How Fraud Perpetrators Target Military Personnel and Veterans

According to the Federal Trade Commission, veterans lost approximately $60 million to fraud in 2020. Active-duty military personnel and their spouses and dependents also suffered big financial losses to fraud last year. In fact, in 2020, military consumers lost more than the general public to fraud — a median $600 compared to $311 for nonmilitary consumers. Here’s what you and military friends and family need to know. Beware of imposters The greatest fraud threat to this group is “imposter” fraud. In this scheme, a criminal calls, emails or texts potential victims and pretends to be working for the Veterans Administration or another government agency. Perpetrators may claim they need personal information, such as Social Security or bank account numbers, to authorize the release of benefits. Instead, they...

10 Facts About the Pass-Through Deduction for Qualified Business Income

Are you eligible to take the deduction for qualified business income (QBI)? Here are 10 facts about this valuable tax break, referred to as the pass-through deduction, QBI deduction or §199A deduction.  It’s available to owners of sole proprietorships, single member limited liability companies (LLCs), partnerships and S corporations. It may also be claimed by trusts and estates. The deduction is intended to reduce the tax rate on QBI to a rate that’s closer to the corporate tax rate. It’s taken “below the line.” That means it reduces your taxable income but not your adjusted gross income. But it’s available regardless of whether you itemize deductions or take the standard deduction. The deduction has two components: 20% of QBI from a domestic business operated as...

IRS Audits May Be Increasing, So Be Prepared

The IRS just released its audit statistics for the 2020 fiscal year and fewer taxpayers had their returns examined as compared with prior years. But even though a small percentage of returns are being chosen for audit these days, that will be little consolation if yours is one of them. Latest statistics Overall, just 0.5% of individual tax returns were audited in 2020. However, as in the past, those with higher incomes were audited at higher rates. For example, in 2020, 2.2% of taxpayers with adjusted gross incomes (AGIs) of between $1 million and $5 million were audited. Among the richest taxpayers, those with AGIs of $10 million and more, 7% of returns were audited in 2020. These are among the lowest percentages of audits conducted in recent...

Can Non-Working Spouses Contribute to an IRA?

Married couples may not be able to save as much as they need for retirement when one spouse doesn’t work outside the home — perhaps so that spouse can take care of children or elderly parents. In general, an IRA contribution is allowed only if a taxpayer earns compensation. However, there’s an exception involving a “spousal” IRA. It allows contributions to be made for nonworking spouses. For 2021, the amount that an eligible married couple can contribute to an IRA for a nonworking spouse is $6,000, which is the same limit that applies for the working spouse. IRA advantages As you may know, IRAs offer two types of advantages for taxpayers who make contributions to them. Contributions of up to $6,000 a year to an IRA may be...

Are Your Liable for Fraudulent Credit and Debit Card Charges?

Credit and debit card fraud was already a big problem when COVID-19 hit. Although how much payment card fraud increased in 2020 depends on the source, most experts agree that, like most types of fraud, it flourished during the pandemic. COVID-19-related prevention and treatment scams and increased online shopping likely contributed to this rise. If you become a victim, it’s probably good to hear that the law protects consumers from serious losses. But to reduce financial liability, you need to follow the reporting rules carefully. Unauthorized credit card charges If your credit card is lost or stolen and you report the loss to the card issuer before your card is used in a fraudulent transaction, you can’t be held responsible for any unauthorized charges. If you report it...

Seniors May Be Able to Write Off Medicare Premiums

Are you age 65 and older and have basic Medicare insurance? You may need to pay additional premiums to get the level of coverage you want. The premiums can be expensive, especially if you’re married and both you and your spouse are paying them. But there may be a bright side: You may qualify for a tax break for paying the premiums. Medicare premiums are medical expenses You can combine premiums for Medicare health insurance with other qualifying medical expenses for purposes of claiming an itemized deduction for medical expenses on your tax return. This includes amounts for “Medigap” insurance and Medicare Advantage plans. Some people buy Medigap policies because Medicare Parts A and B don’t cover all their health care expenses. Coverage gaps include co-payments, coinsurance,...

Dont Let Fraud Ruin Your Restaurants Reopening

Most restaurants are finally reopening to in-person dining. And while you may now be thinking about luring customers back, hiring enough workers and managing supply-chain shortages, one issue has remained the same: fraud. Restaurants often face fraud threats from employees, customers and vendors. So now isn’t the time to drop your guard. Potential risks Your restaurant may have high transaction volumes but lack the technology linking point-of-sale, inventory and accounting systems. This leaves gaps for fraudsters to exploit. Employees could, for example, provide food and drinks to friends without entering the sales — or ring up only a portion of friends’ bills. They might issue voids or refunds when there was no original sale and pocket the proceeds. Or they could overcharge customers by, say, charging for...

Traveling for Business Again? What can you Deduct?

As we continue to come out of the COVID-19 pandemic, you may be traveling for business again. Under tax law, there are a number of rules for deducting the cost of your out-of-town business travel within the United States. These rules apply if the business conducted out of town reasonably requires an overnight stay. Note that under the Tax Cuts and Jobs Act (TCJA) , employees can’t deduct their unreimbursed travel expenses through 2025 on their own tax returns. That’s because unreimbursed employee business expenses are “miscellaneous itemized deductions” that aren’t deductible through 2025. However, self-employed individuals can continue to deduct business expenses, including away-from-home travel expenses. Here are some of the rules that come into play.  Transportation and meals The actual costs of travel (for example, plane fare and...

Tax-Favored Ways to Build up a College Fund

If you’re a parent with a college-bound child, you may be concerned about being able to fund future tuition and other higher education costs. You want to take maximum advantage of tax benefits to minimize your expenses. Here are some possible options. Savings bonds Series EE U.S. savings bonds offer two tax-saving opportunities for eligible families when used to finance college: You don’t have to report the interest on the bonds for federal tax purposes until the bonds are cashed in, and Interest on “qualified” Series EE (and Series I) bonds may be exempt from federal tax if the bond proceeds are used for qualified education expenses. To qualify for the tax exemption for college use, you must purchase the bonds in your name (not the child’s) or...

The Risks and Rewards of Accepting Cryptocurrency Payments

To use their ill-gotten cash, criminals must make it appear legitimate. That’s the job performed by money launderers, who increasingly use cryptocurrencies. According to digital currency analytics company Elliptic, crooks use them to launder $3 to $4 billion per year. With over 4,000 digital currencies to choose from, they gain access to a liquid asset that’s cost effective and usually untraceable. But cryptocurrencies may also have something to offer legitimate businesses. Let’s look at the pros and cons. Accepting cryptocurrencies Some banks deny customers the ability to deposit digital currencies. They often cite laws that make it illegal to process cryptocurrencies, concerns about security and a lack of infrastructure to support such transactions. But even though banks are reluctant to embrace cryptocurrency, there are some potential benefits for businesses....