Today, members of our team are representing Beers, Hamerman, Cohen & Burger (BHCB) at the American College of Physicians Annual Scientific Meeting at the Aqua Turf Club in Plantsville, CT.

This event offers top-notch educational content, CME and Maintenance of Certification credits, and is a great opportunity to connect with general internists, subspecialty internists, hospitalists, allied health practitioners, residents, and medical students. BHCB is excited to be part of this important gathering!

Here’s a little-known secret for parents planning to send their children to college in the future: Some of the tax-saving moves you make now could hurt your student’s chances for getting financial aid later.

That’s because of the way the financial aid system treats different assets. Retirement plans and IRAs don’t count for college aid purposes. You’re not expected to break into these accounts to pay for tuition.Another key point:The college aid formula requires 20% of the assets in your child’s name to be used for college costs. But the government-mandated formula only expects about 5.6% of the money in the parent’s name to be spent. So you’re better off keeping accounts in your own name, especially during the last two years of high school, which is generally when you’ll be asked to start providing tax returns.

Don’t assume you’re not eligible for assistance. With the high cost of college today, many schools now have programs available to relatively well-off families if they meet certain qualifications. For example, your child might be able to get a “merit award” based on high standardized test scores and superior grades.

The best strategy: If you expect to apply for financial aid, don’t hold back placing money in your own retirement plan in order to put away savings in a college account in your child’s name.

Contributions to retirement accounts are usually tax-deductible and the earnings are tax deferred until withdrawn. On top of these tax breaks, your family may also become eligible for more financial aid.

Remember that you can usually tap retirement accounts for college money. Many 401(k) plans allow loans to be taken. And thanks to a tax law that went into effect in 1998, you can generally withdraw a limited amount from your IRAs penalty-free to pay higher education costs for yourself, your children and grandchildren.

Although fewer paper checks are being issued now than in the past, old-fashioned paper checks remain the “go-to” payment method for many individuals and organizations. While checks may be convenient and familiar, fraud is a persistent problem. According to the Federal Reserve Bank of Boston, the total losses from check fraud were estimated at $24 billion in 2023, nearly double the amount from five years earlier.

These schemes are on the rise, partly because check theft is an easy, low-tech crime to pull off. Plus, there’s still a sizeable pool of potential victims. Dishonest individuals and organized crime networks often steal checks from residential mailboxes and public mail drop boxes.

Recent Statistics

A recent government report from the Financial Crimes Enforcement Network (FinCEN) highlighted common ways checks stolen from U.S. mail were used to commit fraud:

• 20% were fraudulently signed and deposited,
• 44% were altered and then deposited, and
• 26% were utilized as templates to create counterfeit checks.

The FinCEN report revealed over $688 million in suspicious activity linked to checks in just six months. In addition to direct financial losses, check fraud can adversely impact credit scores and business goodwill, as well as result in bank fees and payment delays.

Nip Check Fraud in the Bud

After a check has been stolen, the thief may continue to conduct fraudulent transactions until theft has been detected. So, it pays to prevent fraud from happening in the first place. Consider the following seven preventive measures:

1. Stop writing checks. Replace checks with alternative payment methods, including debit and credit cards, wire and Automated Clearing House (ACH) transfers, and third-party electronic payment services, such as PayPal, Venmo and Zelle. These options have security measures in place to prevent criminal activity.

2. Use your bank’s fraud prevention tools. Banks provide customers with many solutions to combat payment fraud. Visit your local branch or contact your relationship manager for customized fraud-prevention advice.

3. Respond quickly to alerts or calls from your bank. Many banks offer fraud alert services that notify you of suspicious account activity, such as transactions over a certain dollar threshold. Make sure to update your contact information with the bank. Businesses should also train employees who are designated as points of contact to understand the importance of responding quickly.

