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6 tax moves to make this November

Autumn leaves in our backyard stream. (Photo by Kay Bell)

You can stop staring at your calendar. October is gone, apparently roaring through 2021. Today really is the first day of November.

Once you regain your temporal composure, it's time to get busy. Even though some of us started dealing with upcoming year-end festivities last month (guilty!), it's now officially holiday season.

And we have to adjust to the time change. And vote. And, of course, deal with our taxes.

If you don't know where to begin, here are six November tax moves that you might want to consider.

1. Don't miss today's deadlines. Yes, we have another bit of calendar confusion. Nov. 1 is the tax due date for some taxpayers. Today is the extended filing deadline for some Michigan and Mississippi taxpayers who endured major disasters earlier this year. It's also the day for recipients of advance Child Tax Credit payments to opt out of the remaining monthly deliveries or make income changes online that affect the credit amounts. If any of that applies to you, get to work. Now!

2. Review your portfolio. Despite lingering COVID-19 pandemic effects, the market has been doing quite well. If your holdings reflect that, it could be to cash in some of your long-term holdings. The capital gains tax on these sold assets generally is lower than your ordinary tax rate.

If, however, your holdings were hard hit, they still could provide some tax benefits. As part of your overall asset analysis, you might decide to sell some of those losing assets. This stock loss harvesting can offset any gains you made on other holdings.

Capital losses also could be especially beneficial to higher income taxpayers facing the 3.8 percent Net Investment Income Tax (NIIT). This surtax, part of the Affordable Care Act, is still in the tax code. It applies to the unearned income, not adjusted for inflation, of single or head of household filers with modified adjusted gross incomes (MAGIs) of more than $200,000 and married joint filers earning $250,000 (or $125,000 if married and filing separately). Harvesting losses can help high earners reduce their NIIT amount.

And if in taking those losses you discover you have more of them than gains, you can claim up to $3,000 in bad investments against your ordinary income to help lower that taxable amount. Then get a new financial adviser!

3. Fine tune your Form W-4. By now, you should have a good idea of what your final 2021 earnings will be. If it looks like you might be getting a refund when you file next year, consider adjusting your withholding now. That way, for the final pay periods of 2021, you'll get more of your hard-earned money in your pay rather than some of it being held for months by Uncle Sam.

If turns out instead that you need to have more withheld, making the change this month will spread out the added tax bit over several paychecks. That will help ensure you don't have to come up with a big payment when you file your taxes next year.

Either way, use the IRS' withholding calculator to help you have the correct amount of tax taken from your remaining 2021 pay.

4. Spend down your FSA. If you have a tax-favored medical flexible spending account (FSA), now's the time to check that balance. Have you submitted all your qualifying medical expenses for reimbursement? If not, do so. Do you still have a substantial amount of pre-tax dollars in the account? Then think about what health-related costs you can spend them on in the next few months. You want to do that because, despite the tax benefits, this workplace benefit has one big drawback. It's a use-or-lose proposition.

Many companies still require staff to use up FSA money by the end of the benefits year, which is Dec. 31 for most. If you don't, your company gets to keep all unused funds. Some companies give FSA owners a grace period until March 15 to use the money. Others allow a rollover of at least some of the accounts' funds.

COVID relief law changes have provided more latitude in these areas. But make sure you know what your employer's policy is when it comes to FSA fund usage.

Your best, and easiest, bet is to spend down your FSA completely to ensure that it's not wasted. Making those decisions in November can help you avoid panic FSA spending at the end of the year.

5. Be charitable. Most of us have a lot to be thankful for, even without this month's Thanksgiving holiday. Many, however, are not as fortunate. If you can spare it, consider giving to Internal Revenue Service-approved charities that can help out those families.

Food banks are especially strapped this year, due to coronavirus supply chain issues. Homelessness remains a major problem for urban and, increasingly, more rural areas. And many are struggling to recover from the major disasters that hit the United States this year.

Regardless of what charity you choose, don't forget to get your tax thanks. In addition to help out and making your feel good for doing good, you likely will be eligible for a tax break on your 2021 taxes. And you don't even have to itemize. You can claim cash donations up to $300 if you're a single filer, $600 for married couples filing jointly, right on Form 1040. You can find more about this tax break and other charitable tax benefits in my post 4 enhanced tax-deductible donation options this year.

6. Feather your nest eggs. Don't forget to give to yourself, especially your future, older self. If you haven't already maxed out your retirement accounts, add more now. Yes, you do have until next April 15 to make IRA contributions, either traditional or Roth, for the 2021 tax year. But the sooner you get your money into the account, the sooner it has the potential to start to grow tax-deferred or tax-free. And if your traditional IRA is deductible, a contribution will reduce your taxable income for this year.

When it comes to workplace retirement plans, Dec. 31 is the last day you can put money for the current tax year into your 401(k) or similar plan. Get to your benefits office ASAP to bump up your contributions for the final few pay periods of 2020. This post on inflation adjustments for retirement plans has specifics on how much you can put into your nest eggs this year.

More November tax moves: Yes, that's a lot to think about in this month that just showed up on our doorsteps. And you need to consider tax moves while also making holiday plans and still coping with coronavirus challenges.

But doing so could help you cut your 2021 tax bill. So try to make some time for tax moves that fit your situation this month.

And if you're industrious and want some more tax topics to think about, check out the ol' blog's right column for a few more November Tax Moves. They're under the so-named heading, just below the countdown clock ticking off the time left here in tax year 2021.

Once all this tax stuff is done, you still have time to work on your Turkey Day spread and get in some early holiday shopping and celebration planning. And you'll be able to do all that without that nagging year-end tax voice in your head.

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[elizabethcariasa]

Democrats propose expanding estate tax, GOP wants to kill 'death tax'

Elected officials come into office with grand plans. Then the reality of governing hits.

Although President Joe Biden has a nominally Democratic House and Senate, the margin in both chambers, especially when we're talking about the perpetually infighting Dems, is razor thin.

That means Biden is not going to get everything he proposed on the campaign trail. That's become obvious in the wrangling still going on over his scaled-back Build Back Better (BBB) budget bill.

Estate tax/other benefits tradeoff: The Biden Administration had hoped to help pay for new and increased family-focused tax breaks in the BBB by upping another tax that affects far fewer families, the federal estate tax.

In an early Ways and Means Committee draft, the Democratic plan called for a reduction in the federal estate and gift tax exemption amounts. Currently, an individual may give up to $11.7 million during life or leave that much at death and escape these federal levies. Married couples get double that exemption, or $23.4 million if you're as bad as doing even simple math in your head as I am.

Any estate valued at more than those exemptions is taxed at a flat rate of 40 percent.

The Tax Cuts and Jobs Act of 2017 created these estate tax exemption amounts, which are adjusted annually for inflation. They are set to expire at the end of 2025. The exemptions then would go to $5 million, again adjusted for 2026 inflation, or $10 million for couples.

Democrats on the House tax-writing panel proposed accelerating the estate tax exemption reduction. Under their plan, it would go to just more than $6 million (or $12 million, after the inflation adjustment for both figures), starting on Jan. 1, 2022.

Why to support a larger estate tax: Supporters of collecting more from the estates of the wealthy say that the tax, even in its previous smaller exemption form, affects very few.

The Tax Policy Center's Briefing Book section on the estate tax provides some supporting numbers.

Internal Revenue Service data show that roughly 109,600 estate tax returns were filed in 2001, the year before a series of federal laws reducing the tax began to take effect. That year, fewer than half — about 50,500 — of those estates had any estate tax liability after credits allowed against state estate taxes.

About 4,100 estate tax returns will be filed for people who die in 2020, of which only about 1,900 will be taxable. That's less than 0.1 percent of the 2.8 million people expected to die in that year.

