The Internal Revenue Service's crime fighting division did a bang-up job last fiscal year, stopping almost $10 billion in tax fraud.
That 2018 amount was four times more than the previous fiscal year, according to the IRS Criminal Investigation (CI) Division’s annual report released today.
CI, which marked its 100-year anniversary at the Oct. 1 start of the 2019 fiscal year, identified $9.7 billion in tax fraud during the last fiscal year (Oct. 1, 2017, through Sept. 30, 2018).
That's up dramatically from the $2.5 billion CI found in fiscal 2017.
Much crime, but tax fraud focus: General tax fraud investigations are at the core of CI’s law enforcement efforts and directly influence the American public’s confidence and compliance with the tax laws, notes the latest CI report.
"Publicizing these convictions helps to reinforce the voluntary compliance aspect of our nation's tax system. It shows law-abiding taxpayers that we take violations of the tax laws seriously and will pursue those who take advantage of the system," said CI Chief Don Fort in his report preface.
The common practices that CI agents see in their general tax fraud investigations include keeping two sets of books, making false entries in books and records, claiming personal expenses as business expenses, claiming false deductions or credits against taxes owed and hiding or transferring assets.
Tax scofflaws, consider yourself warned!
In addition, the report also notes that in fiscal 2018 CI, the only federal law enforcement agency with jurisdiction over federal tax crimes, also:
Data increase to offset depleted staff: That conviction level was accomplished even though the number of CI special agents fell by the end of the last fiscal year to less than 2,100.
That's the lowest level since the early 1970s.
To make up for the personnel losses, CI says it turned to data analytics to help its remaining investigations find the most-impactful cases.
White-collar conviction problems: However, the news wasn't all good.
The CI leader cited studies released this summer that show the United States on pace to record the fewest number of white-collar crime prosecutions on record.
"This statistic is especially troubling because financial crime has proliferated over the past few years," said Fort, who cited recent CI successes in cyber-crime cases including Silk Road, Liberty Reserve, Alpha Bay and BTC-e.
All CI employees, not just special agents, now are required to complete cyber training, said Fort, adding, "Moving forward, it is hard to imagine future cases that will not have a cyber component to them."
"Future criminal investigations must make use of data to help drive case selection and efficiency in the critical work we do. That means using models, algorithms, and the millions of records and evidence we have at hand to help identify areas of tax noncompliance," said Fort. That includes making the use of data analytics and other technologies such as predictive policing an everyday tool for CI.
New data analytics unit ready: Ford cited what he called "one particularly noteworthy success," the launch of the Nationally Coordinated Investigations Unit (NCIU).
This unit relies heavily on data analytics to help drive future case selection, he said, and in 2019 will become an official CI section.
So far, NCIU has already referred more than 50 leads to CI field offices. Ford said that number is expected to grow substantially this new fiscal year.
Old-school investigations still matter: While the types of tax crimes and the methods to fight them have changed markedly with the advent of new technology, Fort says the traditional way of catching tax crooks remains a key function of his division.
Cyber tools are just one more means to stop the rampant, worldwide problem of tax fraud and other financial crimes.
"Although these tools will never replace good, old-fashioned investigative work, they will make us more effective and allow us to maintain our reputation as the world’s finest financial investigators," said Fort.
"As we begin our 100th year of criminal investigations, I could not be prouder to lead this exceptional group of men and women. We have never been more capable, well-trained, or relevant to the financial crime landscape than we are today. While challenges always lie ahead, I know we will meet them with the same energy and expertise that has made us successful over the last 99 years," said Fort.
You can check out the latest CI report to find out what these special IRS agents are doing in your backyard. The report summarizes the division's involvement in stopping a wide range of financial crimes during the last fiscal year and features examples, via links with details on CI efforts and subsequent convictions, from each field office.
You also might find these items of interest:
The holidays are here. Yeah, I'm not ready either, but …
In this season of giving, many folks donate to charities. This year, much of the focus in on helping nonprofits that assist folks who've suffered through natural disasters, notably the deadly wildfires still burning across California.
Some folks also volunteer at their local charities.
Tasks range from the administrative — making sure year-end solicitations go out, accounting for the gifts, sending out tax-deduction receipts — to the more practical — working the soup kitchen line, delivering care packages to needy families, helping folks make it to their seasonal jobs so they can enjoy some much-needed year-end income.
Most volunteers give of their time and talents because they are committed to their favorite charity's cause.
In some situations, you might be able to claim a tax deduction for your volunteer efforts, but the real reason you do it is because you want to help.
If you find volunteering during the holidays satisfying, then the Internal Revenue Service has a way for you to expand the joy you get from helping into the new year. Specifically into the new 2019 year. The IRS is now accepting applications for volunteers at its annual community-based free tax preparation sites.
