There May be Another Medicare Hold Harmless in 2017 so Beware

Most tax advisors learned last year that the Social Security law would prohibit the net amount of a Social Security check from decreasing because of increases in Medicare premiums. It’s called the “Hold Harmless” provision and is not an issue because a COLA is usually in place. That means Social Security benefits are greater than the increase in Medicare premiums.


However, in 2016, there wasn’t a COLA and Medicare premiums increased because of expenditures. There will be a COLA in 2017 but it will only be a tiny 0.2%. Medicare trustees announced in June that a 22% increase in Part B premiums may be mandatory.


This will affect the wealthy but others may also be affected and face a stiff increase in their Medicare Part B premiums. They will need to fall into certain categories in order to be protected. Kevin E. Thompson, CPA says “I have seen three (3) taxpayers thus far that have seen significant increases driven by their income levels.”


In 2017, premiums will be based on 2015 Medicare expenditures. (a 2-year “look back”) 75% will be paid from the general fund. (where Medicare taxes is generally collected.)  25% is paid using premiums that are charged to beneficiaries. Because the “hold harmless” was triggered in 2016, there are two base premiums. If you’ve already been paying for Medicare Part B in 2015, you will pay just short of $105 monthly. If you are a new Medicare beneficiary for 2016 you will be paying $121.80 per month. Both bases will see their fees increased in 2017.


Higher end seniors pay more in Medicare because there is a surcharge based on income. This is determined by adjusted gross income plus tax-exempt income. There are now 5 Medicare income brackets. The highest brackets (over $428,00 in annual income) pay about $390 per person per month. The lowest bracket pays $105 per month for Part B.


It’s possible that the “hold harmless” provision will be triggered again in 2017 even though there is likely to be a small COLA. That’s because Medicare premiums will need to increase to more than the net amount of the Social Security increase. The majority of Medicare beneficiaries will only have a small increase because they will be in the “hold harmless” groups.

  1. Those who are not already Medicare beneficiaries will be the ones to make up for the shortfall. They will be divided into the following groups.
  2. New Medicare beneficiaries who enroll as of November 2016.
  3. Medicare beneficiaries who do not have premiums withheld from their SS checks (includes people 65 and older who are on Medicare but are not receiving Social Security)
  4. Those with incomes that exceed the first level of income – $170,000 for a couple and $85,000 for an individual.

The following will not see an increase.

  1. Those who are receiving Social Security benefits in Nov and Dec 2016, AND
  2. Have Medicare premiums for December deducted from their SS checks, AND
  3. Have incomes lower than the first level of income.

The increase is estimated to be as high as 22%.  It’s possible to pay as much as $467 per month per person in the highest income bracket of over $428,000 per couple and $214,000 for an individual.


Why you need an advisor who is able to understand the laws and how it will affect you.


It’s a complicated scenario. Kevin E. Thompson, CPA is here to help you understand the maze that is the Social Security System.


It’s important that your advisor determines whether or not you fall into the “hold harmless” group and will help you decide whether claiming Social Security by November 2016 and giving up delayed retirement credits of 8% is better than paying an increase in Medicare premiums.


Contact your tax advisor before making this important decision.

Reduced funding for the IRS has Resulted in Lower collections from High Income Nonfilers

The IRS has been ignoring high-income taxpayers who owe billions of dollars and its watchdog group is pressing them to go after them. Approximately 1.9 nonfilers for 2012-2013, who have expired extensions, still owe an estimated $7.4 billion according to the Treasury Inspector General for Tax Administration Audit. (TIGTA)


However, they are not faulting the IRS, as much as Congress, who have cut the agency’s budget. Reduced funding has subjected compliant taxpayers to mediocre service and has made it harder for the IRS to pursue delinquent taxpayers.