The graphic below from the Tax Policy Center (TPC), a Washington, D.C.-based nonprofit joint venture of the Urban Institute and Brookings Institution, illustrates the revenue changes, i.e., losses, due to tax law changes to the estate tax over the years.

  Why to eliminate the estate tax: As you already know, the other side has its own arguments for at least keeping the estate tax exemption at higher (and increasing along with inflation) levels.

It would be even better, they say, to eliminate this tax, which opponents refer to as the death tax. That consistent Republican tax goal was achieved back in 2010, largely due to Congressional inaction. But the estate tax was resurrected and put back in the Internal Revenue Code the next year with a $1 million exemption ($2 million for couples) and a 55 percent tax rate.

Democrats are in control of the White House and (sort of) Congress, but the GOP is fighting back. Republicans won this round, with the estate provisions dropped from the latest draft of the Biden budget plan.

I can't say for sure what prompted the concession, but a presentation by Ways and Means Republicans might have helped. At least its theme fits today: 10 Reasons to Repeal the Death Tax this Halloween, as told by Halloween Classics.

So on this All Hallows Eve, the GOP online arguments, complete with GIFs from some of my favorite funny scary movies — I'm looking and laughing at you Young Frankenstein — earn top spot in this weekend's Sunday Shout Out.

  via GIPHY

  Of course, a second shout out goes to the TPC's more scholarly look at the estate tax.

Regardless of which side of the estate tax argument you take, enjoy both of today's recommended tax readings. And, of course, have a safe and Happy Halloween.

You also might find these items of interest:

Tax-smart ways grandparents can help pay for college

Death, taxes and more and the effects of inflation in 2021

Just 1.1% of family farms face estate tax under Biden plan

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Income update feature debuts Nov. 1 on IRS Child Tax Credit portal

Family income affects just home much Child Tax Credit can be claimed. It also matters in the distribution of the 2021 increased amounts that are being delivered monthly through the end of this year. (Photo via Shutterstock)

The Internal Revenue Service will be delivering two more Child Tax Credit payments this year, on Nov. 15 and Dec. 15.

Eligible families need to make sure the IRS has the correct data for the payments. It could make a difference in both the amount of credits distributed this year and the families' tax returns filed in 2022.

Notably, any changes to income could affect how much Advance Child Tax Credit (AdvCTC) amounts families will — or should — get these last two months of the year.

So that the IRS has the correct information, it is adding a new taxpayer income feature to its Child Tax Credit Update Portal. It will be available on Monday, Nov. 1.

The IRS is urging AdvCTC recipients whose income has increased or dropped significantly since their 2020 tax return filing use the online tool's new feature to alert the IRS of the changes.

To ensure that changes are in time to affect the November payment, do so by 11:59 p.m. Eastern Time on Nov. 1. Note the time zone specificity. If you live in another region, adjust your time deadline accordingly. Or, easier still, make sure you make the changes early on Nov. 1.

Any changes made after Nov. 1 but by Nov. 29 will be reflected in the December AdvCTC payment, which is the last scheduled monthly payment for 2021.

Getting the correct payments: The new income feature can help families make sure they are getting the correct amount of AdvCTC this year. This is half of the total 2021 credit amount, which has been spread over six months of distributions.

The payments are $300 a month for each child younger than age 6 and $250 monthly for youths ages 6 to 17. The total payments from July through December come to $1,800 for the youngest age group and $1,500 for older children.

Small changes in income generally will not impact the AdvCTC payment amounts. But in some instances, a big income swing can either raise or lower a family's monthly payment.

The IRS will adjust the payment amount to reflect income revisions and ensure people receive their total advance payment, either $1,800 or $1,500, for the year.

And while those dollar amounts are nice bumps to family budgets, this weekend's By the Numbers figure is the Nov. 1 debut date of the income adjustment feature on the Child Tax Credit online portal.

Using the portal to report income changes: Only families who are already eligible for and receiving AdvCTC payments based on their 2020 tax return can use the IRS portal to update their income.

The IRS also points out that someone who filed a joint return for 2020 can only update their income if they plan to file a joint return for 2021 with the same spouse.

Married couples also should note that if one spouse makes the income update, it will apply to both spouses and could impact each spouse's future monthly advance payments of the Child Tax Credit.

After an income update is completed, the update portal will acknowledge a change was made but will not display the change.

Earnings update to get more credit now: Numbers, as the ol' blog's weekly feature highlights, are key to taxes. And since it is an income tax, those amounts are especially noteworthy.

They take on even more importance in connection with the enhanced Child Tax Credit.

In some cases, families who are currently receiving monthly payments that are below the maximum may qualify to have their payments increased. This could happen if, for example, they experienced job loss during 2021, or for some other reason are receiving substantially less income this year.

If the reduction in income is large enough, reporting that change now may increase the amount of their advance CTC payments for the rest of this year. This means that your monthly amount will be adjusted per the changes to ensure they receive half of their total expected credit — the previously mentions $1,800 or $1,500 depending on their children's ages — before the end of 2021.

Earnings update to avoid paying back excess credit: If you're on the other end of the earnings scale, you also should alert the IRS using the online CTC portal.

Yes, that will mean for families whose income rose substantially in 2021 that their AdvCTC amounts could be reduced. This is especially true for families currently receiving the maximum monthly payment, but who expect to qualify for less than the full credit when they file their 2021 federal income tax return.

When they do file their taxes next year and run the numbers, they likely won't get any additional Child Tax Credit amount and could even discover they must repay some or all of the amounts they got this year.

Rather than hassle with that and have to come up with the repayment cash, adjust your earnings info at the IRS portal so that you're getting the correct AdvCTC amount now.

Note the phase downs and outs: The American Rescue Plan Act that became law in March increased the Child Tax Credit for 2021. This tax year, instead of $2,000 per child, it is $3,600 per qualifying child age 5 or younger. It's $3,000 for children ages 6 to 17.

However, the Child Tax Credit begins to be reduced to $2,000 per child if your modified adjusted gross income in 2021 exceeds:

$75,000 if you are a single filer or are married and filing a separate return,

$112,500 if filing as head of household; or

$150,000 if married and filing a joint return or if filing as a qualifying widow or widower.

There's also a second income-based phaseout. The credit could be reduced to less than $2,000 per child if your adjusted gross income in 2021 exceeds $200,000 if you are a single or head of household taxpayer or $400,000 if married and filing a joint return.

Sign up if you haven't yet: Finally, the IRS urges any qualifying families who aren't getting the AdvCTC to use the online portal to sign up for the payments.

This is especially important if you haven't filed a tax return recently because you didn't make enough money to be legally required to send in a Form 1040.

The IRS has a variety of online tools at its special Advance Child Tax Credit 2021 web page. There you can determine if you're eligible for the advance payments. If so, you can file a simplified tax return online to get them now.

You also might find these items of interest:

Some Advance Child Tax Credit payments might have to be repaid 

6 Advance Child Tax Credit questions still being asked … and the answers!

Nov. 1: Deadline for some MI, MS taxpayers and to opt out of early Child Tax Credit payments

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Online tax scammers keep the scares coming year-round

Shutterstock

There's one terrifying ghoul who hangs around long after Halloween. In fact, he and his ilk have been busy all year.

It's the tax scammer.

The Federal Trade Commission (FTC) just this week warned that scammers are sending yet another phony Internal Revenue Service email about COVID-19 relief payments.

"There's a fake IRS email that keeps popping into people's inboxes. It says that you can get a third Economic Impact Payment (EIP) if you click a link that lets you 'access the form for your additional information' and 'get help' with the application," says Cristina Miranda of the FTC's Division of Consumer and Business Education.

