Our heads aren’t so big here that we think you want to read anything long or in-depth from us this week. After all, if you are actually even present at work this week, you are spending half the time looking at the clock and the other half daydreaming about not being there.

So just let this be a call to make them good daydreams, then. After all, this is our second straight year where the holidays may not be being fully celebrated in the ways that we like. Even the best-case scenario involves them coming with some extra concerns and considerations. No matter then where you fall on that spectrum of celebration, this is a wish that you craft something good from it, find joy, and get special time to enjoy yourself, your friends, and your family.

We can all use some propping up during difficult times, and the start of the 2020s certainly has qualified as difficult times. Everyone deserves whatever solace and comfort they can find within it. So if that comes in the form a holiday-week daydream (even if you’re supposed to be working), then go ahead and enjoy it. We promise not to tell anyone.

Happy Holidays!

At the end of 2020, it would have been disheartening to think that a similar level of uncertainty would still be present at the end of 2021. But … here we are, and questions still abound. Have we gone through the worst of a pandemic or are we still in the middle of it? Where will the midterm elections bring us in 2022? Are we sitting on as much of a political powder keg as it sometimes feels?

During times when so much feels uncertain, it becomes ever more important to check in with yourself, to see how you are really doing. This is also applicable to your business if you happen to own one. So this week, I wanted to implore those of you in that situation to take a moment and do that check in with your yourself and your business.

One reason this is a good idea is because you can’t really move forward without knowing where you have been. If you don’t take the time to do that check-in, then you aren’t learning. You will be making choices based on whims and that is never going to lead to long-term success. When you think about the last year, be sure to look at both successes and failures. Did you not complete everything you had hoped to? If so, why? And even if outside circumstances are to blame, how could you have handled and/or prepared for them better? But also, where did you shine despite those circumstances?

If there is unfinished business that you hoped to complete, how can you still get there moving forward? And don’t just answer such questions with vague assurances and promises. Saying you’ll get there eventually means you can keep kicking your definition of ‘eventually’ down the road. Be sure to set very distinct goals with definite timeframes.

And do not only commit yourself to finishing what remains unfinished. Be sure to ask yourself new questions, too. What would you still like to change about yourself or how you behave in your business? What are you looking forward to learning or implementing? Where can you continue to improve? What is a big risk you are willing to take?

A way to deal with a time of uncertainty is to just kind of move along, be tossed around by the waves, and just keep your head above water. And you may ‘just survive’ for a while with that attitude, but things will never improve. And then when times get more certain, you will not be ready to adapt to them because you haven’t been looking forward the whole time. So may this moment of reflection serve you well, help you find solace, and let you derive strength from where you are even in tumultuous times.

If you started a business before March of 2020, the landscape of your industry is most likely nothing like it was when you started. The pandemic changed nearly anything in some way. One of the biggest results of this was an increase in technological advances and how much they were embraced.

We clearly are not yet through this global sea change, so it is impossible to give any definitive conclusions about its fallout. It is naïve, however, to think that everything is going to go back to just how it was in February 2020. So this is a call to business owners out there to embrace any new technologies your industries have moved toward during this time.

I started to think of this when word came out that the IRS was going to be accepting more digital signatures through Oct. 31, 2023. This is something that had already been extended a few times by the agency, and is looking like one of those things that they probably won’t be able to take back.

And why can’t things go back to how they were here? Convenience.

The key with a lot of the new technologies that have been being embraced is that they are designed to take less time and less work. If we can collaborate on a task in different locations at different times, it removes a lot of obstacles. There is no need to set up meeting times or possibly sit around while you watch someone complete one part of their task before doing yours.

And of course I can understand why some have reluctance to embrace some of these technologies. I mean, I just talked about things taking less time but there is clearly a time commitment involved in learning how to use and implement anything new. And of course, as with most new things, there can be a reluctance to look at it because you already know how to do what you’re doing, and likely do it very well, so why could you change?

Well the reason to change is that others are. How can you draw in new people to your business if a competitor is offering them more services with less hassle and it takes less time from them? I foresee many businesses that don’t adapt with the times being left behind by these times.

And if even a Luddite like the IRS is looking at new ways to make things easier, shouldn’t you?

It happened. We are actually in the final month of the year. We have already talked a bit here about getting to the end of the year and your last chances to make moves that can affect your tax picture. And now, it is December, the chances are decreasing, and it will be 2022 almost before we know it.

So consider that another little warning about timing.

But there’s no need to be all doom and gloom here, for there can be good news when it comes to taxes. (I know, I know, that sounds utterly impossible.)

First, last month the IRS released some guidance over a 100% deduction for food and beverage from restaurants. That’s right, 100%! Now, can you even get more good news than that?

You can! It applies to next year, too!

Hyperbolic exclamation points aside, this is something that will be a pretty good benefit for many. The actual IRS news about this is full of boring notices and procedures, but what they represent is not complicated. The meals deduction is usually 50%, so when you double what you are eligible for, that’s a good thing. Granted, this isn’t something so huge that I’m recommending planning some more end-of-year work dinners, but it is still a benefit worth highlighting. So just remember to keep those receipts after you have finished eating.

And yes, it is now time for the return of excessive punctuation! For did you know that teachers were also eligible for some deductions?!?!

This essentially is a deduction for classroom expenses that teachers paid out of their own pockets. Again, there is some hyperbole involved here, though, for this deduction caps out at $250 for an individual. The IRS sent out another notice about it last month, though, so I figured it was worth highlighting it here, too.

These may be only small bits, but they call attention to a bigger point about timing. The more prepared you are for your tax return, the more deductions you will have time to find out about, document, and claim. Each individual deduction may not be the difference between owing money and getting a hefty refund, but enough of them could shift things in a significantly better direction. And sure, the things we most look forward to this month aren’t tax preparation, but don’t forget about how good it can be to be on top of things before it is too late and time gets away from you.

It is a good general rule to know that if anyone receives money for a good or service, the IRS wants to know about it. Income is taxable, no matter how it is received. This basic tenet is reasonable and understandable, but as more people use more money in new ways, it can take a while for some of the rules around that to make complete sense.

This has been most noticeable in recent years when it comes to cryptocurrency. No matter whether you think of it as an investment or another type of currency, if it is worth more than you paid for it, there’s an amount in there that is taxable and the IRS has been working on cracking down on getting its share of that. Beginning next year, it will start to have its hands deeper in payment apps, as well.

Your first question may be just what is a payment app? The answer is probably simpler than you realize, for most of us have used something along the lines of PayPal or Venmo to send and/or receive money. At the same time, you may be surprised to think that this could affect your tax picture if you mainly use it to pay someone back when they go pick up coffee. If that is all you use such platforms for, though, then don’t worry, you will not be affected by this. What will be changing is payment app providers will have to start reporting if a user’s business transactions total $600 or more a year. If you want to get into the weeds on this, you can read this recent article from CNN.

This isn’t the space to get into deep details, but I do want to highlight a couple takeaways from this:

The biggest thing is that this is not making any sort of transaction newly taxable. Rather, this is being put in place because the IRS is trying to track down transactions that are already taxable and may be slipping through the cracks. So if you are already paying taxes on everything you should be, this is not increasing your tax burden.

