Actual Changes

With all the political madness of the past year, many people wonder "What does this have to do with me?" The biggest effect it has on you is your taxes. Not just how much you pay, but how you pay and who you work with. The recent changes to the IRS budget say a lot about it's focus in the upcoming years. First, Crypto (surprise, surprise) is a huge focus for the IRS as well as all other financial institutions around the world. But, if they can't track it, how are they going to tax it? Well, the answer is to make the exchanges report it, and that's exactly what they are doing.

In this reporting change, they are also financial institutions responsible for reporting total inflows and outflows for business and even personal accounts. This is a huge change that could bring about a lot of unintended consequences. The first thing I wonder is how can they manage that data? IRS systems are already the oldest in the entire government. Their security is extremely weak at best, and they are not held accountable for breaches as private companies are. Next, how long do they get to keep that data and what can it be used for? Can they sell it? Last, what if it's wrong? There's so many questions this proposal creates, I doubt it can actually come to fruition in this administration, luckily.

The other major change would be a focus on regulating preparers. Sounds good, right? Nope! What they consider "ghost preparers" would be a thing of the past. No one can advise you on your taxes without signing your return or face a penalty. Case in point: Have you ever sat across from HR filling out a W4 and they say "I can't help you." The exact person who should be able to tell you everything there is to know about the W4 is legally not allowed to tell you how to fill out your W4! Imagine this on a ALL tax form level.

For most of us, our tax amounts won't change. Do you live on investment income only? Do you make a million dollars a year? Do you have 11 million dollars to give to your kids when you die? If you're reading this...I doubt it! But, these changes can inflict serious wounds on the little guys that will be felt for decades to come. If your answer was yes to any of those, CALL ME! ;-)

Stay aware!