Colorado Springs: What Did I Learn from the 2022 Tax Season?

 

In fact, what did I learn from the 2022 tax season? As well as what do you need to know for 2022? Well, I've been in this business for 20 plus years doing a lot of different tax returns, individual business tax returns, and 2022 certainly hit some firsts, as we were doing tax returns for the 2021 tax year, as well as much slow service from the Internal Revenue Service. All of us know you get on the phone; it takes what takes forever. And sometimes you don't even get through a very, very low percentage of IRS calls are actually even answered. I do know that if I have clients, which I had a few get the little ID verification letters, IRS Call this number or do it online? Well, I'll tell you what calling the number used to work great. But this year, you just cannot get through, it says there's just too many calls going on. I've tried it personally myself a few times, just trying to see how long it's taking to get through for a client. And guess what, it just takes a while.

So then now we're going to try to do the id.me, which I haven't personally done that yet. But I'm gonna try to walk some clients through to try to help them to make sure they get their refunds because they're still waiting for it. And that's just plain crazy. Now, last year, going into the 2021 tax season, the IRS had opened up the system to out for everyone to get what's known as an Identity Protection ID number or an IP pin which was only previously available to those who had had ID theft problems. Now at the beginning of each tax season, right in January, you can go on to irs.gov, verify yourself, get a six-digit number that's assigned to you. And what the purpose of this is to present misuse of your social security number on someone filing a fraudulent tax return. So, keep that in mind. That's something you can definitely do and something I encourage you to do as well. But it's something you got to go in and do each and every year. That way you can prevent yourself from basically having a fraudulent tax return. So now a few of the items that we covered in 2021 tax year are gone.

And that's what I want to kind of touch on now just so you don't want to think about or be thinking about, well, I got all this great tax credits. I got these great refunds when I filed my tax return in 2022. But is it going to happen in 2021? Well, let's see. Well in 2021, keep in mind the Child Tax Credits, this is perhaps the one that most people really observed that is gone, is that you got a $3,000 tax credit for those children that you have from ages six through 17 and $3,600. For those under age six, plus you got half of that up in advance some individuals, some parent to opt out of that advance, others did not. And as a result, what happened in many cases, and I actually had this happen, many actually had reduced refunds at tax time, and I had to sit down and explain to them. This is why your refund is less, now it didn't happen with everybody. But it did happen with some daycare, this was also a huge difference in 2021. With a daycare amount jumping from $3000 per child and $6000 for two or more up to $8000, and $16000, into for 2021. But that was only for the tax year 2021.

That's gone. So then if you're planning and looking ahead to 2022, on your daycare, well be keep in mind that the credits $3000 for one child, and up to $6000 for two children, there's other limits in there. And it's not fully refundable. That was a difference 2021 credit was fully refundable, for the tax year 2022 that we're planning for. Now, you're not dealing with a refundable credit for daycare, if you're having daycare and we do know that someone, having less daycare just simply because of the pandemic and there's your daycare providers. Now, one thing to keep in mind with the daycare credit that you're getting is that it doesn't necessarily have to be a licensed daycare, but you do have to have a tax ID number for the individual to whom you're paying for daycare, because they got to turn around and claim it as income on their tax returns. So, there's a difference there that to keep in mind as well.

Now, Earned Income Credit was very challenging this year. And there's some things that are gone with that. So, I encourage you if you're really depending on the Earned Income Tax Credit, go get a job, go find employment, because a lot of the past things that happened for 2021 are gone. One of the common, one of the other deals was is that if you were 19, and not in school, or part of the foster care system or a homeless youth, if you're 19, you qualify this year for 2021. You were age 24. If you're a student, you've qualified for the Earned Income Tax Credit or 18. If you are in foster care or home with you and you had earned income you qualified for the Earned Income Tax Credit, that is gone for 2022. It reverts back to what existed before, for 2020 and earlier and for 2020. To keep in mind that need to be between the ages of 25 and 65 to qualify for the Earned Income Tax Credit, which that was actually kind of nice for those over 65, because it was over 65 for 2021 also qualified for the Earned Income Tax Credit.

We're previous years they did not but that was once again exclusive to this tax year that we just did 2021. Now another unique feature that was on the 2021 taxes is that if you didn't have that much earned income in 2021, you could have elected to use your 2019 income for calculation purposes of the Earned Income Tax Credit if it gave you a higher credit amount. And I did have several clients that took advantage of this and were able to get them a little bit better refund because of this provision. But that once again, is gone. And so, for 2022 It is vital if you're using this credit that you go find qualifying income, wages to help you to be able to get this credit for 2022. And keep in mind things like retirement income, Social Security, also unemployment, those are not considered Earned Income for the purposes of the Earned Income Tax Credit. So, you need to have self-employment income, Legitimate self-employment income, so keep records, keep good records, especially if you didn't pay in cash, you need to keep records.

Now that cash can be considered but you got to have record keeping receipts, write out receipts, keep records of expenses, all of those can certainly help you to get that credit. If you're self-employed, if you're working at a, at a job, go work, get a job. There's a lot of them out there. So go find work, get have the wages, so you can qualify for the Earned Income Tax Credit. One of the headaches that I had as a tax professional was the Recovery Rebate Credit or what that $1,400 stimulus payment that was sent out in March April May of 2021. If you didn't get it for whatever reason, you were able to claim it on your 21-tax return is recovering rebate credit that is gone as well. So, we're not going to be working to claim that but if you still had not received it, you're gonna have a couple more you years to be able to claim that credit because of just the statute of limitations on tax return filing, so but you don't want to miss out if you didn't qualify for. Also, through 2021, there are a lot of the payroll Protection Program loans or PPP loans that many employers qualified for.

I'm not going to go into too much detail on these, but what I am going to say is that there was first draw, second draw loans, these redirect incentives for businesses to keep their workers some businesses did very well took advantage of these programs, if you're a sole proprietor or a farmer, but you really made out well with these because you took in your tax return. And basically, it was free money, and several clients that were able to take advantage of this through their bank. And their bankers were very good about helping them through these SBA programs, other businesses, if you had employees that you were providing for and getting the loan for on the first draw, or the second draw, or maybe you got just the first draw just depends. But you still needed to use it primarily for wages, but then the rules kind of adjusted as time went on, but you still needed to go in and apply for forgiveness of along, basically certifying that you used it for the appropriate purposes.

And as long as you've gotten that certification done, once again, essentially free money with of course, the provision that was provided through law changes is that even though the it was essentially tax-free income, you're able to deduct the expenses that you paid with the PPP loan. And because many have done this, it's kinds of tax-free income. Now, if you were a partner, in a partnership, an LLC, or a shareholder, in an S corp, this is basically considered tax free income to you or other tax-free income. So, it could actually kind of help with your basis as well. But you'd have to talk to your tax professional or come in and talk to us to be able to help you see exactly what we can do to help you there. If you're still needing to file that, we're definitely available to help you with that. And deducting expenses, as usual through the PPP loans very, very productive for you.

Now also in 2021, and 2022, this is a unique deduction. In all prior years, in the longest time, I've been doing tax returns, meals have always been 50% deduction. But if you're eating in a restaurant, this is the interesting part of that restaurant meals are 100% deductible for 2021 and 2022. So, if you're on the road, a lot and having meals as a result of business travel, and you're eating in restaurants, hey, keep those good receipts, keep good records, you can get 100% of those meals. Now, of course truck drivers, they got the special provision to get 80% on their meals because of the Department of Transportation regulations, which is a very nice provision. I work for several truck drivers on that the over the road truck drivers, there's even a provision for local truck drivers when it comes to meals and per diem, which we really do take good advantage of. So, keep these few points in mind of what is not around for 2021, for I mean for 2022 tax returns. So, you need to make sure you're using a good tax professional to help you walk through all of these particular items. Now some important points that I always this talk about here is good books and records.

