Taxes: What's New and How to Protect Yourself From Scams with Kevin Cross

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Click on Analyze My Investments on the homepage to tailor your portfolio to what truly matters to you. Albert Einstein reportedly once said, The hardest thing in the world is to understand the income tax. Hi, I'm Rob West. Well, if Einstein thought the U.S. tax code was mysterious, imagine how difficult it is for the rest of us. So we're thrilled that Kevin Cross is here today with some much-needed tax tips and that it's on to your calls at 800-525-7000.

That's 800-525-7000. This is Faith and Finance, biblical wisdom for your financial decisions. Well, it's always great to have my friend Kevin Cross on the program. He's a CPA who's headed accounting firms in Florida and now Georgia. He stays up to date on the tax code and is something of a tax Einstein himself. Kevin, great to have you back. That's great to be back.

I only look like Einstein. Kevin, our listeners have gotten their W2s and 1099s and they were hopefully working on their taxes. So why don't you share with us what's new for tax year 2024 and perhaps what they need to know as they prepare their returns?

Well, there are some things that are different this year than last year. The stock companies, the crypto companies are getting more sophisticated. They're getting more regulation to give you your data in a very concise way so you can report it to the IRS. So don't try to say, I don't really have crypto or I had it just a little bit or I lost a little.

I don't have to report it. Go ahead and do that. That's very important and it might give you a loss. Also, what I've noticed is that there's a lot of gig workers out there who are driving, they're doing door dash, they're just making ends meet and they're getting these 1099s and they're saying, my goodness, I made 10 grand. Well, I shouldn't have to pay much tax on that because I have expenses. Well, you've got to calculate those miles. You've got to calculate how much it costs you to buy your backpack or your luggage to get this stuff to them. And so keep that in mind. And also there's always that cool home office deduction that if you take this little $1,500 one, you don't have to prove much. You just have to show how many square feet used in your home. And it's what they call, we would call the tax court method.

And it's almost like taking the easy form on the home office. So don't forget that. That's very important. Okay. I love those.

Those are really practical. Now, unfortunately, Kevin, as you well know, tax scams are becoming more prevalent. So what are some of the most common right now that folks need to know about?

This is egregious. I speak on this every single year at conferences. There's a new one that's going through Merrill Lynch. Anybody who has a Merrill Lynch account gets this email saying that, hey, we deposited money into your account.

Obviously, we know that. But then these are legit deposits that are going into your brokerage account. Merrill Lynch, of course, doesn't accept it because it sounds like it's some phishing scam. But they go ahead and contact their customer saying something happened, but we intercepted it. At that point, these regular people are getting an email the next day from the bad actor saying, hey, this is Merrill Lynch. We just want to follow up on the fraud.

So all of a sudden, you believe the narrative. You go, oh, my goodness, I already got – I better call them. Hello? Oh, yeah, this is so-and-so from Merrill Lynch.

We just need you to do this and this and this. We need to transfer your money out of this account because there's a problem. This has happened to two clients of a colleague of mine, and this is so egregious.

The one client committed suicide because he couldn't get the money back, $900,000 of his savings. That's how awful – and it's all a narrative. There's a narrative we're all going to believe in being scammed.

This one is the worst. Well, and because they're connecting it to something that was actually true, I suspect it makes you more willing to give your information out, right? Absolutely. We can all be duped. That's what Frank Abagnale from Catch Me If You Can says. We can all be duped. It's what narrative are we going to believe to dupe us?

Yeah. Well, Kevin, it always involves giving personal information out to someone that we think is legitimate, so I guess the moral to that story is let's always verify by initiating that call or going directly to the website, never responding to something that came through the mail or email, correct? Exactly, and that's where the IRS comes in. The IRS will never send you a text to collect. They'll never send you an email to collect. They'll never call you and say, we need you to pay right now.

The IRS does not do that. So never fall for an IRS scam, even though it sounds legit. Well, folks, some practical things for you to take away.

Three things for you to look for that are different this year versus last year and a new scam that's making its way around. Make sure you apply that great counsel. Kevin, always grateful for you, my friend. Thanks for stopping by.

So good to be on your program. That's Kevin Cross, CPA and enrolled agent in the Atlanta area. You can learn more at kevincrosscpa.com.

Back with your questions after this. You can find a local CPA professional in your area by going to faithfi.com and clicking Find a CPA. FaithFi is grateful for support from One Ascent. One Ascent believes that your values inspire why you invest and how they can inspire how you invest. One Ascent's goal is to provide solutions designed for every need and invest in businesses that bless the people and places God has made. We want to help investors do well by doing good to explore a new way of investing that aligns with your values.