The next thing to know about this, though, is that it might be making things messier for some and placing the burden on the taxpayer to find a way through that mess. First, it’s possible that one could receive a 1099 from a payment app for transactions that should not be taxable. It could then fall to the taxpayer to have to explain that to the IRS. It’s also possible that you will receive a 1099 from a payment app and also a 1099 from a client for the same transaction. Again, it would then fall to the taxpayer to explain to the IRS that they are not covering separate events and reflect the same money.

So don’t be afraid that this is going to increase your tax obligation in any way, but be aware that you may need to be vigilant to ensure that this reported on your tax return in the right way. Even if this isn’t going into action until next year, I wanted to mention it now so that we can be ready to help you handle this in the right way.

  

I have written a lot recently about this being the time when you must start thinking about big moves you can make if you still want to really affect your tax picture. Granted, this is a discussion that is not for everyone. You need to have a certain amount of money (and possibly in the right places) for some of that to really matter. For this week, though, I want to talk about a smaller thing that everyone can do.

Tax laws are currently set up that you usually cannot claim a deduction for charitable contributions unless you are itemizing your deductions. Legislation passed during the coronavirus pandemic, however, allowed for everyone to claim some of that deduction for tax year 2020 and it will now continue through the 2021 tax year. This allows an individual to claim up to $300, with married people filing a joint return qualifying for up to $600.

Now sure, as I intimated above, this is not a huge amount of money and not being taxed on a few hundred dollars isn’t going to result in you getting some massive windfall of a tax refund. I do still want to highlight the availability of this deduction, though, as an extra little impetus to do an extra little good during this time of year when many could use it.

First, I don’t want this to be such a push as to be asking those who cannot afford it to donate money they do not have. Your obligation then is to take care of yourself and any family depending on you. Beyond that, though, if you can give, please do. Chances are really good that you will feel better about putting the money there than in your next few coffees.

So if you do have enough to give, give to something meaningful to you. Is there an organization doing something in your local area that you admire? Have you or someone in your family personally benefitted from the work of a charitable group? Do you feel a pull to a cause every time you hear about it but have never actually donated to it? No matter where you fall, no matter how you feel, there are connections that can be found which will leave you feeling happy and satisfied with where a donation goes.

And all of that is even before you get that little tax benefit at the end of it. So how can you lose? 

Over the past couple of weeks, I have been writing about looking forward to next tax season and getting a hold on your situation while there is still time. This week, I wanted to change the focus a bit to those who may be paying taxes for the first time.

I first started thinking about this group because of this recent article, which discusses how some NCAA athletes may be receiving payments for the first time. We are still in the early stages of seeing how (and how much) these athletes are going to be paid, but I am sure the tax implications of what they receive are going to be a surprise for some. Ideally, their institutions would provide some guidance on this, but how much of it, how good it is, and how well people listen are certain to vary.

Now this may feel like a small group of people, and the high-profile ones certainly will be a limited batch. The amount of people who have to pay taxes for the first time each year, though, is still pretty vast. As we get older, paying taxes (and having them withheld from our paychecks) just becomes part of the process and many do not give it a second thought. I think many of us, though, can still remember when we were younger and had to enter that so very ‘adult’ world.

Traditionally, this was not necessarily a trying experience. You filled out a form when you got your first job, some amount of money was taken out of your pay, and then when it came tax filing, you found someone who could help you with that part of it. With more and more people making money in new ways, though, this can get complicated. After all, it’s not only the NCAA’s ‘real’ sports that come with payouts, others are making money in Esports, as well. Add in delivery drivers and other types of ever more available freelance work and you build a larger and larger group of younger people with a cloudier and cloudier tax picture than the one seen by previous generations.

Let this then be a call to not only give some thought to your tax picture as we approach the end of the year, but to also think if there are people in your life who may not have had to have these thoughts before. And if there are, give them a nudge to do so. For to them, those potential unpleasant surprises at filing time may be even more surprising if they didn’t appreciate that they were even possible

Last week I wrote a little bit about how time was running short to make moves that can affect your tax picture by the end of the year. A lot of that was aimed at the individual taxpayer, but this is also the case for small businesses.

So if you are a small business owner, you may want to look at this recent article from Forbes.com that goes a list of things you may want to consider as you look ahead to tax planning. In this spot, I want to highlight only one part of this, though, and that is to keep on top of your bookkeeping.

I completely understand how this falls to the bottom when it comes to the to-do list for your business. You want to be much more involved in what you do for your clients and/or customers. You want to be doing what you started your business to do, and that wasn’t to go home at the end of the day and categorize your banking transactions.

But then it becomes something that suffers from procrastination. It’s not something that HAS to be done for your business to operate. You then think you can do it at the end of the week, which becomes the end of the month, the end of the quarter, and suddenly, Eek!, it’s tax season. This snowballs into many problems.

First, operating in this manner makes it impossible to really know how your business is doing. Sure, you may be doing okay enough since there is money in the bank and you are paying your bills, but you don’t have really any idea how much money you are making – and how you can make more.

Second, operating in this manner is going to make the task feel unbearable when you finally come around to the bookkeeping. You will be scrambling from behind, won’t remember what every transaction was for, and will potentially be missing out on deductions. When it then comes back around to just how much money you are making, this could again mean it is not going to be as high as it could be.

Lastly, this is going to result in you losing a sense of control. It can feel great when you have enough things to do while working in your business, you feel successful when your schedule is full. But it will feel awful when things catch up to you and you realize you have spent no time working on your business.

Let this be a call to catch up on the things you need to catch up on. This puts you in the best position to have the most success. And remember that we are always here to help you reach that spot in any way that we can.

It has been less than a week since the deadline passed for filing your taxes if you received an extension. That may seem like it must be much too early to discuss next year’s filing, but it means we are in the final quarter of 2021, and that means the time to make moves that can affect your tax picture for this year is running short.

If you are someone who just filed and were surprised at your final numbers, let that be the kick you need to seek the answers that will move things closer to where you need them to be. That kick can be more difficult if you filed six months ago, however, for the sting wears off. But let this be a call to remind you that back then you wanted to investigate what you could do to improve things and better enjoy how your tax picture looks come filing season.

The trick with these situations is that there is no one-size-fits-all solution. If there was some simple action everyone could do to pay less taxes, it would be well known and you would have already done it. Instead, everyone’s personal situation is different and the answers and strategies that are best for you may not be best for your neighbor, and vice versa.

We are always happy to provide this personal touch. And sure, when it comes time to file, maybe we can make you aware of some deductions that you did not know you were eligible for. But at that time, we may also see things that you could have done six months previously but is too late to do then. Time is an ally in these situations.

So do not be afraid to reach out at this unorthodox time. We clearly cannot make any promises that doing so will result in future savings but can guarantee that you will have a clearer vision of your tax picture. Even if the answer isn’t the best, and even if there are no ways to make a big difference to it, you will at least be prepared and can plan for it. For again, time is your ally in these situations.

For not only is time a help in this area, so is knowledge. The bad times happen when you find out something you didn’t know at a time when you can’t do anything about it. This is your chance to not end up there.  

I have recently tried to communicate just how difficult it can be to deal with the IRS. This is not a straight criticism of the agency as an institution, it simply does not have the manpower to properly address all the things it should be able to properly address.

The IRS has given indications that things will improve, but that doesn’t seem to be happening, or at least not very quickly. This recent article showcases some of the ways and some of the reasons the IRS is falling behind and how a fix doesn’t appear to be imminent. With this all happening at a time when even some who filed their taxes on the original deadline back in May are waiting for their returns to be processed, the frustration can be strong.