Nonfilers account for at least $26 billion of the $458 billion estimated tax gap.  In the course of a year, the IRS will typically send delinquency notifications to approximately 7 million nonfilers. But the TIGTA has found that programming errors, bad management decisions, and lack of resources have contributed Treasury losses. In 2012 and 2013 the IRS collected $433 million and $290 million compared to $4.3 billion and $3.6 billion for 2010 and 2011.


Nonfilers are tracked by third party reporting such as 1099 Misc, (self-employment) and 1099-B (stocks) forms.  They also look at taxpayers who have filed in the past but failed to later on.


In 2012, programming errors overlooked nonfilers with expired extensions and at least ½ were not identified. Most had high incomes and owed significant amounts in taxes. The nonfiler program is standalone so it is unlikely, those nonfilers will be reassessed.


The IRS fixed most of the program errors they found in 2013.  However, because of funding cuts, the agency stopped sending out notifications to delinquent taxpayers and established installment agreements. The TIGTA took issue with this because the agency is required to issue notifications regardless of balance due. They are saying that notifications would have brought in at least $3.8 billion in collections and is recommending that the IRS reinstate it. The IRS agreed to review 127,000 high priority cases but still only expects $2.7 billion in collections.


Kevin E. Thompson says “personally, I think it’s great they keep reducing the IRS budget and demand more from less. This IRS will continue to struggle and this means less and less impact on the US taxpayers.” There are many implications to a lowly-funded IRS and one of them is fewer audits. This is good for the US Taxpayers who fear examinations. “Professionally, I think it time the IRS enters into a Public-Private partnership with tax preparers (TP). These TP’s would be well-trained and can resolve many of the IRS issues with taxpayers quickly and more economically than the IRS can. Look for my book this summer on this topic.”


Contact Kevin Thompson CPA  or call him @ (310) 450-4625 x102

Bitcoin User Data Being Sought by IRS

The IRS is looking for user data from Bitcoin customers causing tensions in regards to compliance and privacy. The agency has requested that Coinbase turn over records on users who have completed transactions between 2013 – 2015.


Kevin E. Thompson CPA says “I began looking at the Bitcoin phenomenon maybe 5 – 7 years ago. My long-time business associate said I should check this out and the Burger King on Pico and 20th started accepting Bitcoin. So, I did. I am not normally a risk-averse person but this stuff had risk written all over it. The rest of this article validates why I stayed away.” Thompson says “but that doesn’t mean everyone stayed away.”


Coinbase currently has nearly 5 million users. Their main concern is that they will be required to turn over their customer’s financial records. The IRS has previously targeted banks but didn’t require them to turn over data on most of its account holders. What they are asking Coinbase to do is much broader. The company is concerned that innocent as well as fraudulent customers will have their privacy violated.


For instance, if you have bought books, considered to be politically incorrect, the government will have a record of it. The IRS feels that most Bitcoin users are suspect because cryptocurrency doesn’t require using third parties to report information to the government. This increases non-compliance.


Coinbase, known for its “know your customer” and monitoring practices has said it will appeal the John Doe summons if it goes to court.


Generally, the company adheres to law enforcement requests if they are reasonable. However, what the IRS is asking for, goes beyond those boundaries. The have demanded that Coinstar give them information on their customers for a three-year period.


Though the summons allows the agency to go after anonymous tax evaders, it cannot investigate specific individuals according to the IRS internal Revenue Manuel.  They also cannot issue that information be released to conduct “fishing expeditions” based on assumptions.


Some say the IRS is doing the right thing asking for Bitcoin customer data. They believe it would be a way for them to sense how the digital currency is being used by taxpayers to avoid paying taxes. It would also help them determine the size of the market and what percentage of customers are reporting transactions on their tax returns.


Transactional analytics for the Bitcoin market are controlled by local, national, and federal regulations.


Government officials are pressuring the IRS to crack down on Bitcoin tax evasion. Whenever a customer makes a profit they are liable for capital gains tax, which needs to be reported.