"But the link is a trick," writes Miranda in her FTC blog post. "If you click it, a scammer might steal your money and your personal information to commit identity theft. It's yet another version of the classic government impersonator scam."

Year-round scams: The FTC warning comes as October, which also is the annual National Cyber Security Awareness month, winds down.

As the internet has become a fixture in our personal and business lives, it's also made sensitive data more accessible.

Most of us willingly divulge our private data to multiple e-commerce stores, banking websites, personal email accounts, and myriad other digital locations. That's all accessible to anyone with the right access.

Criminals know that, too. They target these sites that collect consumer data. When they're successful, the breaches put all of us at risk.

Scammers go further. They concoct schemes to get us to hand over our data so the crooks can use it to steal our money, including tax and other government payments, and our identities.

Don't make it easy for the identity thieves. The FTC and IRS offer the following cybersecurity tips that should be followed not just this month, but all 12.

Uncle Sam doesn't email us: The federal government will never call, text, email, or contact you on social media saying you owe money. Neither will they contact you offering to help you get a larger refund or other government payment.

If you get a message with a link from someone claiming to be from the IRS or another government agency, don't click on it. It's a scam. Fake links will take you to bogus websites or email addresses. Often, simply clicking open an electronic door for malware.

If you think you owe money or are still awaiting a refund, contact the IRS directly to resolve the issue. Refund status can be found at Where's My Refund? The IRS has a special web page about EIP payments.

Ignore phone calls and messages, too: Some scammers are old-fashioned. They like to call their potential victims.

If you get a call from someone claiming to be from a government agency and asking for personal or financial information, or for payments of purported overdue tax bills, hang up. Then, as with email and text questions, contact the IRS.

If the caller leaves a message, don't respond. And, again, contact the IRS if you think do have a tax issue that needs attention.

A clear tip-off that the call is fake is when the caller asks (or demands) payment by cash, gift cards, wire transfers, or cryptocurrency.

Don't let generosity snare you: Another popular scam category is where crooks try to take advantage of people's goodwill. As noted in my earlier post, the many recent natural disasters and the coronavirus pandemic have led to more charitable tax donation deduction ploys.

Scams requesting donations for disaster relief efforts are especially common on the phone. Always check out a charity before you donate. And never feel pressured to give immediately. Reputable nonprofits are willing to wait for you to do your donation due diligence.

Report scam attempts: If a government impersonator or any other type of con artist contacts you, let the real feds know.

These reports do make a difference. Reports help Uncle Sam's law enforcement officers investigate, bring law criminal and civil cases, and alert others about what frauds to be on the lookout for so they can protect themselves, their friends, and family.

You can go to the FTC's site ReportFraud.ftc.gov to file a report.

The IRS has a variety of scam reporting options on its Tax Scams - How to Report Them page. It covers the steps to take if you encounter email phishing scams, abusive tax scheme promotions, and suspected tax fraud.

Also check out the FTC's OnGuard Online page for more security tips. The IRS has similar info in its publications Security Awareness for Taxpayers and Identity Theft Information for Taxpayers.

The main thing to remember is that scammers' use internet access as their masks, on Halloween and the other 364 days of the year. But if you're careful, they won't be able to spook or spoof you or steal your money or ID.

You also might find these items of interest:

Don't fall for scary tax scams on Friday the 13th or any day

Fake tax promises, other phony ploys are part of the 2021 IRS Dirty Dozen

COVID pandemic provides new paths for con artists to steal tax (and other) money, identities

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Nov. 1: Deadline for some MI, MS taxpayers and to opt out of early Child Tax Credit payments

No, you're not time traveling. Tax Day is coming up quickly — like Monday, Nov. 1, quick — for some taxpayers. 

Halloween is almost here, but some folks need to take a break from their spooky costume and party plans and double check their tax situations.

Monday, Nov. 1, is a tax deadline they can't afford to miss.

Opting out of early Child Tax Credit payments: Most families who've received the Advance Child Tax Credit (AdvCTC) payments are thrilled.

It's meant a much-needed $300 per child for kiddos younger than 6 or $250 per child for youngsters ages 6 to 17 since July, when the Internal Revenue Service started delivering them.

But the IRS is using prior tax data to determine who gets the credits early. And some folks have discovered they shouldn't be on the AdvCTC distribution list.

By getting the cash now, they likely will have to pay it back when they file their tax returns next year. The reasons why that might happen are discussed in my post Some Advance Child Tax Credit payments might have to be repaid.

If that's your tax situation, you need to stop the payments before the payback bill gets any bigger. The opt out option is done electronically via the IRS Child Tax Credit Update Portal.

As noted, Nov. 1 is the deadline to do that. But there's also a time deadline. You must make the online change by 11:59 p.m. Eastern Time, so adjust for your time zone if you live elsewhere.

I recommend, though, not waiting until that very last minute. If your clock is off or your computer burps or the IRS has connection issues or your internet provider goes down, then you're stuck getting an incorrect AdvCTC for another month.

Major disaster filing delays: Certain taxpayers in Michigan and Mississippi also need to note Nov. 1. It's their new tax deadline for many tasks.

They go the new and later due date because they endured major disasters earlier this year.

For Michigan residents, it's those who endured severe storms, flooding, and tornadoes back in late June. Most Mississippi filers got the upcoming new November due date because they were hit by remnants of Hurricane Ida.

A quick caveat for Mississippi residents in 19 counties. These areas recently were deemed eligible by the Federal Emergency Management Agency (FEMA) for additional disaster relief. The IRS then pushed these Magnolia State taxpayers' deadline to Jan. 3, 2022.

You can find more about the further extension of the original Nov. 1 extended tax deadline in my post titled Jan. 3, 2022, is new tax deadline for folks in 19 Mississippi counties hit by Ida.

Mississippians, however, still must meet the rapidly approaching tax deadline. As do those in parts of Michigan who dealt with an outraged Mother Nature. And, of course, all y'all who don't want to get AdvCTC payments for the last two months of the year.

So put your spooktacular Oct. 31 plans on hold for a bit and take care of the necessary tasks that must be met by Monday, Nov. 1.

If you miss the deadline, it could cost you. Plus, dealing with the IRS is much, much scarier than Halloween.

You also might find these items of interest:

Considerations in making a major disaster tax claim

6 Advance Child Tax Credit questions still being asked … and the answers!

IRS and other government resources can help you deal with a natural disaster

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How Financial Statement Fraud is Done

Financial statement fraud happens is one of the most costly types of fraud. It is a significant problem because people inside and outside the company rely on the information provided in the financial statements. They assess the financial results and make predictions and decisions about the future of the company based on those results.

Upper management or company owners are the ones who are usually responsible for financial statement fraud. Executives are entrusted with entire companies. They have access to nearly all data and employees, and they can exploit this access to commit and conceal fraud.

The power the executive has by virtue of her or his position in the company is closely linked with the high cost of financial statement fraud. Power and access within a company make it possible for larger frauds to be committed and covered up.

One of the most innocent-sounding terms used to describe financial statement fraud is “earnings management.” Such a phrase minimizes the seriousness of the crime. “Management” almost makes it sound like something good! But earnings management isn’t a noble effort. It is, in fact, financial statement fraud. The degree and seriousness can vary, but it is fraud nonetheless. It is the purposeful manipulation of account balances in order to make the financial statements conform to some predetermined template.

Especially with public companies, there are expectations related to the financial results, and executives may alter numbers to conform. Earnings management (financial statement fraud) means that management played games with the numbers, shifting revenue or expenses from one period to the next, or inflating assets or underreporting liabilities.

In addition to the opportunity to manipulate revenue, expenses, assets and liabilities, there are other forms of financial statement fraud that are gaining in popularity. Schemes include the misuse of reserves, often referred to as using reserves as “cookie jars” to shift income and expenses between periods depending upon the company’s “need” for the financial statements to fall within certain parameters.

