April 29, 2018

Tip Income? Don't become an IRS audit target.

Got Tip Income?

Tip income is a frequent audit target by the IRS, and is earning more IRS scrutiny in today's gig economy.  If your income includes tip income, here is some information from IRS Tax Tip 2018-16 for help in correctly reporting tip income and avoiding a painful IRS audit.

IRS Tax Tip 2018-16:  Tip Income

Generally, income received in the form of tips is taxable. Here is some information to help taxpayers correctly report the income they receive as a tip:


  • Use the Interactive Tax Assistant. The ITA tool is a tax-law resource that asks taxpayers a series of questions and provides a response based on the answers. Taxpayers can use Is My Tip Income Taxable?
  • Show All Tips on a Tax Return. Use Form 4137, Social Security and Medicare Tax on Unreported Tip Income, to report the amount of any unreported tip income to include as additional wages. This includes the value of non-cash things someone receives as a tip, such as tickets or passes to an event.  
  • Report All Types of Tips. Taxpayers must pay tax on all tips received during the year, including those:
    • Directly from customers.
    • Added to credit cards.
    • From a tip-splitting agreement with other employees.
  • Report Tips to an Employer. Employees who receive $20 or more in tips in any month must report their tips for that month to their employer by the 10th day of the next month, including cash, check and credit card tips received. The employer must withhold federal income, Social Security and Medicare taxes on the reported tips.  
  • Keep a Daily Log of Tips. Use Publication 1244, Employee's Daily Record of Tips and Report to Employer, to record tips. This will help report the correct amount of tips on a tax return.

  • About Mary Rae Fouts

    Questions about tips and taxes?  Mary Rae Fouts, EA provides tax, insurance consulting, and expert witness services to clients who have technical or complex concerns.  For more information visit FoutsFinancialGroup.com.

    Mary Rae Fouts

    April 27, 2018

    17-Year-Old Dog Max Saves Missing 3-Year-Old Girl in Australia.

    Once again, a dog saved the day!

    Meet 17-year-old cattle dog Max.  Farm dog, and family pet on a rural farm in Australia.  In spite of Max's age - he's also blind and partially deaf - Max rose above his challenges and saved his 3-year-old human sister, who had wandered off the family farm.

    When the young girl Aurora wandered off recently about 3 PM in the afternoon, Max followed her and stayed with the young girl until rescuers found them the following morning, more than a mile away from the family farm.  It was also Max who ran to a rescuer - who just happened to be Aurora's grandmother, 1 of over 100 people in the search party -  and let Grandma to Aurora.

    It is believed that Max never left Aurora's side, and that he protected her overnight in the very rugged terrain and cold, rainy weather.   Max likely saved Aurora's life, keeping her safe and warm.

    Max

    Not bad for a 17-year-old dog, huh?  Good boy, Max!  Read more about this happy rescue in this Good News Network article.

    And just other reason why God is Dog spelled backward!

    About Mary Rae Fouts, EA

    Mary Rae Fouts, EA provides tax, insurance consulting, and expert witness services to clients who have technical or complex concerns.  Mary lives a canine-inspired life with her Faithful Canine Companions Husky-Malamute mix Sid and Chow-Chow-Pomeranian mix Lexi.  For more information visit FoutsFinancialGroup.com.

    Mary Rae Fouts

    April 25, 2018

    More California Craziness: A cancer warning on your morning cup of coffee!

    Folks, time for another only-in-California moment. 

    What now, you ask?

    It's about coffee.  You see, if pending litigation is upheld, coffee sold in California will require a warning label stating that consuming coffee may cause cancer.

    Yep.  Cancer.

    You see, roasted coffee beans contain acrylamide, a natural occurring substance. As stated in this New York Times opinion piece written by Dr. Aaron E. Carroll, MD, (who disagrees with a need for a coffee cancer warning), acrylamide is "a chemical that is made almost any time you cook starches at temperatures above 250 degrees Fahrenheit. You can make acrylamide from frying, baking, broiling or roasting — essentially anything that isn’t boiling or microwaving."
    French fries, coffee beans, and your morning toast all contain acrylamide.  In fact, according to Dr. Carroll's analysis, "acrylamide is present in about 40% of the calories consumed by people in the United States."

    Even the American Cancer Society disagrees with the coffee warning label requirement!

    A group who believes acrylamide is cancer causing filed the lawsuit to require a cancer warning label on coffee sold in California.  In spite of the fact that the American Cancer Society believes that acrylamide  consumption does not pose an increased risk of cancer, if a recent court ruling stands, the warning notice will be required on coffee.