Decades of free tax help: You say you're not a tax pro. That you have enough problems, even with tax software, completing your own 1040 every year. That you'd never be confident enough to advise someone else on their taxes.
Not to worry. The IRS will train you so that you can be a volunteer at VITA and TCE locations and be able to provide accurate — and free — tax help for low-to-moderate-income families who need assistance preparing their annual returns.
The IRS and its VITA and TCE partners are old hands at this. The programs have been around for almost 50 years.
VITA, which debuted in 1969, assists under-served communities, such as low- and moderate-income individuals and limited English proficient taxpayers. In 2007, Congress finally OK'ed funds so that the IRS could establish a grant program to help community groups become a part of the tax help program.
TCE first appeared in 1978. This program provides tax counseling and return preparation nationwide to people who are 60 or older.
This year, the IRS awarded grants to 29 TCE and 249 VITA applicants. The TCE grants cover one year and the VITA grants cover two years. The IRS received 336 applications requesting $60.5 million.
Tax help partnerships: Every filing season, returning and new tax volunteers make an enormous impact in their communities at VITA and TCE sites nationwide, helping their neighbors fulfill their tax-filing responsibilities.
While the IRS provides training, the actual operations are handled by outside groups. Most of the TCE sites, for example, are run by the AARP Foundation's Tax Aide program. These sites typically work with taxpayers between January and the April tax filing deadline. Some volunteer tax help sites, however, are open year-round.
The two free tax-prep locations generally are located at community and neighborhood centers, libraries, schools, shopping malls and other convenient locations across the country.
They are open various days, nights and weekends, but the hours are flexible to meet the needs of volunteers and taxpayers. Volunteers generally serve an average of three to five hours per week.
Last year, more than 3.5 million returns were prepared by volunteers at VITA and TCE sites.
Now it's time to get folks to fill the volunteer spots at those free tax help sites during the coming tax-filing season.
Choose your tax volunteer role: Once you complete your training, you'll be hooked up with an organization that sponsors VITA and/or TCE sites in your area.
Still a little hesitant to help other fill out their actual returns, even after the IRS training? That's OK. There are other options.
Below is a look at the volunteer roles the IRS is looking to fill at free tax preparation sites.
Submit your volunteer application: See a volunteer tax role that interests you? You can get additional information and take the next steps by using the online Volunteer Signup form.
That will get you one step closer to becoming a VITA or TCE tax volunteer and giving back to your community.
Helping someone accurately file their taxes and possibly get a refund or pay less than they expected definitely is a gift worth giving any time of the year.
You also might find these items of interest:
Earthquakes have been displaced as the most feared nature disaster in California. Wildfires, which once again are ravaging the Golden State, now are the biggest perennial natural threat, as evidenced by the latest rash of devastating and deadly flame outbreaks.
This morning, firefighters are still battling three wildfires across the state.
The Camp Fire, now the deadliest and most destructive wildfire in California history, had as of Sunday, Nov. 11, night taken the lives of 29 people and destroyed 6,713 buildings in and around the Northern California city of Paradise. It gets worse. More than 200 people are still missing, according to local law enforcement.
The Woolsey Fire burning in Ventura County has killed two people, according to CAL Fire. It's already burned 83,275 acres of land and has destroyed 177 structure with another 15,000 structures threatened. The Hill Fire, which is also burning parts of Ventura County, is at 65 percent containment and has scorched 4,531 acres.
Those of us with family and friends in the Golden State are anxiously watching the amazingly horrific reports on television and online and keeping our phones and social media apps at the ready in case there's a call, hopefully to let assure us that things are OK or that we need to get the guest room ready for a while.
But there's also something we do as we watch and wait. We can donate to organizations that are on the ground and helping folks displaced by the fires.
Show them the money: Sending money generally is the best way to help in a disaster.
Financial contributions give the on-site professional relief organizations the ability to buy the precise supplies that are most urgently needed by disaster survivors, avoiding delays and the often steep transportation and logistical costs that accompany donations of goods.
It also makes things easier for the volunteers on the ground. If they're faced with loads of donated goods, they have to spend time sorting them rather than buying exactly what’s needed. Such extraneous tasks also cut into their valuable time that's better spent on things such as directly getting help to those in need.
Plus, some commodities, particularly food, can almost always be purchased locally, even after devastating emergencies, according to the Center for International Disaster Information, part of the United States Agency for International Development.
From the donors' standpoint, when you give a financial gift, you know your help is more immediately put to work.
And if you plan to take a deduction for a gift in a disaster situation, cash is the easiest to document for Internal Revenue Service record keeping requirements.
