Occasionally, I feel like I get into a rut with these articles where it seems like I am writing about the same things over and over. So consider this a short apology for that before I commence doing it again. New tax law is again behind this article, and I’m afraid this may carry right through next tax season as the IRS figures out implementation, and we then react to their reactions.

This time, it’s because the IRS announced last week that its processing systems were reprogrammed to handle three benefits that are common in early tax returns. There are benefits that were renewed as part of the Bipartisan Budget Act that was passed on February 9 (just when you thought one big passage affecting taxes was enough).

So first the nuts and bolts. This means that you can still claim the following:

-        Exclusion from gross income of discharge of qualified principal residence indebtedness (claimed on Form 982)

-        Mortgage insurance premiums (PMI) can be treated as qualified residence interest (claimed on Schedule A)

-        Deduction for qualified tuition and related expenses (claimed on Form 8917)

Now what this means in practice:

First, it is only a good thing when extra deductions are allowed. So even if it feels wild that changes are still being made more than a month since the IRS started accepting tax returns (and yes, you are right if you feel this way), at least there is some solace that these are changes that will only positively affect you. More deductions only mean more potential money coming back to you.

Second, however, this means that if you already filed without being able to take these deductions, and they are ones you would have been able to use, then you should file an amended return.  If you have not yet filed, you can ignore this, for all will be in order when you submit your return (and we still have many appointments available to help you do this, but that number will steadily decrease over the next six weeks, hint, hint).

If you do need to look into an amended return, this is done with a different form (Form 1040X), and we will be happy to help you with this. Or if you know anyone who did their taxes on their own (or with a preparer that inspires less than full confidence), send them our way and we will help them determine if they missed any deductions for which they could be eligible.  Keep in mind, though, that amended returns cannot be filed electronically, and the IRS warns that it could take up to 16 weeks to process them. Sure, it is not convenient, but it is also not that difficult and a way to get yourself some extra money in the not too distant future, so why wouldn’t you do it?

Finally, the IRS also says that it is continually updating its systems to implement any other changes made necessary by the recent act, but those are expected to be more minor and affect a much smaller number of taxpayers. But if anything does happen where you feel your return could be helped by one of those, we will remain ready to help.

This is an interesting economic time, on many timescales. It starts with this week’s Presidents’ Day holiday, and how I have never quite been able to figure out why this has been deemed the moment when one should buy a car or a mattress. With another step back, there is the curiosity surrounding how the recent tax reform bill will play out as our economy adjusts over the next year. Then, I read this article from Forbes.com, which led me to take a much bigger step back.

Overall, this was a more playful article looking at Presidents’ Day and some historical tidbits when it comes to presidents and taxes. It wasn’t intended to be serious or groundbreaking, and did not try to present new information, but I was struck by an old fact – the United States’ modern income tax system did not start until 1913. There were some temporary and smaller income taxes prior to that date, but that was when the system began that included all people and was intended as a longstanding program. It even took a constitutional amendment to put into effect.

That means that the United States has existed for more time without this type of income tax than it has with it. It feels like such an unavoidable part of government and society, it’s a little mind-boggling to imagine the nation existing for over a century without it.

The concept of what government is, and what it should provide, has evolved to such a degree since then that it would be impossible to ever put that genie back into the bottle and imagine the country existing without such a tax. Sure, a handful of states operate without it, but it generally means they are taxing other things to fund themselves.

Still, however, the federal income tax has existed for a significant portion of time. That middle-level timescale of recent tax legislation, though, highlights how little consensus there is on how the system should operate. In fact, I would be much more shocked if there ever comes a time when there is general consensus over how the system should work than I was by this recent realization over how long it didn’t exist.

That means that it is only a matter of time before the next big tax change comes along. After all, it was not that long ago when the Affordable Care Act gave us our last batch of confusing changes where no one felt certain what their tax return was going to look like. And even If Republicans remain in power for a number of years, tweaks happen all the time.

I know this is different than most things I write, but hopefully you don’t mind this one-week historical interlude. I think it has value, for not only can it be slightly surprising, but it can also be heartening. It shows that changes always happen, and no matter how big they are, we always navigate those changes. Hopefully there is some wisdom to be drawn out of that in these uncertain times.  

The amount of money that moves around come tax time means the emergence of scams is inevitable. So even though many people are expecting tax refunds to hit their bank account over the next couple of months, be wary of unexpected ones. These unexpected returns are not a surprise windfall, and instead the start of a potentially large issue.

