Weekly Update – August 5th 2022
I am in mid-week 6 of my hip replacement recovery and glad to see real progress as I have returned to my office for 3/4 days and am able to walk without a cane and use just the hand rail for assistance on the stairs. Now I am also back in my garden picking those cukes, and string beans that like to hide in their leaves…
What could be better than a healthy breakfast of organic blackberries with oatmeal…
Or fresh mozzarella with tomatoes and basil from the garden drizzled with balsamic vinegar and extra virgin olive oil…
Yes I am eating my way through the summer produce!
Weekly Take Away
Why do we ask our clients to sign an multi-year IRS power of attorney? Just mentioning the IRS can cause them concern. Last week one of our clients called to check on just such a request she had received from a newly hired CPA who would be helping her with her not-for-profit entity. I explained the importance for the request, and this also reminded me that it is worth taking the time to thoroughly explain and provide all the details as to why we asking something of our clients/patients/customers or need something specific from them. On our end it may seem to be simple and obvious, this is not always the case when it comes to our clients/patients/customers . As the recent telephone call I received showed, leaving out the specifics on WHY can cause confusion and frustration. We need to explain exactly why we need something and what we will use it for then leave space for them to ask any necessary questions to ensure they understand and feel comfortable.
TAX ISSUES/TAX PLANNING
IRS Warns of Scams to Steal Client Data
As part of a special Security Summit series, the Internal Revenue Service is warning tax professionals to beware of evolving scams designed to steal client data. They warn tax professionals using cloud-based systems to store and prepare tax returns and information to make sure they use multi-factor authentication in light of recent attacks. Specifically, the Summit partners urge people using cloud-based platforms to use multi-factor options like phone, text or tokens. This can avoid potential vulnerabilities with authentication done just through email, which is easier for identity thieves to access.
This is important not only for tax professionals but anyone using cloud based software and those who have systems which store critical data such as: names, addresses, social security numbers, dates of birth, etc. Please see my February 2020 blog post about the importance of two factor authentication as part of your data safeguard system.
Some Married Taxpayers are Receiving Erroneous Balance Due Notices from the IRS
The Internal Revenue Service has announced that some married couples received erroneous balance due notices for their 2021 tax returns which seems to happen when the “spouse” makes a tax payment under their social security number. They said that no immediate response to the notice or telephone call were necessary right now as they are working on fixing the problem. “The IRS is aware that some payments made for 2021 tax returns have not been correctly applied to joint taxpayer accounts, and these taxpayers are receiving erroneous balance due notices (CP-14 notices) or notices showing the incorrect amount,” the IRS said in a statement Wednesday.
A Reminder: The IRS Mileage Rate Increased as of July 1st 2022
In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2022. The IRS normally updates the mileage rates once a year in the fall for the next calendar year. For travel from January 1 through June 30, 2022, taxpayers should use the rates set forth in Notice 2022-03.
As of July 1st, 2022, the standard mileage rate for business travel will be 62.5 cents per mile, up 4 cents from the rate effective at the start of the year. The new rate for deductible medical or moving expenses (available for active-duty members of the military) will be 22 cents for the remainder of 2022, up 4 cents from the rate effective at the start of 2022.
“The IRS is adjusting the standard mileage rates to better reflect the recent increase in fuel prices,” said IRS Commissioner Chuck Rettig. “We are aware a number of unusual factors have come into play involving fuel costs, and we are taking this special step to help taxpayers, businesses and others who use this rate.”
While fuel costs are a significant factor in the mileage figure, other items enter into the calculation of mileage rates, such as depreciation and insurance and other fixed and variable costs.
The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
The 14 cents per mile rate for charitable organizations remains unchanged as it is set by statute.
Midyear increases in the optional mileage rates are rare, the last time the IRS made such an increase was in 2011.
Treasury Yields Fall; What Does This Mean for Us?
U.S. Treasury yields fell 56 basis points to 2.586% on Monday after a few key reports signaled that high inflation may be cooling off. “As demand slows and supply bottlenecks improve, we should expect a corresponding slowdown in inflation during the back half of this year. The Fed will likely respond with smaller rate increases in the coming meetings,” LPL Financial chief economist Jeffrey Roach said in a note.
Gold Makes Steady Gains Early in the Week
A weaker dollar and a dip in US Treasury yields boosted demand for gold on Tuesday amid mounting worries of an economic slowdown.
American Manufacturing Rates Slip
New numbers from the Institute for Supply Management show that manufacturing pace dipped in June to a 25-month low of 52.8%. The slip is seen as a sign of a weakening US economy.
Consumers Treating Back-To-School Shopping as Essential
Of course it is, how could we feel comfortable sending our children back to school unprepared to tackle their school work. Recent numbers for back-to-school shopping show that it is being treated as an essential spending category. Many consumers have pulled back their spending in other areas as inflation continues wreaking havoc on the U.S. economy. I googled “back to school shopping” and found that Minnesota has a special K-12 education tax credit for families who report their spending on school supplies like pens, notebooks, or even computer hardware. In other posts I see many special sales.
Grain Ships Headed to Market Leaves Ukraine
On Monday, a ship loaded with grain has left the port of Odesa, the first since the war began in February. Now we are hearing that three more ships carrying tons of corn have left Ukrainian ports. Let’s hope this will continue and will ease soaring grain costs around the globe.
Help Wanted: Chief Candy Officer
A Canadian candy company is offering CAD $100,000 a year (approximately $78,000) to work from home, taste candy, and lead monthly meetings. I hope the compensation package includes dental insurance. Details and instructions on how to apply can be found here.
- IRS resources for stimulus payments:
- IRS information about the Advance Child Tax Credit Payments
- The best source for up-to-date and accurate health information is the Center for Disease Control (CDC)
- Our Covid-19 Resource Center with relevant blog posts, videos and prior weekly newsletters
- Payroll, HR and benefits company Gusto has put together An Employer’s Guide to Navigating the Coronavirus
- Accounting Today has a special page for articles on COVID-19
- Intuit QuickBooks has a dedicated page to help small businesses
- Entrepreneur put together a listing of free tech resources for remote work
- The Consumer Financial Protection Bureau has warnings about COVID-related scams
- Fast Company has a listing of the best productivity apps for 2020
- The New York Times has an online newsletter on K-12 and higher education
- The Wall Street Journal has a collection of articles on education
- The Louvre has digitized 482,000 artworks from its collection
- PC Magazine explains how to carry your vaccination card on your phone
- How to create a strong password
We sincerely hope that you and your family are well and remain well. If you have any questions or concerns, don’t hesitate to reach out to us. We are all in this together!
If you need help with your accounting, want to create a tax minimization plan, want to discuss your business growth plan or your finances, are concerned about retirement goals or need to be held accountable for your 90 day action plan, contact us for a complimentary discovery session or an appointment to just get started.
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