled in the hopes of avoiding an audit?

Of course not.  Instead, I think that the proper mindset to take when doing a tax return is to make sure you are submitting a legitimate one. As long as you do that, you can have as many red flags on it as you want. That will just mean that you are using the system to your best advantage and getting a better return.

This type of mindset may be even more crucial as we head into the first tax return season following the passage of the Tax Cuts and Jobs Act. Are you just assuming that you will now fit into the larger standard deduction and that will essentially sum up your return? Well, that is certainly going to be the case for a number of people, but it’s an assumption that could also lead you to not looking into everything for which you could still qualify and benefit from. And if there are legitimate credits or deductions, don’t you want to use them?

Sure, the more that you do take advantage of those things, the more chances there are that your tax return will look different enough from the norm that the IRS may question it. But why should this be a worry if everything you are doing is legitimate and legal?

As always, we are happy to help you find the best answers for your individual situation. If you want some of those answers before the end of the year, time is starting to run short, but we can still offer appointments before year end.  Even if you don’t look deep into the situation by then, though, we will still be here once we get into 2019 and are again ready to help you with another tax return.

Market Turmoil or Transition?

With the recent market sell-off, many investors have been asking: What is causing this?  Should I get out of stocks completely?  Is there a safe-haven? What they are really asking is: What should I do now?

Passive to Active

In 2007, passive investments represented 26% of the U.S. Stock Market.  Now, in 2018, 83% of investments are passive.  This means that most of the investments are made (in mutual funds, ETFs (Exchange Traded Funds) and by passive managers) without much regard to the fundamentals.  This tends to exacerbate market moves in both directions and causes additional volatility.  We have seen this to the upside, where the FANG stocks (Facebook, Apple, Netflix and Google) have propelled the market higher.  We can now see it to the downside as this can lead to indiscriminate selling, potentially allowing great companies to be sold off for no reason other than their inclusion in an index.

What we need now more than ever is to evaluate companies on their fundamentals and earnings, moving our investments from passive back to active management where the company’s performance is most important.

Overvalued to Undervalued

During these times there is a divergence that occurs from the true value –referred to as the Intrinsic Value, and the current Market Price of an investment. We should look to be buying companies whose market price is currently lower than its intrinsic value.

We have constructed a portfolio to do just that. We suggest moving to this Intrinsic Value Portfolio. It’s easy to see that the fundamentals of such a portfolio will be more resilient in these times and positioned for a higher probability of long-term success.

Get Out Of	Get In To
Overvalued Equities	Undervalued Equities
Fixed Income	Variable Income
Speculative Paper Assets	Defensive Real Assets
Passive Funds and ETFs	Active Management

Let’s get together to discuss how we can transition or rebalance your portfolio to be better able to weather the storm that we are predicting is ahead.

Our work here can sometimes feel over the place – not that this is a bad thing.

In fact, it is one of the parts of my job that I find most interesting. It can be numbing to do the same thing over and over. Here, though, I get to work with many different clients who face many different issues, so helping them always comes in a unique form.

This is something that seems to be hitting many taxpayers as we rush toward the end of 2018. Many people have heard of the some of the tax law changes implemented by the Tax Cuts and Jobs Act, and many used some political calculus to determine how they felt about them. Now, however, they are getting much more interesting in knowing how those changes are going to affect them personally.

As we have said many times, there is not one answer that we can give to cover everyone. Personal answers will be needed. And those personal answers may also change how you go about that political calculus.

So if you need some of that one-on-one attention, please reach out to us BEFORE the calendar turns to 2019.

Now in the interests of continuing to be all over the place, here are a few quick-short items.

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Ohio has become the first state in the nation to start accepting Bitcoin as tax payments from many businesses.

I am not an expert in cryptocurrency, so do not want to give any financial advice on how sound of an investment it is. I would only say that in general the volatility in Bitcoin’s value seen over this year goes to show that one should go into investing in this area with a realization of what kind of risk-reward spectrum you are on.

A move like this by a state, though, only adds legitimacy to the concept and helps the long-range forecast of success for these new currencies.

Maybe this could even lead to us one day understanding just what blockchain is anyway.

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Now I’m not really sure if this time of year opens one up to higher risk of identity theft. There is definitely talk about it, though, as more people make more online transactions during the holiday season.

I am sure, however, that it does always do one good to take common-sense actions to protect your information no matter what the calendar says.  And if your holiday shopping has made you realize that you should be taking some added measures, here is a little primer the IRS recently put out in the spirit of the season.

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Late last week the IRS began an Instagram account. Now sure, I can’t find any real fault in the agency using as many means as it can to reach more people with more timely information, but it was never a platform I imagined was cut out for tax news dissemination.

And no one really wants a heap of tax professional selfies.

Some of us do have some rather cute cats, though …

It is already widely known that the passage of the Tax Cuts and Jobs Act means fewer taxpayers will be itemizing deductions on their tax returns early next year. This means that I will not be spending a lot of time over the next month or so talking about last-minute moves one can make to improve your tax picture. For many, those options have been decrease. This also unfortunately means that I will not be steering as many people to make some late-year charitable donations and then enjoy the tax benefit.

Hopefully, most thought of that latter benefit as a corollary bonus and not the main impetus behind making those donations, for they are still needed.

Giving Tuesday just passed this week, and we are in the time of year when donations reach high levels as feelings of goodwill and hopes of peace drive many to help others. It is not the only time we have had those thoughts this year, though, as recovering from traumatic events like hurricanes and wildfires also necessitated leaning on the generosity of others.

And when you look at the amount of money that can be raised for such wonderful and worthy causes, it can be very heartening. So even if there is a larger chance that making such donations may no longer affect your tax picture, I still want to express the hope that it will not affect your inclination to give if you have the ability to do so.

At the same time, though, there are scammers out there trying to take advantage of this goodwill. It seems that every time a disaster comes along, there are stories of fraudulent people and organizations that pop up to collect money and not pass it along to those they were claiming to help. That is only bound to happen in this more general season of giving, too.

Although it may feel bad to question someone who is claiming to be doing a selfless act, it can do you good to implement a little due diligence and look up the credentials of an organization before making a donation. Sure, there are some large charities that we all know about and trust, but many smaller ones are also doing great work. You may support their mission and just not have known they existed.

So just to ensure that you can feel confident about where your money is going, the IRS offers a Tax Exempt Organization Search online. It provides information on an organization’s tax status, allowing you to confirm it is a tax-exempt entity and eligible to receive tax-deductible charitable contributions. It is an easy check at legitimacy, for if it is a legitimate entity, there is no reason why it would not have formally received tax-exempt status through the agency.

And as always, remember that if something feels fishy, it is worth investigating before you commit to anything. But when things don’t feel fishy, they can instead feel great and wonderful, so please commit to helping there.

It is hard to believe that it has been almost a year since the Tax Cuts and Jobs Act was passed. Because of that, much of what has been discussed in tax circles throughout 2018 has been new rules. Today, though, I think it is worth giving some time to an issue that is a perpetual one – tips.