With this growing frustration then, I thought it could be helpful to look at what rights you have as a taxpayer, a list that Is very simply labeled, the Taxpayer Bill of Rights. Of course, when you look at this, it may seem more than a little ironic that the second thing on the list is the right to quality service (where even the IRS includes the word ‘prompt’ in the definition of this type of service).

Furthermore, I can completely appreciate a cynic’s view of this list. It may look like a lot of platitudes that do not do you a lot of good if you are actually facing the IRS. Add in the increased tension that can be caused by the difficulty experienced in attempting to contact the agency, and a list of rights can feel empty.

You do not have to just throw up your hands, though. If you receive a letter from the IRS, it does not mean that you are automatically wrong. Sure, some people make mistakes when filing their taxes. But the IRS also makes mistakes when looking at those filed returns. And even more often lately, the agency makes mistakes when sending out notices – some of which have not been actually applicable to its recipients.

And it is frightening to receive such a letter, especially since they sometimes come in the form of a large bill that you did not expect. But one of the rights on the list is ‘The Right to Challenge the IRS’s Position and Be Heard,” so if it is their mistake, you have a chance to set it right. You want to act quick (especially when receiving a response to such action can be delayed) but you can do so. And if you need assistance from those with a greater understanding of how those things work, then do not hesitate to find it. 

Someday we will hopefully reach a point where discussing tax matters won’t just involve things that happened (or happened more) during the pandemic.

But we are not there yet.

So today I wanted to write a little bit about location. This really stood out last year as more people worked from home. And that home was not always in the same state as where they used to work. That changed how many had to pay and file taxes.

And now this year, many people are still doing so, some others are joining the work-at-home forces for the first time, others who could not travel for a time are working in new areas, and all these situations could raise new questions.

These issues came back into my view through a recent Accounting Today article that covers a lot of these situations for mobile entertainers. I don’t have the space to go as in depth here but wanted to put out a couple key points for those who may be affected.

The biggest one of these is to just keep records of what you are doing and where you are doing it. You are not going to be able to look back at a year of transactions and payments if you are working in various areas and specifically recall where each happened.

This is also good practice for people who may not be setting up shop in different areas but travel for work. The better your record keeping when on trips, the more you will be properly tracking your potential deductions and keeping yourself from missing any expenses.

In addition to record keeping, though, I also want to stress the important of planning. So often in situations like this, where someone may be working in a new state, they understand that there could be tax implications, but tend to push that idea away and plan to deal with it when tax filing comes. Of course, this could lead to a nasty surprise if you did not set things up correctly, owe more money than you realized, and hit yourself with a surprise, large bill. At the same time, though, maybe you’ll be paying way more than you would have had to and could have been using that money that was being withheld to do something different along the way. Either way, planning would have prevented the situation.

So be aware and be active in addressing your situation. After all, in a time that has upended a lot of our lives, the more we have control over, the better we feel.

It is not like it is difficult to understand procrastination. Of course it is easier to not do something than to do something, no matter how much you should do it. And when it is not difficult to get a deadline extended for something you don’t want to do, kicking that can further down the road becomes super tempting. But even with all that, we are approaching the October 15^th deadline for submitting taxes even if you received an extension.

Aside from procrastination, sometimes you can’t complete tasks because of circumstances beyond your control. So if you have been affected by one (or unfortunately more) of the numerous disasters that have ravaged parts of our country, it is possible that this deadline could have been pushed back further for you. If things have happened that would prevent you from reaching the October 15^th deadline because of such disasters, it can be worth looking into if you qualify for the added time. Please do not hesitate to reach out to us if you need clarity with this.

But for the rest of you, it is time to get moving. The sooner you get everything together to prepare your taxes, the more time you have to confidently answer any questions that come up, and the better chance you have to use those answers to your best advantage. After all, if you are expecting a refund, why would you not want that money and as much of it as you are entitled to?

Getting this done can be even more important for those who still owe money to the IRS, though. We say this every year, but every year still see people who were unaware of it – receiving an extension to file is not an extension to pay your taxes. The deadline to pay 2020 taxes was still May 17, 2021. At that time, fees and interest started to accrue on your balance. The sooner you get your taxes filed, the sooner you get a handle on how you will pay that amount.

Every year it is true that filing electronically (and receiving payments via direct deposit) will get your return through the system faster. That is going to be even more true this year, however. As we have recently said in this space, we are seeing people who filed at the regular deadline still waiting for their return to be processed. That is already a long line so if you can avoid joining the slower one, it will only be good for your peace of mind.

So yeah, what are you waiting for?

Small Business Week typically takes place in the first week of May each year, but as with, well, everything else over the past year and a half, it was postponed and is now being celebrated this week. There is nothing inherently necessary about that May date anyway, and it can always be a good time to think about a small business, so let’s join in the festivities.

Know that is even possible to starting thinking about a small business without actually having a business. Everything has a starting point after all. I think the biggest thing here is to have a passion for something you want to do. Have you ever had a tickle of an idea that you thought could become a business? That spark that you knew could be profitable if someone would just do it? Well, that probably came out of something you would like to do and when it comes to work, the things you want to do are going to thrive more than the things you need to do. So lean into it, identify that opening you saw, and think about how you could fill it.

As a quick tip, once you actually decide to pursue something as a business (even if you don’t envision it ever being more than a side hustle), set up a new bank account for it. This doesn’t have to be any special type of account and can likely be accomplished in minutes with your current bank. Keeping your business and personal spending separate, though, will fend off the headache of going through lists of transactions and determining what was what months down the road.

For those who try to make the transition from side hustle to business, the biggest hurdle can be getting from doing those things you want to doing the things you need to do. This can be as simple as properly forming the business legally, keeping a bank account balanced, paying the right taxes, or knowing whether you are actually making a profit. All of these are things that one understands need to happen on some level, but they aren’t why you start the business, and they aren’t what you know about. So when it comes to them, do not shy away from seeking out help from those who do know such things.

So to that end, know that the federal government runs a Small Business Administration, which shares a lot of information on its website at sba.gov. For more strictly tax-related issues, the IRS has put together a website in celebration of this week that offers up some information. And as always, if there is anything we can do to help facilitate your success, do not hesitate to reach out.

Last week in this spot I wrote about how the dealing with the IRS and getting 2020 taxes processed still involved a long waiting game for many. The agency does not get put in the best light when the conclusion is that all you can do is just shrug and continue twiddling your thumbs.

But when the IRS does things right, we should also give it credit and it recently has done that a couple times.

Almost as if in response to some of the waiting times involved with paper forms and phone calls mentioned last week, the IRS extended the ability to digitally sign a variety of forms. That ability is currently only slated to run through the end of this year but hopefully shows an increasing openness to allowing it more as a rule. If you are interested in what forms are included in this, you can find a list at the end of this article.

Of course, there are security concerns with such signatures as they are being placed on sensitive documents. It is obviously impossible to be able to guarantee nothing will ever go wrong. It is also impossible, however, to deny that digitally signing documents is only going to become more the norm in numerous areas in the future. It is a genie that can’t be put back into the bottle and as the IRS works through its backlog, further embracing of it is only going to help ease that situation. This is probably another area where we have to embrace the electronic world.