Those watching the Bitcoin market are questioning whether the IRS is attempting to go after both individual tax evaders and the companies themselves. Others would rather they spent time on more important concerns because the profit levels of digital currency is low.


Bitcoin users may be driven away from companies like Coinstar, who offer attractive services such as currency conversion and storage services because of privacy concerns.


Contact Kevin Thompson CPA  or call him @ (310) 450-4625 x102

Beware of the Quickbooks Software Phishing Fraud

“Fishing is fun,” says Kevin E. Thompson CPA “But PHISHING is dangerous. ”Phishing is when a scammer sends an email that makes you think it’s from a reputable company. They can replicate a company’s branding to trick you into giving them important information. If you think you’ve received a phishing email do not click on any of its links. Instead, go to your browser’s address bar and type the company’s main domain. Scammers often use well-known banks and other financial institutions to phish. One company that has recently been targeted is Quickbooks.


You may receive an email with a subject line that reads “Quickbooks Support: Change Request.” It asks you to confirm that you’ve made a change to your business name with Intuit, the company that owns Quickbooks.


This is also called “click bait” When you click on a link in the email, scammers can download harmful malware to your device. They can then collect your passwords or financial information and steal your identity.


A good rule of thumb is to never click on links in the emails of financial institutions, even if you think it’s real.

Ways to identify phishing emails

Check the reply email. If it does not come from the main domain of the company ( it is probably not legit.


Hover over the link to find its destination URL. It should also point to the main domain of the company.  It’s easy for scammers to create variations of a link, by putting the company name at the end of the link (accompany/ or in addition to the domain name. (


If a company you do business with normally contacts you through the mail and then starts sending unsubscribed emails or texts, be suspicious.  For instance, the IRS will only contact you through the mail, and never by phone, text, or email.


Be care of emails that are generic in nature and do not contain valuable information.


Just because an email looks real, don’t assume it is.  A scammer can easily fake logos, other brand images, and even the “sent” email address.


Educate employees to be careful about clicking suspicious email links. If in doubt, ask someone. Otherwise, your company could be the victim of a costly mistake.


As Sgt. Phil Esterhaus on Hill Street Blues would say “be careful out there..”


Original Article


Contact Kevin Thompson CPA  or call him @ (310) 450-4625 x102

Replacing Computer Equipment

Co-written by Kevin E. Thompson CPA and Ted Mayeshiba, MBA, Fellow, Institute of Industrial & Systems Engineers.


How do you define “business interruption”?  News reports that talk about earthquakes, hurricanes and tornados come to mind.  However, the most disruptive for the single person or small business is as simple as an electrical outage maybe due to high winds or an isolated burst pipe.  Since most of your business is on computers, how far do you get with no electricity?  How far do you get with a computer failure?  How willing are your clients to wait for service?


  1. Let’s help you determine your greatest risk potential.  (


Risk of Failure Laptop Desktop Virtual Terminal Server Firewall
Low <2 years <3 years <7 years <3 years <4 years
Moderate 2-3 years 3-5 years 7-10 years 3-4 years 4-6 years
High 4+ years 5+ years 10+ years 4+ years 6+ years
Ease of Replacement Moderate Moderate Easy Hard Moderate


As a physical asset, hardware replacement must usually be planned for in advance so that you’re not scrambling to replace it after it fails. This proactive replacement is often referred to as performing a hardware refresh. This is done to reduce the risk of failure of a hardware asset. As you can see from the table above, different types of hardware have varying risks of failure as they age.

  1. Let’s consider recovery

Along with the risk of failure, you should consider how difficult (and how long) it will take to replace the asset.  So first, consider Ease of Replacement.   If your laptop, desktop or virtual terminal (e.g., Chromebook, Wyse) can be retrieved at your local Best Buy, replacement is easy.  What makes laptops and desktops moderately difficult is the time to reinstall all your software from the original disks/licenses.  A summary appears below.

