2021 may be remembered as the year when more taxpayers were hurt by bad tax advice than any other. Some recently published sources say millions were led astray by just one illegal strategy involving IRAs. The scam was promoted by just a few sales companies but gained viral popularity as quickly as other fake news that dominated national headlines. I personally fielded dozens of questions by those who believed misleading advice – even advice published in major media sources.
Real estate investors seemed to be especially vulnerable to falling for cult-like sales tactics of a few social media publishers. The fact that some are CPAs with carefully worded sales promotions keeps me from calling them “scammers.” Even earlier today, I read comments from low information investors who followed advice of one of these CPA media personalities. To be clear, they aren’t violating any tax rules with this advice, but rather just wasting money and possibly not maximizing their net long term returns.
Meanwhile, endless stories of the “Biden tax plan” changes made millions for seminar salespeople and media companies. Tax preparers were targeted and I was surprised how gullible some appeared this year. In their defense, the field of tax preparation does not typically include much training in the field of tax law policy development and procedural development. I tested the phrase “Biden’s financial plan is not your financial plan” that fell flat. Clearly some were fully engaged with what they heard or read in popular media. Sadly I observed it these might’ve been the same group of people who fell for other conspiracy theories and misinformation also in the press simultaneously. I know people who completely revamped their investment portfolio and incurred excessive taxes in 2021 based on this misinformation from their accountants and the public media. Even my own family members attempted to correct me when they said “I read it in Forbes.” It is pointless to counter that they misread it. None of it was real tax planning advice; just pipe dreams.
Those of us in the profession of forecasting future taxes for a living were even criticized for point out that the tax change emperor had no clothes.
In the midst of so much misunderstanding, it pays to keep tax advice clear and simple. The following statements are deliberately oversimplified for the point of clarity as our federal income tax laws will affect most people, especially those who may be reading this blog post.
There were a ton of tax changes affecting ordinary people for 2021. I covered them at:
There are no significant changes affecting most taxpayers for 2022.
The only change affecting taxpayers in 2023 pertains to cryptocurrency. If you deal in cryptocurrency, this will likely be the biggest change in your tax reporting requirements – with the greatest risk of penalties for running astray – that we’ve seen in federal tax law in decades.
At this time no major tax law changes are forecast for the future . This obviously doesn’t mean that are not possible. It means that tax policy forecasters like me who make our professional reputation on advising clients of the future of taxation are virtually unanimous in our advice that changes are improbable.
As always, I’m curious to hear what’s going on in your taxes. Click the “Let’s Talk” button here to schedule a new obligation 15 minute informal chat.