Also on the positive side of the IRS’s ledger is it instituting some help for victims of Hurricane Ida. The biggest headline here is that those affected by the storm now have until January 3, 2022 to file various tax returns and make some tax payments.

Granted, this is not the largest type of help that many need, but it is at least something and is what the IRS itself can directly provide. The agency has also put together a web page that gives more information on its own actions for the victims, and also directs those who need it to other resources that may be needed.

In the interest of doing good then, I want to close this week by urging anyone reading this who can help people affected by this disaster to do so. From the storm making landfall to dropping massive amounts of rain across various sections of the US, it upended life for many. Every little thing we can do to help others works to put them back on an even keel because enough little things add up to big ones.

As the calendar turns to September, as Labor Day Weekend looms as the traditional end of summer, you would think that the IRS should be pretty much finished with forms it received months ago at the tax deadline.

Well, you would be thinking wrong.

This isn’t exactly new news as the agency experienced a large backlog during the early days of the pandemic when fewer of its workers were working in their offices. Then they probably started to catch up a little bit at some point, but at the end of the 2021 tax season were still left with over 35 million returns that require manual processing.

There are many reasons for this, and if you want to get a little more into the workings of the agency, you can do so by reading this article.

We have received enough recent inquiries about the state of tax returns, though, that I thought it was worth putting this article out this week to make everyone aware of what is happening.

The first thing to remember in this is that even if you submitted your tax return months ago and it still has not been processed, that does not mean that there is anything wrong with your return. You are just among millions still being handled.

Clearly at that point, though, you want to do something to speed up the process. And many people want to call the IRS to do that.

Well, just as there is a backlog of returns that the agency must process, there is a pretty constant barrage of phone calls they are fielding, too. Wait times on the phone can extend to longer than you want to wait to just find out your return is in that large pile they are still getting to.

This then is an urging for patience if you are still waiting. I know this can be very difficult, especially if you are expecting a refund and have that money earmarked for specific purposes. Unfortunately, we do not have any secret key that can be turned to speed up the process. Unless you have been informed of specific issues with your tax return, it really is just a waiting game at this point.

The agency does appear to be increasing (or is at least planning to increase) its workforce to try to solve some of these waiting issues. So maybe this will not be such an issue in the future. Until then, though, we are sorry that we cannot do much more but wait alongside you.

The Child Tax Credit is one of those, er, gifts that keep on giving. This is not a complete surprise as it was a novel idea distributed in a new way, so there were bound to be questions. There were also bound to be many who would just let the money enter their accounts every month without having thought about it, so I am sure we will have to discuss this again when tax filing begins next year. So maybe this is just part of the continuing questions.

In this month’s distributions, there was a snafu at the IRS that resulted in a number of people not getting their direct deposit of the credit this month. Look at one number – that less than 15% of families receiving this payment were affected – and it doesn’t seem too bad. Look at another number – that makes up more than 4 million families – and it feels like a lot of people are having to deal with this.

For more information on this mishap and more background about the credit, you can read this article from Forbes.

More and more of what is being written about this credit, though, seems to be on the warning end of things. I suppose this is inevitable in a way because this is not like the series of three stimulus payments that went out over the pandemic. That really was largely ‘free money’ that the government sent you. This prepayment of the credit – although a larger credit this year than it was in the past – will involve a reconciliation when it comes time to file your taxes for 2021.

And this could become an issue for some people. Let’s say you are making more money this year than you did in 2020 (a not unheard-of occurrence), you may be receiving a credit that you do not actually qualify for. Or maybe you are receiving credit money for a dependent who is going to cross the age-eligibility line before the end of the year.

You can read about some of these potential issues and more in this other article.

With this increased attention to the credit, I think it is important to restate here that you do not need to receive the prepayments of the credit. You must get an online account on the IRS’s website to start this process but doing so isn’t THAT difficult. And it can definitely be worth the time if it is going to keep you from paying hundreds (or potentially a couple thousand) dollars back to the government come tax filing time. Or if you need to update some information with the agency to ensure you are getting these payments because you need them now, you can do that there, too.

If after the first couple of months of payments, you still have questions, that’s okay! Feel free to set up an appointment with us and we can help you figure out where your personal situation sits.

Last week I wrote about how even parts of the government have trouble navigating tax rules correctly. A big conclusion there is how beneficial it can be to enlist the help of an expert who knows the rules and can help you use them to your best advantage. So granted, I was already thinking along those lines, but the IRS released a couple of tax tips that drove this home.

I hope that you have been able to enjoy the current summer season, but July is coming to an end, and it will only be a matter of time before it is time for many to go back to school. Do you know that this can have tax ramifications? See, it pays to have people who know these things so you do not have to guess.

Those tips the IRS released have to do with school and this time of year. The first is a pretty simple deduction where eligible teachers and administrators can deduct part of the cost of supplies used in the classroom for which they were not reimbursed. Granted, this is not a huge deduction and caps out at $250. At the same time, though, I do not know of any teachers who ever end up not spending that much money on their classrooms out of their pockets, so it ends up becoming a deduction all of them qualify for. You just need to know that it exists and to retain the receipts that prove that spending.

The second release involves tax credits that one can qualify for when it comes to higher education. Higher education can include anything from trade school or community college to four-year universities or advanced degrees. I do not have the room to go into the basics of everything involved here but know that it even includes a partially refundable credit, meaning you could actually get some money paid directly to you when you file your taxes.

These notices are coming out now because of how applicable they are to the where the calendar currently sits. This means they are not the only ones out there. This also means if you are not currently using a professional tax preparer, you are likely eligible for some deduction or credit of which you are unaware. And there is little more rewarding in our work than when we can show people that they are in a better position than they realize. So if you want to reach that position, please do not hesitate to reach out.

 In general, I would counsel against making assumptions from a headline, but when the headline is “Hundreds of government entities wrongly claimed tax credits,” well, you have to know you are not being led to a feel-good story. (Click here to see the article being discussed).

To make sure this does not spiral too far, the article is not about some government duplicity with wicked schemes to grow its own coffers. Instead, this is just a case of mistakes. It just feels like the government should know what the government is doing, though, right?

That would clearly be ideal, but ‘the government’ is an enormous entity and the part that actually deals with taxes is only a small part of the monstrosity. It would be a little unrealistic to expect all groups involved to be experts.

But beyond the initial pushback at how ridiculous this seems, it does speak to the complications that exist when speaking of taxes. These complications only increased over the last year-plus as Congress passed multiple large bills to fight against the coronavirus pandemic. Those acts changed rules without anyone being super clear on how they would be implemented. We then waited for implementation guidelines that sometimes changed multiple times, only increasing the confusion.

It then should not be surprising that mistakes were made. But how does one avoid making these mistakes? I say the best way to do so is to not go it alone.

It has been a long road from stimulus payments to Child Tax Credit payments, from PPP loans to Employee Retention Credits, all coming during a time when outside forces were weighing on people as heavy as they may ever have. Knowing what Congress passed that you could benefit from, and then how to properly benefit from it, took more time and attention than many people had. So before trying to use such programs, you should get answers from someone you trust.

That is a role that we have been able to play for many people since early last year, and it has been wildly satisfying to be able to do so. It has allowed us to be a place of comfort for many who needed it, and an unexpected light for others. Working together benefits all involved and helps fend off those unintended mistakes.