I think a big part of why this is such an endearing question is because those who make tips tend to see them as separate from their wages. And this makes a lot of sense - they are received in a different way, aren’t always received in a paycheck, and seem to be earned from a customer instead of an employer. In the end, though, the disappointing answer to how tips are handled is that they also are subject to taxes.

I am now going to be even more disappointing for this taxation is supposed to happen no matter how the tips are received. Whether they are received in cash, part of a credit card transaction, or divvied up with coworkers in a sharing arrangement, they are all supposed to be reported and subject to tax withholding.

Legally, employees are supposed to report cash tips received to their employer by the 10^th of the following month. That amount is then to be recorded as part of one’s pay so that the appropriate taxes can be withheld.

But yes, I knowingly prefaced the last paragraph with “legally.” I’m not going to be naïve enough to pretend that some do not report all of their tips, or that there possibly unspoken arrangements in an establishment to not speak of all the tips that come through. So if some tips have never been reported, that is out of our hands here when tax time comes. I am just making it my job to speak of the legal obligations, what you choose to do with that information is in your hands. But yes, when cash is simply handed over, reporting can be tricky and spotty.

When these tips are reported, they are subject to income tax, employee Social Security tax, and employee Medicare tax. It is quite understandable how it can feel it like a hit when you have to pay into multiple areas out of money that already reached your hand. If you keep up with reporting this month by month, though, you can learn to estimate how it will affect your paycheck. Possibly more importantly, though, is that you the regular reporting keeps there from being any big surprises come tax reporting time. When things are done monthly, payments are being made, preventing large ones being needed come April.

The rules on tips can get a little more complicated when you reach higher numbers, but I will not discuss those here. Those don’t tend to be the questions I get when it comes to this area anyway. Instead, it is almost always about whether tips are taxed at all, and now you know the answer.

It happened as it always happens, the country voted and made it through another election. This one, however, certainly felt a little more divisive than most, and the results showed that that division is real. Those results also show that one can’t make financial and tax plans based on election promises.

One of the promises that President Trump spoke about in the lead-up to the election was a Republican plan for a 10% middle-class tax cut. Obviously, this would appeal to many people and speaks to concerns some have that his party’s passage of the Tax Cuts and Jobs Act did more for high-wealth people and businesses than for those in the middle.

For the people this rhetoric spoke to, if that was their biggest concern with the country’s direction, they should have voted on that promise. The Republican Party had already shown it has the ability to pass tax legislation. If it retained majorities in both houses of congress, there was no reason to think that it could not have done it again.

Now, however, with a Democratic majority in the House of Representatives, the chances of this happening are essentially nil. And therein lies the crux of what I want to say this week.

There is nothing wrong, and it is an essential part of our democracy, with voting for the way that you want the country to run, and that often aligns with self-interest. It is great to have a candidate or party speaking to what you want addressed, and feeling they will address your issues and concerns. You just can’t plan ahead based on that information.

For now, the tax rules passed in the TCJA look to be the rules we will be going by for the next few years. Another power shift will likely be needed before anything major can be passed. Heck, if there’s one thing the TCJA is teaching us, it is that even when major tax legislation is passed, it takes time to fully get into the minutiae of it and understand all of its implications.

It is worth spending some time investigating how the rules affect your tax picture and what you can do to make it work in the best way for you. That is a difficult enough experience to work through without making speculative moves based on promises and rhetoric.

And yes, as you take that time and make your moves under the current system, chances are good that you will find rules you wish were different. Latch onto that, feel strongly about them, do what you can to make your voice heard, and continue to vote in the future. That is a powerful act that can help you see the change in the country you want to see. It’s just part of the process, though, and a process that can take a long time to see through to a conclusion. So in the meantime, work within the rules we have, and know that we are here to support you along the journey.

HAPPY HALLOWEEN ! ! !  A few times over the last couple of months I have written about the benefits of keeping all your financials on the up-and-up, whether this is how you handle the books of your business or when you file your taxes. And now, a recent study from Columbia Business School has looked at if it is beneficial to engage in financial reporting misconduct, even when you get caught.

The eye-catching headline from this report is that a quarter of the people who get caught still end up experiencing a net benefit (follow these links if you want to see how the news was treated by CPA Practice Advisor and Accounting Today). To me, however, it means that three-quarters of those who were caught did not experience a benefit, which means that the chances of coming out on the positive side are not good, even if they are a little better than your Powerball and Mega Millions chances.

Also noted in this report, though, is that there’s also only about a 25% chance of getting caught in the first place. I suppose that number would be about what I expected, and it speaks to why people could be willing to get away with such practices in the first place.

Combining these numbers means that more than half of perpetrators stand to benefit when you count those who are never caught. Just what these benefits and costs are, though, determine how one should really feel about this. For the purposes of this study, the benefits include salary bonuses and stock gains and the costs are things such as fines and forgone earnings. Essentially, its calculus is solely financial.

I am not saying this to demean the study in any way, but this view fails to give the whole picture, for shouldn’t there be a morality aspect in this? The study is still an interesting look at an interesting question, but there is more to the situation than finances.

The fact that morality does play a part means there are other costs involved. First, there is the emotion and worry one has to feel when wondering if they will get away with it or not. Second, those who are caught have more to deal with beyond the financial costs. The emotion and worry are then amplified many times. And once it is known, it will take a toll on work relationships, and is bound to bleed into one’s home and family life, too.

So yes, I’m not speaking from an academic viewpoint here, but I don’t think anyone involved in fraudulent practices is really “getting away” with anything. Instead, I believe there is value in sleeping soundly at night and working with people that you know are helping you be successful in the right ways. That is why I love the people I work alongside and the clients I work with.

Recently, I have written in this space about how the IRS offers some relief to those affected by natural disasters in the form of relaxed deadlines. Of course, this is a small concession to those who lost property or businesses that lost information. This week then, I want to counsel on that final part, and how it doesn’t have to happen anymore.

I understand that many people are wary about keeping information in any type of cloud service. And sure, we hear enough stories about information breaches that caution is warranted. If you personally feel this way, however, I urge you to do a little research about the security offered by legitimate services. Chances are that unless you have invested significant time and money into your on-site security, it is not any better than cloud services. Obviously one cannot deny that you are opening yourself to a possible breach when you store information somewhere else, but you are already open to that possibility. The only way to prevent it is if you are keeping everything on a computer not connected to the internet. And in that case, how are you reading this anyway?

Even in that situation, however, you are not completely safe. In the case of actual physical theft, you then would be left with zero access to everything you lost. Or envision one of those natural-disaster situations that results in a flood that makes your electronics unusable. At that point, you may wish you embraced cloud services a little more.

Think of storing your information digitally not as opening yourself to a new point of attack, but ensuring against the points of attack you already have. For as I intimated before, it is impossible to say that you are completely safe if you work on devices that are open to the internet. After all, cyberattacks do not only occur on a grand scale.