  • Desktop or Laptop – Moderate: Once the computer is received it must be configured, operating system updated, system software (like antivirus) installed, and user application software installed. Additionally, the user’s profile and data must be loaded from their old computer onto the replacement.
  • Virtual Terminal – Very Low: Virtual terminals are used in conjunction with virtual desktops or hosted desktop services. In this case, the user’s “actual computer” is resident on a server in a data center and the terminal is merely there for user input (e.g. keyboard and mouse) and output (e,g. monitors and printers). Because the user’s software and data are sitting on a server, replacing a virtual terminal is simply a matter of switching out the terminal box.
  • Server – High to Very High: Once a server is received it must be configured, operating system loaded and uploaded, system and platform (e.g. database server) software installed, business application software installed, business application data restored, and all users reconnected to it. Systems maintenance jobs and backup processes must also be configured to work with the new server, and security monitoring software must also be configured to monitor the new server.
  • Firewall – Low to Moderate: Depending on the type of firewall and complexity of the network environment this could be as simple as restoring the backup of a configuration file and reconnecting all the physical wires to the firewall, or it could be as complex as reconfiguring the firewall from scratch (which usually isn’t too bad).

When evaluating your tolerance for business interruption, consider determining the refresh cycle for hardware assets and both the Risk of Failure and Ease of Replacement.  How often your organization refreshes its hardware depends on your level of risk tolerance for interruption of critical business processes that are supported by your computing hardware.


Kevin Thompson, CPA has more than 30 years’ experience operating CPA firms ( and Income Tax Preparation ( and is the CFO for the Aditi Group ( specializing in organizational and technical solutions for the challenges business faces every day.


Ted Mayeshiba, MBA has over twenty-five years of management experience in operations engineering and management from various industries from automotive to satellite to biopharmaceutical and clinical medical practices. He has proven that he can direct and launch new initiatives which transform operations, improve productivity, reduce cycle time or improve decision-making capabilities within highly technical, competitive and legacy entrenched organizations. His latest efforts involve the successful transformation of a Lean Health Care Academy, built upon the successful Lean Academy for Operations under the auspices of the Lean Advancement Initiative based out of MIT. As West Coast Director of LAI EdNet based at USC, Ted plans and executes Operational Academies to improve outcomes for various groups both in manufacturing, engineering and now, health care. Ted is one of the founders of The Aditi Group (


He is a Fellow of the Institute of Industrial & Systems Engineers


To download the document to print click here.



How the Donald Trump Tax Change Proposals Could Affect You

“My tax cut is the biggest since Ronald Reagan. I’ve very proud of it. It will create tremedeous (sic) numbers of new jobs” ~ Donald J. Trump (Well, he can’t spell)

Here is a summary of Donald Trump’s tax change proposals.

Tax Rates

There will only be three brackets rather than the existing six – 12%, 25%, and 33%.  Corporate taxes will be fixed at 15% and there will be a 10% repatriation tax on foreign subsidiary accumulated earnings.


There will be new deductions for health insurance premiums, childcare costs, and dependent care savings accounts. Itemized deductions will be limited to mortgage interest and charitable gifts.  All deductions will be limited to a cap of $100,000 for individuals and $200,000 for those filing jointly.

Proposed Repeals

Trump has promised to repeal the Affordable Care Act (ACA), Alternative Minimum Tax (AMT), Gift & Estate tax, stepped up basis on gains over $100, and most business tax incentives. Kevin Thompson, CPA says “I cannot imagine the complexities surrounding the repeal of the ACA. Although I don’t like the idea that health insurance has become a tax issue, I also do not like the idea of uninsured Americans.” Thompson goes on to say “with these revised brackets and limitations on deductions, the complex AMT Regulations most likely become irrelevant.”