How to give: Once you've decided to donate, the next big question is which group(s) get your money.
The typical disaster standbys, the American Red Cross and Salvation Army, are ready, willing and eagerly awaiting your California wildfire relief contributions. Their websites, linked via the groups' names in the previous sentence, have details on making online, text and mail donations.
Direct Relief, which helps provide resources to healthcare agencies and first responders in disaster situations, is providing N-95 masks, medicine and other resources to support medical attention needed in the wildfire-affected California communities. Your cash donations to Direct Relief are being matched, up to $15,000, by Tito’s Handmade Vodka.
But some more local California organizations accepting relief donations include:
California Community Foundation’s Wildfire Relief Fund provides aid, as it has done for 15 years, to those affected by wildfires. Grants are used to help victims rebuild homes, provide financial and mental health assistance and assist in getting medical treatment to those affected by the fires.
California Fire Foundation is a statewide nonprofit that is distributing emergency funds to fire victims via its SAVE (Supplying Aid to Victims of Emergency) program. Fire victims who didn't have time to pack everything they needed before they were forced to evacuate are given prepaid credit cards with which they can buy food, clothing and pay for a place to stay.
Caring Choices, a Chico, California-based nonprofit, organizes volunteers who want to help those affected by the Camp Fire. Volunteers duties include caring for displaced animals and, for those who are certified doctors or nurses, offering medical care. While it's still seeking volunteers, Caring Choices also needs monetary donations to keep its work going.
Enloe Medical Center is a 298-bed hospital is in Chico, which is the site of multiple evacuation centers for the Camp Fire. Donations go to help patients and families who have been displaced.
Entertainment Industry Foundation is a nonprofit, started by Hollywood stars, has a fund that helps firefighters and other emergency workers battling California wildfires. One of its beneficiaries is the Los Angeles Fire Department Foundation, which provides hydration backpacks and night vision goggles for helicopter pilots. Another beneficiary provides meals for emergency workers and evacuees staying in shelters.
Firefighters Charitable Foundation accepts donations to support volunteer fire stations and help wildfire victims.
Humane Society of Ventura County is accepting donations to help animals displaced by the Woolsey and Hill Fires. It is taking in domestic pets as well as livestock.
Los Angeles County Animal Care Foundation supports various other animal shelters' relief efforts in areas affected by the fires.
Los Angeles Fire Department supports the first responders fighting on the front lines of the wildfires. They are seeking donations to buy hydration backpacks for the firefighters.
North Valley Community Foundation is another Chico nonprofit that is raising money to support organizations that are sheltering evacuees of the Camp Fire. It supports churches, fairgrounds and community centers that house the displaced.
United Way of Greater Los Angeles, the Southern California local branch of the national organization, is raising money for those affected by the Woolsey and Hill Fires, specifically low-income residents.
United Way of Northern California, as its name indicates, is that area's local United Way chapter and it has created a disaster relief fund to provide emergency cash and assistance to people who have lost their homes.
Ventura County Community Foundation has established a special needs fund to assist those affected by the Hill and Woolsey fires.
If you're in California and want to literally do more, check out California Volunteers. This state office manages volunteer programs across California and has a list of services and donation options to help the victims of all three fires.
Check out charities: Finally, remember to double check any group to which you give in any disaster situation.
This isn't just for tax reasons, although guaranteeing that a nonprofit is qualified either by using the IRS' online Tax Exempt Organization Search tool or Charity Navigator means your gift, if you itemize, is tax deductible
Sadly, unscrupulous folks use disasters as a way to scam generous people who only want to help. When that happens, you and the victims you wanted to get your assistance are both robbed.
And even if a charity is on the up-and-up, you want to make sure it is one that operates properly and efficiently. You want your money going to the work necessary to help folks who've lost everything, not into administrators' pockets.
By double checking a nonprofit's status and reports on its operations, you'll be able to ensure that you give to a reputable, well-run group that will provide the help that folks in California right now so desperately need.
You also might find these items of interest:
The poppy was adopted as the official memorial flower of the Veterans of Foreign Wars in 1922.
One century ago today, history's bloodiest war to date ended after more than four years of slaughter. The Veterans Day holiday was conceived as Armistice Day to honor the 4.7 million Americans who served — and the 116,500 who died — in World War I, or what was then called the Great War.
The original specificity has a solemn meaning. It marks the armistice between World War I's Allied forces and Germany ending the fighting on the Western Front at precisely 11 a.m. on Nov. 11, 1918.
Remembering Flanders Fields sacrifices: Perhaps the best-known commemoration of the lives lost during WWI is the poppy.
The flower, now seen on lapels worldwide every November, was immortalized in John McCrae's poem "In Flanders Fields."