Beyond the security aspects of embracing the cloud, it can also greatly enhance your business’s workflow. Even if you’re a solo entrepreneur, have you ever been away from the office and wished that you had access to some work information? Placing that information into the cloud can allow you that any-time, any-place access.

This can be even more beneficial if you work with a team. Then, when you are networked, you allow everyone who needs access to that information contact with it. If they make changes to that information, those alterations will be saved so that everyone gets the latest version. This removes the need to reconstruct or combine changes in the future or send updated files between workers (which would just be another place for a potential security breach anyway).

There are so many new tools to help with these workflows that it is impossible to give an overarching recommendation to everyone; different businesses will have different needs. Chances are, though, that there are many things out there that can help your business while remaining secure. I recommend everyone take the time to consider them.

As of now, the deadline to file your 2017 taxes has passed, even if you filed for an extension. If this is news to you, then yes, that happened Monday.  If you have yet to file, get on that quick to at least minimize the penalties and interest for which you may be liable.

This also means that now everyone is going to point their focus toward the 2018 tax filing season and just what the Tax Cuts and Job Act is going to make your tax return look like.

I feel like I am talking about this almost every week, but there seems to be news about it every week. The IRS is still figuring out how all the aspects of the reform bill will look in implementation. You can visit the agency’s news website and see that even this month amongst getting through the extension deadline and issues with natural disasters, the IRS also is moving to make small businesses aware of new rules that affect them and clarifying meals and entertainment deductions. There’s no reason to think these bouts of clarification and advice will stop before filing season begins (and seeing some come during the filing season is also a safe bet).

And if you want to know – the general rule now is that those deductions that fell under entertainment are no longer deductible. 50% of meals and beverages can still be deducted, as long as they are not “lavish or extravagant.”

Then there was this recent article from Accounting Today, where many tax preparers were asked about what questions clients had about the TCJA’s changes. It seems like this can best be summed up as “all of them.”

I think this stems from the fact that taxes are such an individual matter. If you’re filing a personal return or a business return, you will have different questions. If you are a small business, you will have different questions than if you are a big business. If you are a high-wealth individual, you will have different question than if you have an average income.

Even within those groups, the questions will change. How will your dependents and children affect the return? Will you still be able to itemize deductions? What is this SALT thing? And then there are pass-through deductions and what qualifies as a specified service, trade or business.

No matter who you are, chances are something in there reads like Greek to you – yet they all appear in the article as crucial issues.

You probably won’t need to worry about the parts you don’t know about, but the parts you do recognize are likely not going to work the same way they did last year. It is difficult to feel content in times of uncertainty, and the constant updates and changes mean that uncertainly won’t go away completely. There are some things that are known, though, and having that knowledge, and asking the questions that do concern you, is a good thing.

So if you have questions, let us help you get the best grip on your situation possible as we enter the final downhill stretch toward the 2018 filing season.

I say it all the time, but taxes are never simple. It also appears that tax fraud criminal cases can also feel complicated.

Last week, the New York Times reported that the IRS’s criminal division only brought 795 cases last year in which tax fraud was the primary crime. That is an astoundingly small number. Heck, it’s plausible that in a week you could list 795 people whose names you come across in your personal circle that paid taxes.

At the same time, though, tax evasion is also the highlight of the criminal cases against two former associates of President Trump, Paul Manafort and Michael Cohen. So the number of people who face these cases is small, but it may not matter who you are, or how much money you have, when it comes to having charges brought against you. It can feel a little more daunting is everyone is vulnerable

Also in the Times last week came a lengthy report on President Trump himself and the history of his finances. It was so lengthy that any attempt at summation does it an injustice, but let’s just say it includes claims of tax schemes devised to not pay what the president’s family legitimately owed.

On the heels of this report, New York state and city officials said that they will look at those allegations. That’s not (or maybe just not yet) yet to the level of the IRS, but it is at least another possible high-profile case of tax dealings being investigated.

Now I am sure that there are a number of taxpayers (and their advisers) who use less-than-scrupulous tactics to get more money back from, or at least pay less to, the government. And with this small number of tax fraud criminal cases, and the ever decreasing number of audits as the IRS receives less and less funding, more people are probably getting away with it.

When I read about cases like those above, though, when things catch up to the cheats, I can only imagine how their heart must drop. When you abuse the tax system to that degree, you must know that what you’re doing is unscrupulous and that there is the chance it will catch up to you. You can make some moves to make things look okay on paper, sure, but that falls away when someone pays attention to it.

It is such situations that also make me wonder when I hear people talk about how the system favors the rich. The rich may be able to afford the people who can help them work best within the system, but even that service they pay for. And if they try to go outside of the legality of the system, they can get caught, too. I can understand envy of the rich, but it is not like they’re operating with different rules here. 

Even those who don’t live with elite levels of wealth, though, can use the system to their best legal advantage and there are professionals also willing to help you do that. I can never say that this service will be cheap, but I pride myself in being committed to serving my clients to the best of my ability, and in a way where they don’t have to keep looking over their shoulder.

I want to begin this blog with a general public service announcement. If back in April you got an extension for filing your taxes, you now have less than two weeks to complete that task. Six months goes by fast when you’re not paying attention, doesn’t it?

That’s about all I want to say on that issue. Yes, we still have some appointments open if you need one to work through this. And we will do all we can under this time crunch to make things work out for you in the best way possible.

Along with this looming deadline, though, comes a renewed thrust by scammers to work some tax schemes. It only makes sense (through their twisted logic), for the more general anxiety that already exists around taxes, the more vulnerable one could be to fall victim to these scams.

This led the IRS to send out a reminder on scam tactics. There does not seem to be any new ones out there right now, but a few things are worthy of reminders. The first is that if you get a call from someone claiming to be from the IRS, chances are really good that they are not agency employees. Your first contact from the IRS will almost always be by mail (and probably only would not be if you did not have a correct address on file). Moreover, if anyone claims they are from the IRS and demands immediate payment by some odd source like prepaid debit cards of money wires, then this is DEFINITELY not the IRS.

I want to put a bigger spotlight on email phishing scams, for this is something I have not discussed as much in the past.  This probably comes from a personal bias where I find it pretty easy to weed out suspicious-looking emails, and they get quickly deleted, while the phone calls feel like more of an intrusion (and it seems like they’ve grown to where a majority of people have now received some sort of financial scam call). Those emails, though, while less obvious, could also be working under the radar.

Remember this general rule – if you receive an email from an unknown sender that contains attached files or internet links, do not click on them. We are sharing more and more things over the internet and this can be wonderful, but if you don’t know where something came from, chances are it is not good.

By clicking on such things, you open yourself up not only to computer viruses or malware that could make for an immediate problem, but you unwittingly may be putting something on your computer that is working behind the scenes to pull information you do not want exposed. General protection software thankfully does a pretty good job of keeping most of these things at bay, but some extra vigilance could mean they do not have to do as much work.

Finally, this time of year also requires being on the lookup for fake charity scams in the wake of natural disasters. This does not mean do not donate, but a quick Google search can help you vet potential places to send your funds and make sure they are helping where you want them to help.