    Just another warning notice that Californians will see and shrug off.  More hassles for businesses, restaurants, and coffee shops that sell coffee products.

    So you see, according to the Coffee Causes Cancer plaintiffs, since I had coffee and homemade sourdough toast for breakfast this morning, and another slice of toast with lunch, I am really ... really ... screwed!

    Just another Crazy in California moment.  What's next?  A warning label on my toaster?

    About Mary Rae Fouts, EA

    Mary Rae Fouts, EA provides tax, insurance consulting, and expert witness services to clients who have technical or complex concerns.  She will never forgo her morning coffee and toast.  Never, ever, ever.  For more information visit FoutsFinancialGroup.com.

    Mary Rae Fouts

    April 23, 2018

    Commissioned Insurance Agents: Is your agent honest?

    Commissioned Insurance Agents.


    While the sale of insurance is typically based on commission payments to the selling agent, commissions can create a conflict of interest in the sale of an insurance policy.  How so?  Well, an unethical agent can simply choose to sell insurance products that offer the highest commission payments, rather than selling insurance products that are in the best interest of clients.

    And sometimes, the thirst for commission payments leads to criminal activity.  Click here for a recent press release from the California Department of Insurance about a criminal scam run by former insurance agents.  The insurance agents fraudulently collected $1.9 million in upfront commission payments when they submitted bogus life insurance applications to insurance companies.

    As an aside, the lingering question I have about this matter is:  How did the insurance companies that received the bogus applications allow this matter to happen?  Nothing is said in the press release about insurance company involvement in this criminal matter.

    About Mary Rae Fouts, EA

    Insurance questions?  Mary Rae Fouts, EA provides tax, insurance consulting, and expert witness services to clients who have technical or complex concerns.  For more information visit FoutsFinancialGroup.com.

    Mary Rae Fouts

    April 21, 2018

    April: A few interesting facts about the Gregorian calendar's 4th month.

    April.


    The month of April is associated with Spring by many people in the Northern Hemisphere , even though Spring officially begins on March 20 or 21 each year.  The month of April is associated with some interesting trivia.  Here are a few things I recently discovered.


    April Trivia

    In thе Unіtеd Stаtеѕ, 4 Prеѕіdеntѕ were born іn April: Grant, Buchanan, Monroe, Jefferson.  Four Prеѕіdеntѕ have also died in April: Harrison, Lincoln, Franklin D. Roosevelt, and Nixon.

    Similarly, in the United Kіngdоm, 3 Prіmе Mіnіѕtеrѕ were born in April: Lord North, the Duke of Portland, and George Canning.  Three Prіmе Mіnіѕtеrѕ have also died in April:  Benjamin Disraeli, Henry Campbell-Bannerman, and Margaret Thatcher.

    Aрrіl іѕ аlѕо a fairly рорulаr first name for people.  April іѕ thе 423rd mоѕt соmmоn nаmе іn the Unіtеd Stаtеѕ, and the 250th most common name in the Unіtеd Kingdom.

    The exact origin of the word April is uncertain. However, the most common theory is that April is derived from the Latin verb Aperire, which means to open. This theory corresponds to Springtime events in April, in the blossoming and budding - or opening - of flowers and trees.

    April is a food happy month.  April is not only Grilled Cheese Month, it is also Pecan Month, BLT Sandwich Month, Florida Tomato Month, Garlic Month, and Soft Pretzel Month.

    April also includes the dreaded Tax Day in the United States, but let's not spoil the month by dwelling on taxes.  😁 

    Enjoy your month of April!


    About Mary Rae Fouts, EA, CFP®

    Mary Rae Fouts, EA provides tax, insurance consulting, and expert witness services to clients who have technical or complex concerns.  For more information visit FoutsFinancialGroup.com.

    Mary Rae Fouts

    April 19, 2018

    Homeowners Insurance: Are you prepared in the event of a disaster?

    Homeowners Insurance.


    Homeowners Insurance coverage is absolutely essential if you own a home.  Same with Renters Insurance coverage if you rent your home.  Although Homeowners Insurance is only required if you have a mortgage on your home, it is an absolute must to have if you own a home.  Just because a fire or other disaster has not happened at your home, does not mean a calamity never will occur.

    In the event of a fire or other disaster at your home, are you prepared for the insurance claim process?  Most people are not, as they have few records about home construction and contents.