In addition to expressing the immeasurable grief over the "row on row" of graves of soldiers who had died on Flanders' battlefields, the poem also notes our global commitment to peace through sacrifice in its closing stanza:
"To you from failing hands we throw
Expanded to honor all veterans: Armistice Day kept its name and focus until 1954, when the Nov. 11 commemoration was changed in the United States to Veterans Day and its scope widened to honor veterans from all eras.
Overall, World War I took around 16 million lives, out of some 35 million civilian and military casualties.
The last American veteran of that war died in 2011, but the U.S. Census Bureau estimates that there are almost 19 million living veterans nationwide, including 7,200 from between the world wars.
Veterans and VA spending growing: The largest ever Department of Veterans Affairs annual fiscal budget was signed into law on Sept. 21.
The fiscal 2019 VA budget was an increase of more than 6 percent that pushes the agency's total spending over the $200 billion mark for the first time.
The bill includes $1.1 billion for the start of a VA electronic health records overhaul and $400 million for opioid abuse prevention within the department.
That money is vital since, despite no longer having a draft, the number of U.S. men and women who serve at least some time in our armed forces continues to grow.
The latest official count by the Census, using American Community Survey data collected from 2009 to 2013, shows that Alaska had the highest proportion of its population who were veterans, at 13.8 percent. Puerto Rico, at 3.8 percent, reported the lowest proportion of veterans.
Here in Texas, we have almost 1.6 million veterans.
You can get a look at the veterans' population where you live via the Census' graphics for each state, the District of Columbia and Puerto Rico.
Veterans and taxes: Since this is a tax blog, I'm compelled to remind you that beyond tax dollars finally being spent on those who serve and sacrifice for us, there are other tax implications for veterans.
The most recent veterans' tax matter is the extended time period under which some disabled veterans could file for refunds for disability severance payments under which they originally were shortchanged.
Those affected veterans need to file an amended tax return using to claim a disability severance payment-related credit or tax refund for the prior erroneously taxed payments.
Elsewhere in the tax code, there are several provisions that apply to veterans and current members of the military. They include:
Mostly though on this Nov. 11th, which earns this week's By the Numbers honor, take a moment to remember those, to borrow McCrae's words, who loved and were loved and now lie in Flanders fields and elsewhere.
And if your veterans thankfully made it home after serving for us, the United States of America and the world, give them a huge hug for all of us.
Since I'm still recovering from my medical procedure last week, I'm following doctor's orders and taking it as easy as possible. Translation: More milkshakes!
But I'm nothing if not a slightly obsessive-compulsive creature of habit. So I did want to get a Saturday Shout Out piece up today.
Solution: I'm combining both medical directions and blogging impulses and recommending related tax reading today.
Specifically, I'm going to the source, the Internal Revenue Service, for its comprehensive list of tax-deductible medical items and procedures.
That is, of course, IRS Publication 502.
IRS' medical deductions codex: The IRS hasn't updated Pub. 502 yet for the 2018 tax year, but since the Tax Cuts and Jobs Acts didn't make substantial changes in this area — it only made the deductions easier to claim by keeping the adjusted gross income threshold at 7.5 percent through 2018 — the data in the document is still good.
So what does that include?
Publication 502 explains the itemized deduction for medical and dental expenses that you claim on Schedule A, which is where you itemize your allowable health-care expenses and send along with your Form 1040 at tax time.
In addition, the publication:
Even better, it's a directory of the allowable deductions.
What you can deduct: Starting on page 5 of Pub. 502 under the heading What Medical Expenses Are Includible? is an alphabetic listing of items that you can include in figuring your medical expense deduction.
They range from the mundane, but medically important, annual physical exam costs to, as in my case and per the IRS "amounts you pay for legal operations that aren't for unnecessary cosmetic surgery" to, 10 pages later, X-rays.
Of course, since taxes are personal there are so, so many permutations of potential medical expenses. If you don't find yours in the list, the IRS says to refer back to the beginning of Publication 502, where it discusses just what it considers a medical expense.
You also might want to talk to a tax professional to help you determine your medical, and other, deduction options. These folks have seen a whole lot things in their tax careers and can give you good advice as to what to expect when making certain claims.
What you cannot deduct: Some things, obviously, are not going to ever clear the medical tax deduction threshold.
Most of those disallowed deductions are listed, starting on page 15 and again alphabetically, in the section following the deductible medical expenses list.
You've probably read about some folks trying to convince the IRS that, for example, their dancing lessons really do help relieve the paid in their arthritic knees, but Uncle Sam isn't in most cases buying that argument.
And sorry, even though Fido or Fluffy is a member of your family, tax law does not generally allow you to include your pets' veterinary fees in your medical expenses.