My office receives inquiries daily that ask “is there anything I should do to reduce my tax liability before President-Elect Trump’s inauguration.” Thompson says “that’s a tough question to provide some comprehensive answer that applies to all.” We are saying to all “It’s imperative that you plan for 2017 before the end of the year and before Trump takes office. He has made tax reform a priority in his first 100 days. Make sure to make an appointment with your tax consultant.”

Be cautious about deferring income.

This must be done with strategic planning.  Even though tax rates are set to decrease, (according to Trump’s proposals) do not defer it immediately. Delaying your year-end bonus may result in a 7% decrease in taxes, for those in high-income brackets, but some taxpayers will see an increase in their tax. If you earn between $127,000 and $200,500, your tax will increase by 5% because the brackets will be changed from 28% to 33%.


What may affect you more is the elimination of popular tax deduction items. The only deductions available will be for mortgage interest and charitable contributions. You will not be able to write-off any of the other business expenses you did previously. Lower rates will only be guaranteed for those in high tax brackets. That means more of your income will be subject to taxes.  This will result in higher effective rates even if marginal rates have decreased.

Accelerate your capital gains.

Although Trump hasn’t proposed changing the rate of capital gains taxes, the threshold for the 33% bracket will be much lower. Individuals will reach it with income of only $127,500 ($255,000 filing jointly) rather than the present $425,400 ($487,650 filing jointly)

Change your work classification

The 33% bracket will be in force for individuals with taxable incomes of $127,500 ($255,000 filing jointly) rather than at $425,400 ($487,650 filing jointly) Trump has also proposed that all business income be taxed at just 15%.  You may want to consider freelancing rather than working as an employee. If you are an independent contractor, in compliance with IRS criteria, you can cut your tax by more than half for those paying 33% simply by swapping your W-2 to a form 1099. Thompson warns “this should not be done in a vacuum. There are a plethora of consequences including benefits and insurance that might be impacted by this decision. You should discuss at length with your counsel, both legal and tax, to ensure that you do not impact other issues relative to your career and employment.”

Make your charitable contributions before he takes office

Trump’s proposal for charitable deductions is limited to $100,000 for individuals. ($200,000 joint) If you exceed those amounts, it is recommended that you make your contributions this year before the cap is enforced. Thompson says “it is not clear from the proposals whether amounts exceeding the limits are carried over for future years. I don’t know to what extent this will impact charitable giving as tax consequences are not the only reason for charitable giving.”

No more depreciation.

Deducting the cost of business assets over a period of years will be a thing of the past. Trump wants any asset purchases to be deducted in full the same year as it was purchased. If you can’t deduct them all in 2016, you would be better off waiting until Jan 1.  That way you’ll be able to write it off for next year. “this is a revolutionary approach to capital acquisitions” says Thompson. “Businesses will be able to finance some acquisitions with tax savings AND reduce their record keeping requirements.”

Don’t die until 2017 or later

Trump wants to get rid of the estate tax completely. If you die before Dec 31, 2016 your estate tax could be as high as 35%. Thompson says “Happy New Year. Your heirs are not looking for a reason to knock you off early.”


Contact Kevin Thompson CPA  or call him @ (310) 450-4625 x102


IRS Takes Aggressive Stance on LLC Self-Employment Tax Income

If you have an LLC do you know how much your member’s shares are when it comes to self-employment tax?


It’s a complicated matter because the IRS code and regulations do not provide any guidance on how to treat an LLC member in that regard. However, the agency has just provided a form that details how aggressive it will be in going after self-employment taxes from certain LLC members and it’s something to be aware of. Kevin Thompson, CPA says “this is another example of a complex set of laws biting taxpayers when they try and do the right thing.”


Before anything else, it’s important to understand why this is an issue, who is subject to SE tax, and why the authority doesn’t exist.


Self-employment income is taxed at 15.3%. 12.4% goes to old-age survivors and disability insurance tax. The remaining 2.9% is designated toward hospital insurance tax. Another 0.9% has been tacked on to a taxpayer’s self-employment if their income is over $250,000 married – filing jointly, and $200,000 if single. In total, the self-employment tax burden, under the current law, can be as high as 16.2%, before considering the deduction for one-half of the self-employment tax that doesn’t include the 0.9% surtax.