So remember, when things are overwhelming, do not hesitate to reach out to those who can help. And when those overwhelming things are ones we can help with, know that we love helping you get on the best possible track.

I suppose it should not be surprising that so many things feel different after the last 16 months or so. In looking at some news headlines Monday morning, though, I was struck by just how all over the place that shakeout seems to be:

-        There is a housing market that is going crazy, but so crazy that many people are giving up being able to buy a house right now.

-        Inflation is still happening, but for varied enough reasons that it is more than just one story.

-        “Black Widow” actually got some people back into the theaters.

-        Fast food places are trying many different ways to get people back there.

-        And through all this, a business magnate even went to space.

The world changed in the last year and it is still changing at a pace that can feel off-putting. Overall, I think most of us agree that things are better than they were a year ago. I also think most of us agree, however, that things have not reached a place where they again feel settled.

This unsure feeling can feel the worst when it comes to our financial situation. When comfort there feels tenuous, it reaches into so many other aspects of our lives. That is why with so much of this shakeout still happening, I think it is important for everyone to take a personal look at what will make them feel best in their own situation.

Did you have to reach into your savings over the last year more than you wished? Then you should build that back up again if that will increase your comfort.

Did you weather the storm well, but missed traveling? Then hey, make plans to get out there again that fit in your comfort zone.

There currently are so many forces pulling in different directions that big answers are difficult to give. This is a time then to do what is going to make YOU feel good. While there are still so many questions that are figuring themselves out, take control of the areas where you determine the answers. Make the plans that make the most sense for you and pay attention to the news in the areas that affect you the closest. From that starting point, we can branch out more and eventually reach that more settled spot. Until then, do not be afraid to use a narrower lens to get yourself to where you want to be. 

Last week, the IRS released its annual list of the “Dirty Dozen” tax scams for the year. If you had not noticed, the last year was a little wacky, so it should not be a surprise to know that some new things have popped up on this list.

With the three rounds of economic impact payments that went out over the pandemic came ways for scammers to try to take advantage of people because of them. One of the things that I found most interesting in the IRS’s mentioning of such things was straight-up theft of mail from people’s mailboxes. So much of what we think about with scams involves using technology to nefarious advantage, but some of those on-the-ground tactics can still be effective.

The agency also, though, gives blanket statements that any text messages, phone calls, or emails inquiring about any personal information related to these payments (bank account numbers, social security numbers, etc.) should be considered suspicious. This is a good reminder that the first contact you have with the IRS concerning any issue will almost always come through the regular mail first (as long as no one steals it apparently). So, if you are surprised by a call or email concerning a tax issue, chances are good that it is not legitimate.

The last year has also been a time when many have been more generous with giving to charity as the news (and our lives) showed us many people who needed assistance. Also included on the IRS’s list, though, is the presence of fake charities. Interestingly, it notes that these fake actors do most of their action over the phone where the pressure to give feels more immediate and can prevent you from doing a little research that would show you that it was not legitimate.

Because what happens in many of these schemes is that a scammer has a little bit of information on you that gives them an air of legitimacy that can then push you to do something you should not have. To that end then, I want to mention something that we have seen that is not necessarily a scam, but uses some of the same tactics.

This started because the information on who received PPP loans is publicly available. Potential loan offers are now going out saying that someone could be eligible for even more financing. And sure, this may well be true, but it is not related to the PPP loan in any way and is not part of the same program where loan amounts were forgiven if used for certain purposes.  So again, as with all these cases, take the time needed to understand the situation you are in, then take measured acts. You always deserve to act with the comfort of knowledge in any financial situation.

With the ever increasing opening-up of our country at the tail end of the COVID-19 pandemic and the warmth of summer are coming more weddings. You may have even received some invitations to some, which reminded you whether you were happy or not to have not had to go to one over the last year-plus. For those getting married, this comes with many tax implications, so it seemed a good time to go over some of these.

Some of those implications do not even involve getting into numbers or computations. If a partner is changing their name due to the marriage, this should be reported to the Social Security Administration. And then remember that the name on your tax return must match what is on record with the SSA. If marriage is meaning a change of address for one or both parties, also notify the IRS and US Postal Service about that.

Then of course, there are the numbers. All too often, couples get married, understand there are going to be some tax implications, but have no idea what they will actually look like until it comes time to file. You can get way ahead of this, though, and it does not even have to be that complicated.

A good first step will be to fill out a new W-4 form and give it to your employer. Even if you put no thought into this beyond selecting that you will be filing as a married couple instead of a single individual, this could get you closer to having the correct amount of taxes withheld from your paycheck. The form also has places to mark if your tax situation includes multiple jobs, dependents, or any other income you expect to report on a tax return.

A full W-4 form comes with multiple steps, charts full of numbers and a worksheet to fill out so a lot of people get overwhelmed by it. When you break it down, it is not overly complicated, but it sure looks like it is. The IRS, however, also offers an online withholding estimator that can be reached by this link. There you can input some information and numbers and get a little feedback on how to fill out your W-4. Chances are you will not mind how things look and you will avoid any surprises come April of next year.

Marriage is a joyous time but it also comes with a lot of to think about beyond the vows and reception. I do not expect taxes to be anywhere near the top of the list of what is on your mind when it is happening, but it should be fit in somewhere soon afterward. And if you can do that, it is just another reason to offer you congratulations and good wishes.

I often talk in this space of how one must use the current tax rules. You should use them to the best of your ability, but you cannot use any other rules. Some people feel like they are in a tricky spot now, though, because they are assuming they will have to pay more in taxes in the near future. A big part of this is coming from an increase in capital gains taxes as part of changes proposed by the Biden administration.

There are certainly ways to take this as a negative thing, as you can read in this article from Accounting Today. That view starts right in the headline talking about how tax planning is “tougher,” and then goes immediately into how the situation is “worrying.” And sure, not everyone who will have to pay more in taxes is going to a fan of Biden’s plan. They may “worry” and feel like it is “tough.” But there are also individuals who support the president’s agenda and will be happy to pay those extra taxes to help fund it.

For I do not know if you have heard this before, but there are two sides to every story.

So of course, the article presents a legitimate view of how there will be some transactions that some people may choose not to carry out because of trepidation over its tax implications. But then again, if you are in a position where you can afford to wait, is that not a form of planning in itself?

The other side of this story is that there will be people who carry out similar transactions, some who may even need to, and they should still do so if they want to. It is probably not a bad idea for such people to be aware of the potential higher tax implications and be ready to pay more than the current tax rate when next year rolls around. But again, is that not a form of planning in itself?

Either way, the key to planning is that you are looking to the future. That look keeps you from being completely surprised by what will roll around. You may not be happy about changes that come about, but when it comes to finances little is ever perfectly predictable anyway. You do the best you can with what you know and use the rules in place when it come time to pay taxes.

So if things feel “tougher” or “worrying,” act in ways to minimize those feelings. None of this means you have to only be run by emotion and throw your hands up in defeat until a political tide turns.

If you want to get attention, mess with our gas and meat.

That means everyone is suddenly more aware of ransomware than they were a few weeks ago.  And although the Department of Justice got back a couple of million dollars of what was paid during the Colonial Pipeline hack, it is tough to imagine that is going to make this issue go away. We should take this to heart even if we are not near the head of big companies for the security of our information can be very tenuous. This seems like a good time, then, to be reminded of measures to take to try to keep that information secure.