If you're thinking about itemizing this tax year and expect your medical expenses to be a big part of your Schedule A, then spend some time with Publication 502.
It's also handy for some tax-related trivia that could make you a hit at your next social gathering! OK, social gathering of tax geeks, but …
You also might find these items of interest:
The 2018 tax season is not quite over for some folks. But if you're an extra-late filer and want to submit your 1040 electronically, you must do so by Nov. 17.
After that date, you'll have to complete your 2017 tax year filing on paper returns.
Must-do maintenance: The Internal Revenue Service didn't select the Nov. 17 e-file drop-dead due date randomly.
The agency says it needs to shut down its IRS Modernized e-file system that processes electronically-filed individual returns after next weekend so that it has enough time to perform annual maintenance.
The IRS also has to reprogram the e-file system for the upcoming 2019 tax-filing season, which entails myriad changes under the Tax Cuts and Jobs Act.
Late-filing reasons: There are many reasons folks miss filing dates. Sometimes life just gets in the way, with personal circumstances taking precedence over tax due dates. I get that.
Just know that if you missed either (or both) the regular April and October extended filing deadlines and owe money, your penalties are continuing to accrue.
So try to get those tax forms to the IRS ASAP — and e-filing is the quickest way — to stop that money flow.
Extra-extended disaster-related deadlines: Some folks are spared those penalties because they live in major disaster areas.
This includes, notes the IRS, individuals and business owners e who endured the wrath of and damages from Hurricane Michael, Hurricane Florence and the wildfires in Northern California earlier this year.
The extended deadlines in these disaster situations vary by locality and range, from Nov. 30 for some Golden State taxes and from Dec. 17 to Feb. 28, 2019, for parts of Florida, Georgia, North Carolina, South Carolina, Virginia, Wisconsin and the Northern Mariana Islands that sustained hurricane and typhoon damages.
In addition to the links above to my blog posts on these extended deadlines, you can get more information at the IRS' disaster relief page.
Then get to work on your returns. You have just more than a week, by next Saturday, Nov. 17, to file them electronically.
You also might find these items of interest:
Sometimes someone special walks through your door – someone so special that they make you want to scream in frustration.
I’m talking about the problem client – also called the toxic client. We’re talking about that person who does nothing but cause you problems and agony. The ones who make you question why you went into business for yourself.
Well, these moments are precisely why you went into business for yourself. When you work for someone else at a company you don’t own, you might have to put up with an awful lot of ridiculous behavior and situations from coworkers and clients. You don’t get to decide who gets the boot.
But when you own your own tax business, you can decide when a client has crossed a line – and then take action to correct the situation. It’s both a drawback and a perk of being the big boss. (But ultimately, it’s more of a perk, because at least you get to be in charge of making the call!) That’s why it’s important to learn how and when to fire problem clients.
First, determine if they are actually a problem
Part of working for yourself – or really just part of life – is getting along with different kinds of people. Some of your clients will become your friends. Some of your clients will be just that – clients – and you’ll have purely business relationships with them. That leaves a handful of others who will always not be as easy to work with as others.
However, “not as easy to work with” doesn’t actually take them to the level of toxic clients who are so bad you need to fire them.
Ask yourself these questions:
Depending on the answers to these questions, you might be able to work things out.
Have you tried absolutely everything you can to salvage the relationship? If the answer is “yes” and it still isn’t working, keep reading …
Problem client red flags to look for
Sometimes you aren’t going to be able to resolve things with some clients. Four of the biggest, most glaring red flags are:
When you see too many of these red flags in your client relationship, it’s time to cut your toxic client loose. Otherwise, you risk digging yourself in deeper, losing more money, increasing your stress levels, and making the situation worse overall.
When it’s time to have the conversation
Once you’ve decided to let a client go, how do you tell them?
Of course, there is a “plan B.” You can always say something along the lines of, “Some things have come up and I’m not going to have the time and energy to devote properly to you right now.” Whether it’s true or not, some people would rather not give any hint of a problem within the client relationship. That choice is up to you. We tend to recommend the direct-but-polite route, but you make the decision that you’re comfortable with. After all, it’s your business.
Also, please note that if your client has actually done something really bad or even illegal, such as sexually harassed you or your staff, provided false documentation, or somehow put you and your staff in danger or in any legal risk, all bets are off. Call your lawyer and let them know exactly why you’re cutting off the relationship.
Assuming this is simply a toxic client you need to let go, a sample script or email (because we recommend talking on the phone or in person, but if you have to do an email, you can adapt this script) might look like this:
After much thought, I regret that My Tax Company, LLC, will no longer be able to help you with your tax preparation.