The misapplication of accounting rules is another opportunity for financial statement manipulation. Executives may deliberately incorrectly apply accounting rules in a way that enhances the company’s financial results.

One of the simplest ways to manipulate financial statements is through the omission of information. There are rules regarding explanations and disclosures that must accompany financial statements. Without that additional information, the financial statements themselves might easily be misinterpreted. Deliberately omitting necessary information from the notes to the financial statements is a simple, but effective, way to tender misleading financials.

Financial statement fraud is difficult to detect. A tip from an employee about the manipulation of accounting records is the primary way that financial statement fraud is detected. It can also be discovered through an intense analysis of the company’s financial statements over time. There are telltale signs in the financial ratios, which tend to move in strange ways when the numbers are being manipulated.

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Jan. 3, 2022, is new tax deadline for folks in 19 Mississippi counties hit by Ida

Hurricane Ida just won't let go.

The major storm made landfall on Aug. 29 near Port Fourchon, Louisiana. But the havoc wreaked by the category 4 hurricane extended well beyond that Gulf Coast town.

The Federal Emergency Management Agency (FEMA) declared a swath of counties slammed by Ida in Louisiana, Mississippi, New Jersey, New York, and Pennsylvania as major disaster areas. The Internal Revenue Service followed up by offering tax relief to individuals and businesses in those designated areas.

Now, almost two months after the hurricane hit, both agencies are still in the Ida relief business.

Expanded disaster, and tax, relief: FEMA last week announced expanded relief to 19 Mississippi counties affected by Ida. Today, the IRS said that residents in those locales who were facing Nov. 1 tax deadlines now have until Jan. 3, 2022, to complete their tax tasks.

In case you're reading this on a phone or other small device, the two extra months of tax time apply to individual and business taxpayers in the following, listed alphabetically, Magnolia State counties:

Amite

Hancock

Pearl River

Claiborne

Harrison

Pike

Copiah

Jackson

Simpson

Covington

Jefferson

Walthall

Franklin

Jefferson Davis

Wayne

George

Lawrence

Wilkinson

  Lincoln

  The IRS says that if FEMA adds any more Mississippi counties, they also will get the January deadline.

As for residents in the rest of Mississippi, they still must meet the originally extended Nov. 1 due date — that's Monday! — for various tax deadlines.

Extended filing further extended: The major deadline is one that just passed for millions of other filers who were spared a major disaster, the Oct. 15 extended filing deadline.

Any taxpayers in the 19 Mississippi counties now eligible for added disaster relief who got extensions to file their 2020 returns now have until Jan. 3, 2022, to get those 1040 forms to the IRS.

They also need to decide if they want to claim any qualifying Hurricane Ida losses on that prior year return when they file it by Jan. 22, 2022.

Some taxpayers could find it more tax worthwhile to count their uninsured losses against their 2020 taxes. That could get them a larger refund sooner, which they could use toward repairs now.

Others, however, might discover they'll do better tax-wise by waiting to claim the Ida losses on their 2021 tax returns when they file them next year.

Check out my earlier post for more on what to consider when making a major disaster tax claim.

If you're not a Mississippi resident, but sustained major storm damages, you can check my disaster tax-related posts about your revised tax deadlines. There's a small sampling of such links at the end of this post.

You also can go straight to the source. The IRS' collection of national tax news has a section with state links for more on disaster relief or tax provisions affecting those jurisdictions.

You also might find these items of interest:

Tracking down tax records to file a disaster claim

IRS and other government resources can help you deal with a natural disaster

Storm Warnings: Preparing for, recovering from & helping those affected by natural disasters

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Bill to save Social Security would increase payroll tax wage base, change annual COLA calculation

Rep. John Larson speaking at a press conference announcing his latest Social Security bill. Joining Larson were his Democratic colleagues (in masks behind him left to right) Reps. Terri Sewell of Alabama, Steven Horsford of Nevada, and Alexandria Ocasio-Cortez of New York. (Photo courtesy Office of Rep. John Larson)

If you're like me, closer to your retirement date than when you started your first full-time job, you keep a close eye on Social Security. For, well, it seems like forever, we've been hearing that Social Security is going broke.

The federal retirement benefits doomsday date is a bit like those other end-of-whatever predictions. It hasn't happened yet and it moves around.

But the constant dire warnings make us a little — OK, a lot — uncomfortable. Some members of Congress are among the worried, including Rep. John B. Larson, chairman of the House Ways and Means Social Security Subcommittee Chairman.

The Connecticut Democrat for years has introduced legislation to strengthen Social Security and the companion medical portion Medicare. He's did so again today, Tuesday, Oct. 26.

Larson's bill, entitled Social Security 2100: A Sacred Trust, makes two key changes to the benefit. It would:

adopt the Consumer Price Index for the Elderly as the basis of the annual cost-of-living adjustment (COLA), and

combine the Old-Age and Survivors and Disability Insurance trust funds.

COLA change: Older Americans anxiously await the Social Security Administration (SSA) fall announced of annual cost-of-living adjustments (COLAs). They got good news on Oct. 13, when the SSA said the benefits would go up 5.9 percent effective Jan. 1, 2022. It's the largest hike in almost 40 years.

Uncle Sam uses a few different COLAs. Most are calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W. This calculation usually means at least a little bump, but sometimes it determines that inflation essentially is nonexistent, meaning no Social Security increase. That happened in 2010, 2011, and 2016.

Not only did that upset Social Security beneficiaries, they and some economists say the CPI-W doesn't accurately reflect the costs that seniors face because they aren't working. For example, they don't care that fuel costs are flat. They aren't commuting to work.

CPI for an older demographic: Supporters of the proposed Consumer Price Index for the Elderly, or CPI-E, say it would better reflect the costs seniors face. This change was advocated by President Joe Biden during his campaign.

The CPI-E calculation uses households whose reference person or spouse is age 62 or older. The U.S. Bureau of Labor Statistics (BLS) says that in 2009–2010, approximately 24 percent of all consumer units — you and I tend to call them families — met the CPI-E's classification of the main person or spouse being that age or older.

And, as the BLS graph below shows, expenditures in the CPI-E tend to produce slightly larger COLAs than do the CPI-W or the other main cost calculation, the Consumer Price Index for All Urban Consumers, or CPI-U.

  The areas of notable CPI increases for older individuals are housing and medical care. Recreation and apparel are less, although that definitely didn't apply to my well-dressed mom who went to weekly senior center dances well into her 80s!

The CPI-E is projected, on average, to be higher than the CPI-W by 0.2 percentage points per year, according to the summary of Larson's bill. This inflation measurement change, the congressman says, "will especially help older retirees and widows who are more likely to rely on Social Security benefits as they age."

The CPI-E under Larson's bill would apply to COLAs calculated from 2022 through 2026.

More payroll would be taxed: Larson's bill also would mean more workers would pay more into Social Security.

Currently, payroll taxes for the retirement benefit not collected on wages that are greater than $142,800. This Social Security wage base will go up to $147,000 in 2022.

Larson's proposal would make wages up to $400,000 subject to the Social Security portion of Federal Insurance Contributions Act payroll taxes. That means both the workers earning that amount and their employers would pay 6.2 percent of the wage amount toward Social Security.

The remaining payroll tax, 1.45 percent for Medicare that also is paid by both employees and employers, already is collected on all wages, regardless of amount.

The wage base provision would only affect the top 0.4 percent of wage earners, according to a Social Security 2100 fact sheet released by Larson.

More time for more changes: In addition to the Social Security changes that would affect older Americans, Larson's bill makes changes to the program's benefits that go to others, such as survivors and those with disabilities.