Yes, it’s more Tax Cuts and Jobs Act talk. It’s the blog gift that keeps on giving, and promises to keep on giving through next tax season, too.

When I have written about this blast of tax reform, I have attempted to not be political about it. What one feels about the reform matters little here, for we must operate under the rules passed no matter what they area. A recent survey commissioned by the Republican National Committee, though, says that many are not happy with the reform measures.

I came across this news in an article on Accounting Today, where it was reported that respondents, by about a two-to-one margin, believe that reform favors the rich. Breaking it down into just whether people approve of the measures passed (because hey, if you’re rich and you think it favors the rich, you’re all for that), 45 percent of people were against the moves and 44 percent were in favor. That sounds like a good microcosm of our country right there.

I only imagine that stories like this are going to proliferate as we move toward tax season. There will be ever more predictions about what tax returns are going to look like, and then we will have feedback once the returns are filed. This isn’t wrong, we should have opinions in a democracy. I do, however, urge you to separate that a bit from your actual tax prep.

Again, these are the rules, we have to abide by them. Some of you reading this are going to love the new rules when you see your return, some of you reading this are going to curse the new rules when you see your return. Just remove that emotion from the actual filing.

Instead, do the things you’re supposed to do, follow the rules you’re supposed to follow. We will help you use them to your greatest advantage and understand why things work the way they do. Whether or not anyone likes it.

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On another note, the Treasury Inspector General has figured out what caused an outage at the IRS on Tax Day 2018 that put quite a crimp in that last-day flurry of activity.

Granted, this doesn’t seem like it should have taken months to figure out – I mean, they did fix the problem, right? Shouldn’t that tell them what went wrong to some degree? – but at least the news was good. Good for everyone who isn’t the IRS anyway.

The final conclusion was that it was a firmware problem. The timing still makes this completely embarrassing for the agency, but at least it wasn’t any sort of outside attack that brought things down. I write a lot in this space about keeping your information safe, and what the IRS does to help achieve this goal, and I do think they deserve some credit for what they do well.

Just stay tuned a week or two, I’m sure we’ll be able to talk about something it doesn’t do well, too.

Granted, this is probably because I had different things to worry about when it passed, but I didn’t think about how the Tax Cuts and Jobs Act would affect tax fraud. A recent article from Accounting Today, though, takes a look at how some proponents claimed that it would have this effect.

Spoiler alert: there is not a whole lot of optimism among tax professionals that that will be the outcome.

On one hand, it is easy to see how people felt that less fraud would be a positive outcome. The setup of the new plan is that more people will be taking fewer deductions, and that seems like it would provide fewer places for people to cheat.

On the other hand, as some interviewed in the article allude to, it just means that people will probably look for other places to pad their numbers. What this seems to come down to is that the rules are different, but it is not as if people are any more thrilled with paying taxes.

And illegal actions aside, people should look for places where they can use the new rules to their advantage. Contrary to what some say, it is not as if taxes have suddenly become simple. The rules are complex and those with the proper knowledge will find ways to use it to their advantage. This isn’t fraud, and even should be encouraged, but the mindsets are similar – getting the most that you can returned to you.

Also mentioned in the article is the funding of the IRS, something that tax reform did not really handle. The agency has been receiving less funding for years and now has to implement a large number of new rules. It is easy to see how this could lead to more things slipping through the cracks. This is never something one should count on, though.

As a personal note, I am sure the new rules will also lead to new mistakes. I only call them mistakes because not everyone is going to know how to work within the new rules and it will lead to honest errors. The IRS won’t simply overlook these, though.

No one likes to pay taxes, and only a very simple system would present a situation where people could not try to turn things to their advantage and also know they’re doing everything correctly. The complicated system isn’t going away, though, so just be sure you operate in a legal way with the proper support. That is just good practice no matter the rules and what we always strive to provide.

Another good practice to mention now is thinking of disaster plans. I know I spoke of this last week, but with the destruction from Hurricane Florence that followed, I thought it would do well to mention it again. Especially after I read this article about how many businesses don’t have a disaster plan, never mind individuals.

Again, this is something that is not fun, but something is worth spending the time to do.

As I also mentioned last week, the IRS does offer some relief for those affected by natural disasters, and this has happened for those affected by the latest storm. For those who want the official data on it, please click here.

Occasionally my job is just to remind you of things you may have heard before, things that that the IRS wants to make sure you remember. A lot of these things are usually dictated by the calendar.

So to start, estimated tax payments can be due for many on Monday, September 17. This is something that may need to be spoken about more as an increasing number of people earn their living in non-traditional ways. You see, taxes are supposed to be paid as you earn money. This isn’t a big deal if you have a W2 job, for that money is being taken out of your paycheck each time you are paid.

If you do not earn a large portion of your money in such a way, though, and expect to owe taxes at the end of the year, the IRS really wants you checking in with it four times a years and making estimated payments toward that tax bill. If you do not do that, you could face penalties when you next file your tax return.

If this is something you want to check in on and see if you should be making such payments, don’t hesitate to contact us.

The calendar is also telling us that it is hurricane season again, and as images from the news remind of the potential disaster of these events, it is also worth a reminder that you want to take some actions to protect your finances from acts of nature.

So first, think about where your key documents are kept. If you have something that would be difficult to replace if lost, it should be protected. A safe that can guard against most disasters may be more affordable than you think, and what it pays back in peace of mind could even more valuable. And this should not only be physical documents, think about where the digital information is kept, and ensure that it is not in only one location.

Second, documenting the valuables in your home could help you recoup their value if you ever have an insurance claim. This is even easier than getting a safe now that almost everyone carries a phone with a camera in their pocket all the time. A series of photos of your valuables can help support any claims you have to make.

Lastly, when large disasters do strike, there is often some deadline leniency given by the IRS when it comes to making payments or filing forms. This is only small solace, but it is something to remember and be thankful for when you are dealing with larger, more pressing life issues.

Overall, all of these little bits come down to being proactive and not procrastinating. Those are lessons that are always worth remembering no matter the subject or date. So as always, if there is anything that you have been wanting to do with your finances, be it personal or business, let us know. We would love to help, and if we cannot, we can at least point you in the right direction.

I feel like this blog is either going to be shouted into the void or have you shaking your head because I have said these things already and you are sick of hearing them. I’m going to say them one more time, though, in the hopes that maybe it can catch someone new before going off into that void.

Simply put – next time you file your taxes, the rules are going to be different, and you should check your withholding now to know where you will stand when it comes time to file.

I am saying this based on a recent article from accountingtoday.com, where many in the tax industry speak to their concern that not enough people are doing this and some could be in for a surprise when they see their return.

I think part of this may come from politics. If someone is in favor of the basic changes that were made, they may expect positive ramifications. And with the increases in the standard deduction, this is a reasonable expectation.

But do you have children? Were you previously taking a mortgage interest deduction? Are you counting on charitable contributions still having an impact? That increased deduction is going to be a simple positive for many, but it decreases or negates the impact of other deductions. There are also other changes in the law that affect other areas of your return so that the standard deduction’s impact is lessened.