More information is available at one ascent dot com and by clicking Analyze My Investments. Thanks for joining us today on faith and finance for taking your calls and questions today. If you have a financial question, something going on in your financial life related to perhaps getting out of debt or maybe this is the year where you want to increase your giving. You're wanting to do that in a way that's wise and creative. We'd love to help with that.

Perhaps you're dealing with some issues related to wealth transfer and how much do you leave to the kids? Any of those financial questions and more in play today. You can call right now with lines open. We'd love to hear from you. Eight hundred five two five seven thousand. That's eight hundred five two five seven thousand. Kalamazoo, Michigan. Clarence, thanks for your patience.

How can I help? Hey, I want to ask your opinion on these multi-year guaranteed annuities, if you think they were a good idea or not. I was looking at one from Gamebridge for three years and they're paying around six percent. I wonder if you thought that might be a good thing to play some money for at least a little while.

I think it certainly could be. I think you need to always determine what is the ultimate use of that money. What's the time horizon?

How much risk are you willing to take? Gamebridge is interesting. I don't know a lot about it, but they've emerged on the scene as kind of a, you know, an Internet only annuity company. So it's kind of like these online banks where they don't have the brick and mortar operations.

You can only communicate with them electronically for the most part. But they take all that savings and pass it on in the form of, at least in the banking options, no fees and higher interest rates. And I think Gamebridge is taking the same approach. And that's why they're paying these higher interest rates. Last I saw, yeah, I think, you know, Gamebridge had a five year annuity, you know, at five point seven percent, which is pretty attractive to some folks because, you know, if you could lock that in for five years and, you know, there's you're going to get that guaranteed if you let it ride and you can take out up to 10 percent a year.

So I like that a lot. I think the question is just always would it be better, Clarence, you know, to take a longer term perspective and try to do better. But I think if you're looking for a low risk environment with guarantees and either where you recognize the income as the interest is paid yearly or you take the tax deferred option where it's not paid until it's withdrawn with these flexible term lengths, which you pointed to, you can do anywhere from one to 10 years, I believe. No annual contribution limits. I mean, that's pretty attractive if the goal here is safety and a reasonable return. And I would say approaching six percent is absolutely reasonable. So just make sure you're OK with the limited liquidity and the taxable withdrawals and no growth beyond the guaranteed amounts. And then you've, of course, got inflation risk because the fixed interest rate may not keep pace with inflation.

But other than that, you know, I think these are pretty attractive. And from what I've seen, Gainbridge is pretty highly rated. But the taxation on I mean, that's that would be no different than a regular CV, though, right? Yeah. So you would pay the tax on the interest if you if you'd paid the taxable option as it is accrued, then you're right. That's exactly right. So as the interest is paid, you would or is as it's earned, not it's paid, you would have to pay the tax on it each year.

If you decide to defer it with one of their products is a tax deferred product, then, yes, you would pay that the taxes as you redeem it down the road. OK. OK. Next question. Real quick, real quick.

I'm already here. I'm 76 years old. I'm already in an annuity. It has a guaranteed minimum income, has a death benefit, is paying out five percent. But I'm questioning it because I don't really need the guarantee. You know, the death benefit. I'm wondering what would be your thoughts about getting out of it? You know, I think it's a good question.

And I think the key is, are you past the surrender penalty period? And if so, and you could repurpose that money elsewhere. And to your point, you don't need the life insurance. You know, I would always prefer investing outside of insurance products. I mean, I realize they have a place where you need a guaranteed death benefit for life because of a buy sell agreement or, you know, you've got a lifelong dependent child. But for most people, I think, you know, bearing some risk and managing that risk through the investment selections without the fees and commissions, without the surrender charges, without expensive premiums for life insurance as you age is a better approach. Because, you know, I'd have to pay the taxes on it when I withdraw it. But that's the only kind of downside to it. Yeah. And I just get with your CPA and make sure you understand the implications of that so you're not caught by surprise.

But you're going to pay those taxes at some point. So the question I think is always, you know, where's the best place for that money long term? And I think that's worth considering. Hey, we appreciate, Clarence, your call today, sir. God bless you. Brian, you've been waiting patiently. Go right ahead, sir.