"The [COVID-19] pandemic has only underscored what we already knew and has exacerbated systemic inequities — current benefits are not enough," said Larson at a press conference announcing his bill. "With 10,000 Baby Boomers a day becoming eligible, and with Millennials needing Social Security more than any generation, the time for Congress to act is now."

Larson also noted that his bill will deal with that Social Security doomsday date that I mentioned at the start of this post.

He says the bill will extend the depletion date — that's when a 20 percent cut to benefits would occur — to 2038. That gives Congress more time to ensure long term solvency of the Social Security and Medicare Trust Funds.

Will Congress get that time? Larson has introduced similar versions of Social Security 2100 in previous congressional sessions and they stalled.

But with, as Larson noted, the U.S. population quickly aging, there seems to more urgency. The press statement about the bill says it already has nearly 200 cosponsors and has been endorsed by more than 100 advocacy groups (37 are listed here).

So 2021 just might be the year that Social Security 2100 passes and program recipients and those of us nearing benefits eligibility can quit worrying so much.

You also might find these items of interest:

7 tax breaks for older taxpayers

More retirement, and tax, changes ahead under W&M approved SECURE Act 2.0

Retirement threats: Older Americans' growing debt, taxes on Social Security benefits

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[elizabethcariasa]

Capital gains taxes: Proposed increase for the ultra-wealthy, an overview for the rest of us investors

As the battle over how to pay for the Biden Administration budget continues on Capitol Hill, much of the focus has been on the wealthy. A new annual tax on billionaires' unrealized capital gains is the latest suggestion to help pay for the nearly $2 trillion bill.

Under current law, every property owner, regardless of income, pays tax on assets when they realize a gain from them, usually by selling them. 

This so-called wealth tax, however, would force the ultra-wealthy to pay tax on the value or their holdings, stocks as well as real estate, before realizing the gains.

It would apply to around 700 of the richest people in the United States, specifically those with $1 billion in assets or those who have reported at least $100 million in income for three consecutive years. Projections put the revenue potential at around $200 billion in revenue over a decade.

While you and I don't have to worry about facing this wealth tax, if we have assets, it's a good idea to know how we regular Jane and Jim Taxpayers are taxed on our holdings. Here's a quick refresher.

Lower capital gains tax rates: Under current federal law, the tax rate on capital gains — the money made (gains) from selling investment assets (capital) — typically are lower than the ordinary tax rates (the seven rates that range from 10 percent to 37 percent) applied to earned income, or money made from working.

The three long-term capital gains tax rates of 0 percent, 15 percent and 20 percent. They also apply, since another Bush tax cut change in 2003, to qualified dividends.

And, yes, that 0 percent level is not a typo. For taxpayers who don't make a lot of money but have invested some of what they have, Uncle Sam gives them this special no-tax break.

Which long-term rate you pay on your capital assets' sales profits depends on your income. Those thresholds are adjusted annually for inflation. The Internal Revenue Service should announce changes for the 2022 tax year soon, like possibly this week or early November.

Until then, and for tax year 2021 planning and filing purposes, the table below shows the three capital gains tax rates and the current income brackets to which they apply.

Tax Year 2021

Capital Gains Taxable Income Brackets by Filing Status

Long-Term Capital Gains Tax Rate

Single

Head of Household

Married Filing Jointly or Surviving Spouse

Married Filing Separately

0%

$0 to $40,400

$0 to $54,100

$0 to $80,800

$0 to $40,400

15%

$40,401 to $445,850

$54,101 to $473,750

$80,801 to $501,600

$40,401 to $250,800

20%

$445,851 and more

$473,751 and more

$501,601 and more

$250,801 and more

  Homes and special capital gains tax situations: While most of us tend to think of stocks and other financial instruments when it comes to capital gains, the tax applies to other assets.

Notably, the sale of real property can produce capital gains taxes. This usually happens when the real estate is held for money making purposes. For those of us, though, our foray into the real estate world is limited to buying our homes.

When we sell our primary residences, the tax code says we don't have to pay tax on all of our profit. Specifically, single home owners can exclude personal home sale profit up to $250,000. The tax-free profit is twice that for married jointly filing home sellers.

You can read more about tax-free home sale profit in my post on 6 popular homeowner tax breaks.

There also are a couple of other special federal capital gains tax rates. A 25 percent capital gains tax applies in cases of unrecaptured section 1250 gain from selling specified real property. The 28 percent rate is for profits from the sale of collectibles and some qualified small business stock.

My post on unique baseball cards and other collectibles has more on these special capital gains tax rates.

Time commitment is key: Finally, note that the lower capital gains tax rates go out the window if you don't hold onto your investments for a long enough time.

You probably noticed earlier in this post the repeated reference to long-term capital gains. This is the designation for assets that you own for more than a year before selling. In these cases — and I emphasize more than a year, not just a year, of ownership — your gains are taxed at the capital gains rates.

But if you sell after owning an asset for 365 days or less, then you'll pay for your short-term gain at your probably higher ordinary tax rate.

So in addition to keeping an eye on how the markets are doing, also pay attention to the calendar.

You also might find these items of interest:

Bernie Madoff's tax legacy: Ponzi scheme loss deduction

Investment & capital gains tax lessons courtesy GameStop

What cryptocurrency's booming values mean to owners' taxes

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[elizabethcariasa]

Calculating Spousal Support in Divorce Cases

Each state has its own guidelines for calculating spousal support. Generally, factors which may be considered in determining alimony include:.

The length of the marriage

The needs of the recipient

The relative earnings of each party

Career sacrifices made to benefit the family (i.e. one parent gave up a career to raise children or one spouse worked so the other could complete a college degree)

The earning capacity of each party

The ability to pay spousal support

The lifestyle of the spouses during the marriage

The age of the parties

The property divided by the spouses

The ability of the recipient to earn income in the future

Completing an analysis of the expected post-divorce cash flow can help sort out these issues. In such an analysis, the expert may include the wages each party will earn, the investment income each may receive, assets available for investment, taxes required to be paid by each, and projected short-term and long-term expenses of each spouse.

Calculating income for spousal support can be fairly straightforward if the spouses only have W-2 earnings from jobs with companies unrelated to them. The calculations are more complex when one or both spouses has self-employment income, works in a job with non-traditional compensation, owns multiple business, owns multiple pieces of income-producing real estate, or has income from trusts.

Documents that are needed to analyze these income issues include:

Income tax returns, both business and personal

Financial statements

Bank, credit card, and investment account statements

Many other documents may be needed to do a complete financial analysis, and a lengthy list of possible documents is found here.

Items that should be included in calculating income will vary by state, but the following items are usually considered:

Wages

Investment income

Business income

Rental income

Royalties

Other sources of income (varies by jurisdiction)

More information on calculating income for purposes of divorce actions can be found in my book Lifestyle Analysis in Divorce.

[elizabethcariasa]

Wireless phone taxes continue to climb

Photo by SHVETS production from Pexels

A cell phone provider's television ad that's on heavy rotation here in the Austin area touts that it has no added fees or taxes.

What it really means is that those charges, aside from sales tax, are included in the price of whatever company plan you choose, rather than listed as separate line items in your monthly bills.

So, despite that Mad Men -style ad sleight of hand, you're going to pay taxes, fees, and state and local government surcharges for your mobile phone services.

And you're paying more than ever toward these amounts.

Taxes and fees keep climbing: A recent Tax Foundation analysis found that those taxes and fees on the typical American wireless consumer increased in 2021 to a record 24.96 percent.

This is the fourth consecutive year that the assorted charges have increased, notes the Washington, D.C. nonprofit tax policy group.

In dollars, that means a typical American household with four cell phones on a family share plan costing $100 per month would pay nearly $300 per year in taxes, fees, and government surcharges in 2021, write Scott Mackey, managing partner with Leonine Public Affairs LLP, and Ulrik Boesen, Senior Policy Analyst, Excise Taxes, for the Tax Foundation.