As much as I’d like to be able to help you, I think another tax preparer may be a better fit for what you need. You may want to reach out to [Competitor A] at [contact info] or perhaps [Competitor B] at [contact info] to see if they can help you.
Thank you again for your business. I wish you all the best!
Keep it short, simple, and to the point.
In short, know your deal breakers when dealing with clients. What can you put up with from difficult clients – and what behaviors and situations will not be tolerated?
When you’re doing a cost-benefit analysis to consider if this client is big enough to keep or not, remember to include your own sanity in that check. It’s not always about the dollars and cents. If a client causes you too much stress or could possibly damage the reputation of your office (either because your project goes badly or they start talking badly about you around town), they aren’t worth working with.
Do you have any horror stories about clients you had to let go or whom you wish you’d let go? Let us know in the comments.
I'm not nearly as cheery as my smiley face socks in the above photo, but at least I'm recovering from oral surgery at home.
The downsides are some pain and for me (but not the hubby!) not talking very much. There are some pluses, though: ice cream and milkshakes for every meal!
Yesterday's procedure also means I'll have more medical expenses to deduct on our 2018 tax return.
Yep, we're one of those few people who will be itemizing deductions under the Tax Cuts and Jobs Act (TCJA), primarily because of our medical situation the last couple of years. We will be able to reach a larger deductible amount than even the new almost doubled TCJA standard deduction amounts.
That's $24,000 for a jointly filing married couple in 2018. If you're a single taxpayer, the new increased standard deduction is $12,000.
The big deductible expense for us, due to employment changes, is the cost of our medical insurance.
No deducting workplace insurance premiums: Millions of folks don't think about deducting their health insurance premiums when they get that coverage through work.
This is because in many — actually most — cases, company-provided health care is a tax-free workplace fringe benefit for employees.
Yes, you do have a chunk of money taken out of your check each pay period for your health care. And it seems to increase each year.
But typically, these premiums you pay and see listed on your pay stubs are taken out of your paycheck before your income taxes are calculated. If you don't know whether you pay pre-tax or after-tax for your health care, ask your human resources or benefits department.
When your premiums are paid with pre-tax dollars, that means they already are income-tax-free. So you can't double dip, that is, use that tax benefit to claim another tax benefit.
Subsidized coverage not deductible either: Similarly, even if you pay premiums out of your own pocket, such as purchasing a policy through the Affordable Care Act (aka Obamacare), that full cost isn't likely deductible.
If you get a subsidy — that's the premium tax credit (PTC) — to help you meet your ACA policy's cost, you can't deduct the amount that's also covered by the credit.
However, any of the policy amount that you pay in excess of the PTC could be tax deductible.
If things work as planned with the PTC, though, that shouldn't leave you with much medical insurance costs to be counted as an itemized deduction.
When medical insurance is deductible: There are, however, folks who are in the same situation as the hubby and me and are able to write off a large amount of health insurance premiums payments.
This typically is the case for self-employed workers.
When your work for yourself and are not eligible for employer-sponsored medical coverage through a spouse's job, you may be eligible to write-off your health insurance premiums on your taxes.
These premiums, however, can't produce a tax loss for your business. You cannot deduct more in health insurance premiums than you earned.
If you are an employee and your company doesn't provide health care as a benefit, the coverage you buy totally on your own generally is tax deductible.
In these cases, you are paying for your policy with after-tax dollars, either by purchasing the policy directly from an insurance company or via a health insurance exchange. Deduct those payments!
Other tax-deductible policies: Also, a portion of a long-term care (LTC) insurance policy that you buy is tax deductible.
Just how much of your LTC premiums you can claim on Schedule A are based on your age and are adjusted annually for inflation. For 2018, the deductible amounts by age range are:
Also, some Medicare plans, notably Part B and Part D of the government medical benefits program, are tax deductible.
Crossing the tax deductibilty threshold: If you find you can deduct your health care policy premiums, don't get too tax happy just yet.
Determining that you can indeed deduct your medical insurance premiums is just the first step. Now you have to run the numbers.
Your deductible medical costs must be more than your standard deduction amount noted earlier. But not all your medical expenses count in pushing you past the standard numbers.
You can only claim a portion of your qualified medical expenses that exceed a portion of your income.
The good news for folks who are considering itemized medical expenses for the 2018 tax year, the threshold remains at 7.5 percent of your adjusted gross income (AGI). The cap which your medical deductions must excess under the TCJA in tax years 2019-2025 is 10 percent of AGI, making your health-related expenses that much more difficult to claim.
The bad news is that only your medical claims that re more than 7.5 percent of your AGI can be claimed.
Say, for example, your AGI is $50,000. You must have enough health-related costs that total more than $3,750. If your medical expenses come to $4,000 you can only claim $250.