As I have also said before, tax law is complicated, and it remains complicated even under the new system. A full reporting doesn’t really fit on a postcard (and yes, I’ve said that before, too), so it’s not something that you can hope to figure out without a deep look.

So why not take that deep look?  You have four months still to put yourself in a good position and know what to expect come filing time. That is time you can make work for you, but time that is continually dwindling.

A final note from this article that I want to highlight is one interviewee’s statement on how people think the rich have some secrets they use within the tax system, when really they just are better prepared and paying more attention throughout the year. This is so true that it deserves notice.

Do you want to make it feel like you aren’t paying that much in taxes? Plan throughout the year, so that you’ll know what the bill is going to be. And when you know that, you can have the proper money either taken out of your paycheck or made in quarterly payments so that the burden feels manageable.

So from here on out, I’m going to try to not mention this anymore. I have said it’s worth checking up on these things, now you can see an article where many others say the same thing, and we’re months after the passage of the Tax Cuts and Jobs Act, so you have had time to take action.

Consider this then my ‘I told you so,’ if you decide not to do a tax checkup now, so that I don’t have to say it in a few months.

Much of what I’m been writing over the summer has felt pretty positive as I have focused more on general business concepts that can make one both happy and profitable – and who doesn’t feel positive about those things? Maybe this positivity means I have been enjoying the season, or maybe there was just a need to get out of the tax morass it felt like we were in for more than half a year as tax reform was hammered out and then we worked on hammering out its ramifications.

I think it is now impossible to keep these two things separate, though.

I know I am not giving any breaking news updates here, as I am sure that most reading this know that both Paul Manafort and Michael Cohen have been found guilty of various crimes. I will not regurgitate the stories here, but suffice to say that both situations are an entangled mess of politics and finance. I will also not take any political stand or guess what this could mean for any politician’s future, but it is now indisputable that people close to the current president were involved in financial dealings that were not on the up and up.

And have we not talked this summer about how, if you have not been taking a fully honest look at your financial numbers, there is only so much you can do with them until they catch up to you? Move things around for a time and all can still look good, but they’re not actually good.

These situations also show that keeping an eye on the culture and vision of your business is necessary. The stories show that somewhere along the way, people lost their way. After all, when ostrich jackets and porn stars play large roles, things have gotten messy. And messy is clearly not leading to any positive outcomes for anyone.

I also always write about how there are no secret ways to find financial loopholes or secret rules that the rich get to live by. Everyone should take advantage of all they are allowed within the law, but the key is to stay within the law. If you have to get real creative, chances are you are falling out of that realm.

Now at the same time, we also are hearing encomiums about former Senator John McCain following his passing. Those tales come from the opposite end of the spectrum, as he was a man who seems to have been almost universally respected. There is a lesson in there about living one’s life with honor, With honor, even if you disagree with someone, you will still earn their respect.

So let these little political reminders reinforce some of those points we have discussed in the past couple of months. After all, examples can come from both ends, the good and the bad. Pick the right people to emulate, push yourself in that direction, and you will not have to worry about things catching up to you in the long run – no matter who you are, who you know, or what position you hold.

Word is that Amazon is in the considering buying Landmark Theaters. This leads one to wonder if there is anything that company doesn’t want to do.

Over the summer, I have written a good deal about business theories that can lead to success. When looking for such lessons, it is always good to look at those that have had success and currently there are not many companies in a tier with Amazon when it comes to growing and thriving.

It’s a little humbling/disheartening to think it is possible people could read this who do not realize that Amazon began as an online bookseller before it was an adjective preceding Prime, Music, Video, Kindle and Alexa. One could have a long talk about whether this is a good or bad thing, but Amazon even sold books so well that it precipitated the demise of bookstores both big and small. One cannot, however, debate how good the company was at what it did.

The first lesson there then is that even if you want to work within a long-established industry, make what you do new and different than what everyone else does. If you do that, you ensure there is still room for you. I mean, I can’t imagine that 25 years ago there were many people who would have predicted that a giant business empire could begin by selling books. The space to do that, however, clearly did exist.

If Amazon only ever sold books, though, it may have remained successful, even to a high degree, but it would not be the company it is today. That higher level of success came from not being idle. So Amazon went from changing how we bought books to changing how we read books and was at the forefront of delivering e-readers.

The second lesson here then is to not be afraid to change. If you only ever do one thing, you will get left behind. Just ask those bookstores that no longer exist.

And as you keep having more success in more areas, you can keep trying to have more success in other areas. Who would have thought such a company would then be revolutionary with new shipping policies, then go off and create award-winning entertainment, too. Now, Amazon could be trying to change brick-and-mortar grocery stores by removing checkouts, and who knows what their movie theaters would look like.

So at the start, businesses should have a vision for what they want to do, and remain committed to doing it very well and different than everyone else. That gives people a reason to keep returning to you. Doing it really well in the right way can then sure you’re profitable enough to give you the means to do new things.

Knowing what you’re doing well and where you’re succeeding helps you put your efforts in the right places and continue growing. So think both small and big, but do it mindfully so that you can keep track of what’s working and what’s not. We love nothing more than seeing our clients grow and prosper, so if you need help tracking just how well you are doing, let us know and we will help you get to where to you want to be.

For the past few weeks, tax talk has died down in this space. You may think that’s because in the middle of the summer there isn’t much tax stuff to talk about. You would be wrong, though, as I will prove in this summer tax highlights blog.

The first thing worth mentioning here is that if you have filed for an extension, keep an eye on the calendar. You only have about two months left to file. That six months that you gained with the extension sounded like a long time back in April, didn’t it? And two months probably still sound like a long time, but they mean you haven’t filed in eight months, so you might want to get a move on.

And why wouldn’t you get a move on? If you’re set to get a refund, get that money into your pocket (or account) so that you can do things with it instead of the government. If you’re set to have to have to pay, figuring out exactly how much and getting it handled could help you stave off potential penalties and interest.

Next up on the tax docket is urging everyone else to take a look at the calendar. When tax reform passed in December of last year, a lot still felt up in the air, and no one (tax professionals included) felt immediately confident on how it would affect everyone as a rule. More and more guidance has come since then, though, and now good guesses can be made.

Really good guesses can be made when you actually look at your situation from its individual perspective. Therefore, if you have not yet done so, you might want to take a look at the IRS’s withholding calculator. Answering a series of questions here will let you know what you should be having withheld from your paycheck to meet your tax obligation. Your tax picture isn’t going to look exactly the same as last year, so wouldn’t you like to know?

The IRS’s latest call for who might want to check their withholding went out to people with high incomes and complex returns. But the agency has told many different types of people that they might want to use it, though, so I don’t think there’s anyone who wouldn’t benefit from the knowledge.

And remember that look at the calendar? Did you notice that we’re rapidly moving toward the end of the year? That means that if you want to make some changes, time is starting to run low for making them effective. Do it now while your moves have time to make a significant difference.