What exactly is self-employment income?

It is the gross income derived by an individual from any trade or business carried on by the individual less deductions allocated to the business.

How it affects partnerships

Partners can receive income in 3 ways.


For services to the partnership – Some partners in an LLC are paid wages and receive a W-2, like an employee. Even though this is popular it’s wrong because members who are partners are not employees of the partnership.


Instead, the proper way to compensate partners is to pay them a “guaranteed payment” which is subject to self-employment tax.


The third way is when any net income the partnership generates that is not paid out as guaranteed payments is later divided among the partners, with each including his or her allocable share of the partnership’s net income (or loss) in taxable income. This is whether or not the partnership actually distributes the income to the partner.  It’s known as the partner’s “distributive share.” Thompson says “I am a CPA, practicing near 40 years and my eyes rolled in my head like a slot machine when I read this. Why does this have to be so complicated?”


It gets tricky because the distributive share of partnership income of a “limited partner” – other than guaranteed payments – is not included in self-employment income.


In limited partnerships, there are two types of partners under the state law.


  • General partners
  • Limited partners


General partners are able to manage and control the business but have unlimited legal liability.


A creditor can only take a limited partner’s share of what they invested in the company and cannot pursue their personal assets.


A limited partner cannot take control of the partnership.


Congress has excluded the distributive share of limited partners from self-employment income. And because a limited partner can’t participate in the management of the partnership, their involvement is limited to their cash investment.  It would appear that the limited partner’s distributive share was the same as earnings on a passive investment. Because of this, the Congress has decided it shouldn’t be included in self-employment income. However, if a limited partner performed services for the partnership and was paid a guaranteed payment, that payment would be included in their self-employment income. Thompson says “Congress has already ruled on this so this is pretty well defined. But, I do believe if there is a way for the IRS to squeeze one more drop of blood from this they will try.”


Limited Liability Companies (LLC’s) are different than general or limited partnerships. In an LLC, ALL the members of the partnership have limited legal liability. But unlike limited partners, LLC members are able to participate in the management of the organization to some degree. This poses a problem for tax law.


The IRS proposed regulations to govern whether the distributive share of partnership income of members of an LLC should be included in self-employment income. The LLC partner would then be treated like a limited partner and the distributive share would not be self-employment income unless the member had personal liability for the debts of the LLC under law. The problem is, the regulations were never finalized. “And this, in theory,” says Thompson “is another example of the challenges facing both sides. We realize this is a problem; Congress starts to fix it but then special interests kill it.”


The Congress went ballistic about the idea of a “hidden tax increase” and squelched it. In theory, you can exclude the distributive income of an LLC member from SE income but that doesn’t mean the IRS will not argue that you should. Several arguments have ended up in the courts.


You can read examples of these arguments and other details here.

Self-employment tax for LLC’s in summary:

The IRS says that if an LLC member provides significant services to a service LLC, then the member is not a limited partner because the income of the LLC is attributable to the services rendered by its members. It has determined that even when the LLC is not a service partnership, but instead sells a product, it doesn’t matter. If the LLC member manages the LLC, all the income attributable to the member is subject to SE tax, even if a portion of that income could reasonably be argued to represent a return of the LLC member’s capital investment to the LLC.  If the LLC member is involved in the management of the LLC, the income needs to be subject to SE tax.


Contact Kevin Thompson CPA  or call him @ (310) 450-4625 x102


IRS Penalties Go Up as 2017 Tax Rates Go Down

Bloomberg BNA has just published its 2017 Projected Tax Rates along with a projection of tax items that have been adjusted for inflation.


That means that the cost of noncompliance will increase. The good news is that individuals and businesses can look forward to lower tax liability because of higher deductions and credits. You can view the full report here.