With a $12,000 standard deduction, that's not going to make itemizing worthwhile unless all your other Schedule A expenses are much, much larger.
Bulking up your medical deductions: There are ways to get your medical costs to a worthwhile deduction level.
My earlier post on ways to maximize the many medical expenses that are still tax deductible under the TCJA has some ideas.
Check it out now while you have time to make all your necessary medical appointments.
You also might find these items of interest:
Even before it was official that Democrats had wrested House control from the GOP in yesterday's midterm elections, Donald J. Trump's taxes were once again a target.
Votes were still being counted and, on the West Coast cast, when some on the House tax-writing committee announced that the when leadership is transferred to them in January 2019, they will officially request to see Donald J. Trump's tax returns.
Trump knew it was coming. And he says it's no big deal.
"I don't care. They can do whatever they want, and I can do whatever I want," Trump told reporters who raised the matter of his tax returns as he exited Air Force One Nov. 5 for a midterm rally in Fort Wayne, Indiana.
What the House can and likely will do is request Trump's tax returns.
And what Trump can and likely will do is the same thing he's been doing since he announced his run for the White House more than three years ago. Ignore them.
But that won't be so easy now that his political opponents have regained a modicum of power in Washington, D.C. They have tax law, in the form of an a 1920s-era Internal Revenue Code provision that gives them a shot at seeing Trump's 1040s.
Breaking tax return tradition: During the 2016 campaign, Trump disregarded a 40-year tradition by deciding to keep his personal tax returns private.
Trump's explanation was that his taxes were under audit. He still has that excise since winning office, since all presidents' filings are automatically audited.
Trump, however, had indicated he would make his older filings to the public once the Internal Revenue Service examination was complete. But once he settled into the Oval Office, it became evident that he has no intention of opening up his tax life, prior or post-election.
Trump's other unorthodox approaches to the highest elected office in the land, such as refusing to place his self-proclaimed riches into a blind trust and letting his company continue to do business and benefit from his political post (particularly his hotel down Pennsylvania Avenue from the White House), have only increased interest in his taxes.
There's been much speculation — and salivating by partisans at the prospect — that if the Democrats got control of the House and/or Senate while Trump was in office, they would move to take a look at his tax returns.
New interest in old tax law: Here's why and how that would work.
An obscure tax code law from 1924 says that the chairmen of the House Ways and Means Committee and Senate Finance Committee (not the House Financial Services Committee as has been widely, and wrongly, reported) the two tax-writing Congressional panels, can request the president's — actually, anyone's — tax returns from the Internal Revenue Service in order to conduct an investigation.
The law was an outgrowth of the Warren G. Harding Administration's involvement in the Teapot Dome Scandal. For those of us who haven't looked at our high school history books for a while, the issue here was alleged bribery of government officials by private interests to gain leases to public oil fields.
The Congressional ability to see a citizen's tax returns was added to rectify what was an apparent conflict of interest in seeking tax data as part of an investigation. Previously, if in conducting its oversight duties Congress wanted to see any tax return, it had to request them through the president's office, even if the president and his taxes were part of the investigation.
Once the committee members review the tax returns in private, they can vote to release all, or parts, of the returns to the public.
Already tried and mostly failed under GOP rule: Rep. Bill Pascrell, Jr. is probably the happiest House member right now. The New Jersey Democrat has tried repeatedly to use the law to get a look at Trump's taxes.
Each time, House and Ways and Means leaders shot Ways and Means chairman slammed the door on Pascrell's efforts.
As rebukes of Pascrell indicate, there's been much vociferous debate over this process.
However, it's been used before, most recently, during the GOP-led House investigation into the IRS/Tea Party scandal. This issue arose in 2013 after allegations that the tax agency intentionally and for political reasons delayed granting of tax-exempt status to primarily conservative organizations
The ensuring years of questioning about the IRS' 501(c)(4) process ended last year, with many IRS leaders resigning, but without the results that many Republicans and Tea Party-affiliated groups wanted.
The Capitol Hill inquiries did, however, lead to the public release of some of the groups' privacy-protected (and redacted) tax materials, albeit no individual returns were revealed.
Trump's real tax return reaction: Despite 45's apparent nonchalance, when push comes to shove (and it will), he will likely fight the effort to let anyone, in Congress or beyond, see his tax filings.
"Still, after withholding the documents for so long, Mr. Trump is unlikely to hand over his taxes without a fight. Rudolph W. Giuliani, Mr. Trump’s personal lawyer, said this month that it would be a struggle for Democrats to prove that they have a legitimate oversight objective and that it would be a 'heck of a good battle' for the president," noted Alan Rappeport in a recent New York Times article.
And Trump would have some powerful potential allies in that battle.
