Tag Archives: taxes

How to Track Your Expenses

Expense Tracking

One of the most important tenets of a stable financial life is to spend less than you make. That may sound pretty basic, and it is, but it’s also easier said than done in some cases. It’s surprising how quickly a few extra purchases here and there can add up to totally derail your financial health. The key to staying on top of that is to track your expenses. Know how much you need for your bills, know how much leeway you have, and keep things in the black. It makes tax time easier too.

Paper and Pencil

Certainly not the most glamorous technique, but also not prone to internet outages or software glitches, a basic paper budget can do the job (you can even print out blank budget pages from the internet). When you pay a bill, write a check, shop online or bring home a receipt, jot down what you spent and subtract it from your income for that period. A page taped inside a kitchen cupboard works, or in your planner. If you want to track budget categories, like groceries, utilities, or gas, make a list for each.

Excel or Spreadsheet

A more detailed, if complicated, option is to use a spreadsheet. If you have some familiarity with spreadsheets (or can learn), this can be a good choice. The spreadsheet can be set up to do the math for you; enter your income and expenses and keep a running tally. One advantage is that categories can be easily separated (even color coded), a total budget set for each, and you can see at a glance how much you have left for dinner out or supporting a worthy cause.

Budget Apps

Apps vary in cost and features, but they can be very convenient. Some let you snap photos of your receipts, link with your bank account, or connect with a partner so everyone is on the same page. You can set goals and watch your progress, and get reminders when bills are due. Digital privacy is a reasonable concern, so make sure you choose a trustworthy platform or service before you share bank or financial data.

Choose and Use

Whether it’s simple and old-school, or a high-tech monthly service, the key is to make use of it. The one that works is the one you use.

Tax Updates September 1

IRS Waives Penalty Automatically

More than 400,000 eligible taxpayers who were subject to a penalty for underestimated
tax payments for the 2018 tax year will automatically receive the waiver, the IRS has
announced . No action is required for eligible taxpayers to receive this waiver.
Additionally, taxpayers who already paid the penalty will receive refunds.

New Associate Chief Counsel Selected

The Income Tax and Accounting (ITA) Division has a new associate chief counsel in the
person of John Moriarty . This division provides legal advisory services regarding
fundamental rules of the federal tax system, including many income tax and tax
accounting issues. IRS Chief Counsel Mike Desmond calls him “an outstanding choice
for this important assignment.”

Tax Security Remains a Priority

The IRS continues to help tax professionals secure client data and reduce tax fraud.
“Taxes-Security-Together” – Step 5 reminds tax professionals to report data breaches
and thefts immediately, and to create a data recovery plan. If the IRS is notified quickly,
they can help stop fraudulent returns from being filed. The data recovery plan should
include the steps of notifying the IRS and law enforcement, other experts and officials,
and clients. This is the final step in the Taxes-Security-Together Checklist.

IRS Warns of New Email Scam

The IRS is warning taxpayers to be aware of a new email phishing/malware scam which
attempts to impersonate the IRS. Subject lines may include “Automatic Income Tax
Reminder” or “Electronic Tax Return Reminder.” The IRS reiterates that they DO NOT
contact taxpayers over email (or text message, social media, etc), and anything
purporting to be the IRS via email is not to be trusted. Malware can give imposters
access to taxpayer’s computer, files, even keystroke history, eventually giving them PIN
numbers and passwords to sensitive accounts. More information can be found at the
IRS’ Phishing and Online Scams page.

IRS Updates Mid July

IRS Updates, July 16

Data Security and Tax Professionals

The IRS and Security Summit partners have issued a checklist to help tax professionals stay ahead of scams and fraud risks. Cybercriminals continue to evolve tactics, but reported identity theft is down significantly since 2015. Tax professionals are urged to deploy the “Security Six” measures (anti-virus software, firewall, two-factor authentication, backup services, drive encryption, and VPNs), create a data security plan, be aware of the latest email phishing scams, recognize the signs of client data theft, and create a data recovery plan. More resources are available.

EITC Report and “Subway Map” Released

National Taxpayer Advocate Nina E. Olson has released a special report on the Earned Income Tax Credit (EITC), which makes recommendations aimed at increasing the participation rate of eligible taxpayers and reduce overclaims by ineligible taxpayers. Additionally, the Taxpayer Advocate Service (TAS) has published a subway map that illustrates a taxpayer’s “journey” through the tax system to help individuals better understand the tax process. Among the EITC recommendations is that the IRS acknowledge its role as an administrator of benefits programs, and that Congress hold regular oversight hearings of the IRS. 

Summertime Tax Tips

Many common summertime activities can have an impact on next year’s taxes or deductions. Getting married? That has tax implications. Summer day camp (not overnight camp) can often qualify for the Child and Dependent Care Credit. Part time and seasonal workers should use the Withholding Calculator to make sure their withholding is appropriate. If you plan to itemize deductions next year, buying or refinancing a home, donating cash or time, and paying state and local taxes are things to keep track of to make filing easier. A tax professional can help you be ready for tax season.

Refunds For Combat-Injured Veterans

Time is running out for some combat-injured veterans to claim a tax refund. Those who received disability severance payments after 1991 and claimed it as income may be eligible for a refund of up to $3200. Eligible veterans should have received a mailed notice from the Department of Defense in July of 2018 explaining how to claim their tax refunds. The IRS has instructions for claiming the refund, or what to do if you are eligible for the refund but received no mailed notice.