That's up from the $270 in such charges last year.

Overall, say the pair, wireless subscribers will pay approximately $11.3 billion in taxes, fees, and surcharges. Nationally, these amounts account for the previously mentioned record 24.96 percent combined levy on taxable voice services.

All those percentages and dollar amounts rival most wireless companies' convoluted bills. But for this weekend's By the Numbers [dis]honor, I'm going with the almost 25 percent annual increase in cell phone service taxes.

National wireless taxes overview: The study found that Illinois has the highest wireless taxes in the country, at 34.56 percent.

The other top five in the cell telephone tax area are Arkansas at 32.04 percent; Washington at 31.81 percent; Nebraska at 31.36 percent; and New York at 30.73 percent.

The Tax Foundation map below shows how each state stacks up when it comes to cell phone taxes.

Taxable telephone services are cheaper: The one bit of good news is that the taxable telephone services themselves have become more affordable, relatively speaking, of course.

The per-line price for wireless service continues to fall, according to Mackey and Boesen. Over the last five years, the average monthly revenue per wireless line has gone from $41.50 per month in 2017 to $35.31 in 2021.

For most of us that means our higher cell phone taxes are offset by the services' lower prices.

Personally, I haven't seen this price drop from my cell service. So as soon as I post this, I'm starting my search for a potentially cheaper wireless provider.

You also might find these items of interest:

Deducting your cell phone as a business expense

Tax law changes in 13 states took effect on July 1

Where your state ranks when it comes to property taxes

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[elizabethcariasa]

A Child Tax Credit work requirement likely wouldn't work as proponents predict

The Child Tax Credit (CTC) was expanded as part of the COVID-19 relief bill signed into law by President Joe Biden. Instead of $2,000 per child, the CTC in for the 2021 tax year is $3,600 per child age 5 or younger. It's $3,000 for children ages 6 to 17.

Part of the 2021 credit money is going out through the end of the year as advance payments. The October payments went out last Friday. Two more rounds, on the 15th of November and December, will be issued.

Few of us will turn down money, so the credit increase and monthly payments have been popular pieces of tax policy. The Biden Administration and Democratic leaders on Capitol Hill want to make the increased CTC amounts, which are just for this year, permanent.

That's not the legislative slam dunk some pundits had predicted.

All Republicans in the House and Senate are citing the cost of continuing the larger CTC amounts, even for a shorter term.

And one of the 50 Democrats in the evenly divided Senate has other issues with the family tax break. Sen. Joe Manchin of West Virginia is demanding that the CTC include a "firm work requirement," as well as a "family income cap in the $60,000 range."

Would such a work requirement for the Child Tax Credit be effective? Probably not, say some who've studied similar conditions set on other government benefits.

Their analyses are discussed in Janet Nguyen's article for Marketplace, "Joe Manchin is calling for a work requirement for the child tax credit. Would that be effective?"

Doesn't do what advocates want: Elena Prager, an associate professor of strategy at Northwestern University's Kellogg School of Management, looked at work requirements for Supplemental Nutrition Assistance Program, the assistance formerly known as food stamps and now usually referred to by its acronym SNAP.

"In my work on work requirements in SNAP, it doesn't seem to be the case that getting rid of work requirements makes people any less likely to work and to maintain paid employment,” Prager told Nguyen.

Prager's study found that work rules for government assistance didn't boost employment. In fact, she found they tended to cause a substantial number of recipients, typically the neediest, to leave the program.

Nguyen's article with Prager's and others' analyses on benefits' work requirements earns this weekend's Saturday Shout Out.

You also might find these items of interest:

6 Advance Child Tax Credit questions still being asked … and the answers!    

Where in the U.S. families are likely missing out on advance child tax credit checks  

The child care tax credit is a good claim on 2020 taxes, even better for 2021 returns 

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[elizabethcariasa]

Dallas man already jailed for tax fraud, pleads guilty to new PPP criminal charges

One of my favorite Lyle Lovett songs is "What Do You Do/The Glory of Love," where the Houston singer-songwriter shares the vocal spotlight with the incomparable Francine Reed.

The lyric that initially caught my ear and makes me chuckle every time I hear it goes, "If you make all that money man, make damn sure it shows."

That's a great exchange in a duet, but such showiness raised suspicions about a Dallas-area accountant accused of defrauding the COVID-19 Paycheck Protection Program (PPP).

PPP fraud guilty plea: Steven Jalloul was indicted in September 2020 on charges he orchestrated a fraudulent scheme to secure more than $23 million in forgivable PPP loans.

The 43-year-old pleaded guilty on Oct. 19 to "a superseding information charging him with one count of engaging in monetary transactions using property derived from unlawful activity."

That's a lot of legalese from Chad E. Meacham, acting U.S. Attorney for the Northern District of Texas. The bottom line, though, is that Jalloul admitted in court this week that he submitted roughly 170 falsified PPP loan applications to lenders, some through a fintech company, seeking more than $23 million on behalf of more than 160 clients of his Dallas tax preparation business.

Already in jail for another tax crime: A sentencing date for the PPP fraud plea has not been set, but when that happens, Jalloul could face up to 10 years in prison.

And law enforcement officials won't have any trouble getting him back to court to face his coronavirus crime fate. Jalloul already is behind bars at the Federal Correctional Institution in Seagoville, Texas.

He was sent to that federal lockup southeast of Dallas after pleading guilty in January 2020 to a separate tax fraud case. That crime got him six years of time.

Flashy clothes + cars = suspect: As for the PPP charges, investigators aren't saying how they were tipped off to Jalloul's scheme. However, some of his neighbors suspected he was up to something.

Residents at the Garland, Texas, apartment complex listed as Jalloul's address told local news crews that the high-end clothing he wore and the expensive cars he drove didn't seem to fit.

The median household income in the suburb northeast of the Dallas-Fort Worth metroplex was, per 2019 data, just more than $61,000. Court documents show that Jalloul's false PPP loan scheme netted him at least $972,114 in client fees.

As Lyle and Francine note in their duet, when it comes to such impressive amounts of money, some folks just got to flaunt it.

You also might find these items of interest:

Almost 20% of California restaurants used zappers to evade taxes

IRS' law enforcement unit successes: COVID crimes, traditional tax investigations

[Another] Texas man pleads guilty to $24.8 million PPP fraud; IRS touts more success in COVID-19 investigations

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[elizabethcariasa]

Strategies to Reduce Employee Theft

It might be hard to believe, but each and every day companies are losing money because they not only give employees opportunities to steal, they encourage it.

How? By not providing adequate oversight. A clerk, for example, sees that an error in an account wasn’t caught by anyone. A purchasing manager notices that no one is watching over his vendor relationships, and won’t know it if he establishes a fake account. Employees are not stupid. They know when they are being monitored and when their work is being checked. They know when they are working in an environment ripe for fraud.

But you have honest employees, you say? You’re probably right. If we thought job applicants were criminals, we wouldn’t hire them. But situations occur where the temptation to steal simply becomes too much. Imagine owing money to a hospital or having an expensive (and necessary) car repair that you can’t afford. What if your child needs clothing or food? There may come a day in your life when your morals are challenged because you have a financial need and an opportunity at the workplace that seems too good to pass up.

Management can discourage employee theft and reduce its risk of fraud by taking some basic steps. The key to all of these strategies is creating a work environment where employees know that honesty is monitored and theft will be discovered.

Physical Security: The first step involves examining a company’s physical security and control over assets. Consider a company in which doors are regularly left unlocked or sensitive financial information is not secured. Employees see these lapses in security and may take advantage of them. Make sure all entrances and sensitive doorways are locked and monitored. A key card system is even better than just locking doors, since employees understand that management knows who’s accessing what areas.