4. Reconcile accounts regularly. It’s essential to verify the legitimacy of transactions posted to your account as often as possible. Most banks offer online banking tools and apps that allow you to view check images as soon as they post to your account. Use these tools to verify the payee, amount and account paid. Notify your bank promptly when you suspect fraudulent activity. Acting quickly maximizes the assistance your bank can provide and lowers your out-of-pocket costs.

5. Use security ink. Check fraud often involves altering legitimate checks. Criminals can easily erase regular ink using common household products, such as bleach and nail polish remover. Security ink is hard to erase, making it more difficult for criminals to compromise your checks.

6. Secure your checks. While check fraud often involves third parties, it can also be committed by family, friends and employees. Store blank checks in a locked cabinet. Businesses should also limit employees’ ability to reorder checks.

7. Shred old checks and statements. Destroying old financial records can prevent sensitive information from being used to engage in check fraud or any other payment fraud

Awareness Is Key

While opportunity is fueling check fraud schemes, knowledge and vigilance can help individuals and businesses reduce their risks. Alternative payment methods are the first line of defense against check theft, but that’s not a realistic solution for every situation. So, implementing additional security measures is crucial for those who still write and accept paper checks.

We’re thrilled to be part of the Fairfield University Career Fair today, connecting with the next generation of bright minds!

If you’re a passionate accounting major or just curious about the dynamic world of public accounting, stop by our booth to learn more about our amazing team and how we’re helping clients succeed every day!

Members of our team spent the morning at the Quinnipiac University Business Career Fair. Marcos and Victoria had the opportunity to meet and share their knowledge with future accountants and auditors.

Marcos is quite familiar with the experience as he interned for BHCB this past busy season and was asked to join us full time once his internship was completed.

Taking Money Out of Your IRA

If you withdraw money from a traditional IRA before age 59½, you’ll generally owe income tax plus a 10% penalty on the amount. But there are exceptions, including if you withdraw the money to cover certain higher education costs or to buy a home (first-time homebuyer expenses up to $10,000). You can usually make penalty-free IRA withdrawals when you have or adopt a child ($5,000 limit per child), in the event of a financial emergency ($1,000 limit per year) and to help with disaster recovery costs ($22,000 limit). Those who become disabled and domestic violence victims ($10,000 limit), among others, also may qualify.

Document Your Donations Right Away

Did your summer chore list leave you with boxes of items to donate to local charities? Not only is it generous to donate, but you might end up with tax savings as well (if you itemize deductions on your tax return). You’ll need to secure proper documentation from the qualified charities you donate to. Noncash donations of less than $250 must be supported by a receipt, showing your name, address, date of donation and detailed descriptions of the items. For donations valued at $250 to $500 you must also obtain a “contemporaneous written acknowledgement” from the charity. Click here for more details, including documentation needed for higher value donations.

Time’s Almost Up to File Your Extended Return!

If you requested an extension to file your tax return after the original April 15, 2024, due date, you probably know that the new deadline is coming up soon on Oct. 15. If you have the information you need, you may want to file now, the IRS says.

There’s no advantage to waiting, and last-minute filing may lead to worry. If you’re concerned about paying any tax owed, the IRS offers short- and long-term payment plans, as well as installment agreements, to taxpayers who qualify. It’s important to act quickly if you owe because any amount that was due April 15 accrues interest until the balance is paid. As soon as possible, gather your 2023 tax year records and contact the office for a tax preparation appointment or to ask questions you may have.

Tax Credit Help with Dependent Care Costs

If you incur daycare expenses for children or other dependents, you may qualify for a tax credit. The Child and Dependent Care Credit is available for expenses that allow you or your spouse to work or actively seek work. If eligible, you may be eligible to claim up to 35% of your expenses. The credit can’t exceed $3,000 for one qualifying person, or $6,000 for two or more persons, and a percentage applies based on your income. Suppose you pay your mother to watch your children during the day. Does that count towards a credit? Yes, if your mother isn’t your dependent. You can also pay other relatives to watch your kids, but conditions apply. Click here for more information.