The decision to turn over 45's taxes would be made by Steven Mnuchin, the man he appointed to head the Treasury Department.
The Treasury Secretary said in a pre-election interview that he would honor any legal requests from Congress to release Trump's tax returns. But, noted The New York Times, the demand would undoubtedly put Mnuchin in the uncomfortable position of balancing his loyalty to Trump with a legal requirement to deliver the returns.
Headed to the High Court: Regardless of what Mnuchin decides, the matter likely will end up in court.
I'm not saying the High Court pair will decide a matter of law simply to satisfy the man who got them jobs.
However, both were appointed in large part because of their judicial history of rulings that Trump and his advisers liked. Kavanaugh in particular has indicated that he favors protecting sitting presidents in legal cases against them.
But it will take a while before it gets to that point. So get your popcorn supplies ready and settle in for the long haul.
It's going to be a political reality show that even the former Celebrity Apprentice boss didn't see coming.
You also might find these items of interest:
Vote! Vote! Vote! Vote! Vote! Vote! Vote! Vote! Vote! Vote! Vote!
The choices you make in today's midterm elections could have a major effect on your life, including how much you'll pay in taxes.
At the national level, if the House and Senate remain under Republican control, expect more tax law changes.
Federal tax reform results: The House already has approved three bills that GOP leaders have dubbed Tax Reform 2.0.
The main focus of the multi-legislative effort is to make permanent a variety of individual and small business tax breaks that, under the Tax Cuts and Jobs Act (TCJA), are set to expire at the end of 2025. The GOP measures also would expand or create tax-favored college and retirement savings plans.
Plus, House Ways and Means Committee Chairman Kevin Brady (R-Texas) joined Donald J. Trump last month in saying his House colleagues, if still in charge after Nov. 6 would push for more, specifically a 10 percent tax cut for the middle class, when the new 116th Congress convenes in January 2019.
Across Capitol Hill, the Senate didn't act on the House proposals before recessing at the end of August. That chamber could, if it still has a post-election Republican majority, could take up those bills in the lame duck session.
And both House and Senate GOP leaders have said that the ballooning federal deficit, which hit $779 billion in October and is projected to approach $1 trillion in 2019, means that changes must be made to entitlement programs, i.e., Social Security and Medicare.
Ballot questions also beckon: Then there are the policy questions that voters will be asked to decide directly by their votes today.
Overall, U.S. voters will determine the fates of 155 statewide ballot measures in 37 states. One that’s getting a lot of attention is Ohio's initiative on drug penalties, which election watchers say is motivating voters in Cleveland.
Some of the ballot questions also involve taxes, notably those asking voters to decide on levies related to marijuana legalization (medical and recreational), sodas and other sugary beverages (and food in general) and residential real estate.
Where and when to vote: OK, you've done your midterm homework. You know which candidates and ballot questions you'll support.
Now make sure you get to the proper polling place.
You can check with your state or local election office.
Or you can use a couple of interactive tools:
Know where you're going? Great! Get to it!
Just make sure your polling place is open.
Most operate on a 7 a.m. to 7 p.m. schedule. A few, however, open earlier; a few, later.
And while some voting stations end the day earlier than 7 p.m., others stay open well past that time.
Vox has compiled a list of what time polls across the country open and close.
Same-day registration and voting: What? You didn't register in time to vote today?
That might not be a problem if you live in one of the 16 jurisdictions that allow qualified residents to register to vote and then cast a ballot on Election Day.
Election Day registration (EDR) is an option today in 15 states — California, Colorado, Connecticut, Hawaii, Idaho, Illinois, Iowa, Maine, Minnesota, Montana, New Hampshire, Utah, Vermont, Wisconsin and Wyoming — and the District of Columbia.
Report voting and problems: If you have any problems voting today, Stateline and ProPublica's Electionland want to know.
You can report issues ranging from long lines to voter ID or same-day registration difficulties to voter roll confusion to access problems for disabled voters by using your cell phone and any of the following methods:
Hunkering down for the results: Once you do your civic duty, it's time to camp out in front of the TV or at an election watch party.
If you opt to stay at home or host a party, Kitchn recommends some food, snacks and drinks that will fuel you as you watch the results roll in.
Drinks, of course, also are necessary.
Speaking of drinks, both Food & Wine and Australia's The Weekly Times have some suggested potent potables based on your election night emotional state, like the one pictured below if your favored candidate's bid tonight goes up in flames.
But, please, don't drink alone. It's always better to toast a victory or commiserate over a tough loss with some friends. And drinking games can help you make it through this long night of watching democracy in action.
Good luck to your candidates and issues. Thank you for voting.
And if you haven't been to your polling place yet, what are you waiting for? Get going!