Make sure that sensitive information, both on paper and in the computer system, is properly secured. What starts out as a nosey employee could easily turn into fraud because confidential information is readily available. Monitor who is accessing data and when they’re doing it, and make sure employees know that there is a paper trail for their activities within the company. Audits and Reconciliations: The next important step in reducing fraud is the implementation of surprise audits and regular reconciliations. Employees should be aware that management is checking their work. Consider having internal audit staff or managers make routine audits of departments. These might include surprise cash counts, verification of authorization for transaction, reconciliation of detailed records account balances, and spot checking of documentation. The procedures don’t have to be elaborate. If employees know their work could be checked at any time will be more likely to be honest and accurate. Discipline: Dealing swiftly with fraud and abuse communicates to employees that management takes this issue seriously. Discipline is key, even in instances where a minor fraud is discovered. An internal discipline policy should be developed and communicated to employees. Make them aware of the range of disciplinary options, which might range from a verbal warning to a written warning to a suspension or dismissal.

When a fraud occurs, tell employees what happened and what punishment was received (keeping in mind that certain laws might prohibit employers from revealing identities). This will also demonstrate that management takes seriously its own directives and follows through with fair and appropriate punishment.

Consistency: The final basic step is treating employees consistently and fairly. Make sure that your punishment is in line with what is outlined in your employee code of ethics, and that you are in fact enforcing those rules. Whether an employee is working on the front line or in the executive offices, they deserve to have a punishment that fits the crime. It wouldn’t be fair to fire a front-line employee for a small inventory theft, while keeping on an executive who has manipulated financial statements to significantly increase his annual bonus. Employees understand fairness, so it’s important for management to strive to be swift but fair with any employee caught engaging in fraud.

Remember, corporate fraud prevention is not necessarily about creating a gigantic rule book. It’s more about setting the right tone and the right example for employees, showing through action (rather than words) that the company values its assets, is willing to monitor them, and will take action against employees who steal.

[elizabethcariasa]

Business closure tax tasks

Photo by ivan sellar from Pexels

You're finally ready to give up being the boss. Or maybe you got a great offer for your business. Or maybe the COVID-19 pandemic did a number on you and your company.

Whatever your reason, you've decided it's time to close your company's doors.

Make sure that during that process, you take taxes into account.

The Internal Revenue Service offers these tips to business owners who've decided to call it quits.

File the appropriate final return: This filing is for the year you close your business.

The type of return you file, and the related forms you need, depends on the type of business you have. These include —

Sole proprietorship, which is when a person owns an unincorporated business alone. The key form here is Schedule C (Form 1040 or Form 1040-SR), Profit or Loss From Business, that's filed with your individual tax return for the year you close your business.

Partnership, where two or more individuals participate in the trade or business. Here Form 1065, U.S. Return of Partnership Income, for the year you close your business.

Corporation, which is a separate taxpaying entity with at least one shareholder. This includes S corporations. The primary final filing here is Form 1120, U.S. Corporate Income Tax Return, for the year you close the business.

Not so bad, you say? Sorry, there also are potentially many other final forms that must be sent to the IRS when any of the about entities close. You can find details in the filing section of the IRS' special web page on closing a business.

There also are special tax consideration when a married couple is in business together, as well as when your business is a limited liability company (LLC).

An LLC is not a tax entity. It is a business designation under state law. An LLC may be classified for federal income tax purposes as a partnership, a corporation or an entity disregarded as separate from its owner.

Take care of employees and contractors: If you run anything other than a sole proprietorship, you'll need to take care of your staff.

This entails paying any final wages and compensation owed. You must also make final federal tax deposits and report employment taxes.

In cases where you use contractors, where you've paid those folks at least $600 during the calendar year in which you close your business, you must report those payments. That information goes to the contractors via Form 1099-NEC, and is copied to the IRS.

Some filers must file 1099 forms electronically. Where paper forms are issues, send those copies to the IRS by using Form 1096, Annual Summary and Transmittal of U.S. Information Returns.

Cancel your tax identity number and close your IRS account: The employer identification number, or EIN, that your business was assigned when you started it is the permanent federal ID for your closing company. Your IRS business account is keyed to this identifier.

To cancel your EIN and close your IRS business account, you must send the agency a letter that includes the —

Complete legal name of the business,

Business EIN,

Business address, and

Reason you wish to close the account.

If you kept the notice you received from the IRS when you got your EIN, send a copy of it with your EIN cancellation letter.

The material should be sent to Internal Revenue Service at Cincinnati, Ohio 45999.

But wait, there's more: You can find other key business closure tax matters to take care of — and details on those listed above — at the IRS' special closing a business web page.

As you can see, there's almost as much to take care of tax-wise when ending your entrepreneurial effort as there was when you started. That's why it's also a good idea to talk with your tax professional, or hire one, when you start thinking about closing your business.

A tax pro who specializes in business filings can help ensure that your final business interactions with the IRS are indeed the last time you have to deal with the agency.

You also might find these items of interest:

Tax implications of business entity choices

Employee or contractor classifications and other employment tax tips for businesses

Work Opportunity Tax Credit can help businesses meet staffing needs, save on taxes

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[elizabethcariasa]

IRS is seeking volunteers for VITA and TCE programs

Photo by Liza Summer from Pexels

Everyone needs help now and then. That truism especially applies to filing taxes.

But not everyone can afford to hire a tax professional.

That's where the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs come into play.

For decades, these two programs have provided free tax preparation and filing assistance during the annual filing season to millions of lower- and middle-income taxpayers, as well as elderly filers. The Internal Revenue Service just announced its financial support for 334 VITA and TCE programs in 2022.

Now the agency is looking for volunteers to staff all these sites across the United States next year.

Who's eligible for free tax filing help: VITA help generally is available to taxpayers making $58,000 or less. Eligible VITA clients also include people with disabilities and those whose who are not proficient in or comfortable speaking English.

The companion TCE program is mainly for people age 60 or older. That's why many TCE sites are operated through AARP Foundation Tax-Aide. And although the program focuses on tax issues unique to seniors, most taxpayers can usually get free assistance.

At both VITA and TCE sites, once the tax returns are properly completed, the workers help the taxpayers e-file their returns. This helps them get any refunds more quickly.

Who's providing the tax help: This nationwide no-cost tax assistance comes from a special group of people. They are volunteers.

But don't worry. It's not just any Joe or Kathy walking in off the street to start filling in folks' 1040 forms. And no disparagement meant toward folks with these names; J & K are a couple of my cousins, neither of whom is in the tax preparation business.

All VITA and TCE volunteers are trained by the Internal Revenue Service. And yes, since the COVID-19 pandemic is still hanging on, proper precautions are taken during the training.

Why to volunteer: The IRS has put out its annual call for individuals who want to volunteer at VITA and TCE locations across the country. It's also emphasizing why people might want to volunteer. The reasons offered by the IRS include —

Hours are flexible. Volunteers can generally choose their own hours and days to volunteer. Tax preparation sites are usually open from late January through the tax filing deadline in April. Some sites are even open all year.

Virtual work is an option. Some volunteer sites will offer virtual help for taxpayers. This allows volunteers to help taxpayers complete their tax returns over the phone or online. Some volunteers will conduct a virtual quality review with the taxpayer before e-filing their tax return.

You don't need any prior experience. Volunteers receive specialized training to become IRS-certified. They can also choose from a variety of volunteer roles to serve. VITA and TCE programs want volunteers of all backgrounds and ages, as well as individuals who are fluent in other languages.

The IRS provides free tax law training and materials. Volunteers receive training materials at no charge. The tax law training covers how to prepare basic federal tax returns electronically. The training also covers tax topics, such as deductions and credits.