I constantly, constantly mentioned to you and mentioned to the clients to whom I personally work with about a mileage log if you're going to claim mileage use a vehicle. You need to keep a mileage log in order to be able to take mileage and automotive expenses because that is what is going to help you in the event of an audit. And once again, another tax court case came through. In this case it was a taxpayer who was a heavy equipment operator. This is for tax year 2014 that this case referred back to this operator work in several locations. He claimed 32,640 miles on his tax return. He just claimed the miles. He did not have a log. He did not keep a calendar. He did not keep a record of work location, even couldn't even provide testimony in the Tax Court regarding the work locations. What does this happen to him? Well, the court Tax Court said Nope. You cannot take this deduction for mileage because you do not have the verification, you do not have the log, you do not have what is needed to be able to properly claim the deduction, which is why I stress so hard, you need to make sure you keep a mileage log when you're having vehicle expenses or wanting to claim vehicle expenses.

And that's even if you're taking actual expenses and depreciation on your business vehicle, it is a absolute must to do that. And some way Well, I'm not gonna keep a record, I'm not good at writing it down. You know, you just got to figure out how to do it. There's apps out there and one app that I tend to mention to individuals to use to help them Track business mileage is called Mile IQ is free, you can use it to track business miles, personal miles, easily an easy app to use from what I understand. So, I would suggest doing that or keep a paper now, what also can help you in doing so is that you take your vehicle for new tires, you take your vehicle for various service work, you get annual maintenance work, you get quarterly oil changes, or maybe oil changes more often. You need to have those records, because what happens is that when you take it into the repair shop, they will record the mileage. And that's actual further verification of your mileage for the year when you claim it.

So yes, keep those excellent records. So that you can have that should once again, just you get that unexpected letter from the IRS because they're, they're trending toward enforcement through Congress right now, or at least that's what they're trying to push. So, we want to make sure you as a taxpayer, are ready for that. So, keep your mileage log and keep it going strong. Now, we want to think about another area, which is your electric vehicles, I'm bringing this up because many are concerned about the cost of a fuel, gasoline and diesel and so on. So maybe some of you are looking at alternatives, such as the electric vehicles, there is a Federal Electric Vehicle Credit that is still available. Yes, some models like Tesla, and GM, if you go and buy a new one of those models, you cannot get the Federal Electric Vehicle Credit and you can't even get the state credit. You might or you might be able to get the credit in some states, it just has to be a new vehicle. But you cannot get the federal credit because the Federal Credit for Electric Vehicles phases out when a manufacturer sells at least 200,000 qualifying vehicles, and GM and Tesla have already sold more than 200,000 of the qualifying vehicles. Now, once again, this vehicle has to have a gross vehicle weight under 14,000 pounds. And the credit is really nice because it's raised anywhere from $2500 to $7500 credit that you get for purchasing of a vehicle. Now there is a very long list.

It's amazing you only hear about a few electric vehicles. But there is an essentially very comprehensive list that you can get from the IRS and talks about all the makes and models of electric cars that you can buy that you can get a new Electric Federal Vehicle Credit on. And certainly, if that's what you're thinking about doing, you need to take a little bit closer look at that. Maybe look at one of these vehicles, I mean, there are, there are models and makes vehicles on there that I had never even heard of before. And then, of course some of the more common names like there's like some you see advertised, like the Nissan, a Nissan still qualifies for there's some BMW and some other makes that are out there that you that you can get a vehicle credit on. Now, of course, as we always talked about the cost can be the issue for many people on these new vehicles. So, but you got to examine and see what's worked. But I just wanted to go ahead and mention that to you. That way, you know that that credit is out there, and is available if you're considering purchasing an electric vehicle.

And another area I'm going to touch on is in the planning session as we look at where we're heading, going into 2022. That's exactly it is, where are we heading? What am I what are we doing? What am I doing? Many people are still getting used to the new W-4s that have been out the last couple years. And they're like, oh my goodness, I mark this and my withholding just isn't right. While there is a calculator you can use on the IRS website, wage withholding calculator estimator that can help you to do that. If you have more than one place where you're working. You may want to use this but I always recommend and I always think it's best not just to use what the IRS provides, but use a tax professional. That's why I keep myself available year-around because I know your situation better than the IRS estimator does to help you perhaps to realize, you fill out that W-4 form.

And what happens when you fill it out is that it just goes off of a base calculation. And it may not necessarily be right for you, it's in essence, it's just kind of guessing. So, if you haven't thought about it, you need to have an, I call it a mid-year meeting with your tax professional, get your pay stubs that show your year to date on withholding federal and state and sit down, have a meeting, whether in person or video conference, have that conversation so that you're not there. In January, in this case of 2023 going, what's up with my withholding have that conversation, let's look at it ahead of time. Now, if you're a self-employed person, or you're operating some type of entity business, like an S corp, or C Corp, you better get your books on par, you better not just be relying upon a type of online software to make sure your books are right. Don't go cheap assets when I say don't go cheap, go with someone who can really help you, look at your books and don't just depend upon individuals who you think are getting the job done. Now I know I say this, because I've encountered over the years, I've encountered people who have come to me right near the end of tax season in some cases, and say, can you help me? And I'm like, well, what kind of help do you need? Well, again, I dig a little deeper and find out that perhaps they have not had some tax returns filed or maybe their W-2s for the for the year that we're processing haven't been filed yet.

And so, we work through those little problems to help them at least get a few tax compliance issues addressed. But then, which is where I've really working into now is trying to help people to solve tax issues. Because the IRS, they'll send out a notice to you, for example. And the notice doesn't always get to you sometimes, or it gets to you years later, or as we see here, they put off notices going to you, as a taxpayer for maybe a path new tax, some all the way back, say to 2015 that they're collecting tax on right now are trying to collect tax on and their whole paperwork and have a whole miscalculation. Well, then how do we come to know that? Well, what I go in and do with individuals, as they come see me is I say, first of all, sign this as a 21-form, or 2448, 2848, whichever I need according to this person's circumstance, so that I can go in and I can take a look and say, here's what's going on on your tax account. Here's the wages that have been reported. Here's the income that's been reported. Here's what the IRS says you owe. Not we agree with this.

Well, that's what we got to go back and see or if we go in and take a look at that transcript and see that maybe you haven't filed. That's what can happen particularly with some business owners who put their trust in, in some type of individual who they send off information to that individual each month thinking everything is getting done, but they don't really get the information back or they really don't get the reports back. But they just think everything is getting done. Well. I'm here to caution you particularly, when it comes to your payroll taxes with a C corporation, S-corporation, partnership, or LLC, any of those entity tax that you're talking about. It's vitally important that whoever you're working with, and these are the services that I provide, that they have to you copies of what has been done, what is being accomplished. That's what I do for all of my clients, all of them. We all have the web portal set up, where all of them have access 24 hours a day, seven days a week to their records, all they got to do is log in with their email, and they have their payroll records all sitting right there.

 They have their payroll, compliance tax forms all sitting right there. Everything shown that they have been paid and they're caught up so nobody is behind. So how do you get caught up? If you're a business? And maybe you discover or I go in and I discover Well, you know, your federal income taxes for your business haven't been filed in a few years. It's just kind of good in the sense that the IRS hasn't caught up with you yet because of the pandemic and other issues going on. So, then what do we go in and do? Well, first we pulled transcripts, which is what I go in and do. And then I take a look and see, okay, this is what has not been filed. But if we discover some years have not been filed, what do we got to go and do? Well, first, we got to go in and look at your books, what have you been doing? How have you been keeping it? Well, sometimes I'm coming to learn sometimes individuals and businesses are doing an okay job on their books, they're getting expenses put in through whatever type of accounting software that they're using. But I come to find out, well, maybe their bank statements aren't being reconciled, maybe their other information isn't being done. So how do we know what to do? Well, we don't, sometimes we're starting from just a whole new set of books.