Congress has passed legislation that may revoke the passports of taxpayers who currently have serious delinquencies in tax debt. This has caused a trend toward higher penalties. Congress has provided more predictability for business taxpayers by returning to annual increases for the business expensing limits.


The report includes projections for income tax brackets, personal exemption, standard deduction, and penalties that will give taxpayers and tax planners a reference to save more tax dollars in 2017. It also includes over 320 that are contained in more than 55 Internal Revenue code provisions. The official statement from the IRS will be published later this year. Amounts are based on the Bureau of Labor Statistics inflation adjustments.


Kevin Thompson, CPA says “Watch out for more penalties.”


The IRS code will be imposing penalties for failure to file returns, failure to furnish information returns, and failure to pay tax. This will affect individuals, companies, trusts, and estates. Several of these penalties have been tied to annual inflation adjustments and some were increased. This raises the possibility that there will be even higher penalties for noncompliance coming in the future.


Tax preparers may also see their penalty costs soar. You can see a complete list in the full report.

How tax brackets are affected

Because the higher Consumer Price Index (CPI) is higher, it pushes the definition of brackets higher. It will also increase the standard deduction and exemption amounts.


Those who are in higher income brackets will have some relief in 2017 because the top 39.6 % bracket will begin at $470,700 for those who are married and filing jointly and $418,400 for single taxpayers.

Personal Exemptions and the Standard Deduction

Thompson says “Most taxpayers may claim a personal exemption for every member of their household. In 2017, this should remain unchanged.” The personal exemption for taxpayers with higher income has been phased out. Taxpayers may choose either the higher of their itemized deductions or take the standard deduction which varies according to filing status. Standard deduction amounts will be somewhat higher in 2017 than in 2016

Alt Minimum Tax (AMT)

Inflation adjustments will make the difference between having to pay AMT or not for some taxpayers.

Estate and Gift Tax Exclusions

Bloomberg is projecting that the estate tax basic exclusion for those who die in 2017 will be $5,49 million.  It was $5.45 million in 2016. The annual gift tax exclusion will remain the same ($14,000) in 2017. Thompson says “high net worth individuals should consider large gifts to family members. This large estate exclusion can disappear anytime.”


Original Article


Contact Kevin Thompson CPA  or call him @ (310) 450-4625 x102


Retirement May Not all it’s Cracked Up to Be

Retirement isn’t for everyone. It turns out many retirees aren’t satisfied with the way it’s been going for them. The Employee Benefit Research Institute did a study between 1998 and 2012. They interviewed the same 20,000 retirees every 2 years. Here is what they found:


Only 31.7% – 40.9% reported moderate satisfaction with retirement and just over 10% were completely unsatisfied. Very satisfied retirees dropped from 60.5% in 1998 to 48.6% in 2012, which is below half.


Kevin Thompson, CPA says “I think most people think retirement will be easy. I think most people forget just how much of their time was consumed by their careers and young families and neglect to plan for that time.”


Although the study didn’t research the reasons for the rise in dissatisfaction, other studies say that financial difficulties are the cause. For one thing, retirement income from traditional pension accounts has fallen from 38% in 1980 to 20% in 2008.


Other reasons that retirees have become dissatisfied is that they had raised expectations about what it would be like. Some are searching for new ways of creating a retirement income that would give them flexibility. Baby Boomers are clearly not as happy with retirement as generations who came before them.


If you are retired or approaching retirement here are tips to make your experience more satisfying:


  1. Interact and socialize with others. – Keep up relationships with old friends and don’t be afraid to make new ones. Make most of your social interactions in person rather than by telephone or email. Personal contact is more beneficial, emotionally.
  2. Do things you love – Stay busy. You may want to find a new career or pursue a hobby. When you follow your passions it adds years to your life. Think about what you enjoyed doing when you were young. Reconnect with those joys and put them back in your life.
  3. Use your time wisely – Fewer than 3 in 10 people plan their personal activities, recreation time and travel once they’ve retired. A lack of structure may make you feel like you don’t have control over your life. You may feel less motivated to try new things and that can lead to depression or loss of self-esteem. Instead, detail your goals and create an action plan to achieve them. A happy retirement depends on meeting your expectations.


