There are some things said about taxes that become truths through their repeating and live forever in the societal mindset. One hears jokes about how getting married or having kids are being done just for the tax benefits. And well, it’s not as if there’s no truth there, but little enough of it that it’s probably not worth buying diapers for it. There is also a concept that owning a house brings some great benefit, but that also is not as much as some would believe.

A big shift in this area came when the Tax Cuts and Jobs Act of 2017 was passed in the first Trump administration. This changed the standard deduction for a married couple from $13,000 to $24,000 for a joint return. That kept many homeowners from receiving benefits because taxpayers must itemize their deductions to deduct homeownership expenses and many fewer were itemizing following this change..

For those who do itemize their deductions, though, there can still be benefits to home ownership. Home mortgage interest and state and local real estate taxes can be deducted and depending on the size of your mortgage or location of your home, they can add up quickly.

But remember that all these rules are subject to change. And just as the TCJA affected the standard deduction, it also capped the amount that can be deducted for state and local taxes. As with most things then, the passage of that bill made some people happy, and some people fumed over it.

And also remember there is a current push in Congress for another bill that will affect the tax rules. There is no telling exactly when this bill will be passed and it is impossible to know exactly what it’s going to include, but the fact that something will be passed at some point looks inevitable.

Hearkening back to the first point, don’t accept things as forever gospel even if you have heard them many times. There seems to be a shakeup coming and it could very well affect some things that have been true for a long time. By staying on top of it, though, you can at least keep it from becoming an unwelcome surprise and maybe even be ahead of things enough to use it to your advantage.

Warmly,

Josh Bousquet
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Even as a middle-aged guy, I don’t want to seem full of doom and gloom when looking to the future and speaking to the dangers of new technologies. In fact, I am incredibly impressed by how many things AI can do, do very well, and only see that growing as the technology ages, especially since it is something that can build on itself. I will, however, caution against trusting it too much.

Some people in our industry are touting how bookkeeping is now totally automated because of AI – and that looks very far from the case to me. Again, I think there is space for AI to be very helpful in this type of work. For example, let’s say someone is on a work trip to an area they have not visited before and eats at a local restaurant. It is nice if AI can do a little research in the background first and determine that this was a meal before having to do that Google search ourselves. It’s a small thing, but making little tasks quicker adds up over time.

And the hit rate that AI gets on such moves is good, but not perfect. Even if we say it gets it right 75% of the time, that again may be impressive overall, but would you want a quarter of such transactions entered incorrectly into your bookkeeping? At that point you’re in danger of having books that may be approaching not being useful for meaningful predicting, budgeting, assessment, etc., which is quite a turn from being fully automated.

People trying to sell the fully automated idea makes sense – implement some sort of AI program that does an okay job, get it to people for less money, and you’ve already established your selling proposition. Is there not value, however, in knowing actual eyeballs have gone over your books? If there’s any place in your life where an extra look and a little bonus care can go a long way, your finances must rank high there.

And if you do pay a little extra for that attention, that doesn’t mean they have to eschew Ai completely. I think it’s inevitable that it’s going to find its way into most jobs and make them a little easier. At the same time, too, this opens time for someone to pay more attention to the situation from a different vantage point. Maybe each individual transaction doesn’t need as much attention, so the overall state of your business can receive it instead. I think these type of hybrid relationships are where the real values are going to lie when AI gets firmly established. 

Warmly,

Josh Bousquet
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I feel like I must give a little bit of warning before you read this blog. It is a little self-serving and it does have a specific point of view that specifically comes from the type of work that we do. There are ideas that came to me after reading an article from cnn.com about how there is growing skepticism about being able to achieve the American Dream, especially among younger people. II am not claiming to be offering any type of final answer to this issue, but I do think that our special POV can offer something.

We often find that if we get new younger clients, they are often referred by someone else. Seeking outside help does not seem to be as much of an impulse amongst the younger generation. And this makes sense because they have grown up in a time when information that they needed was always at their fingertips. The days of knowledge being limited to what was held at a local library are long past. Now you can learn about anything you want to without going further than YouTube, never mind how much a deeper search or two could lead you.

Even if the younger generation is better at accessing and sharing communal information, that does not mean that they are better at getting to higher levels of expertise. It also doesn’t mean that all the information they are getting is good information. Remain in a limited bubble and lies can proliferate even if they come with good intentions.

And even though I won’t claim it’s a ‘lie,’ that type of dynamic can fuel the thoughts that the traditional American Dream is no longer accessible. But I do think it is a case of if everyone around you says so, then it must be true. If everyone around you has one view on where your finances are headed, you will believe them.

And yes, I can definitely appreciate the difficulties that young people are feeling when comparing themselves to past generations. I don’t believe, however, that the way to combat them is to give up and think it’s a dead issue without massive change. Instead, as with many things, I would counsel people to reach to those outside their circle, seek people with expertise in how to accomplish what you want, and strive to make the changes that get you to where you want to be. After all, something like home ownership may feel impossible but there’s not a rash of unsold houses on every street.

Warmly,

Josh Bousquet
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We have mentioned many times when speaking about scams that the IRS will never contact you first through a phone call, email, text message, social media, etc. Its first move is essentially always to send you a letter through the mail. But what do you do once the letter arrives?

This is a question so important that the IRS recently put out a release on what a taxpayer should do if they get mail from the agency. There are a few things I would like to add to/comment on about this, though:

• Don’t be frightened. Most of us have received something from the IRS at some point, so I can sympathize with the feeling you get when you first see that envelope. Most of us immediately jump to worrying about it and wondering what terrible news lies inside. Most of the time, though, it’s not so bad.
• Read the letter. Even if what is inside the envelope turns out to be bad news, nothing is going to be improved by ignoring it. Open the envelope, look at what it says, be aware of what is facing you.
• Don’t go it alone. The IRS release of what to do when receiving a letter urges making a payment if the letters asks for it. Of course, there are times when you may understand what is being said and understand that you do owe that amount and it is due at the time indicated. If that is the case, of course this should be paid as it says. If you are unaware of the issues or have a problem with what it says, though, you will do best to contact a tax professional to determine what your next steps should be.
  
  

The biggest thing I want to emphasize is that there is power in knowing what your situation with the IRS is. You may be receiving good news, bad news, or simple information, but no matter what it is, you want to know what’s going on. And if what is going on is as bad as we all can worry it may be when seeing the agency wants to reach us, please remember that you don’t have to battle through this by yourself.

Warmly,

Josh Bousquet
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