And but we do have to get documentation of course, which what does that entail, that entails getting bank, bank statements. And sometimes it means if they don't have them, sometimes they got to go to their bank, and get those records for two or three years back. And some banks do have those available without much research, and sometimes they do sometimes they don't just depend on the individual banks. So that's what we need to go in and take a look and do. So that's what I'm saying is that if you're working with an individual, you need to make sure whoever that individual is, which is why I take a lot of pride in making sure that all my clients know that their stuff, their financial information, their financial statements, profit and loss balance sheets, those are there, we get them done. Now, we're not perfect, of course, but we get them done in the sense that there's a good record there. And if we make a mistake, we go back and we fix it. Because taking care of the client is number one, for this business. and for me, as a tax professional, that's the difference between a tax professional and one who's just a tax preparer, or one who's just kind of around a little bit, or seasonal. Those are the really individuals that I'm just not personally too big on because they're they come in for the first three and a half, four months, jump in, have an office open, then they close in or maybe open only one day a week or who knows when they're open actually, then they're gone.

But the How's that, how does that help you if you're an individual looking to get something accomplished, because one of the issues I always talk about people is the fact that you need to talk to your tax professional on so many occasions, if you're considering taking money out of your retirement plan, you should talk to your tax professional. If you're considering starting any type of business. If your banker suggests something or an attorney, suggest something before you do anything, I'm serious before you do anything, go find a tax person and talk to them. Find out what kind of tax situation are you going to be in? Because from a tax standpoint, other professionals don't always understand it. They know their area, which is great, they're fantastic at it, they do a good job. But sometimes recommendations are made of a certain type of entity or how you should conduct business. And it's not necessarily good for you tax wise. So yes, make sure that you talk to your tax person before you go in, just go to the state and because it's easy, anybody can go to their state and register as an LLC or register as a corporation or do all these registrations, like Colorado I mean, go and do it for like 50 bucks.

But yet, is that the right action for you to take from a tax standpoint? I don't know. Till I sit down and talk to you and see what your goals are. I see what you're wanting to accomplish. Maybe from a legal standpoint, a certain type of entity is good. But yet, is that still good for you tax wise or what are the tax ramifications of doing that? What's going to happen? So, you got to be willing to really study, really get that information, talk to a tax professional, talk to your tax professional, or talk to us, or talk to me, give me a call here 844-394-4287 to help you to figure that out. So that your tax situation is not so taxing, come the end of the year, because the last information or the last person to know you've done a business should not be your tax person. Because they can help you make good moves, a tax professional can help you make good moves, so that in that first year of your business, you're making good tax moves, and not only help you in the first year of your business, but can help you going forward in your business, make certain types of elections for your business.

And if your bank or your lawyer, whoever you're talking to, doesn't say talk to a tax person. I mean, because I always tell people, you should go talk to a bank about this, or you should go talk to an attorney, it's I'm not licensed to practice law. So, you need to go talk to them about this particular setup, this particular situation, and then work together with the bank or work together with the lead tax person, tax professional, and work together with the attorney so that you are having the best turnout for your business. Now also, I like to remind business people, are you signing any forms on a regular basis, there should be some signatures required. I know when I come in, and I talk to somebody or have a client come in, especially on taxes, there are certain forms, that they only sign that you only sign once in regards to payroll, and then we take care of it. But we always provide the documentation, which is something you should always have from a professional that's working with you, you should have the documentation showing that your sales tax is getting paid documentation showing that your unemployment tax is getting paid and file, I have all those reports available to clients showing that those items are pain.

When it comes to the income tax, yes, we file the entity, the corporation, the partnership, the LLC, all those income taxes are filed electronically. Yet, what I do personally, in my area is that whether it's if they're close by, of course, somebody that can come in and actually sign the authorization to transmit the tax return, I have them come in and do it. Now I have a few clients. And I have more clients developing in a virtual sense, we'll sit down, we'll discuss and have a video conference meeting with them, or at least a phone conversation. And then what I do is I send it to them to sign that form electronically, because we can accept the 8879 with an electronic signature now and still submit the tax return, you should always be signing something whether in person, or electronically. And if you're not always signing something of some sort, then you really need to find out if you don't have physical copies, which to me some, it really depends on the tax professional, myself, I'm one that I still like to provide physical copies to individuals. So, I actually mail out some to my clients that are not in Colorado or in other parts of the country.

I'll still mail out copies of a physical tax return to them. But I also provide electronic copies through a web portal. Do they have those available? I don't know. I do. And that's why I'm so up on this and so much and wanting to be forceful and just reminding you as the listener to think about these things. Are you getting these as a business person? Do you know what's going on with your information? Does your tax professional visit with you about these items? visit with you so that you know what is going on with your business? And so, you're not you may not fully understand it. That's why you have the tax professional. I mean, I don't know how to go and repair a diesel vehicle or do a lot of different other actions but I am here to help my clients to succeed on their tax and to make their tax time have a whole lot less taxing. So, make sure that you are signing forms on a regular basis. Now, many times during tax season, whether it's individual or business, I'll get one, I'll get someone calling in saying, he's, how much you charge to do a tax return.

Well anymore, it's going to happen, it's going to tell people with depends. And because when you call, make a phone call like that to a tax professional, you're just shopping around, as a tax professional I'm not really looking for people who are, who are looking for a low-cost tax preparation option. But I look for is individuals who want it done, right? Who want to do the tax return accurately, and who want a good long-term relationship with a tax professional, to help them to succeed in their taxes, and even help them to save up a little bit of money and understand their overall financial situation? And to have that you are going to pay a little bit more to have that available. Yes, I have some clients that I only do tax returns for. And that's, that's fine. And some of these I've had for many years, they're great people, I'll continue to help them out, continue to serve them. But yet I go beyond just doing those tax returns. If we need additional help, we offer that additional assistance to them.

They're separate fees. But we also have plans that offer monthly programs to individuals so that you can come in and talk, no additional fees, you're just paying a monthly fee that gets you all taken care of for the year. Now, what many people don't realize when they're trying to find a low-cost way to do a tax return, is security. How secure is their information? This is a huge deal for me. I believe in such stringent security measures. I mean, I got file cabinets locked in here, I have all of my computers are encrypted, the drives are encrypted. There's a password to get into the windows, of course. Plus, there's additional security software on each cuz each computer and of course, I actually help have a third-party service helped me to keep my computers secure. Yes, it is vital that you ask whoever you're going to use to do your tax return. How secure is my data? Do you have a security data plan, which mine is under constant development, but I do have one for software security, for in office procedures to make sure that people's data is safe?

Now, if you're getting a low-cost tax return, this is something to think about, how safe is your data, if you're just doing the lowest cost option, if you're having your neighbor or your individual over, you're saying you know, I can go on to whatever software and I can do your tax return. But when you do a tax return, think about it, are you have your tax return done? How much data do you have to give, you basically give your whole life story over to somebody, all kinds of private information? Now you don't know what that individual is going to do with that information. They could be family. I'm not knocking any family; I'm just saying these are things to consider. You want certain individuals to have access to all of this information. I mean, I mean, they may dispose of it. They may not I don't know. But security, these are things to think about. And so, it all comes down to the old adage, at least the way that I look at all of this, you get what you pay for, if you're going low cost, you're gonna have low cost, security, low cost, protection of your data. So low cost isn't always best for data security. Now, we all as tax professionals in my office, and in many of the well-respected ones that I know, take great precautions to protect computers to protect individual data. I mean, I got a security system in my business as well to help protect the hard drives how protecting computers and the physical, everything on a physical sense. So yes, how secure is the data.

So, keep that in mind too, about security. If you're thinking about your data, and you want to keep it safe. Don't be afraid to pay a little bit extra to a proper tax professional who is available year-round, who has proper securities procedures and who really genuinely cares for you, which is what we do we care for people here, we do what we can to help them to succeed as best as we can. Because as I've really been going through everything and talking about what I learned in this last tax year, I learned that there's a lot of different people Well, there's been a lot of different struggles individuals have had, in the last couple of years because of the pandemic, I've had to also look at helping ones to minimize taxes, try to talk to them a little bit more, try to encourage them, you know, come see me, give me a call. That's why I'm here. We let let's sit down, let's go over this information. If we need to discuss about some sales that you're potentially going to have, let's talk about the potential taxes that can be involved on the sale of some of your assets, like mutual funds, stocks, those kinds of deals, what's potential capital gains, let's discuss those ahead of time. That way to learn, do you want to make those moves are those good moves for you individually, once again, till we sit down and look at it from a tax standpoint, I can't tell you for sure.