Hey, Rob. Thank you for taking my call. Just wondering, I got a return of premium insurance policy that is my return of premium is after 20 years, I get supposed to get all my premiums that I paid in and which will amount to close to thirty two thousand after 20 years. And I was just kind of wondering, I got I got other loans and stuff that I I got, yeah, mortgages and some other loans that I need to get paid off to. And I was just wondering, what's my best option? I'm only two years into this return of premium policy. But I'd be better off to drop that and then and get a different health insurance versus that. Or what's your I just wondered what your opinion is on that.

Yeah, let me just make sure we're clear here. Is this life insurance? No, it is health insurance, like like basic accidental insurance, like for accident. Basically, it's only for accident insurance.

OK. All right. Yeah. So it's a rider or it's for accidental death or injuries. Is that is that basically what it is? Yeah, it's just for basically injuries and only like accidental stuff that, you know, emergency stuff is basically if I break my arm or leg and go to the hospital, they pay, you know, they only pay X amount per injury. You know, they only they have a set amount they pay.

So it's not really a really good coverage. The biggest thing is like a savings account. But I don't like I cannot only access it 20 years down the road. And I have other places for that money right now. Yeah.

Well, I think, yeah, I think that's the answer there. I mean, ultimately, you need to decide you're offsetting a risk that could happen. And so, you know, I can't necessarily tell you to drop that because, I mean, you may need to collect on that tomorrow. And, you know, we we would want that money to be there at the same time. I think whenever we're looking at our financial lives, we've got to determine, OK, first things first, we need to be we need to have an emergency fund in place.

We need to not paying be paying high interest debt. We need to make sure we have proper insurance. And I would start with property and casualty, making sure you have the right homeowners and automobile insurance, making sure you have the proper amount of life insurance that's going to cover the risk that your income would go away.

And you'd have a dependent child or a spouse that, you know, would would have a financial hardship as a result of that. I mean, the kind of insurance you're talking about is really, you know, nice to have, but not one of the must haves. And I think to your point, if there's other things that you really need to solve for at this point in your life, given the fact that you're still early in this policy and you're not going to get that premium back for 20 years, I wouldn't keep this as a savings vehicle. I would only keep it if you have the financial means to do it. And you feel like this is offsetting a legitimate risk that exists that could harm you financially if you found yourself in a position where you were injured on the job or otherwise.

But I wouldn't do it just purely because it has a return of premium coming 20 years from now. Does that make sense? Sure.

Yeah, it does. OK. That should answer my question. All right. Very good, Brian. Thanks for your call today.

All right. A quick break. And then back with our next segment here, just around the corner. That number to call if you have questions today, 800-525-7000. This is Faith and Finance.

We'll be right back. It is available at soundmindinvesting.org financial wisdom for living well. Soundmindinvesting.org. Empty stomachs, waterborne illnesses, hopelessness. These are harsh realities for impoverished African children. But you can make a difference. Join with Cross International to share the love of Jesus with a child in critical need today. Each gift of sixty two dollars provides a child with life saving resources. Give now at Cross International dot org slash faith or 866-843-9500 and help kids go from barely surviving to thriving.

So glad to have you with us today on Faith and Finance. Let's take more of your phone calls today. The number 800-525-7000. You can call right now. Let's go to Texas. Hi, Wanda.

How can I help? Thank you for being here. I recently heard a minister commentator that I respect say that once you are living on your retirement, that you don't have to tithe off your retirement anymore. My husband and I are tithing off of he's still working and I'm retired, but we are tithing and we find it of great value and really have been so blessed.

And we've seen such a difference. And the thought of not tithing once he retires, it's concerning. I'm not sure. Is this biblical? Yeah, it's a good question, Wanda.

I would just say first, hearing you talk, I wouldn't change a thing. Number one, we can't out-give God. Number two, I love the principle of the tithe as a beginning point to honor what we see under the Old Covenant and the Old Testament with the Jewish people and what they did with multiple tithes. There was actually three of them, different purposes for them, and they weren't all every year.

It came out to about 23 and a third percent if you averaged it all together. But I think that's a great place for us to begin our giving for those of us who are no longer under the law of Moses and have seen what Christ has done on our behalf on the cross. And I would say your ability to give systematically and proportionately as God provides and everything you receive is a gracious gift from Him, including that retirement check.

And I would say your demonstration of worship and giving back to Him proportionately on that is a great thing. What this pastor or preacher is probably getting at is that if you have been a faithful tither and you've been tithing on the gross income, not after taxes and other deductions, but on the gross amount, then what you're getting back, let's say from Social Security, part of that includes what you've already paid in and therefore tithed on. And so what he's probably referring to is the fact that although it would be a daunting task to determine exactly how much of every check should be allocated toward a return of what you've already paid in through your FICA taxes during your working years, and how much is the gain that came by the Social Security trust fund investing it and now returning it to you. And keep in mind, if you were a W-2 employee, not to get too technical here, half of those FICA taxes were paid by your employer.