    For help in keeping track of home contents, click here to download a handy Home Inventory Guide from the California Department of Insurance.

    About Mary Rae Fouts, EA, CFP®

    Questions about Homeowners or Renters Insurance?  Mary Rae Fouts, EA provides tax, insurance consulting, and expert witness services to clients who have technical or complex concerns.  For more information visit FoutsFinancialGroup.com.

    Mary Rae Fouts

    April 17, 2018

    IRS: Trying to E-File Tax Returns Today? No Can Do. Come Back in 7981 Years After the IRS Systems Are Back Up!

    IRS E-file and Payment Systems Are Down.


    And this has been the case since early this morning.  IRS Systems Down.  As in Crashed.  Today, on Tax Day, when 2017 Individual Income Tax Returns (or Extensions to File with any due tax payments) are due, as well as 1st Estimated Tax Payments for taxpayers (such as myself) who pay taxes via quarterly estimated payments.

    And what is the IRS saying about this huge mess?  Essentially nothing.

    Here is the notice taxpayers saw today when they tried to make electronic tax payments via the IRS Direct Pay System:

    image credit:  newyorktimes.com

    No kidding.  Come back to pay (and file) your taxes in 7981 years, after this "Planned Outage" is over.

    For more information on this ginormous debacle, check out this New York Times article.

    Hackers?  Don't know, but that is a possibility.  Which, given the lack of computer security at the IRS, would come as no surprise to me.  (I posted about about this critical topic just last week, here.)  Just one more reason why I have never, ever, EVER been a proponent of electronic payment of tax payments, and electronic filing of tax returns. 

    About Mary Rae Fouts, EA

    Mary Rae Fouts, EA provides tax, insurance consulting, and expert witness services to clients who have technical or complex concerns.  For more information visit FoutsFinancialGroup.com.

    Mary Rae Fouts

    April 16, 2018

    Sourdough Bread: Here is my Most Delicious Everyday Bread!

    Sourdough Bread.


    Baking with Sourdough is admittedly one of my obsessions in life.  I hereby acknowledge that I am an SOB - Sourdough Obsessed Baker.  Nothing wrong with that, right?!

    Except, perhaps, that my husband Jim claims there is either Sourdough Starter or Sourdough Bread Dough on everything in the kitchen.  No comment from me.  And please, it is not my fault that Jim left his wallet on the kitchen counter!  😊  (Yup, bread dough on the wallet.)

    Here is my Everyday Sourdough Bread.  Some of the best bread I have ever, ever made.  All wild sourdough yeast (sourdough starter), no active or dried yeast.  I bake the bread in larger 1.5 pound pans, which are sized 10" x 5" x 3".Easy!  This creates a nicely-sized bread loaf for sandwiches, and a uniform slice.  4 of these larger loaf pans just fit into my oven.  So glad for the larger oven in my professional series Frigidaire Range!

    No fancy boules for this Sourdough Baker, just my classic loaves.  Here is a recent Sourdough Everyday Bread bake.  Want some?



    My Everyday Bread has a nicely browned crust - golden brown, not burnt - and a tender, not too holey crumb.  And the aroma, enhanced by the butter and local honey in the bread dough ... Oh my!  Makes the best breakfast toast ever!


    Enjoy life and bake bread.  Sourdough Bread, that is!

    About Mary Rae Fouts, EA, CFP®

    Mary Rae Fouts, EA provides tax, insurance consulting, and expert witness services to clients who have technical or complex concerns.  And, an admitted SOB - Sourdough Obsessed Baker.  For more information visit FoutsFinancialGroup.com.

    Mary Rae Fouts

    April 14, 2018

    Missing Husky Identified in an Unusual Way: By Singing to His Favorite Tune!

    Photo credit:  goodnewsnetwork.org

    Missing Husky ID'd by singing to his favorite tune!


    Ready for a heartwarming story that will put a smile on your face and perhaps tears in your eyes?  A missing Husky in Israel was found by police and ID'd in an unusual manner:  By singing to his favorite tune.

    So what happened?  After the Husky's owner reported the dog missing, the dog was eventually found by the joint effort of a group of good samaritan teenagers and police.  The Husky was skinny and a bit disheveled, but otherwise unharmed.

    When the police called the owner with the good news, the owner stated the dog could be positively identified by playing one of the dog's favorite songs, with which the dog loved singing along.   And singing as only a Husky can do!  The Husky's favorite songs just happened to be 2 television show theme songs.