But when we sit down and will be able to determine if that is a good move for you. Because sometimes when we make a lot of sales, we have to do certain attachments, things with a tax return, so that the IRS has all the information that they need to be able to get it done. And to do it right. And so that all information is properly done for you. Now, keep in mind that tax time is over, unless you're on an extension in which we're working on several extensions at this time. And as we work on those, we're helping ones or we're reminding was, you know, we don't want to just be thinking about 21, we want to be thinking about 2022 at this time, and thus, minimize tax liability going forward, and then help you to stay organized to get organized and stay organized with your accounting software. As we look to look at your overall profit for the year to be able to make good plans to help you keep moving forward and pay as little tax as possible and make media adjustments. Yes, let's make tax time less taxing, let's review. Let's make a plan. Let's adjust through the year.

And certainly, as your tax professional, I can help you to do that. And I really like helping people to do that. Because making tax time less taxing helping you to pay as little tax as possible, is indeed my goal and what I want to accomplish, we will need to make estimated payments, we may or may not. That's why when we're looking at potential sales of some appreciated assets, we may need to make estimated payments both at the federal and the state level for you. So just keep that in mind, adjust withholding, maybe we'd need to make and I got some clients we're looking at meeting with you're coming up in June and July to just see, okay, they need to make adjustments. So, they need to have a little bit more held out to make sure they're not paying in January at least trying to break even. So that's what I want to do want to help you at least break even that way you're not having a big tax liability, or we're not getting a big refund, let's find let's, let's find the happy medium. Also, I know there are so many people today that are just very concerned about their health.

And that's very understandable. With the virus happening and a lot of people being concerned a lot of different areas. We are total virtual as a business. Yes, you want to meet virtually, we'll do that. I'm happy to do that. I want to discuss that with you make you as comfortable as possible. Whether you live across the street or across town, here I am, or you're across the country doesn't matter. I want to visit with you, I want to help you video interviews always there to help you secure portal, a web portal to be able to help you to upload your documents very easily and securely. So, we can get it, so we can review it electronic signatures as I mentioned, so that you can sign the proper documents sign whatever contracts we need. So, we can move forward and indeed help you with electronic payment. being set up easily set up monthly electronic payments to help you to easily make your payments as well as invoice you so you can pay with your credit card or with a with an automatic check there. So, we certainly encourage you to think about all these items I mentioned today the importance of this, keep in mind the differences from 2021 tax, which we just completed to the 2022 tax year which is actually going back to the rules, essentially, of 2020.

Keep in mind the importance of planning ahead, tax wise and making adjustments, business owners keeping business mileage logs of your vehicle. It's just absolutely vitally important. Then of course keeping good books and records through the year helping to get organized, don't just rely on software, and that's where I see so many people that are using software that's advertised online or advertised whatever way you see it, they talked about all this offer is going to really be great things, but I'll tell you what it is, you can have issues and I've seen those issues. I got issues right now with clients I'm working on and then we're going to have to fix and perhaps even just start all over again, because of the issues within their software, because they're just plopping things in and they think the software is going to fix, put it in the right place, and all the software will not. So don't just rely upon the software, do it yourself software doesn't always make do it yourself easy, doesn't always make it simple, especially when it comes to tax time. And don't rely upon Do-It-Yourself tax software either.

Because that does, what's going to just popped it somewhere. And it's important to know where it goes and how something needs to be properly classified. So, a good tax professional in your corner, can save you 1000s and I mean, 1000s of dollars in taxes. So, keep in mind, about a few are considering an electric vehicle has to be a new vehicle. There's a lot of different makes and models out there that you can take advantage of. But you just got to do some research with the IRS. And you can always call me I'll be happy to share a couple more with you as we go through. And then of course know what your tax professional is doing. Yes, keep in touch with them. Ask them. How are you doing? What is up with this? Do you have this record? Then? Can you have this this completed yet? Can I see a copy of this, can be physical or electronic? Just see, are you signing these forms? What kind of security does your tax professional have? These are all good questions.

And I recommend you check with because these are questions that I answer even before ones at us because people will say to me, well, you charge whatever I'm like, you know, this is what you are getting, you're getting all this you're getting experiences because it's not just putting numbers on a form, is putting the numbers on the right place on the form. And it's also the data security that you're paying for I pay to keep your data secure. And thus, that's what you're all included in what you're paying for. So, keep these thoughts in mind. And I really appreciate you listening today. Please once again, visit my website which is www.cashtracksfinancial.com or email me its success@cashtracksfinancial.com. I'm also on Facebook, look up the Cash Tracks Financial page. We're on LinkedIn as well and I got a Twitter feed. Also, there where we put periodic posts just to keep you updated on various tax matters.  Sign up for our free a newsletter at cashtracksfinancial.com. 

Cash Tracks Financial Inc.

Marcelino Dodge, EA, CFS

Colorado Springs: (719) 359-8987

Lamar: (719) 336-8739

www.cashtracksfinancial.com

Colorado Springs: How Secure is Your Tax Information With Your Tax Professional?

 

Marcelino:

Good day and welcome to The Tax Answers Advisor with Marcelino Dodge, Enrolled Agent on show number 57. And just enjoying this crazy ride with listeners all over the world which I really appreciate you downloading this podcast. Also, we are going live on Facebook at this time, as well as downloading this to our YouTube page at a later date, as well. So, you'll be able to see us there and find us along with the various discussions that happen. That's already there for you to easily access, I invite you all to join me for a free mutual exploration session at your leisure, you can schedule that just to see if what we're talking about here. Because these securities where we're talking about today, cybersecurity, in particular or anything related to tax just to help you to pay as little tax as possible, which is what always my goal is.

But yet also to keep your information safe, you're invited to contact me at 844-394-4287 or email at success@cashtracksfinancial.com or just visit the website, tons of information available for you there at cashtracksfinancial.com. As I mentioned a little bit today, we're going to be talking about protecting your business and personal tax information from the Cyber Storm. And usually when we hear the word storm, it thinks about a lot of different things. But this is in particular to your personal private information for yourself or your business. And to help me with this discussion today is Alvion Legall, of ABL computers, he just released a new book called Cyber Storm, how to protect your business from a data breach. And the resulting Cyber Storm of fines, lawsuits and customer loss which we hear about these going on. We hear about the major ones from the major companies but they happen to the little guy too, which you don't hear so much about. But that's just like myself.

So, you don't hear much about that. So, it can be very costly for ones like myself. So, we're going to talk about this today as the founder and CEO of ABL computers. AL operates this IT service company focusing on the financial investment firms and medical offices where that line is security is just so important. That's why I'm talking about this because as a tax professional, it's vitally important for me just as much as any others. And in some ways even more so because I'm a little guy, supposedly not having this big IT department. But I got to be able to still protect your data because my computers are online, just like all these other companies are. So, we're focusing on crisis prevention, limiting virus outbreaks, also limiting security issues and want to keep all of these potential problems, we want to keep them to a minimum because that's just the best thing for the business and for you personally.

And I love how AL educates clients on social engineering and social media platforms. This is something that many people don't realize how social media platforms can use your data in predatory way. So, I'm glad to be able to talk about that a little bit as well. So that myself as a business owner, my employees, and even if you're just a student going to school, all of you, and all of these people are actually the first line of defense against disastrous outcomes because that's obvious. That's where a lot of them happen. So, I just want to really just stress it, we're going to discuss these very important topics today. And so, I'm gonna welcome Al, thank you for joining the program today.

 

Alvion:

Thank you, Mr. Dodge for having me once again. So, it was a pleasure being here on your show.