The first thing to do is just be aware of the need for security. If you are keeping some electronic information and you are unsure if it is secure or not, check on that. We are keeping so much in various cloud environments and the amount of security on them can vary. It is also a concern of many platforms, though, so it is quite possible that even if you are unaware of how secure your information is, it may be very secure. But it is worth taking a little bit of time to make sure.

The next thing to do is to make sure that the measures you are taking personally are up to date. Many people have some form of security software on a computer, but they install it once and forget about it. For that type of software to remain useful, updates are needed or you will not be protected against the newest tactics. So when that program says it needs to be updated, update it.

Better yet, use that as a rule for everything that says it needs to be updated. You may pay attention to the notices that pop up when your computer’s operating system says it needs to run an update, but how about each app you run? And sure, when ranking the importance of these updates, those apps will be low on the list. Many times, though, those updates do address security issues and the few moments it takes to see to them can be worth it.

Another thing you may want to keep in mind is keeping money in more secure accounts. With a checking account, each time you write a check, use a debit card, make an online purchase, etc., that information is being sent out into the world somewhere. A savings account that does not have checks written on it, debit purchases coming out of it, etc., remains a bit more difficult for others to access.

What a lot of this comes down to is mindfulness. If you pay attention and think about the issue, you will take actions to try to hold it off. This is not a guarantee of success but it at least keeps you from being an easy mark.

Maybe the last year has taught us to be ready for things to fall apart at any moment. So just when some parts of our lives feel like they are getting back to normal, other parts of the world feel like they remain on the brink of disaster. Everyone is seeing it a little bit at the gas pumps, reading it in stories of rising inflation, and wondering if the crypto bubble has burst.  These are interesting times we have been living through and they appear bound to continue being so.

As we closed tax season, I know we have written a bit about looking to the future. Filing taxes, though, kind of forces you to look at your previous financial year, offering the type of longer view that can be difficult to achieve in your day-to-day life, thus making it a good time to make some changes Those changes can help you take control of the things you can control and gaining that control can help ease the pain that pops up when the world starts to feel wacky.

The COVID-19 pandemic definitely taught us that we cannot plan for everything. That was a novel time unlike anything the world had seen in a century, back when it was a very different world. These latest stories, though, are ones that did not quite come as much out of nowhere and have easier causes to understand. The chances for inflation were understood before the country and its economy started opening up. Add in a malware attack on a pipeline ahead of heavy traveling dates and we can at least understand why we are paying more at pump. As for those investing in crypto, it is like any investment where your returns are not guaranteed and investments that feel so ‘new’ probably come with a little more risk.

Note that all those forces are ones that are out of our individual hands. We know why they are happening but there is little we can do on our own to turn the tide. And that is why it is important to make good plans for the things you can control. Are you paying off debt at a rate you are comfortable with? Are you saving at a rate you are comfortable with? Are you confident that you know what your tax picture will look like when it comes to file again next year? Not only are those the questions you have greater power over, but when you answer them in satisfactory ways, you will be better equipped to handle the things that come up which you had less control over.

You thought tax season was over, but there are always lingering questions following it. I wanted to address them here today so then we could leave the tax stuff behind for a little while.

One of the biggest questions people have after they file their taxes is when they can expect to receive their refund. I certainly understand why people have this question, some of those refunds are sizable and we always want to know when we can expect a big check. Unfortunately, when people come to us with this question, we do not have any secret Batphone way to get an answer or to push things up the calendar. We can say that if you are expecting a direct deposit instead of a paper check, you can expect your refund earlier. When it comes to just how early, though, the best way to get that answer is by using the IRS’s “Where’s My Refund” page, which can be accessed via this link.

That is definitely the biggest question we field from those who have already filed their taxes, but this post-tax season time also comes with plenty of questions from those who have not yet filed. The answer to these questions varies depending upon one’s situation.

First, if you filed an extension for your taxes, remember it is only an extension for filing, not for paying anything you owe. Tax owed and not paid by May 17 can be subject to penalties and interest. If you are in that situation, filing as soon as possible can be a good strategy. That will at least let you know where things stand and start to determine what you must pay and how to pay it.

Next, if you owe taxes from 2020, did not file your taxes, and did not file for an extension, then you are opening yourself up to even more of those potential penalties. Pretending that what you owe doesn’t exist only lets those penalties and interest grow, so it becomes even more crucial to get the filing done and start to figure out how to handle your outstanding burden.

Remember all those tax forms you received that tell you what you earned last year? Those also went to the IRS, so they know if you are going to owe them money. Of course, this also means that the agency knows if you are expecting a refund. And that brings us to the last group of people, those who have not filed but are expecting to get that money back.

To start, what are you waiting for? It is great if you don’t need that money and aren’t worrying about it, but why let the government hold it for you? Get it into your own account and let yourself get a little interest instead of someone else. Beyond that, there is no penalty involved if you are late in filing the paperwork that tells the IRS you want your refund, but it also means the agency is not going to try to track you down and give you the money owed to you.

So no matter what situation you are in, the takeaway in all of them is that acting quickly serves you better than waiting. And once you do that, we really can leave this tax season behind.

Well, we did it … again.

It seems wild to think about this being the second straight tax season affected by COVID. This pandemic struggle sometimes feels like it has been going on forever and at other times feels like it has just started. Our whole sense of time feels out of whack. The extended deadlines allotted by the IRS the last two tax seasons only added to that.

But we did it … again.

And that means I want to thank you again. Filing taxes for anyone is always a bit of an honor with the level of trust we receive from people who ask us to do that personal work for them. It is not something ever taken lightly, but it feels a little stronger after these last couple of filing seasons.

In a time when so many have had so much of their life upended in so many ways, we all need a little stability wherever we can find it. We hope that we have been able to be that for you in these trying times because you have certainly been that for us.

Because we did it … again.

And that ‘we’ is not just us here in the (home) office(s). That ‘we’ includes the work we do together with all of you. So please accept a heartfelt thanks from us for the trust you put in us and for sticking with us in unconventional times. We hope you are pleased with the work we did and endeavor to keep it up into the future.

Until we do it ... again.

Occasionally in this spot I talk about making charitable donations. This often comes in the form of how it relates to tax deductions, but it is also something of value on its own. Combining both of those dynamics this time, I want to talk about how those who are taking distributions from a traditional IRA or other retirement plan can use part of it for a qualified charitable distribution (QCD).  

A QCD occurs as a direct transfer of funds from your IRA custodian to a qualified charity. Utilizing this can have many advantages depending on your personal situation. It can count toward satisfying a required minimum distribution but is excluded from taxable income. A QCD also does not require that you itemize deductions to receive that advantage.

This recent article will give you some of minutiae of how this would look on your tax return and the math behind it. Personally, though, I would like to spend a little time saying more about what the article only quickly mentions, which is making sure your paperwork is in order.

I think that such ideas are often glossed over, because it can seem obvious that you must have paperwork that fits the rules. The problem, though, is that not many people may know the rules. So, if you are making a QCD from a retirement plan, then know you should also receive a statement from the charity that they received that money from you. This is something that reputable charities do as a rule, but it is also something that many people throw out when received. It is nice to have your gift acknowledged, but it is not like that acknowledgment becomes a keepsake. Even if not a memento, though, it does become part of your tax paper trail.