Finally, the IRS also recently put out a notice to remind people that tax reform extended the time limit to challenge a tax levy from nine months to two years. The change in law applies to levies made before, on or after December 22, 2017, as long as the previous nine-month period hadn’t yet expired. This is one of those things that may not affect a large percentage of people, but it is still worth putting out there, for it could be very valuable to those people.

Because after all, tax news never stops around here.

Sometimes I come across pieces written for accountants that I feel have more far-reaching lessons that should be taken beyond our world, and it is to one of those that I want to talk about this week. This article was featured in Accounting Today under the main title “Art of Accounting,” but with a subtitle of “Staff Who Take Ownership.” It is that latter part that I want to talk about here, and not just because I’m unsure how artistic accountants ever are.

The broad theme behind the article is that staff who take “ownership” over what they do are better, more conscientious workers. And I think this stands to reason, as we have all worked with people who only do the tasks required of them on a surface level, check off the box that is done, and let the ramifications of it be handled by others. Those who take ownership are more interested in how it plays out throughout the rest of the operation. More interest, more diligence, more follow-through, those are all traits that it’s easy to see as positives.

The article’s author speaks about teaching staff to take ownership, though, and I wonder how much that is something that can be taught. I believe that businesses should be set up in ways that allow employees to take interest in the endeavor beyond their immediate tasks, but I think that is more a part of workplace culture than something that can be taught. When it is encouraged as part of the culture, one can find people who naturally embrace that, find those who have the drive to do more than what is asked of them, and they will stand out as people who will be worth holding onto.

That is something that I try to embrace in my own work, to where it even goes beyond those who work directly with me. For in my business, it is necessary that I have a number of clients outside the immediate operation, as well, but the same dynamic works best there.

Because sure, there are clients who only need us to do a certain number of tasks, and that is as far as the relationship goes. We are confident that we can still do this very well, be a part of their operation they rely on, but things never go further than that.

There are other clients, however, where we get a little deeper. Since our work puts us in close contact with their financial data, there are many areas we could touch on. This can evolve into more detailed reporting, pointing out inconsistencies, or even becoming more of an advisor than just a reporter. This all depends on the type of company and what they are trying to do, but moving beyond has to start with a mindset that people shine when allowed to look beyond the tasks they are assigned.

So yes, we like to take ownership over the work we do, no matter what type of work it is, and the ability to do more is only something that ends up benefitting everyone involved. Take this chance then to think about the idea of ownership, and whether you have the ability to show initiative and do more in your job, or if you have the ability to enact a culture that will allow those types of workers to shine.

Spin seems to be ever more important with news stories these days. For example, word has come out over the last week New York state tax officials have opened an investigation into the Trump Foundation to determine whether the charity violated state law. That is the fact, but it can result in two different stories depending on the spin. Is this another arrow in the quiver to attack the president, just another piece of evidence about his sordid nature? Or is this another attempt to bring down the president by those who are ever against him, but can never fully prove anything and get something to stick?

The narrative one prefers to follow largely determines how the story looks. For the Foundation itself, though, things are going to be much more black and white. There are rules that it is required to follow in its operation. If it followed them, nothing will come of the investigation. If it did not, issues will arise. Our current political world may not be so clear, but any business should be run under strict parameters.

This is something we often see here when it comes to tax issues. There are stories about how certain people know how to use the tax system in mysterious ways that help them buck the system and leads to benefits that not everyone can either qualify for or know how to benefit from. And frankly, that’s just not true.

Sure, there are people – and this is often people with a lot of money – who have really good tax planning, know how to use the rules to their advantage, and maybe come out of it paying less in taxes than some believe they should. Now there are debates to be had on that last part about just what one’s obligation should be, but I do not believe that anyone can be faulted for working the established rules to their greatest advantage.

Those rules, though, are known. They are public. There are no secrets, and problems only arise when one tries to work against the rules or fudge something to get around them.

This is also something that comes up with business owners. No one in charge of such a venture wants to look at numbers that say they are not doing well. Looking like you are doing well can not only an advantage to one’s wallet, but also helps with any partners, looking for funding, etc.

If those numbers not only look good, but are not real and legitimate, then one should reap the benefits that can come with it. If numbers have been fudged to make things look better than they are, however, that just means you can’t justify yourself when it’s time to back them up.

When it comes to finances, spin is not something that should be used. We are dealing with numbers and laws in these situations, after all, which most often lead to definite answers. There are many things one can do to turn things to your advantage, but you should not seek advantage by trying to buck the system. Keep the difference between theory and reality in mind. Fight for what you want, but what you want to be is not always what is.

The IRS and its Security Summit partners are spearheading an awareness campaign for tax professionals in an effort to protect client data in its ongoing fight against various security threats. Although our clients’ security is something that we consider a high priority, many of the tips put out for professionals work on the personal level, as well. The best security takes place at many levels, so I wanted to pass along some of these tips to you this week.

First, have anti-malware and anti-virus security on all electronic devices. This can hold off many attacks that could expose your information without you ever knowing. A critical addendum to this, though, can be setting your software to automatically update. I know it can be annoying when your phone or some software programs keep telling you to download the latest version, but many times those updates include fixes that enhance security.

After that, keep passwords on everything that can have one. This includes password protecting wireless devices. After all, even if you don’t think you have critical personal information saved on the device, have you ever visited your banking website on its browser? Or checked a credit card balance? You may have information saved on the device that you are unaware of, and could be used against you if it fell into the wrong hands.

Then, of course, there are the passwords you use to access all those websites mentioned above – or any website really. For are you using the same password to get into your bank as you are your Netflix account? Once a password is found somewhere, it is easier to track down usernames, and if you’re using the same password everywhere, you’re making it easier to get at your information.

Not only should your passwords be different everywhere, but you also want to use different kinds of passwords. Sure, your kid’s name and birthday is easier to remember, but using special characters, random capitalizations, numbers, etc., all make it more difficult to figure out just what that password is.

If you are saving any sensitive information on your computer or in any cloud-based service, you want it to be protected by more than just a password, too. Ensure that these places are encrypting information. If they’re not, I promise that with only minimal research you can find a similar service for the same price that will do so and give you that extra level of safety.

Finally, if you do keep some of that information on a hard drive, remember that before you get rid of the device. This is easier to think about if you know it is still going to be used by someone else, but can be overlooked if you’re just trashing a device.  But if you are throwing it away, hey, destroying that hard drive can even be a little fun and help you take out some aggression (just think of every time technology has made you throw up your hands).

None of these tips will have you doing things the easiest way, but they are the safest way. And if you are ever in a situation where someone has information about you that you wish they didn’t, you will think that it would have been time well spent.

Every once in a while, things build up on us.  Hopefully this is not something you’re feeling in the middle of the summer, as ideally this is the time when you are pulling a little less onto your plate, and not just in an attempt to get that beach body. That hasn’t been the case for things that I thought I should mention in this space, though, so here are a few quick hits to get these off my plate.