But nevertheless, you've probably already tithed on at least some of that money that's coming back to you by way of 401k or an IRA that you're pulling money out of and Social Security. So that's probably what he is referring to. But what I would say is that your desire to continue to give faithfully as the Lord provides, regardless of what that source is, I think is absolutely the right heart posture and I believe God will honor that.

But is that helpful at all? Oh yes, thank you so much. My heart leapt within me when you started talking and I know it's about giving away more, not giving it away because we have certainly just things like I used to buy coat hangers, buy coat hangers, buy coat hangers. I can't give them away now. I used to buy socks, buy socks, just all this stuff that would just disappear birthday cards. And now I have so many that I'm almost choking on them.

I can't even give them away. Little things that you don't even think of or a check that appears when you're not looking for it. And he did mention tithing on the increase. We've been blessed to have work that has a retirement to it, you know, a county district retirement. But we've been so blessed by actually, we didn't used to tithe and things would just disappear. And he always blessed us. He always, when my husband was out of work for a while, we got a check that we wouldn't expect or just so many blessings to look for. But now, you know, it's and even talking about it today, my husband, I had said something and he said, Are you thinking about not tithing?

He went into and he used to be the one that was more reticent. And it just you really did help me. Thank you very much. I appreciate it.

Well, I'm so glad to hear that one. And let me encourage you for a second, because what you're sharing here today, I know is a blessing and encouragement to so many that are listening right now. That, you know, here you are in this, you know, fourth quarter of your life and talking about the faithfulness of God and the systematic giving and faithful giving that you've done over the years and how God blesses that. And it's not, this is not prosperity gospel. God is not a cosmic vending machine. We don't give to get. And yet what I've seen in hosting this program and talking to tens of thousands of callers over the years is that when we're faithful in giving, and we try to, you know, live on the 90% or, you know, whatever it is that after the giving, somehow it just goes further.

And it's just somehow that works, even though you can't make it work on your calculator. That's just how it works in God's economy. And so I think when we have the right heart posture, it shouldn't be about pride.

It shouldn't be about control. It really is proportionate, sacrificial, cheerful, and at the end of the day, worshipful. And when we do that, I believe that honors the heart of God. Wanda, thank you for calling today and for your kind remarks about the program. We appreciate it. Let's go to Texas.

Hi, Brandon. How can we help you, sir? Thank you for taking my call.

Sure. I was calling because I'm in a, me and my wife are in some credit card debt about like 8,500 and as well as a vehicle payment. And I was just calling to see what would be the best way to approach that. I was thinking of opening a new card. I used to have the interest-free payment, but her grandma had mentioned to me like a credit card relief program. I just wasn't too sure if that was, if that would be bad on my credit history or anything like that.

Yeah, it's a great question, Brandon. You know, the biggest thing, the starting point is for you and your wife to solve whatever got you into the credit card debt in the first place. And that has to be a balanced budget. And that's a budget that's realistic, then not the if everything goes perfectly budget, but the budget that takes into account, you know, you have non-recurring expenses that come up.

So you might have a semiannual insurance payment and then you got Christmas once a year and you got some family gifts that don't hit every month, but they come up. You got to get everything in the budget and we've got to right size your spending. We've got to get your spending down in line with your income. So you have a surplus and you've got to build up an emergency fund. Now, until you get that credit card debt taken care of, let's only build the emergency fund up to, let's say, $1,000. And then whatever you can free up in your budget by eliminating expenses, maybe you're cutting some subscriptions and you're, you know, eating out less.

Then we apply 100% of that to debt reduction. Now, with this kind of balance, I'd recommend credit counseling. This is called debt management.

It might have been what your grandmother was referring to. I would go to Christiancreditcounselors.org. They're going to leave the debt right there. They're going to get the interest rates down. You're going to send one level monthly payment and you're going to pay it off 80% faster by doing that.

Christiancreditcounselors.org. That's going to do it for us. Let me say a big thanks to my team today.

Certainly couldn't do this without them. Handling our phones today was Adam Suddeth, producing and engineering today. Mr. Devon Patrick and providing me with great research today and just helping navigate the program is Jim Henry, my partner in crime here on Faith and Finance. Thanks to you for being along with us today. And we'll look forward to having you back tomorrow. God bless you. Bye bye. Faith and Finance is provided by Faith Buy and listeners like you.