This is because you are also going to receive a 1099-R from the retirement plan that says how much money was disbursed, but it will not specify where it went. You are going to want to be able to back up how much of it was sent to charity.

The most beneficial ways to use this (and how much money is involved) will vary widely based on individual situations. It is a possibility that not everyone is aware of, though, so I wanted to have this blog be a possible starting point for that conversation. So as always, please do not hesitate to contact us if you would like to continue the conversation.

Now that we are reaching the end of an extended tax season, it may be time to start looking to the future. This may be necessitated more than usual since the whole country is focusing their eyes in that direction.

Last week, President Joe Biden gave his first address to Congress and it is clear where he wants that future to go. I am not going to get into deep policy matters here, but the Cliffs Notes version is he has a lot of plans and programs he wants to implement, they are going to cost a lot of money, and he wants to fund them by increasing taxes on the wealthy.

Just how much Biden is able to get passed is going to take some trudging through the mire of the political wasteland to figure out. His dream is a large, sweeping bill that covers many areas but practicality may necessitate breaking it up into smaller portions.  And no matter how any of those plans get passed, the tax increase that will theoretically fund it could take another vote.

So first, for those who want a deeper look into what may be coming on the tax front, follow this link for a quick, easy-to-understand overview from CNN.com that tackles the highlights.

But second, even if you read that and it frightens you, don’t act too rashly.

Remember it was not that long ago (even though it kind of feels like ages have passed since then), that Donald Trump entered the presidency with promises of vast changes to the tax system. And yes, he got them. But it took him about a year and a half to get there and that was with a little more congressional sway than Biden appears to have right now.

I know that I caution such things often, but this is another time when it seems appropriate - you have to operate under the rules that are already in place. It could also be good to try to separate political emotion from any acts we take. Yes, there are people who greatly benefited from Trump’s move. Yes, many of those people would then be the ones who pay more in taxes under Biden’s plan. Worrying and dreading such passage is only going to make it feel bigger than it is, though.

So for now, be knowledgeable, Know what might be coming that could affect you. The current rules are still the current rules, though, and you can do what you can to use them to your advantage. If the rules change, then use those new ones to your best advantage. At no point does one need to throw their hands up, for with knowledge comes the advantage of time to plan for what you will do when things change. Steady action will serve you better than inflamed passion.

I know that fraud never stops when it comes to the financial world. After all, think of all the reasons one would have to commit fraud and they almost all essentially come back to money. I do end up being surprised at some of the ways this happens, though. The latest jolt came from a recent article concerning fraudulent tax returns using the social security numbers of the incarcerated.

It sounds outlandish when you look at the headline, but then with a little more thought, it starts to make sense. If there is someone out there whose information you could use and have them not immediately notice, is there a better group than prisoners?

This just shows how many different avenues there are for scammers to explore. And they have to keep traveling down those new avenues because if there was just one way for them to achieve success, well, it wouldn’t last long for it would be found and then shut down. They must keep innovating and trying new things to have any success.

This constant push and pull can feel like you have no chance of avoiding scammers, and you know what, that is true, you really can’t. Our ever more interconnected world makes it easier for more people to get more access to more of our information. Even if you are super diligent and keep your most important information private and unknown, I doubt that you are also able to keep all unwanted calls from going to your cell phone.

I think that one can take some positives out of this, however. First off, the more that scams in general rise in prevalence, the more aware people are of them and a little bit of healthy skepticism is all it takes to hold off many of them. Beyond that, financial institutions are aware of the growth in scams, are better equipped to deal with them, making handling a lot of the bad fallout that can come from fraudulent transactions easier to manage.

The biggest thing we can do is remain vigilant. Just as our increasingly technologically connected world has made it easier for the scammers, it has also made it easier for anyone to check what is happening with their financial accounts. It was not all that long ago that it was difficult to get any information beyond a monthly statement, but now almost everyone can pull up a website and get an up-to-the-minute look at an account.

And sure, doing a daily reconciliation is probably overkill. But giving an occasional peek to just make sure you recognize all the transactions, that is probably worth the couple minutes it takes. The worst thing we can do is hide in ignorance and only take action when needed.

The IRS is still going to have quite a bit of work to do until we reach the tax filing deadline of May 17. And things will not stop there as it also has to look beyond that and toward the implementation of the new Child Tax Credit.

I am sure that some of you have no idea what that is. Well, remember when the American Rescue Plan was passed and you heard about getting money every month just because you had a kid? Yeah, it’s that.

First off, those really are the basics of the expanded credit. It sounds fanciful in a way to think the government is just going to be sending people money, but it is true. Beyond that, though, there are some complications that could be involved, which I am afraid could cause some pain for some when it comes time to file taxes next year.

So now that the hubbub following the talk of the latest economic impact payment has passed and you want to know a little more about this other portion of the ARP, I’ll point you toward this article from Forbes. Though be forewarned, although it is entitled “Everything We Know About the New Child Tax Credit So Far,” it is not very long. And therein really lies the problem, for we do not know a lot and there are still a lot of unknowns when it comes to how this will be implemented.

What stands out most to me about the article falls under the heading of “The IRS Is Embracing Technology,” but has nothing to really do with technology. The technology portion is a portal the IRS plans to have set up before the (anticipated) launch of the monthly payments on July 1. That portal is assumed to allow taxpayers to opt out of receiving those monthly payments, which may be good for many.

For example, what if one qualifies for this credit based on their 2020 tax return, when they reported a lower income during a year when many had less than usual. And what if this person then has a return to normalcy based on their 2021 income? They may then find themselves having to repay some of the credit.

Or what about someone who typically has been receiving the smaller amount of the already existing Child Tax Credit and has set up their tax planning during the year to end with their filing largely being a wash, not owing much or not receiving much of a refund. If they have already received some of the credit, so that what the amount of credit remaining to be received on their tax return is smaller, there may be a much larger bill due than expected.

This is not to say that the impulse behind this credit is a bad one. It is trying to help those who need help and it is easy to envision many situations where that is going to be the result. It is also possible, however, to imagine situations where it could cause unforeseen issues. So this is just a gentle reminder that it could be worth putting a little thought into the situation and appreciating how it is going to affect you before the payments begin going out.

Well, here we are, just about at what the original tax deadline was going to be. That came up quick, didn’t it? And I bet that if you have not filed your taxes yet, it came about even quicker for you. After all, that is what happens every time you procrastinate.

Let’s be honest, the things that we file under procrastination are not a slowing down, they are the things we completely are putting off doing. When you make no movement toward an endpoint, you are making zero progress even if you are suddenly allowed more time to get there. If you are worried about something that you only have a week to do, then get a reprieve and are given another month to do it, you are only going to feel the same pressure if you wait until there is again only a week left to finish before starting to work on it.

And trust us, we have seen enough wild April 15^th correspondence to know that no one thrives when that becomes the case. We just expect that on May 17^th this year. The extra month is not going to mean that everyone used the time wisely to avoid that final-moment rush.

Now think about how many things in your life you wished you had got started on sooner. My guess is that everyone can start populating that list rather quickly. In our work, we even hear some bit things get put on that wish list:

-        I wish I had planned throughout the year and avoided this big tax bill.

-        I wish I had saved more.

-        I wish I had put money into retirement funds sooner.

