Spin seems to be ever more important with news stories these days. For example, word has come out over the last week New York state tax officials have opened an investigation into the Trump Foundation to determine whether the charity violated state law. That is the fact, but it can result in two different stories depending on the spin. Is this another arrow in the quiver to attack the president, just another piece of evidence about his sordid nature? Or is this another attempt to bring down the president by those who are ever against him, but can never fully prove anything and get something to stick?
The narrative one prefers to follow largely determines how the story looks. For the Foundation itself, though, things are going to be much more black and white. There are rules that it is required to follow in its operation. If it followed them, nothing will come of the investigation. If it did not, issues will arise. Our current political world may not be so clear, but any business should be run under strict parameters.
This is something we often see here when it comes to tax issues. There are stories about how certain people know how to use the tax system in mysterious ways that help them buck the system and leads to benefits that not everyone can either qualify for or know how to benefit from. And frankly, that’s just not true.
Sure, there are people – and this is often people with a lot of money – who have really good tax planning, know how to use the rules to their advantage, and maybe come out of it paying less in taxes than some believe they should. Now there are debates to be had on that last part about just what one’s obligation should be, but I do not believe that anyone can be faulted for working the established rules to their greatest advantage.
Those rules, though, are known. They are public. There are no secrets, and problems only arise when one tries to work against the rules or fudge something to get around them.
This is also something that comes up with business owners. No one in charge of such a venture wants to look at numbers that say they are not doing well. Looking like you are doing well can not only an advantage to one’s wallet, but also helps with any partners, looking for funding, etc.
If those numbers not only look good, but are not real and legitimate, then one should reap the benefits that can come with it. If numbers have been fudged to make things look better than they are, however, that just means you can’t justify yourself when it’s time to back them up.
When it comes to finances, spin is not something that should be used. We are dealing with numbers and laws in these situations, after all, which most often lead to definite answers. There are many things one can do to turn things to your advantage, but you should not seek advantage by trying to buck the system. Keep the difference between theory and reality in mind. Fight for what you want, but what you want to be is not always what is.
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The IRS and its Security Summit partners are spearheading an awareness campaign for tax professionals in an effort to protect client data in its ongoing fight against various security threats. Although our clients’ security is something that we consider a high priority, many of the tips put out for professionals work on the personal level, as well. The best security takes place at many levels, so I wanted to pass along some of these tips to you this week.
First, have anti-malware and anti-virus security on all electronic devices. This can hold off many attacks that could expose your information without you ever knowing. A critical addendum to this, though, can be setting your software to automatically update. I know it can be annoying when your phone or some software programs keep telling you to download the latest version, but many times those updates include fixes that enhance security.
After that, keep passwords on everything that can have one. This includes password protecting wireless devices. After all, even if you don’t think you have critical personal information saved on the device, have you ever visited your banking website on its browser? Or checked a credit card balance? You may have information saved on the device that you are unaware of, and could be used against you if it fell into the wrong hands.
Then, of course, there are the passwords you use to access all those websites mentioned above – or any website really. For are you using the same password to get into your bank as you are your Netflix account? Once a password is found somewhere, it is easier to track down usernames, and if you’re using the same password everywhere, you’re making it easier to get at your information.
Not only should your passwords be different everywhere, but you also want to use different kinds of passwords. Sure, your kid’s name and birthday is easier to remember, but using special characters, random capitalizations, numbers, etc., all make it more difficult to figure out just what that password is.
If you are saving any sensitive information on your computer or in any cloud-based service, you want it to be protected by more than just a password, too. Ensure that these places are encrypting information. If they’re not, I promise that with only minimal research you can find a similar service for the same price that will do so and give you that extra level of safety.
Finally, if you do keep some of that information on a hard drive, remember that before you get rid of the device. This is easier to think about if you know it is still going to be used by someone else, but can be overlooked if you’re just trashing a device. But if you are throwing it away, hey, destroying that hard drive can even be a little fun and help you take out some aggression (just think of every time technology has made you throw up your hands).
None of these tips will have you doing things the easiest way, but they are the safest way. And if you are ever in a situation where someone has information about you that you wish they didn’t, you will think that it would have been time well spent.
