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.