 

Marcelino:

Yes, yes. We really appreciate having you here. Because these are such vital topics to cover, especially security and related to taxes. See, it's interesting. I have a tax program that I talk about where I talk a lot about tax stuff. But really, because IRS requires that I have basically like a cybersecurity policy. And so, because I deal with so much information, I feel it's important to talk about this for my taxpayers and the people that listen to this program because it is important. We're going to discuss that even a little bit more as we go along there and you got some wonderful information but I just wanted to ask you a little bit here. Why did you feel it was so important to write your book here about the cyber store?

 

Alvion:

Well, one of the reasons why I feel so important because a lot of small businesses out there, they don't see it as, as an important, something as an important task to take on, but rather or they figure, it's an impossible task to do. So, it's super expensive. But I wrote the book with a purpose of trying to educate a lot of the business owners out there that these are some small steps that you could take to help protect your client’s information in protect their own information there so that they don't be fall victim to any of these cyber criminals out there, or these bad actors. So that's the whole purpose of the book is just there to educate anyone that's interested in moving forward in a cybersecurity action plan for their company.

 

Marcelino:

Okay. Yes. And certainly, that's what I've been constantly working on as well, I've taken continuing education classes for this just for tax professionals to do that. And so, I've been, and developing a plan I know for myself is this, it's an ongoing process, you start, and you adjust, and you adjust, and you just keep adjusting. And you keep it up to date as best you can. Because it’s a constantly changing there. Now, one of the interesting points I really liked about your book is how we see how on TV or media, how they often show hackers or that little guy in that dark room with that hood on or whatever, doing their little thing. But yeah, as you point out very nicely in your book. That's not the case for hackers.

 

Alvion:

No, no, definitely not hacking, it's not a difficult thing. And it's just a matter of you have people just paying attention to your actions and what you do. And one thing that a lot of hackers use is something called social engineering. So, they take a look at all of the content that you're putting online, what are you liking? What do you, you don't respond to and even marketers do the same thing. So, they start building a profile about you, if you have a tax account, if you have a tax company, then you will show you do advertisement and so forth. So, hackers gather this information, and then they use this information to try to catch you based on what they have learned or what they have gathered about you so far.

 

Marcelino:

Yes, and one of the important points you mentioned about that is, is how and how you'd run that experiment one time in a class where individuals where you tried to hack a cable company?

 

Alvion:

Yes, yes, that one it's is very good. So, I'll just give you a brief synopsis of it. So, what it is, it's just a simple, I ask someone to just get a video or sound of a crying baby. And then we call the cable company. And this lady pretended to be you know that she wants to change the information on the account, get Disney or cartoon channels shows that a kid could watch the channel, watch this channel. So, with them calling and they're hearing the baby crying in the background, they have already created a case of sympathy or empathy with the agent on the phone. And interestingly enough, the agent was a female. So, you have that already in, the scene was already set. And we were able to make changes to the cable come to the account without even us having access to that account, or anything like that. And these are some of the tactics that hackers use something as simple as a baby crying. So, it presented a stressful situation. And then because of that the representative on the phone was able to make the change how we got the Cartoon Network and the Disney Channel and all of these things added to the account. So, these are things that you know what these are what hackers use for free to get into people.

 

Marcelino:

Oftentimes, too, we think about things like security questions in, I'm sorry, passwords where I'm going passwords and pin numbers. And I know on cable companies, sometimes you're supposed to have the pin number to be able to access the account or beyond the account. But as you just explained, it's not that well, it's easier than you think to get into these if you have the certain emotional appeals, which is certainly in your particular case that you described there. That is what happened. Now I also appreciate Yes, we always talk about having a certain password, difficult password of a certain length and certain types of characters in the password or a pin number and they are stressed these areas about not having something that's easy to remember or just all these different suggestions that's made out there. But something I hadn't thought about. But a point that you made very clearly, in your book is about how hackers don't necessarily need to know that stuff anymore. They can get by with some other things as well. So, what can you tell me about this?

 

Alvion:

Yes, yes, they could get by with many other things. So, I'll give you an example. This happened with an accountant. And what this hacker did, it was the last day of tax season. And as any CPA would know, most clients tend to send their documents on the last day, people tend to wait for the very last minute. So, what ended up happening with this person, they got a bunch of emails from clients with documents attached, and so forth. So, the person was going through their emails, and their senior Cash manager, just clicking open and click and opening click and opening, so that monotonous and repetitive action now, they actually, the hacker actually sent an email with a document attached.

And what the hacker did, they typically, just a little side note, typically most applications when you scan a document, it tends to give it a doc.pdf name, that's what by default, doc. whatever it's going to be. So, this file came in, it was actually picked doc.exe. And just because of the, have seen so many doc files coming in, and so forth, they just click, click, click. And sure enough, this was an executable and all the bells and whistles went off, a bunch of things start to happen in the background. And that's how easily people could fall victim as some of these acts, some of these executable files actually sort of pull information from your system without you even knowing that all of this is happening. So, a lot of times, hackers don't necessarily need to get your passwords for some applications, they just need to gather your data and through your data, even through your browser that also will save passwords, they actually could use these things to get into your accounts, and so forth.

 

Marcelino:

Yes, see that email caution that you have there is actually something I've been very careful about for a long time. And even before I was working with you on my computer security, there were some other professionals CPAs that I do some education with, who talked about this type of deal. And you mentioned the security part in that, you know, they have what they call a no click policy in their office, which basically means they don't accept tax documents through email. And for the vast majority of people that's especially anybody that I don't know, that is the policy.

I mean, it's no, you have to upload them none of this email stuff for the very reason that you just described, which is why I even have in my marketing of how seriously I take this, about security and just protecting client data so that situation is avoided. They're so, so right along with this, though, as we discussed this here. So, they don't need to know your security questions. There's different ways they can get in which I'm going to there's a couple other things later on. But a point here that I wanted to ask you about, too, is because you touched on this in your book about, wisely using social media there, why would that be important for a taxpayer to wisely use social media?

 

Alvion:

Well, in social media clicks for example, Facebook, just to use one, one of the major ones out there, people it's just the environmental social media, Facebook, it tends to encourage people to share information about themselves. And there is a saying that a picture's worth 1000 words. And a lot of times people don't pay attention to things in the foreground of their pictures. So, people post pictures of themselves, they're looking at themselves but, in the background, there are other information that could tell you a little bit about yourself. There could be the Hugen Duzz ice cream on the table or the Twix candy bar on the table. All of these little things start to tell so what hackers do, they start gathering these small little breadcrumbs about yourself and start building a profile for you.

So sometimes we have to be very careful. I know Memorial Day weekend is coming up and what hackers tend to do, if they know that you are always traveling on Memorial Day and you take pictures and you go back into your Facebook profile, and they see every Memorial Day, you're in Washington DC at the monuments and so forth. Guess what, then one piece that no, you're where you're not is in your office. So, your office computers may be on Monday, we'll use this information. Say we're going to try to get you during this time. So, there is, um, don't get me wrong, I'm not saying don't post anything, sometimes we have to just be very careful of the content that we're posted. And make sure everything in the picture in the foreground and the background, and everything of the of the photos is what you want to show, and nothing extra because we'll be surprised. What may what you might be sharing with people out there. So, this is something that you have to also pay attention to when it comes to social media posts.

 

Marcelino:

Okay, so what it sounds like, at least from the way you're describing is that any of us could be essentially, like social media stalked by someone and it doesn't know and it won't necessarily mean that something is gonna happen tomorrow. Or next week, we're talking something could be a year, two, three years down the road as soon as they build that profile as you were talking about. So,

 

Alvion:

Yeah, exactly. So, they are built, they will start following you. And they are realized that, hey, you're a CPA. So, chances are April 15 is a busy day or the week of April 15 pretty busy day, extension deadline, October 31, sales tax deadlines, because this is all of these deadlines are public information, you could find it from the IRS website. And once they know that your CPA or you're working with this particular company, or this particular client, they would use these things to find a way into your network and so forth. So once again, it's not a matter of not posting is just be aware of the content that you're posting.