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Every once in a while, things build up on us. Hopefully this is not something you’re feeling in the middle of the summer, as ideally this is the time when you are pulling a little less onto your plate, and not just in an attempt to get that beach body. That hasn’t been the case for things that I thought I should mention in this space, though, so here are a few quick hits to get these off my plate.
The biggest one of these may be the Supreme Court’s recent ruling in South Dakota v. Wayfair that will let states and local jurisdictions impose sales tax on online sales. For many, online purchases have been most wonderful because of their ease and convenience, but sometimes they came with the bonus of not needing to pay sales tax, but those days seem to be over.
This is most important to note for those who run businesses online, where thinking about sales tax outside of where you are located had not been a concern. If you are in this position, I implore you to find a solution before it is too late, and there are online tools that will help with this. It will take some initial setup, but this is the type of thing that eventually becomes a seamless part of your business. This initial outlay of time and effort will be better than getting into a situation where you are called upon to make sales tax payments when you never collected the money.
On the payroll side of things, the Department of Labor seems set to propose new overtime rules in October. We can speak about this a little more when/if it actually happens, but I thought it was worth mentioning it here to put it into business owners’ heads. Once you appropriately set up payroll, after all, much of making sure you’re in compliance takes care of itself, but the rules do sometimes change and require attention.
Finally, the AICPA (an accounting professional group) sent a letter to the IRS requesting guidance on some FAQs concerning how cryptocurrencies are taxed. This does not mean that anything will necessarily not be taxed (rest assured, whenever there are things of value out there, the IRS is going to want to tax it), but just how it is taxed.
Without getting too deep into the weeds, this is mostly about how things are taxed, and possibly when they are taxed. And it could be that the IRS chooses not to react toward this and nothing changes. If it does, however, there could be some tweaks you may want to make to put yourself in the most advantageous tax position. So if you are involved this world, this is something to keep tabs on.
And of course these aren’t the only things to have come across the radar that never get to see a full blog treatment. So as always, if you have any issues that you would like to discuss, we are always happy to hear from you and give you some more personal direction.
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As part of the Republican’s tax overhaul that culminated in the passage late last year of the Tax Cuts and Jobs Act, there was often talk of wanting taxes to be simple enough that they could be filed on a postcard. Now that has come to pass … sort of … with the official unveiling of a new form 1040 on Friday.
First, I just want to say that for the most part I try to stay apolitical when discussing tax policy. Whether I agree with the rules or not is less important in my situation than making sure everyone follows the rules (and puts them to their best use). In this case, though, this postcard really is a rather empty gesture calculated for its use as a sound bite and photo op. This is just a different look for an old form, it does not reflect any new policy or change in how your tax obligation will be calculated.
Now let’s start from the fact that calling this a postcard can only be done by thinking of it as a rather big postcard. Sure, the form is smaller, but it is still bigger than what you find on spinner racks in tourist destinations, is double-sided, and could still require other forms to make it part of a complete tax return. Some of the things that would require other forms are rather frequently used, too, like student loan interest and education tax credits.
Beyond what this form actually contains, though, lies the bigger question of when is the last time you actually filled out a 1040? Many of us of a certain age, (cough, cough), can remember going line by line down a 1040 as the main action behind filling out a tax return, but with around 90% of filers having moved on to electronic filing, we are no longer really filling out tax returns in this line-by-line manner.
Right, remember electronic filing? The thing that meant you no longer needed to mail in a tax return.
And remember postcards? Those things that you have to actually put in a mailbox.
Also, I’m not sure that something is really a postcard if you have to put it in an envelope, either. And that is something you really would want to do with this new form, otherwise all your identifying information, including a social security number, is available to seen by all whose hands it passes through.
Did I mention that this is really a largely hollow gesture?
Taxes really are going to be very different when it comes time to file next year. And again, politics aside, the increased standard deduction is going to mean that many people have a simpler tax return. That was one of the main goals of the legislation passed, and that was certainly a way to back up those claims and goals. This new form, though, is just bluster with no real substance.
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