And while, as mentioned earlier, professional tax experience isn't required, neither the IRS nor VITA or TCE sites will turn tax pros who have time — yeah, I know: unicorns — or retired tax preparers away.

In fact, if you are a working Enrolled Agent or non-credentialed tax return preparer, you can earn continuing education credits when volunteering as a VITA or TCE instructor, quality reviewer, or tax return preparer.

Varied volunteer options: Still a bit worried about what might be required of you if you volunteer, even with training? Don't be.

There are lots of jobs that need to be done at VITA and TCE locations. Several roles don't require tax law certification. Below are some of the VITA and TCE volunteer positions that usually are filled.

Greeter/Screener – You greet everyone visiting the site to create a pleasant atmosphere. You screen taxpayers to determine the type of assistance they need and confirm they have the necessary documents to complete their tax returns. Tax law certification is not required for this position.

Interpreter – You provide free language interpreter services to customers who are not fluent in English. Basic tax knowledge is helpful, but it is not required for this position.

Site Administrator/Coordinator – You have excellent organizational and leadership skills. You are the primary resource for sharing your knowledge of the program and are available to assist with any issues that may arise. You develop and maintain schedules for all volunteers to ensure adequate coverage, supplies and equipment at your site. Tax law certification is not always required for this position.

Tax Preparer – You complete and successfully certify in tax law training, including the use of electronic filing software, to provide free tax return preparation for eligible taxpayers.

Quality Reviewer – You review tax returns completed by volunteer tax preparers, ensuring that every taxpayer receives top quality service and that the tax returns are error-free. You must be tax law certified at least at the Intermediate level.  

Computer Specialist or troubleshooter – You have a working knowledge of personal computers, software and communications systems. Tax law certification is not required for this position. If working at a self-prepare site you must become familiar with the various tax software option(s) available at your site. Although you may have less taxpayer interaction than most volunteers, you must be patient with those individuals who may not be as computer literate.

Tax Coach – You provide tax law assistance and guide taxpayers in preparing their own tax returns. Tax law certification is required for this volunteer role and training is available on-line or through face-to-face instruction.

Some of these jobs still might be affected next filing season by coronavirus concerns. Let's hope by then, we are operating in much better health if not necessarily tax circumstances. But if we're still dealing with COVID, the IRS and volunteer sites know how to deal with it; they did so this year.

Meanwhile, if any (or several) of the VITA and TCE volunteer positions sound appealing, check the IRS volunteers' web page to learn more about becoming an IRS-certified volunteer. Then register online.

The IRS thanks you now. All the folks who'll be showing up at the tax help sites in a few months thank you in advance.

You also might find these items of interest:

Your many tax season VITA & TCE volunteer opportunities 

Special clinics help low-income taxpayers resolve other IRS issues

High school senior's volunteerism essay offers a valuable tax lesson

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[elizabethcariasa]

More disasters mean more catastrophe-related scams, including charitable tax donation deduction ploys

This has been a wonderful weather week here in the Austin area. Nights have been cool. Days have topped out in the seasonal upper 70s.

But today is a tad warmer, a trend expected to continue through October. So it's goodbye to our brief autumn in Central Texas, and back to closing windows and cranking up the air conditioner.

Don't get me wrong. I'm not complaining. Although it was hot this summer, it wasn't the hottest since we moved here 16 years ago. And after February's devastating ice storm, I'm never complaining about warm or warmer than normal or hot weather again.

Besides, the hubby and I and our Lone Star State neighbors are just part of the meteorological misery loves company club, which grew much larger in 2021.

More disastrous weather everywhere: Weather and climate disasters so far this year have claimed 500 lives and cost more than $100 billion in the United States alone, according to a recently released report by the National Oceanic and Atmospheric Administration's (NOAA) National Centers for Environmental Information.

The country was hit by 18 disasters in the first nine months of the year.

The cost in lives is incalculable. The cost to property so far is more than $100 billion, per the NOAA data, with six weeks left in the official Atlantic hurricane season.

Plus, says the report, 2021 is the seventh consecutive year the United States has had more than 10 disasters totaling more than a billion dollars. That's not an encouraging trend.

Disasters and taxes: So why, you ask, am I fixating on weather and disasters? Long-time readers know I'm a weather nut, specifically one obsessed with the worst of Mother Nature.

Plus, there are tax components to disasters, from deductions for storm-related losses on returns to changes in deadlines for filing those claims.

Folks in nine states are dealing with those possible claims and different tax due dates right now due to fires and floods and tornadoes and hurricanes.

Disaster scams added costs: But disasters also can have deleterious tax effects on those not in their immediate paths.

I'm talking about scammers. Particularly the low-lives who use other's tragedies to try to con money and personal information from the more generous.

Every time there is a catastrophe, these crooks crank up the cons. Scammers have always known that generous individuals are easy marks.

That's why they regularly set up fake websites to take advantage of public generosity, especially in the wake of tragedies and disasters.

The COVID-19 pandemic also has created yet another crooked avenue for scammers, with some seeking donations to fake organizations to help families struggling due to coronavirus deaths and job losses.

Fake tax advices, too: The calling crooks often tell their marks that their donations not only will help those in need, but also give them a tax deduction.

Wrong on both counts.

The money is going into the criminals' pockets. And since the charities are real or IRS-approved, the donor cannot claim the contribution as a tax deduction.

My post on a dozen disaster scam warnings has what to look out for when you get a call from an apparent charity that's ostensibly created to help disaster victims. Fake charities also once again made the IRS' annual Dirty Dozen tax scams list for 2021.

Charity scams have gone global: While the United States has been hit with its share of disasters and related scams this year, it's far from alone.

After Haiti was rocked by a 7.2 earthquake in August, some crooks immediately began ringing up potential American marks.

And similar scam calls pegged to disasters, as well as the ones just trying to rip off the generally good-hearted, crop up in places beyond the U.S. of A.

That's why this week, the IRS has joined international organizations and other regulators in highlighting Charity Fraud Awareness Week.

The campaign is operated by a partnership of charities, regulators, law enforcers, and other not-for-profit stakeholders from across the world. The purpose of the week, which kicked off this year on Monday, Oct. 18, and runs through Friday, Oct. 22, is to raise awareness of fraud and cybercrime affecting organizations, as well as create a safe space for charities and their supporters to talk about fraud and share good practices to fight it.

And global charity scams are increasing: Such interactions are necessary because global cybercrime is on the rise, again exacerbated by the widespread and persistent coronavirus pandemic, notes the United Kingdom-based Fraud Advisory Panel, which is leading this year's effort.

The criminal activity includes not only attacks on charitable donors and beneficiaries, but also on the nonprofits themselves. The Fraud Advisory Panel estimates the average charitable organization will lose 5 percent of its revenue to fraud each year.

Those dollar and emotional costs are why the IRS is participating in the global focus this week on fighting charity fraud.

"We especially advise taxpayers to be on the lookout for scammers who set up fake organizations to take advantage of the public's generosity," said IRS Director of Exempt Organizations and Government Entities Rob Malone. "They take advantage of tragedies and disasters, such as the COVID-19 pandemic. Campaigns like Charity Fraud Awareness Week can help remind everyone to remain vigilant."

You can find more on the event, how you can get involved, and how you can protect yourself at the Fraud Advisory Panel's website, and at the separate Charity Fraud online page. You also can regularly check the IRS' tax scams and consumer resources site, as well as, of course, keep reading the ol' blog for scam updates and alerts.

You also might find these items of interest:

COVID email from FTC chief Khan is a scam

IRS and other government resources can help you deal with a natural disaster

COVID pandemic provides new paths for con artists to steal tax (and other) money, identities

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