    I cannot understand what the people in the video clip are saying, but I truly do not need to.  Watch the video below to see what happens when a police officer plays the Husky's favorite television show tune over his phone ... and the subsequent tear-filled Husky/Owner reunion!

    You can also learn more about the reunited lost Husky and his favorite tunes in this Good News Network article.


    About Mary Rae Fouts, EA

    Mary Rae Fouts, EA provides tax, insurance consulting, and expert witness services to clients who have technical or complex concerns.  She lives a very dog-centered life with her Husky-Malamute mix Sid and Chow Chow-Pomeranian mix Lexi.  For more information visit FoutsFinancialGroup.com.

    Mary Rae Fouts

    April 12, 2018

    Personal Data Theft: Think Facebook is a risk? It's nothing compared to the IRS.

    Personal Data Theft.


    Just who ... or what ... is the real risk, anyway?

    With all of the recent hubbub about the theft of personal data from Facebook accounts, I've wondered why almost no attention ... and almost no publicity ... is given to the ginormous Elephant in the Room personal data risk.

    Facebook?  No.

    Google?  Nope.

    It's the IRS.

    Personal data on Facebook is one thing.  But the personal data maintained on the Internal Revenue Service's 2200+ databases and other computer systems ... and the data security, or glaring lack thereof ...  is quite another.  And few people, including our federally elected politicians, seem to pay attention.  Or much care.

    The Treasury Inspector General for Tax Administration, or TIGTA, performs an annual audit of the IRS, which includes reviewing the adequacy and security of IRS information technology.  TIGTA consistently finds that the IRS maintains inadequate security throughout its information technology systems, placing highly sensitive taxpayer information at risk.

    Heck, some of the IRS computer operating systems are so old that current anti-virus security programs are unable to run on the operating systems, leaving the operating systems with no protection from hackers.

    720,000 U.S. Taxpayer Accounts Hacked at the IRS
    Where is the outrage and investigation
    into IRS computer security? 

    TIGTA recently reported (read the March 23, 2018 press release here) that the IRS Tax Transcript Delivery System, commonly called the Get Transcript Service, is not adequately protected against unauthorized release of tax information to hackers.  And this is after the Get Transcript Service was hacked in 2015, and personal data from more than 720,000 U.S. taxpayers was stolen.

    The hacked and stolen taxpayer data included names, social security numbers, birth dates, and highly sensitive tax return information.  And 3 years later, the Get Transcript Service ... and your highly sensitive tax return and tax form data ... remains at risk.

    And that's just one small component of the IRS information technology system.

    So my question is:  Where is all of the public outrage and Congressional Investigation about the glaring ... and very real ... lack of adequate computer data security at the IRS?  Or perhaps it's simply easier and sexier for our elected officials to drill Mark Zuckerberg about Facebook account privacy, what hotel he stayed at in Washington, D.C., and who he sent emails to during his Washington D.C. stay.

    Or maybe we'll see some attention paid to this critical issue when a United States Senator or Representative has his or her taxpayer data stolen from the IRS.  Perhaps then our federally elected officials will learn that, golly gee, ensuring the protection of U.S. taxpayer data at the Internal Revenue Service is a tad more important than getting one's panties in a wad over a data breach at Facebook.

    About Mary Rae Fouts, EA

    Mary Rae Fouts, EA provides tax, insurance consulting, and expert witness services to clients who have technical or complex concerns.  For more information visit FoutsFinancialGroup.com.

    Mary Rae Fouts

    April 11, 2018

    Happy National Pet Day!

    National Pet Day


    While every day is admittedly a Dog Day at my home, today is National Pet Day.

    Here are my Faithful Canine Companions, Husky-Malamute mix Sid and ChowChow-Pomeranian mix Lexi, on a recent afternoon as they relaxed on a sofa and gazed out onto the front yard.  They remind me to enjoy life and life in the present, as each day is truly a gift.


    To all Companion Animals and their Humans:  Enjoy your day!

    About Mary Rae Fouts, EA

    Mary Rae Fouts, EA provides tax, insurance consulting, and expert witness services to clients who have technical or complex concerns.  She enjoys a dog centered life with her Faithful Canine Companions Sid and Lexi.   For more information about Mary and her professional services, visit FoutsFinancialGroup.com.

    Mary Rae Fouts

    April 5, 2018

    Lexi: I think my princess Chow-mix Lexi likes it here!

    Lexi.

