Keeping Your Tax Information Secure

The IRS announced last week that the 2022 tax filing season starts on January 24th. Most people will not have all their necessary tax documents for 2021 by then, but it’s the first day that the IRS will accept and start processing income tax returns for last year. As you’re gathering those W-2s, 1099s, 1098s, P&Ls, and the rest of the alphanumeric “soup” that comprises your tax information, how are you keeping it secure?

Most taxpayers receive or download their tax documents electronically and save them in a folder on a home computer. While the “work at home” aspect of the pandemic shed light on the need for enhanced cybersecurity at home, tax time reminds us how important it is to protect against identity theft. The IRS collaborates with the tax software and preparer communities to secure the tax filing process. Taxpayers have a role in keeping their tax information secure, too.

Here are three tips from the IRS for taxpayers to protect online personal and financial data from identity thieves:

  1. Keep Your Computer and Mobile Phone Secure 

Use firewall and security software on every device that contains confidential information and set it for automatic updates. Use strong, unique passwords and consider using a password manager to keep it all straight. Implement Multi-Factor Authentication. Only give personal information over encrypted websites, those with a “https” address. Periodically back-up your data onto an external drive as an “insurance policy” against ransomware or a crashed drive.

  1. Avoid Phishing Scams and Malware 

Identity thieves use phishing emails to trick users into giving up passwords and other information. Don’t take the bait. Before opening messages in your inbox, look out for emails that pose as trusted source (e.g., your bank) and for emails with an urgent message (e.g., update your account now!) with a link or attachment. Never download software or apps from pop-up advertising. Talk to your family members who also go online (i.e., everyone) about online security, both with computers and mobile devices. 

  1. Protect Your Tax Return 

Taxpayers who can validate their identities can obtain an Identity Protection PIN. An IP PIN is a six-digit code that prevents an identity thief from filing a fraudulent tax return using your Social Security number. After the IRS issues an IP PIN, that taxpayer’s tax return cannot be filed without entering the IP PIN to “unlock” the taxpayer’s return for that year. Learn more about getting an annual IP PIN at www.irs.gov/ippin

The 2022 tax filing season starts next week, on January 24th. As you receive or download all the tax documents that comprise your tax information, how are you keeping them secure? The IRS has tips for taxpayers to keep their confidential tax and other financial information secure. Read all about it here at https://www.irs.gov/pub/irs-pdf/p4524.pdf.

IRS Help to Prepare for Tax Season

Believe it or not, yet another tax filing season is upon us. Pretty soon, you’ll start getting your 2021 year-end wage, investment, and mortgage interest statements. Between now and when you are ready to fill out those lovely tax forms, you can take three steps to get a jump on tax season and feel more confident. Most of the tips you need are on the IRS website. For free! Well, not exactly for free – our tax dollars pay for the IRS. 

Get your money’s worth with these three tips to be prepared for tax season:

  • Plan Ahead

You can take steps now to get a jump on filing your 2021 income tax return. Use this link to access a list of documents you’ll need to file, check on your tax withholdings, verify your bank information, and reconcile your Advance Child Tax Credit. This page also has a link to potential issues that can delay the processing of your 2021 income tax return. https://www.irs.gov/individuals/steps-to-take-now-to-get-a-jump-on-next-years-taxes

  • Check Your Online Account

Every taxpayer can access her or his online account to see the information that the IRS has on file. Your individual account information includes any outstanding tax balances, a five-year history of payments made, and copies of your tax records. You can even view the details of any payment plans in place with the IRS. https://www.irs.gov/payments/your-online-account

  • Expectations for IRS Operations

The IRS is just as overworked and under-resourced as it was during the last two tax seasons. Service delays include phone support call wait times, paper return processing times, and manual reviews of electronically filed returns. While they are reporting that mission-critical functions are continuing during COVID-19, this link provides periodic updates on expected wait times to reduce frustration and potential complaints. https://www.irs.gov/newsroom/irs-operations-during-covid-19-mission-critical-functions-continue

Tax season is almost here. The IRS has tips to help you prepare and feel more confident about filing an accurate return, and to make the filing process go more smoothly for everyone. Being prepared can help you prevent a delay in processing your return and help manage your expectations for IRS operations during tax filing season. Sure, filing your taxes is not a lot of fun, but getting prepared now will make the process easier and less stressful.

Reflections on 2021 – Plans for 2022

The end of one year and the beginning of another is the perfect time to pause and savor your successes from the year that is ending. Celebrate both your business and your personal accomplishments from 2021, month by month. Reflections on the 2021 goals that you achieved can also be the genesis for planning what you want to achieve during 2022. You know what they say…a goal without a plan is just a dream

Whether you are expanding, launching something new or maintaining the status quo, 2022 will be different than 2021. That means setting new goals and making a new plan. Starting is always the hardest part, so begin by identifying one overarching change you want to achieve by the end of the year. Want more customers, higher cash flow, or a new worker? Focus on achieving that one change, then break it down into manageable pieces.

Change doesn’t just happen; you need a plan to get it done. Follow these three planning tips to achieve your goals in 2022:

  • Gather the Numbers

Quantify all the applicable aspects of your goals. This task will require some research and could entail making estimates and assumptions. For example, how many more customers do you want? Can you quantify the additional income and cost of serving more customers? What about how much a new worker would cost and how much additional income they could generate? The more numbers you can nail down, the better.

  • Be Realistic

Keep market conditions and your resource capacity in mind when setting growth and other goals. It’s important to be realistic to ensure that your goals are achievable. Setting unrealistic objectives is not only discouraging, but it can also result in allocating resources – aka time and money – on activities that are unlikely to succeed. Better to target those resources on realistic, achievable goals.

  • Adjust As Needed

No matter how well you research the numbers and focus on what’s realistic, any view of future events is imperfect, as we’ve seen with COVID-19. Market conditions and other factors that you depended on when setting your goals could change. Periodically assess progress on meeting your objectives. Are you on track? Why or why not? Based on those answers, you may need to make some adjustments.

The end of 2021 is the perfect time to savor your successes and to plan for what you want to achieve in 2022. Don’t let your goals turn into the dreams you never achieved. Establish a plan for 2022 and turn those dreams into your reality.