The biggest one of these may be the Supreme Court’s recent ruling in South Dakota v. Wayfair that will let states and local jurisdictions impose sales tax on online sales. For many, online purchases have been most wonderful because of their ease and convenience, but sometimes they came with the bonus of not needing to pay sales tax, but those days seem to be over.

This is most important to note for those who run businesses online, where thinking about sales tax outside of where you are located had not been a concern. If you are in this position, I implore you to find a solution before it is too late, and there are online tools that will help with this.  It will take some initial setup, but this is the type of thing that eventually becomes a seamless part of your business. This initial outlay of time and effort will be better than getting into a situation where you are called upon to make sales tax payments when you never collected the money.

On the payroll side of things, the Department of Labor seems set to propose new overtime rules in October. We can speak about this a little more when/if it actually happens, but I thought it was worth mentioning it here to put it into business owners’ heads. Once you appropriately set up payroll, after all, much of making sure you’re in compliance takes care of itself, but the rules do sometimes change and require attention.

Finally, the AICPA (an accounting professional group) sent a letter to the IRS requesting guidance on some FAQs concerning how cryptocurrencies are taxed.  This does not mean that anything will necessarily not be taxed (rest assured, whenever there are things of value out there, the IRS is going to want to tax it), but just how it is taxed.

Without getting too deep into the weeds, this is mostly about how things are taxed, and possibly when they are taxed. And it could be that the IRS chooses not to react toward this and nothing changes.  If it does, however, there could be some tweaks you may want to make to put yourself in the most advantageous tax position. So if you are involved this world, this is something to keep tabs on.

And of course these aren’t the only things to have come across the radar that never get to see a full blog treatment. So as always, if you have any issues that you would like to discuss, we are always happy to hear from you and give you some more personal direction.

It seems that all too often in this space I end up writing about tax scams and things that the IRS will not do. That space is warranted, as it has sadly become much more likely that you will hear from a tax scammer than from the IRS. I have come to realize, though, that I don’t spend a lot of time on what the IRS will do, and I thought that deserved to be highlighted.

The first step in almost all issues one has with the IRS comes in the form of a piece of actual mail. This is why you can default to not believing many phone calls that say they are from the IRS if you are not aware of any issue. If you happen to receive such correspondence in the mail, really read the letter and understand what the situation is. It is possible that you have made a payment that for some reason did not get recorded or got incorrectly recorded. Some situations can be fixed without too much of headache.

Even if you find that you are in a spot where you owe money, though, do not ignore the situation. Procrastination can open you up to owing more money through penalties and interest.

If you dispute what it says, this is when it becomes important to keep those documents squirreled away that we talked about a few weeks ago. If you hold onto them, and you know that everything in your return is legitimate, these can be used to dispute the IRS’s claims in the letter.

More frightening can be when an IRS representative actually shows up at your business. This does actually happen, and they may even be there to try to collect on a tax debt. If this happens, though, know that they will be carrying official credentials, and you should ask to see them. Legitimate officials will understand you are only carrying out a standard level of due diligence (if you respectfully voice the request).

But know that the IRS will only ever instruct you to make payments to “United States Treasury.” There are many different ways this can be done (debit card, credit card, check, wire, etc.), but it is the only place where legitimate tax payments will be sent.

I also want to mention here about calling the IRS. In general, this is something that is not always necessary, and is probably also something that you want to avoid. Their correspondence often will contain enough information to let you know what your next actions should be. There is a lot of information provided by the agency online, as well, which can answer questions that you have. If a call is necessary, however, I am sad to say that I can only confirm some of the horror stories you may have heard about how long the wait times can be.

I want to close by saying that I understand dealing with any of this is not a happy thing, (I’m pretty sure the only positive experience most ever have with the IRS is when you receive a tax refund), but it should not be seen as frightening or ominous. Handling it timely and with the proper steps will lessen any potential hardship. As always, if this is something you need help navigating, please do not hesitate to contact us.

Over the past week or so, it was announced that H&R Block is closing hundreds of locations as it prepares to file fewer tax returns this coming year following the passage of the Tax Cuts and Job Act. Now I’m sure you can imagine that I don’t often like speaking about the big tax return factories, and I won’t be able to completely hold my virtual tongue here as I discuss them, but I have to do so as  I find this to be interesting news.

First off, this is not completely surprising. The thinking is that more people will have less complicated tax returns because of the increased standard deduction. And yes, there are going to be more people who no longer will itemize their deductions, and their tax returns will become that much simpler. I believe, however, that if clients receive a higher level of service, they will not simply abandon their tax preparer.

If you feel your preparer is only putting the right things on the right lines of a tax return, then I can see why going it at it by yourself makes sense if you are anticipating having fewer lines to put numbers on. I, however, aim to give my tax clients more than this.

One of the best parts of tax season is making people aware of things we can use in their tax return that they were not even aware of. For it is one thing to be the person who can make sure you put all the right numbers on all the right lines, but it is much more gratifying to add in new numbers on new lines that can lead to a bigger refund.  And this is a dynamic that is not going to go away with a new set of tax rules.

I believe that my clients should leave with the confidence that they are filing a tax return that utilized the tax rules to their greatest possible advantage. For really, if someone misses something on a tax return it’s usually not unreported income, but deductions that are not being used (at least if it’s all done ethically and legally). These things are missed because tax law is complicated. It was complicated before, and it is still complicated now.

So even though many tax returns will become simpler under the new rules, don’t you still want to file a return that reflects the best possible situation for you? Even if you only end up taking the standard deduction and there is little else needed to report on your return, is there not comfort in knowing that was your best possible choice?

I mean, we are months after the passage of the TCJA, and the IRS is still releasing notices advising on how many of the rules will be applied. If they are taking this long to figure things out, can it really be that simple?

And sure, my view on this is far from unbiased. I trust, however, that the level of service I provide to my clients will lead them to agree, and we will remain committed to getting through the new law together.

Now that most of you have filed your 2017 taxes, few of you want to think about them anymore. But if you had to do go back to them, could you? After all, you occasionally do need some information from a return, so you should keep a copy on hand.

The IRS actually recommends that a taxpayer keeps copies of at least the last three years of tax returns. This obviously gives you a chance to pull information off past returns, but can also help with preparing future returns. These may also be necessary when applying for certain loans or a mortgage. Also, in the unfortunate occurrence of an audit, quick access to your information can help you get ready for it faster.

As a further addendum to that official word, you should keep any documentation that went into preparing the return along with it. Granted, the chances are very, very high that you are never going to need to use those pieces of paper again, but it is much better to hold onto things you likely will not need than to try to get a copy in the rare instances when you do need it. Just put them all in a folder, file it away, and throw them away years down the line. Or, you can also store them digitally for even less clutter.

If you don’t have copies of your tax return, they are possible to get. If you have used any online tax software to prepare them, they are saved there, which can be a fine repository, or you can print a copy if you feel safer with a-hard copy. If you had your return prepared by a professional, they will keep copies of them for a number of years.