    Our precious little lioness.  

    Our Chow Chow-Pomeranian mix Faithful Canine Companion. 

    Severely abused and neglected in her prior life, Lexi was thin furred, very skinny, and terrified of everything when we adopted her from the Antioch, California animal shelter in October 2014.

    With loving care and enrichment, patience, and canine help from our goofy Husky-Malamute mix Sid, Lexi blossomed into a confident, happy, healthy, and enjoy-each-moment beautiful dog.

    Here is Lexi relaxing in the backyard on a recent beautiful afternoon.  I kinda think she likes it here!




    Unconditional Love is as close as your local public animal shelters.  Please adopt, don't shop.

    About Mary Rae Fouts, EA

    Mary Rae Fouts, EA provides tax, insurance consulting, and expert witness services to clients who have technical or complex concerns.  She and her husband Jim enjoyed a happy and fulfilling live with their Faithful Canine Companions Sid and Lexi.  For more information visit FoutsFinancialGroup.com.

    Mary Rae Fouts

    Oakland A's Opening Day: Beautiful weather, but where were the fans?

    Oakland, California.


    Good ol' Oakland just can't seem to do much right by its professional sports teams.  The Warriors basketball team is moving to a new stadium in San Francisco.  The Raiders football teams is off to new digs in Las Vegas.

    And the Oakland A's baseball team?  Well, they don't know what they are doing, or where they are going to go.  And Oakland A's fans - or perhaps, former fans - really don't seem to much care.

    The Oakland A's opening day at home last week enjoyed picture perfect baseball weather.  But as for fans, they were pretty much AWOL.  Paid attendance at the Oakland A's opening day home game was a dismal 27,764, in a stadium (well, a very crappy football/baseball combo stadium in an equally crappy, crime ridden neighborhood) that has a capacity of 63,132 spectators.  According to this column in the East Bay Times, this year's Oakland A's opening day attendance was nearly 10,000 less than each of the opening games in the past 5 years.

    Ouch.  Take a look at all of the empty seats here:

    photo credit:  eastbaytimes.com

    But if you think this attendance is bad, consider another attendance statistic pinned to the Oakland A's backs:  possibly the worst attended Major League Baseball game of all times.  This happened on April 17, 1979 when the Oakland A's hosted the Seattle Mariners.  And about that attendance?  Well, only 250 people showed up to watch the home game.  Yes, a paid attendance of 250.  Read about that infamous game here.

    Not sure what's going to happen to the Oakland A's and their search for a new stadium, but their effort is only going to get more bleak as the team's fan base continues to erode.

    About Mary Rae Fouts, EA

    Mary Rae Fouts, EA provides tax, insurance consulting, and expert witness services to clients who have technical or complex concerns.  Oh, and she is a major baseball fan!  (Go Giants!)  For more information visit FoutsFinancialGroup.com.

    Mary Rae Fouts

    April 3, 2018

    Uber's Autonomous Vehicles: Why has society become so risk averse?

    Uber's Autonomous Vehicle program made headlines once again last week when the company announced it would not renew its permit to test self-driving vehicles in California.  Read the New York Times article covering Uber's announcement here.

    When my husband Jim read this article, he brought up a good point:
    "Why has society become so risk averse?"

    Uber's Autonomous Vehicle Program


    Granted, the autonomous (self-driving) vehicle is still in its infancy stage of development, and clearly there are issues to be worked out.  As happens with all ... ALL ... new technologies.  The recent fatal accident in Arizona involving a self-driving Uber car - and a back-up human driver who was clearly distracted at the time of the fatal accident - most certainly warrants serious investigation.  Also, the questions of insurance issues and who ... or what ... is liable in a self-driving vehicle accident when there is no person behind the steering wheel make for fascinating debate and discussion.

    But ... does the accident warrant a near shut down of Uber's autonomous driving program, as appears to be happening?  I think not.  Autonomous vehicles hold so much promise for providing transportation for people who cannot drive, should not drive or ... like me ... simply do not like to drive.  And I really, really, REALLY despise driving!

    As my husband Jim said:
    "If the inventors of the original automobiles had been this risk averse, we would still be traveling via horse and buggy."
    It would be a downright shame to end development of a technology that holds so much promise for society.

    About Mary Rae Fouts, EA

    Mary Rae Fouts, EA provides tax, insurance consulting, and expert witness services to clients who have technical or complex concerns.  For more information visit FoutsFinancialGroup.com.

    Mary Rae Fouts