Thompson closes with this advice: “Our busy lives in pre-retirement become empty post-retirement. Successful retirement will take planning. Not just financial but more importantly planning to LIVE in retirement and not just make sure you have enough money.”


Original Article


Contact Kevin Thompson CPA  or call him @ (310) 450-4625 x102


Get Transcript Data Breach Still Affecting Taxpayers

The IRS’s online Get Transcript app (GTA) ( experienced a data breach during tax season that is still affecting taxpayers, according to a report released by the Treasury Inspector General for Tax Administration (TIGTA). The report was released a day after the IRS relaunched the app with fixes to prevent identity theft.


Kevin Thompson, CPA says “TIGTA was established in January 1999 in accordance with the Internal Revenue Service Restructuring and Reform Act of 1998 (RRA 98) to provide independent oversight of Internal Revenue Service (IRS) activities. As mandated by RRA 98, TIGTA assumed most of the responsibilities of the IRS’ former Inspection Service.” For more information on this function, click here


The GTA was taken down in May 2015 after the agency discovered that thousands of taxpayers’ transcripts had been accessed by thieves. It turns out that 390,000 taxpayers were affected and 295,000 more had their transcripts targeted but not stolen. In an effort to help victims, the IRS provided taxpayers with Identity Protection PINS as well as free credit monitoring.


Unfortunately, the IRS was not able to identify 620,931 individuals whose information was compromised. It was also discovered that unauthorized users successfully obtained access to 355,262 taxpayer’s accounts.


Another 2,470 taxpayers whose accounts were breached through the GTA were not identified because the IRS excluded three system error codes that could have identified them. The IRS also didn’t place identity theft incident markers on the accounts of 3206 taxpayers who had been identified as victims of the breach. They have informed the TIGTA that each would receive an identity theft marker. The IRS also did not offer PINS or free credit monitoring to 79,122 taxpayers whose accounts may have been targeted. Thompson says “as a businessman and CPA, I am aware that these breaches happen. The host of the data breached should do everything in its power to restore those violated. It troubles me that the IRS did not do that in this circumstance.”


The TIGTA is recommending that the IRS execute other methods of evaluation that will identify individuals who have been affected by the breach as well as issue notifications to the taxpayers who may have been targeted and place identity theft markers on their accounts. They must also analyze system error codes, place identity theft markers, and issue PINS to those whose personal data was used by the hackers of the Get Transcript app.


The IRS has agreed to comply with 7 of 8 recommendations from the TIGTA.  They do not want to issue PINS to 79,122 taxpayers whose accounts thieves attempted to hack but didn’t access. The TIGTA is concerned that the IRS’s failure to provide prompt action will leave taxpayers at the risk of further fraud.


The IRS says that most of the information used by the hackers originated outside of the agency. However, Debra Holland, commissioner of the IRS’s Wage and Investment Divisions says, “The theft of taxpayer data from the Get Transcript system was unprecedented in both its scope and the method in which the crime was committed.” Thompson says “and with that, the IRS must take measures to prevent further hacks.”


When the GTA relaunches, its new multi-factor authentication will require users to enter codes, sent to their email or mobile phone to protect their identity. Multi-factor authentication is an upgrade that will provide better security even though it will mean taxpayers will have to take extra steps in the process.


The IRS thanked the TIGTA for their help in finding better ways to serve the taxpayers who were victims. They have announced a new secure access framework for the Get Transcript app that will significantly increase protection against criminals who impersonate taxpayers and aid them in other services in the future.


Original Article


Contact Kevin Thompson CPA  or call him @ (310) 450-4625 x102