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Much of my and other’s focus this week has been taken up by the Canadian brush fires, the broader implications and the effect of the smoke on the air quality on the north east coast of the United States.  While I, as well as most of us have considered news reports and the families affected by wild fires all over, we have only rarely experienced the effects.  With the winds forcing the smoke south, we in NYC have seen and smelled the after affects of this latest disaster, even though it was “just” estimated to be the equivalent to smoking 6 to 7 cigarettes a day. This is yet another reminder of how important each day is and to appreciate it and your family and friends to the fullest.   What more needs to be said we wish everyone a safe day, week, year, lifetime.

For those of us who watch the Netflix series Manifest – spoiler alert:  the smoke over NYC seems like a plague that Angelina brought on after willing action from the sapphire embedded in her palm…

This was a photo a friend sent taken from the window from his office building in midtown Wednesday.

I was extra careful to thoroughly wash my lettuce and herbs this week and glad that my plants don’t seem to mind the air quality as long as they get watered and warm weather…

My beach photos on hold for clearer skies and safer walks outside, hopefully as soon as this weekend.

Weekly Take-Away

The seclusion and limitations this week’s air quality from the Canadian brush fires caused reminded me that there are so many important things we take for granted, like being able to walk outside, sit on our decks, drive to the store or park and walk a block or two, go to work or school, for fear of the long lasting effects on our health.  A reminder, a wake up call, no more complaining or “sweeting the small stuff”.  We are hearing that the wild fires are burning across millions of acres of forests and hoping the land and the people and wildlife living in those areas will not be permanently affected; I hope we can all appreciate what we have.

TAX ISSUES/TAX PLANNING

2023 Tax Estimate #2 are Due June 15th

Yes it’s that time again; time to review your year-to-date income and  profitability.  Let’s also put a positive spin on this exercise.  We can take the time to determine what your 2023 tax liability is, as well as look to do some tax planning, cash flow reviews and operations assessment.

• First steps, review your financial statements and compare activities with your prior year, annualize and project for a full year so that you are prepared to meet your current and full year business and personal tax liability.
• Next, consider making some changes in operations to positively affect your cash flow, life-work balance, return on investment.  Certainly look at equipment needs and use, professional services effectiveness, employee focus allocation, profit centers, etc.
• Finally, update or create a 90 day action plan to incorporate tax plans, business goals, personal goals and exit plans

Extension Tax Returns with Balance Due

As we (and you) review your 2023 year to date income and expected tax liability you may find you have additional or updated 2022 tax information.  For those of you who have filed timely extensions you may find that new information may have caused insufficient funding.  Please pull together any additional documents so that the actual tax returns can be finalized and submitted.  Remember the extension was an extension of time to file, not an extension for time to pay, so any balance due will continue to accrue interest (don’t ask how much), let’s just get those returns finalized and submitted.

 IRS Penalty Relief Available for First Time Requests

Hopefully you will never need this tip, but nice to know it’s available.  In general, taxpayers may qualify for administrative relief from penalties for failing to pay on time under the IRS’s first-time penalty abatement program if the taxpayer:

• Did not previously have to file a return, or had no penalties for the three prior tax years;
• Filed all currently required returns or filed an extension of time to file; and,
• Paid, or arranged to pay, any tax due.

Hopefully you will never need this tip, but nice to know it’s there

IRS’s 2023 Dirty Dozen: The remaining few which make the list every year:

• Schemes with international elements:
  • Offshore account and digital assets- the IRS continues to scrutinize attempts to hide assets in offshore accounts and accounts holding digital assets
  • Maltese individual retirement arrangements misusing treaty- U.S. citizens attempt to avoid U.S. tax by contributing to foreign individual retirement arrangements in Malta.
  • Puerto Rican and foreign captive insurance- U.S. business owners of closely held entities participate in a purported insurance arrangement with a Puerto Rican or other foreign corporation in which the U.S. business owner has a financial interest, then claims a deduction for insurance premiums paid.
• Bogus tax avoidance strategies:
  • Micro-captive insurance arrangements- insurance arrangements with implausible risks, failure to match genuine business needs and duplication of commercial coverages
  • Syndicated conservation easements – when the conservation easement transferred to the charity includes a grossly inflated fair market value and generate high fees for promoters. IRC 170.

Offer In Compromise Mills

Offer in Compromise Mills are a repeat offender on the IRS Annual Dirty Dozen list.  Offer in Compromises can be an effective tools for tax mitigation under the right facts and circumstances.  These “mills” can charge thousands of dollars to individuals who do not meet the eligibility requirements.  We work with several highly qualified legal professionals who have been able to assist our clients after proper vetting ; under the right circumstances help reduce tax penalties.   Click through here for the IRS pre-qualifier tool before you sign the engagement letter.

ECONOMY

Think Twice Before You Use a Payment App for Endlessly Storing Your Money, CFPB Warns

A new report from the Consumer Financial Protection Bureau (CFPB) warns consumers about the risks of using payment apps that store money in balances. The report states that these balances are not FDIC-insured and may not be protected in the event of a company’s insolvency. Consumers should be aware of the risks associated with these apps.

Borrowers Brace for Student Loan Bills to Resume — ‘$600 a month, where is that going to come from?’

Many student loan borrowers are not prepared for payments to restart soon, as the Biden administration has announced that the pause on federal student loan payments will end on September 30th. Borrowers should take action now to understand their repayment options and prepare for the upcoming payments.

The Stock Market’s New Normal is a Future of Never-Ending Chaos

Stock markets are expected to remain volatile in the near future due to the uncertainty of the pandemic. Investors should be prepared for a “new normal” of market conditions, with more frequent and larger swings in stock prices. Long-term investors should focus on fundamentals and diversify their portfolios to reduce risk.

The Side Hustle; Another Workplace Trend Making Employers Angry 

Many people are now working side hustles in addition to their full-time jobs. This is due to the rise of the gig economy, which has made it easier to find and take on freelance work. Side hustles can provide extra income, help people pay off debt, and give them the flexibility to pursue their passions.

GENERAL RESOURCES

• IRS resources for stimulus payments:
  • Use the Get My Payment tool to check on EIP payment status
  • Eligibility and general information about Economic Impact Payments
  • A list of frequently asked questions for stimulus payments
• IRS information about the Advance Child Tax Credit Payments
  • Portal to update information
  • A list of frequently asked questions on 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 prior blog posts, videos and prior weekly newsletters
• Entrepreneur put together a listing of free tech resources for remote work
• The Consumer Financial Protection Bureau has warnings about COVID-related scams
• 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
• 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 here for you.

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

Get in touch

Contact us if you have any questions or want to discuss the next steps for your business.