 

Marcelino:

Yeah. See, that's so that makes it seem to me like you need to, at least when you're looking at a tax person or looking at something to do your taxes anymore. It's not just dialing up the phone book, or searching for a month, searching for the someone online. It's like, well, maybe I need to look and see what they have some type of social media page, what are they doing? I mean, like, what are they doing individually? What are they what are they posting, because it seems like it's got to do as much research? just in that manner to find someone to do your taxes as anything, because how careful are they being about their own stuff is going to indicate how careful they're going to be with your stuff? And they said, that's what that makes me think of when you're sitting, you're talking about this.

 

Alvion:

Exactly, exactly. And one of the things especially for CPAs like what I pay attention to if I go to CPAs office, yes, I know the desk is dirty, and the desk fast and dirty, I mean has a lot of paper on it. But if I could look at a desk and see someone's 10,14 there with their social security number that tells me that they're they don't the company doesn't have certain procedures in place, especially if I am sitting across from their desk, and so forth.

So, I do understand the SG sometimes you put papers on your desk, you may be working on a particular crime, but the most important procedure to do is to make sure and put away all of these documents at the end of the day, lock them away, if you're going to digitally save them, digitally save them and digitally and shred them to shred the paper and so forth. But a lot of accounting firms they don't pay attention to, they don't pay attention to that they will see clients with someone else's tax return sitting there because you never know who may take up there who has a full photographic memory or even use your cell phone, something simple as a cell phone just to take a picture of a tax return that's on your desk. So, these are just some steps that you could take to help protect your information your company and also your client’s information.

 

Marcelino:

Yes, yes. Now on a just a sidestep here for just a minute. I'm thinking, as we're going through this makes me think so I get these, I get these periodically, and it's really weird that I get them but at the same time I'm knowing why is that there are companies out there are Russian hackers out there, delimitate major companies like Microsoft. And one of the things I know is that I get these emails occasionally saying your office 365 password has been changed, or your subscription is expiring. Anyway, something that tries to create a sense of urgency that I need to click on the link that's in the email. Because the subject matter always has something that's makes it seem like it's urgent. But yet I just from stopping oh, wait a minute.

Well, one thing is I know, okay, well, I know what my password is. And I know I haven't changed it. But by the same token, Where's this coming from? And then to if they're saying my subscriptions expired, and I'm like, wait a minute, I know when my subscription renews, why am I getting this in September? And I know that don't, it's in a different month that it does it, so. And so, and then when I stopped when I look at Excel, they'll try to imitate Microsoft's logo and everything there. But when but one thing I have learned is to always go and look at okay, what's the email that it's originating? Where's the originating email or the sending from email address? Then it's like, what? In some way? In some cases, it's like completely different. In other cases, it tries to be just close enough. So, have you seen some items like that happen?

 

Alvion:

Yes, yes, those are things that we that I see and come across a lot. And one of the things that we have systems that we put in place to help in cases of that, like, for example, just like to say this, you know, cybersecurity goes beyond just a firewall and an endpoint protection, it involves five, cybersecurity just involves people, processes and technology, you know, the processes are simple thing that you will implement into your, into your entire practice, what you will do, and so forth. The technology is where you put in your firewall, or you have the risk and compliance thing, those are typically things that is given to you by the federal government, you understand, some state or federal organization. But the last part of cybersecurity is people. And I know earlier, you said that you don't click on emails and so forth, you don't click on links.

And you, you made a very good example, that you saw the email and you stop for a second, and you thought about that email, you said, I know my subscription is not expired, I know I did not change my password. And with cybersecurity, when it comes to the people, it is good. It is great that you stop for a second and just think, just think about it. Because it's not to say your entire company is on fire. And it needs to be dealt with right now. But you stop for a second and think. But what do you do when you're you have an entire organization of multiple employees, not everyone will take those necessary precautions? So that's where companies like mine come in, where we put things in place to help those fast clickers, we call them.

And we it's all about cybersecurity training. We give them security training, what we do, you mentioned office 365, what we do with your office 365 subscription, we brand it to your company. So, when you click on the link, it actually takes you to your everything will look like your company. So that's one of the things that we specifically do, it doesn't look like the traditional Microsoft signing what everyone will typically see. But one of the things we do we specifically branded and we let our clients know, when you see this, you know you're in the right place. If you don't see this, you're in the wrong place. And these are things for the fast, for those fast clickers, and so forth.

But another thing is some of those emails that come through, if you don't have a security, an email security system in place, that scan in your emails that it's coming from, is it's called those types of attacks are called fishing attacks, that you need to have a security system in place that detects fishing attacks, and so forth. And not all system 100% but yet still, aside from everything else, you have to have the security training, you have to do some sort of rebranding with your office 365 accounts and so forth. And last but not least, if you cannot take a second and think about it, there is always an IT person you could call what we try to tell our clients is, give us a call. Just give us a call. If you have any doubts, give us a call. Because what we try to do is manage all of these things for you. So, if your subscription has expired, you don't worry about it, we take care of your subscription, and everything for you. So, these are things that we try to put in place and encourage our clients to do so that we take a lot of the responsibility away from you so that we can help protect you in terms of your network and your infrastructure and your data.

 

Marcelino:

More that's great, fantastic, because that's similar to what I do, when I have a client come in and say they need help with attacks or payroll issue. And I know you experienced this sometimes, but I experience some times where they just don't want to let go of some of that control. But I tell them, if you do, when you do this, at least in my particular, I know you do this, you don't have to worry about whether the payroll taxes are paid, you won't have to worry about if your tax returns getting done these things you won't have to worry about and you won't have to worry about your bank statements getting balanced, which some people that I start with, haven't been balanced in three years.

And so, I look at it like from what you're describing there the importance of having a professional in your corner that can manage these things for you, just as I do what I do, having a professional like you doing what you do to take care of some of these background things it makes, makes these computers feel a whole lot more secure. I know just in the time I've been working through the last couple years, I tell you what, I felt a whole much, whole lot better about my systems.

 

Alvion:

That's great.

 

Marcelino:

They're so and it's makes me feel real confident talking to taxpayers and saying, Yeah, you're doing what we can't protect your data. Because it's just the right thing to do, really is. But yet, as I mentioned here earlier, one of the things I wanted to really stress or get to, is talk about as a taxpayer, when they're doing their tax return, because when one of the complaints I get, because you're always gonna have shoppers, just you have shoppers and everything. And I get the shoppers calling how much you charge for tax, and they go well, that's expensive.

 And I'm like, well, I give them a small explanation of this is why not just the professionalism that we exercise, but the fact that we protect your data to some people, they don't care, which that's their choice. But by then the other token is that those that do care, they actually appreciate it. And I've been telling all my clients, you know, you're not just paying this, you're paying to cover to protect your data as well. And it's amazing the number of people when you explain that to them, they really do appreciate the fact that you take such stringent security measures there. And so, what I want to think about is or get your thought on is, why would it be very important for a taxpayer to consider not just price, but consider is this tax person that's going to do my tax return? How are they going to protect my data? Why is that? Why would you think that's so important?

 

Alvion:

Well, why I think is important, it's that in your as a tax professional, I'm sure a lot of your clients come through word of mouth, or through a family member, and so forth. And these individuals, they talk, they talk amongst each other, they will tell each other Oh, my accountant is really great. He's this type of person, he does this for me, he does a wonderful job. You have a raving fan. But now, let's say one day, this person has a breach. Your accountant has a breach. And now this person is seeing this individual is seeing, hey, another credit card was opened in my name, I didn't open up a credit card. So then now they're asked to go they will talk to their friends that they raved about. And then they'll say, you know, hey, I had the same thing happened to me too. And they talked to another, I had the same thing happened to you too and then no say how it happened to you.