Of course, this is a wild oversimplification. Even in the financial realm, there are actions that are best to wait on, such as making large purchases only after saving enough money to not have to finance them and throw pile interest on top of the purchase price. But even those ‘waiting’ moments are served well – and happen sooner – by not procrastinating the planning process that sets them in motion.

Over the last year, everyone’s sense of time has taken quite a hit to the point where we all had moments when simply recalling what day it was became difficult. Let’s not make it worse by continuing to put off what we can and should do but just do not want to do. Let this used-to-be tax deadline date be a signpost to do something you have been putting off. You will be thankful in the long run.

Sometimes things that are not wholly new come up in a way that strikes us in a new way. That happened this week when the IRS released a notice saying there are more $1.3 billion in tax refunds waiting for people who did not file 2017 returns.

This number comes out every year as the three-year deadline to claim these refunds is reached. And it is not the size of the current number that is staggering -  it always is - but it seems to stand out a little more now after a year when so many battled through difficult financial times.

As part of the IRS’s release on this matter, it states that the midpoint for these refunds is $865. That means about half of the estimated 1.3 million taxpayers who could still get one of these refunds are expected to get more than that amount. That could be a huge benefit for some who need it.

One cannot help but then start thinking about why these returns are unfiled. I suspect a large part of that is not some willful choice by taxpayers. I mean, who is going to choose to not receive money that they are owed by the government? Sure, there may be some people who chose not to file taxes out of a fear they would find they owed money, but I think the overwhelming majority has to be people who did not know what they were supposed to do.

This ignorance can come from many places. I imagine that some start their working life without realizing they must file taxes. I think most people have some concept that they have to pay taxes, but when you see them coming out of your paycheck, you may think that it’s all being taken care of. And even if at some point you find that this is not the case, fear probably keeps many from looking backward, even if it could have resulted in them getting refunds from the past. After all, when people come to us and have to file old tax returns, it is rarely for just one year.

I do not think there is any easy way to fix this. If the tax system were easy, there could be some logline to communicate to everyone what their obligation will be. The American tax system is anything but easy, though, so it should not be too surprising that there are those who do not understand their obligations and end up not filing.

But $1.3 billion??? That is still pretty surprising. And surprising enough that I thought it worth putting into this blog to hopefully do a little bit to increase the education of tax filing.

There have been enough dates thrown around lately that I thought it would be worth it this week to look at timing when it comes to taxes.

As most are probably aware, the IRS has pushed the federal tax filing deadline back one month to May 17. I know for many this feels like some sort of reprieve because you get more time to do a task you don’t want to do, but it doesn’t really offer anything more than time. In fact, I would only counsel people to still get their taxes done as soon as possible, act as if April 15 is still the deadline, and then you can start looking toward next year when there will again be more new tax rules to navigate.

Leaving my quick preaching aside, there are actually times when April 15^th is still critical in reality. For instance, if you are someone who makes estimated quarterly tax payments, the first of those will still be due on April 15^th as that date did not get pushed back with the filing deadline. (You can read a little more about there here).

It is also worth keeping in mind that the IRS deadline only affects your federal taxes. Your state deadline may still be different. Most states have offered some sort of delay, as well, but it is worth checking on that and making sure before you make a mistake that means your state return is late. You can do that by clicking here.

You should keep in mind that the tax filing delay was not only implemented by the IRS as a gift to the taxpayers. The latest stimulus package contained multiple changes that the agency had to implement, so the delay gives it some time to figure that all out. It also does not exactly help that at the same point the IRS received the responsibility of distributing individual stimulus payments, and this all just leads to a couple more issues with timing.

First, I know many people are still eager for information about when they will receive that individual payment. There is no magic information source about that. The best thing to do is to consult the IRS’s Get My Payment website - www.irs.gov/coronavirus/get-my-payment - and find where you stand. Second, the agency is even now still working through some returns from the 2019 tax year, displaying how difficult pandemic-ravaged 2020 was for it. That means some may need to be preparing themselves to have their tax refund take a little longer to receive than usual.

Hmm, it’s almost like that is another reason to not delay filing your taxes.

So just when we (barely) felt like we were getting a handle on all the legislation passed last year due to the COVID pandemic, the American Rescue Plan was passed earlier this month giving us a whole new batch of things to try to figure out.

There just might be some reason why the IRS pushed back the tax deadline by a month shortly following its passage after all.

The easy and headline-grabbing parts of the package were known immediately and by this point many have already received their economic impact payments. After those $1,400 payments, the next biggest news seemed to be the child tax credit because, hey, many people were now going to be looking forward to getting even more checks directly from the government starting later in the year. (Although now the IRS is starting to caution the timing of that beginning could be tricky.)

Beyond those two bits, I think most of the news I saw surrounding the package was partisan takes about whether it was a good idea on the whole. This is not to say that the debate is meaningless, but it does obscure just what else is included in the package.

For instance, were you aware of the Restaurant Revitalization Fund that will makes grants available? Did you know that many people now qualify to have the first $10,200 they received in unemployment benefits in 2020 be nontaxable?

So for those of you who may be interested in getting beyond the initial headlines and finding out more of what is involved to add up to the $1.9 trillion price tag, here is a fact sheet from the Treasury Department that gives you the basic rundown.

Even if you are not currently interested in knowing more, however, I would recommend not keeping your eyes and ears closed to future news of what the bill contains. Just how all these pieces will play in practice really is not known yet. This is going to be an evolving topic and if the past year is any indication, it will only evolve in a way that adds more benefits to more people. Even if you currently feel secure, why not take some added benefits if they are offered?

Trust us when we say that we understand how it can feel maddening when so many tax and financial rules keep changing. There truly have been many moments when we feel we have things figured out, then new guidance or laws say we were wrong. This is hopefully the end of the line when it comes to pandemic legislation, though, so keep your mind in the game a little longer and we will work together to figure out how to continue making it work to your best advantage.

Believe it or not, there is now less a month to go until the tax deadline of April 15^th (barring any change of the filing date, but we won’t get into that again.). This means that it is really time to get your paperwork together. We are now getting to the point where it can become difficult to acquire any missing forms before the deadline.

If you are missing a W-2 or 1099 form that reported income, you should contact your employer or issuer and obtain a copy. It is possible that your personal copy got lost somewhere along the way, which means that IRS knows you received the money and if you do not claim it on a return, they will notice. It is also possible that the information the form contains will result in you getting a refund and you do not want to overlook that, right?

You should also contact your employer/issuer if the form you received is incorrect. Again, if you know the correct numbers and use those instead of the numbers that the IRS has, this is going to garner some interest that you do not want.

There are cases where you will not be able to get a form you should have received, though. We cannot always account for the actions of others who did not do as they should. There is a form you can use at this point – Form 4852, Substitute for Form W-2, Wage and Tax Statement or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.

Yes, that is a long title, and yes, that speaks to how little fun this time of year can be, but it also tells you how good it is to get it handled with enough time to be able to handle all those potential tasks.

 

This also seems like a good time to talk about what to do if you received forms saying you received income that you did not. This could be a tipoff to a scam that became more prevalent over the last year as unemployment benefits were claimed by schemers who used the names of others to get the extra benefit given by the government in the midst of the pandemic. You should not have to pay taxes on money you never received, and again, reporting and getting on top of that immediately will only lead to fewer issues and headaches.