For those who did not use either of those avenues, though, transcripts and copies can be obtained from the IRS. The first thing to know about these is that a transcript and a copy aren’t the same thing. A transcript isn’t a full copy of a return, but will include most line items and most likely will contain any information you actually need when you wish you had a copy of your return.

A benefit to the transcript is that it can be obtained for free from the IRS for the current year and the past three years. One can even be requested online through a pretty simple web form. The agency does warn, though, to plan ahead, for it could take 10 days to get a transcript from the time the IRS receives the request, which means up to a 30-day wait for those requested by mail.

If you do need an actual copy of the return, this can also be obtained from the IRS. These do cost money, however, at $50 per return. They are available for the current year and as far back as six years. This requires filling out a form that must be mailed in, and can take up to 75 days to receive.

Overall, just know this is one of those areas where a little bit of diligence in keeping necessary historical records can hold off a lot of future headaches.

Now that the calendar has turned to June, we have reached the time when many people start to pick up some part-time work in the form of a summer job. The timings leads students (and even some teachers) to seek new positions in the work force, even if just for two to three months. This can feel so small that it is easy to overlook some longer ramifications, but it is good to keep in mind that wages earned in that time will, in all likelihood, end up being taxed.

So as a first note, it can be worth using the IRS’s withholding calculator to make sure enough taxes are being taken out of these paychecks to ensure a surprise doesn’t come at tax filing time. Granted, some of these jobs won’t even result in making enough money to need to pay taxes, but it is better to have confidence in that than just guessing it will be the case.

And for those who are picking up extra work at this time of year in addition to some larger wages being earned elsewhere in other months, that is a situation where you want to know if you should be having some extra money taken out of your check for tax obligations.

Some will turn to the growing gig economy for their summer work, and a little extra vigilance can be food for those not getting a traditional paycheck. If no taxes are coming out of the money you earn, and you receive a 1099 on it early next year, the IRS is going to know about it, and expect you to pay. Again, the calculator can let you take a good guess at what your obligation will be, so you can set aside enough money to pay the eventual bill, or make some estimated tax payments during the year.

As always, we are happy to work with anyone who has questions on how certain events will change your tax picture, even if they are small ones like this. Having power helps you make the right decisions, and the right decisions can’t always be reached by worrying about your tax situation once a year when it comes time to file.

And a final note on this to my business customers – if you can, give someone one of those summer jobs. Trust me, I personally know that running a small business can leave you feeling a little ragged, and wouldn’t a little help be nice? While running that ragged, we can lose track of the fact that in all that work we have picked up knowledge and skills that can be passed on. Wouldn’t doing that while getting that influx of some extra help be a nice thing?

Taking on new employees can be daunting (Can I afford it? Will I find the right person?), but this temporary setup can shrink the size of some of those questions, and give you a chance to be a short-time mentor for someone who could really use it, and bring what they learn into their future. Beyond that, it will bring new eyes to your operation, for this type of relationship works best when the learning goes both ways.

Through the last tax season, I often wrote about how it was not yet time to go through the weeds on just how the Tax Cuts and Jobs Act would affect your tax return. There were just too many variables involved that it didn’t feel the time to get deep into it while we were still doing final returns under the old rules. Now, though, things are starting to flesh themselves a bit more, so we can get a little deeper.

In one of those tax news bits that those who use it keep an eye out for, the IRS has issued mileage rates for 2018. This starts at a 54.5 cent rate per mile traveled for business, a one-cent increase over the previous year. Now that’s clearly not huge, but nice for those who do use mileage on their taxes.

One also has to realize, though, that there are going to be fewer people using mileage on their taxes this coming year. The TCJA also suspended the miscellaneous itemized deduction for those who claimed expenses that their employer did not reimburse, and that could include an amount of mileage for some workers.

Even there, however, there are exceptions being made for reserve components of the armed forces, certain state and local government officials, and also some performance artists. They will still be allowed to use this business standard mileage rate.

There is not much more to say about that, but I did think that the news offered a chance for me to highlight the fact that it’s not only the business use of a vehicle comes with a mileage rate. There is also an 18-cent-per-mile rate for medical purposes (another one-cent bump up) and a 14-cent-per-mile rate for miles driven for charitable organization (but that is set by statute and remains unchanged).

Now granted, these are deductions that not as many will be using with the increased standard deduction. Over the years, though, I have found many people who come to me for tax help might know about deducting medical expenses and charitable donations, but they are not always that there can be the mileage deductions taken along with those. So consider this a reminder, or maybe even a light-bulb moment, for those who will still be tracking those numbers.

Another vehicle-related note, the TCJA also suspended the deduction for moving expenses for tax years beginning after December 31, 2017 until January 1, 2026. However, this does not apply to active-duty armed forces members who had to move because of an order that changed their station.

One thing you may notice about all these updates and changes is that there are few places where the alterations are so universal that it is easy to predict how it will affect tax returns on a whole. Even when a deduction changes, there is also the issue of whether or not you will even be able to take advantage of it anymore. So if you are in a position where you think any of these changes are going to affect you, or you just want to know if they will affect you, please let us know and let’s set up a planning session.

Sometimes after you file a tax return, you realize it was wrong. Sure, we pride ourselves on putting together valid and accurate returns, but that does not mean that you can’t come across income or deductions that you forgot to include, or didn’t know you could include, the first time. So this week I wanted to go over what one should do if you realize you need to amend a tax return.

The first point here is just bluntly to state that, yes, you can file an amended tax return. In general, the IRS gives you three years to do so. That means that there rarely is a time crunch going on with these returns, but you should still get it done as quickly as possible. After all, if the changes mean you get more money back, why wouldn’t you want to receive it faster? And if you will owe money due to the changes, the sooner you pay, the less penalties and interest that will accrue.

There are some things, however, that will not require filing an amended return. For instance, any math errors will be corrected by the IRS and handled appropriately. Also, if there are any forms or schedules you neglected to include, the IRS will mail out a request for them if needed.

This means that what usually requires amending are when things were not reported on the original return. Was there some income you forgot about or didn’t realize was taxable that you should have included? Were there deductions that you did not realize you qualified for that you wished you claimed? Those are the types of things that will be at play here.

Unfortunately, the amended return is not really as easy to file as the original return, because it cannot be processed electronically. Instead, this has to happen on a special form, 1040X, which must be mailed in. The form also includes a space on it to explain the changes you are making to the original return. And as a little note, if this is something that is affecting returns from multiple years (which is allowed under that three-year window) you need a separate form, in a different envelope, for each year.

A final couple quick notes, if you have not received a refund for your 2017 taxes, wait until you do receive it before sending in an amended return. You can cash that original check refund, though, while waiting for the amendments to go through. And if you then want to check the status of the amended return, the IRS offers a “Where’s My Amended Return” page, where you can track it.

This is similar to the agency’s “Where’s My Refund” page, which you will want to use if by some chance you are someone who has not yet received an expected 2017 refund.  Almost everyone has received their refunds by this point (assuming the tax return was filed on time), but there are some things that could hold it up, especially for those returns filed in the final hours. That page will give you the best information as to where things stand.