There are many different versions of this scam, but it starts with a fraudulent tax return being submitted, and scammers then using the victim’s real bank account for the refund deposit. The criminals then contact the taxpayer with one a variety of ways to reclaim this erroneous refund.

I don’t feel the need to really get into the ways the scammers try to get this money, for the way to halt any issues instead comes as soon as the mistaken money is deposited. As soon as it is noticed, contact the bank and have them return the refund to the IRS. Then contact the IRS and tell them why the money is being returned.

This also seems to be a time to mention that some taxpayers won’t know that someone filed a fraudulent return in their name until they try to electronically file the legitimate return. When a return bearing the same social security is on file, the IRS will reject the second one. This then requires filing a paper return along with an identity theft affidavit.

Now these aren’t the most fun things to talk about, for even if you follow all the rules as you should following any identity theft issue, it can have long-ranging consequences and take lots of time to try to set right. Just thinking about it is scary. Talking about it is good, though, for the more vigilant we remain, the more we stand a better chance of not becoming a victim.

And thankfully, this increasing awareness seems to be working.

Last week, the IRS reported that tax-related identity theft declined for the second straight year. This is good enough news, but it is amazing that they saw a 40 percent decline since 2016, a rather significant mark. Furthermore, the agency reported that since 2015, tax-related identity theft has fallen by more than two-thirds.

The overall numbers are still not negligible – 242,000 identity theft reports reached the IRS in 2016 – but the drops are huge. That number was 677,000 in 2015, after all.

There is no reason to think, though, that it will ever stop. After all, the IRS reported it recovered $204 million in fraudulent refunds last year, and it is impossible to keep out criminal acts when that much money is involved. But again, that number was $852 million in 2015, so things are improving.

Personally, this is also a moment when I can step back and be thankful that my clients trust me with their personal information and finances. That is a pact that I do not take lightly, and we take pride in doing everything we can to ensure your privacy. 

Over the past month or so, I often have written about getting your documents together in preparation for filing your taxes. I thought that this week I should take the time to actually expand upon that, and talk about what documents this could include. Please recognize, however, that this is really only the large-picture view, that everyone’s situation is different, and this is far from comprehensive, but hopefully will keep you thinking in the right directions anyway.

First off, since we are paying taxes because we earned some money, you’re going to need the documents that show just how much you earned. So get W-2 forms for any job you had in 2017 (and for the purposes of this article, “you” means you and your spouse if you are filing as married). This also means any side-work you did, however, and you should receive a 1099 form for any of that that earned you more than $600. Then there is income from any business you own (so you will need those accounting records), any interest earned from investments, any money received from unemployment, social security, jury duty, or gambling winnings.

Overall, remember that if you receive a tax form saying you got some money, that information was also sent to the IRS. So even if it was only a few dollars, you want to be sure it is included on your return. Yes, it won’t affect your tax return that much, but you want your numbers to look like the IRS expects them to look.

After income, we have to start looking at ways to reduce how much you owe, and some of these deductions and credits will have also come with tax forms, such as mortgage interest paid and student loan interest. You also want to track contributions made to retirement accounts and medical savings accounts.

There are some general purchases you made that could become deductions. These are especially important if you have any qualified business expenses.  And realize that getting tax numbers together is much easier if you provide receipts instead of saying, “Well, I had lunch with a client once around March and it cost about $50.” Even if you don’t have a business, though, there could be some expenses that were necessary to complete your job, and if you were not reimbursed for those, they could also qualify as deductions.

Beyond those, however, any costs that you had for education and child care can lower your tax liability. And if you added a child through adoption, some of those costs will also benefit your tax picture. If you had a number of medical expenses, you will also want to document those, as well as any moving expenses and charitable contributions.

Finally, there is also more basic information needed that some people can overlook. If you’re filing taxes with someone who doesn’t already have the information, you’ll need social security numbers for you, your spouse, and any dependents. And if you are expecting a refund, having your bank’s routing number and account number handy will help you get that money as quickly as possible.

Again, this is only the bare skeleton of what can be needed for a full tax return. I wanted to put out the biggest ideas, though, that one needs to think about when it comes to tax preparation. Thankfully, if you are already thinking about these things, then you have time to find everything you may need and get all that is owed to you. Also, at this time of tax season, we still have plenty of appointments available and are eager to help you in this endeavor.