Now when you're going to look at it now, they will sit down and realize the only person all three or five of us have in common is the accountant. And this is why it's very, very important and most times when our accounting firm gets a data breach, they typically lose all of the clients. Now, as a as a tax preparer, it is I know you all are required to get to become certified. And you all have to do training each year to be able to prepare people's taxes because tax laws constantly changes. It's the same with the cybersecurity, in the cybersecurity technology world, the landscape is constantly changing.

And it is very important for you, as a taxpayer, and your colleagues to focus on what you do best and have someone else focus on the threat landscape that is also equally changing. I will say the threat landscape for technology rapidly change even more than tax laws already change. So, it is very important. When you reinforce that with your clients to say, hey, we are taking all these steps, we have to get trained, we have to get certified to continue doing the best job we can to make sure you as the client don't get an audit from IRS or don't have to pay penalties. And we're trying to save you the most money as possible. In order for me to do that I have to also take the responsibility to protect your data. And I'm not a technology expert. And I have to pass that off to someone else. So, it's very important. So that is why you should, it's very important people should actually look into this.

 

Marcelino:

Yes. Now, once again, as we look at the taxpayer, we think about the person trying to come in the office here and ask questions. What do you think questions that a taxpayer that's looking to at a tax professional? What kind of questions should they ask this tax professional about firm security?

 

Alvion:

Well, one of a good question to ask is if they have cybersecurity, liability insurance. And that is something that is very important, because in the event that a tax company gets breached, you need to, that company needs to pay for credit monitoring for that individual. And making sure not to get anything rectified. And insurance is the way to go. Because to do this is a very expensive thing. And the way it works is if you may only be working with 100 clients this year or 200 clients this year, 300 clients, but when you have a data breach, they look back at all the data that is exposed to the breach. So, if you have been in business for 10 years, and you have 10 years’ worth of data there, that's 10 years added up of all these clients, you have to pay for cybersecurity insurance for but of cybersecurity, credit monitoring, apologize credit monitoring for what these individuals so that's a very good question to ask. And the reason being why that's a good question. Cybersecurity liability insurance is not something that you could get dressed like that the because of the threat landscape has changed so significantly. Insurance companies are requiring you to make certain that you have certain things in place before they're willing to give you insurance for it. It's kind of like insurance policy. They want you to go get a health check. They want to make sure you're not based jumping or skydiving and all these different things so that before they can approve a policy for you so when it comes to cybersecurity liability insurance companies are requiring you to have certain things in place before they could actually give you give you a coverage. I once that once I think that's the key question at any tax crime could ask the preparer if they have. And that's going to kind of give them some form of umbrella coverage for everything. And,

 

Marcelino:

I like how you brought out about the cybersecurity insurance because I was at a trade show a few years ago. And one of the companies, it was an insurance company there that was talking about this very matter. It's been a few years back, but they were talking about, and I was just visiting with them. Because I mean, we always check out different things. But I was visiting with them. And then one of the guys just flat out asked, do you have cybersecurity insurance on your business policy, and I had to stop and think there and go. You know, I really do not know that I know, I got my building covered. I know I got my liability covered. I know I have my business property covered.

Do I have I mean; I had to really stop and think about that. And so, I kept in touch with them. And eventually I went ahead and I let my current policy expire. And then I went ahead and signed up with them and really got the looking X, I actually called my existing company and asked them about that. And they had really no clue what I was talking about. It was like a new thought for them. This must have been like 2014, I'm trying to think it must have been there, must have been when it was around 2014. I think it was last time anyway, that's what really got me thinking about this was always kind of, well, I have the insurance but and I've been going I stayed with this company for since and I'm with same company.

But then till I got to talking to you about X, I always kept the basic things the internet security anyway, program on computers all saved everything. And then but I just but then I just got the thinking. And I was like man, and I got to visit with you. And I was like, and then as things kept going, I was like, man, things are just, I just don't think I'm doing enough. And as I've continued to learn more about this, it's like, Man, this is very serious. I don't want to be one of those statistics out there, have an individual who has been breached. So, it's very important. Yes. So, as I talked to individuals, I talked to him about security. I mean, it's so important to me about it, I talked about it. In advertising, I talked about it when I talked on this program, because it's so important if you're when you're looking at a tax professional to have that as part of the introductory conversation there. So just to add some of this is just kind of re-emphasizing, a lot of different things that we've talked about today already. So just to kind of really hit the point home here, though. So, what steps once again, do you think that a tax professional should be taking to protect the client data just to make this is just so important?

 

Alvion:

Well, there are many, there are many, many steps that they could take, but I cannot go through them all. I think it all starts with, let's see what you have in place. Because there are multiple, multiple scenarios or multiple solutions, because we have to look at where the data is located, who did, who is withholding the data, all of these things. And there are different procedures that you have to go through for that. So, something like that this is where you have to, I would suggest you call someone like my company, computers just to get a security assessment.

And these are things I redo for our clients or prospects or anyone that's interested, we do that for free. And we're able to develop a cybersecurity action plan for companies and so forth. But if there is one, one thing I will not say this is a silver bullet, that's going to be the one and done on your protected, I will say the most important thing its backup. That's the most, I will say, if I have to call one item, I will say backup your data because in the event that there is a breach, yes, they are taking your data but most times they encrypt your data, what if you have a good backup that has been tested and you know it's working and it does continue or backup even while you're working during the day. That is something else say to go so that you could restore to any point of the day and so forth. So, you don't lose an entire day of data or anything. So, if it's one thing I have to pick, our pick that as if it is not the silver bullet that's going to protect you. You're one and you're done or anything like that.

 

Marcelino:

Oh, yeah. So many layers. Well, I just know just from what I work with here, that we've been talking mainly cybersecurity, but even within the office, you mentioned a little bit earlier, but even about the physical security, because I remember, a few years back, I just didn't think anything of it. But I would leave, I had a table that I will just put finished tax returns on. Didn't even think about it. And then the additional information started coming out. And it was funny, because I thought I was sitting here thinking, a few years back, you know, I had these file cabinets, and I got four of them in my office, these metaphor caps, I said, no, I probably won't be using those again. Well, it turns out that I'm using them rather consistently. Now, I, they didn't have locks on them. But I found a little system where I could put a lock on them and lock them up and have the client information, the physical information secure. So that's the physical security side. So, I got that down. And then as I continued to progress and learn more, I take additional steps of adding in additional cybersecurity steps and driving. I mean, there's so many passwords to get on to everything. But that's what you need. Right? Yeah.

 

Alvion:

One thing I'll just like to say just quickly about passwords is a recommend to anyone to get a password manager, if you're typing the password now, from your head, the password is not strong enough, I will tell you that right away, that's a rule of thumb. If you're typing a password from your head, the password is not strong enough. And I will recommend you get a password manager, what a password manager will do for you, it will help you it will generate passwords for you. Sometimes 20 to 36 characters long, as much as they allow it, the application allows you to put but now the password when you look at it, it's not something you can recognize most of the times the first 15 characters is some special character, and so forth. But the point of it of the matter is that they, what hackers have realized is that even today, I read an article where Microsoft is asking us to turn off the 90 days, Password Reset settings on there, an application password expires in 90 days.

Because what happens is that it leads people to let's say, if your password is tax 1040, and in 90 days, which are tax 1041. Not in tech stacks, 1042 on your keep going on. So, people tend to do these things, and so forth, just changing one number. But once again, the most important thing when it comes to passwords are to just get a password manager select us extra super strong password just to get into that application. And that application is going to generate all the passwords for you for all of your other tools. And with that application do turn on two factor authentication on that application. So, whenever you sign in, it requires a second code for you to access these are things that we do provide all of our clients because we realize the level of security that it required for them just to protect themselves, because we're trying to deal with the people side of the cybersecurity paradigm.

 

Marcelino:

Yes, definitely there I understand that because most of my applications, yeah, have that two-factor authentication, as a part of them, be it going to like an authentication app of some sort, or a texted code to your phone because at least the thought is that they may get the password, but they're not necessarily going to have access to that second code. So, I do know sometimes it's one thing I did happen to notice on one of my when I changed my cell phone over, I noticed I had, did have to go into one of my applications and say this phone is no longer valid for that code. So, I did catch that because they because it'll send it to both phone numbers because it'll but the code, I had to tell it that this one's no longer valid.

So, and something else I do need I do find always interesting. Last couple years this has really been happening a lot during tax season that I caution tax professionals and even tax payers on are that sometimes these hackers will send you a message saying oh I'd like you to do my taxes. And everybody goes through a rigorous was process here because of it. And I always find out who's legit and who's not. Because they'll always send, they'll say, okay, and do my taxes. I say, okay, okay, I'll respond. But this is what we require. And I give them all the little requirements, which is standard procedure anyway. And then what they do is that they'll turn around and they'll say, Well, here's the response. Instead of doing what I told them to do, they'll say, here’s my basic information, click on this link.

And I haven't got one this last year that it, it looked, I mean, that it looked pretty legit. I mean, it had a nice little signature on it, even had the guy's picture and everything like he was serious. But yet, I said, Okay, this is what you need to do. I never heard from him again. I even made it possible for me because I because I said, Okay, here's your email, here's my basic information, I can put it into my client management program and just say, Okay, here's the introductory email, here's your name, open up your account here and put your documents here. Nope, never heard from again. And I'm like, well, he wasn't serious at all. He was just fishing, as you say, trying to see what he could get you to do. And I've had and I've gotten, I've gotten these types of emails, it's been the last couple years, these have been showing up, coming in. And so that's where I know, I need to be professional, which is why when I have new employees or whatever come in, I stress about this, there's no click.

In fact, with them, I tell them, you can't click on anything in an email that comes in, especially any attachments that come in, don't be clicking on anything, because this is why. And actually, most of the people I've worked with, I've had the fortunate to work with, they've been like, okay, yeah, that makes sense. So, I was explaining the seriousness of it to them. And I explained the seriousness to my clients, because it is so vital that they just do this and be very, very careful about it there because it is people's information. There it is people's lives, essentially, that I'm working with here. And I have established a level of trust, which I, which I'm always amazed, I just do my best to help people. But it's amazing how just working with people being kind to them. And just being professional, just you build that that level in there. And then how easily through something like this that can just go poof,

 

Alvion:

Right. And what if I, as you talked about emails, what I will say what I've noticed as common across the industry is a lot of accountants and CPAs, have an AOL or Gmail, or Yahoo email address. And I think that it's a huge disservice that they're doing to their clients. Because just as how the hackers will know that you have your tax accountant or tax professional, they and they find out that you have a Gmail or something like that, they can easily find out who your clients are, not through you, but maybe even through one of your clients saying that, hey, you know, Mr. Dodge, he's a great accountant, and so forth, he does really good job for me and so forth, posting these things online.

Now, but if you have a Hotmail, Gmail or one of these free accounts, what tends to happen and what I've seen a lot, it's that hackers will tend to create an email address that's similar to yours. If your email address has like an I or L, they will try to use uppercase of the version like an uppercase I is looks like a lowercase L in some cases. And when they send these emails, they could send an email to your client saying, hey, I happen to mistake your account number. Can you just send it over to me? And if I would, yes. Okay. This is Mr. Dodge; I'm reply to that email. So, what I tried to let them know is to stop using these free email account because your clients could easily fall victim to that. And as I mentioned before, about processes, some of the things that you could tell your crime is that one, we will never ask you for your bank account number of emails, we will never ask you these information, we will pick up our phone and call you and ask you over the phone for this information. We will never ask you an email for your social security number, or anything like that. So, these are things that companies could implement, and especially with emails, that's the easiest way anyone could get into a company because most threat comes through emails.

 

Marcelino:

Yes. Yeah. Well, that's why I guess that's why for years I've used one of the URLs that I used for business, for the email just for that I hadn't thought about that before. But I said I always thought of as a more I have a branding thing myself. I didn't attach it to a security thing. But it does make sense that it'd be more secure. Because you look at, in my case, Lamartaxes.com. That's like, you know, that's coming directly from him. Because that's he owns that he wrote. Exactly, he runs that. So, but yeah, and but I agree with you a lot of the emails, I've seen from CPAs and other people that do taxes are not what I call a branded email.

They're a free email. And I can see very well how that could be problematic for. And the crazy part about it is and just what I've used in my little technology that I've learned is that it's not that expensive to even set up the email related to your website, because it will all have a website, tax whatever service.com. It's like, why don't you just use that for your email? And it's, it's very low, it's very cost effective. And obviously, from what I can see now, it's even important for security purposes as well. So that'd be another thing that I guess that'd be another reason to question who you're using for taxes? What email address do they are they using? Are they using a free one trial? I'll admit I have a free one. But that's personal, that kept separate from business, so.

 

 Alvion:

But I wanted to check if I may interject here. Sorry about that. But you mentioned branding. And, you know, I'll speak as a client here for now, if I am paying you to do my taxes, why do you have a free email? Why can't you get an email that you could pay for? What are you doing with my money that you're telling me to pay for this service? So, these are, as you mentioned, Branding, that is really key. But it's you know, since I'm a cybersecurity expert, I will tie it back to cybersecurity. It is a security breach there if you're using one of these free email services that you can get your that they have out there.

 

Marcelino:

Yes. So yeah, so that's another caution for use of taxpayer is, what kind of email is your tax person using, or especially if you're allowing your friend to do it, that's another issue, because that's I, you know, imagine how many unsecure that is, as well as how many of those that you got to fix and then even other mistakes that are often made with those, but that's a whole another discussion there. So anyway, just but just think about, if you don't put it like this, at least from my standpoint, is that if you're not going to do your own tax return, you need to have someone who does it who has not only the knowledge of the taxes, but the security precautions in place, both physical, and software and cybersecurity wise, that way your information is protected. And don't be afraid to pay for that kind of protection, because it can end up saving you a lot of hassle. Because we haven't even talked about identity theft. We don't have time to talk about that. But it's just the importance of it that we got to keep in mind there. So where can we even talk about all this, but where can ones if they been very interested here coming about the Cyber Storm or they can work? Can they go find your book there out?

 

Alvion:

Well, our book is found, it's on Amazon, just search for Cyber Storm. And just so that everyone knows all proceeds from the book sale goes to the St. Jude's Children's Hospital. So, none of that is coming to me. However, I have collaborated with some colleagues to put this book together. And you see, all you could visit ablcomputers.com/cyber-storm/, and you could find the, it'll take you directly to a landing page. Now, if you are interested on that page, if you're interested in getting the free cybersecurity assessment for your firm, you can reach me, you could also fill out that form there. Or you could just go to ablcomputers.com.

You will find me or you can reach me at 718-848-8102. There you could just reach out to me there, telling me you saw me on Cash Tracks Financial on YouTube and we'll give you all of these things for free security assessment. Once again, there's no obligation to buy this is just a free service we're given to CPA's, accountants, or any type of businesses we could come and take a look or we could do something over the phone, over zoom and just take a look at your infrastructure and we could put you on a path to becoming a good cyber citizen out there.

 

Marcelino:

Okay, great. Thank you, AL, really appreciate your joining us today on The Tax Answers Advisor it's been very educational for myself and for the listeners hear about the importance, the importance of protecting your data and the importance of having the right tax professional, do your data and protects your data. So, ask them those questions don't be afraid to ask them how did how are you protecting my data? Which at least anymore to me, it's just as important as how well do you do the taxes? That's so let's keep those points in mind.

So, if you have any questions about today or want to talk about any of the services from Cash Tracks Financial, always call me it's 844-394-4278 or visit cashtracksfinancial.com. And then of course the email which is success@cashtracksfinancial.com. I always invite you to perhaps even give me a call for a free mutual exploration session just to see if any of the services that we offer here where we do very strongly protect your data, at Cash Tracks Financial, again I thank you so much for listening today to The Tax Answers Advisor on The Voice America Business Channel.