An Idea for Lowering your 2024 Tax Bill

With the year more than half over, now’s the time to consider ways to lower your 2024 tax bill. If you own or are a beneficiary of an IRA and you’re at least 70½, here’s one option: Make donations of up to $100,000 to IRS-approved charities directly from your IRA (or $200,000 for a married couple where both spouses meet the age requirement).

These qualified charitable distributions (QCDs) can fulfill your annual required minimum distribution if applicable. You can’t take a charitable deduction for a QCD, but the donated amount is removed from your taxable income, which may preserve your eligibility for other tax breaks. QCDs also offer other tax advantages. Contact us to learn more.

On Monday, members of our team attended the annual Mechanical Contractors Association of Connecticut (MCAC) Golf Outing at Chippanee Golf Club in Bristol, CT. Proceeds from the event help fund scholarships for college-bound children of MCAC member contractors and Local 777 union members. We’re proud to support such a great cause!

From left to right: Wendy Cole (spouse of managing partner, Dennis Cole) Kimberly Stofko, Ryan Parent & Jennifer Schempp.

The Internal Revenue Service has announced tax relief for individuals and businesses in Connecticut and New York impacted by the severe storms and flooding that began on August 18, 2024. In addition to flooding, several communities in western Connecticut were affected by landslides and mudslides.

Eligible taxpayers now have until February 3, 2025, to file various federal individual and business tax returns and make tax payments.

For more information: https://www.irs.gov/newsroom/irs-provides-relief-to-victims-of-severe-storms-and-flooding-in-connecticut-and-new-york-various-deadlines-postponed-to-feb-3-2025?fbclid=IwY2xjawF09iRleHRuA2FlbQIxMAABHar5Kr5agqIBJSAvE5GXY8bFWhpLIa6j0HGjX6u8FKyi8CVIM3ja24FzPA_aem_BlRwTHzrxEYuInpwc0JJ4w

Last week, Partner Jennifer Schempp and Supervisor Haley Kaercher from our audit department spent the day at Boys & Girls Village in Milford, where they recently completed an audit of the organization’s 401(k) plan.

For over 80 years, Boys & Girls Village has been one of Connecticut’s leading non-profit providers of behavioral, educational, vocational, and permanency planning services for at-risk youth and their families. In collaboration with the State’s Court Support Services Division, they run programs designed to keep youth out of detention centers and guide them toward successful pathways to adulthood. Their state-of-the-art facility includes a vocational learning center featuring a modern culinary kitchen, a car lift, and a 3D printer, all designed to help older youth develop essential life skills. For more information, please visit the Boys & Girls Village website at https://www.bgvillage.org/

When you got married, you knew it was for “better or worse.” But you might not know about laws that hold you responsible if your spouse cheats on a tax return.

Married couples filing jointly should be aware that:

• You are both responsible for tax, interest and penalties — even after a divorce or the death of a spouse.
• The IRS may hold you responsible for all the tax due even if there is a divorce decree stating that your ex-spouse is accountable for previous joint returns.
• You can be liable for tax even if none of the income on a tax return is attributed to you. 

To illustrate how the law works, let’s say you have a wage-earning job and your spouse is self-employed. You file joint tax returns.

Next year, you get divorced and a year later, the IRS audits your tax return. Your ex-spouse is nowhere to be found and auditors determine that he or she didn’t report all the income from the business.

What Could Happen?

You are generally liable for paying the tax due, plus interest and any penalties. Your wages can be seized by the IRS even if you paid every penny owed on your share of the family income.

Fortunately, there may be a way to get off the hook. In some situations, the tax law provides “innocent spouse” relief if you can prove:

• There is a substantial understatement of tax attributable to the grossly erroneous items of your spouse or ex-spouse.
• The hidden income belonged to your ex-spouse and you didn’t benefit from it.
• You didn’t know or have reason to know about the understatement.
• It would be inequitable to hold you liable.

Be aware that the IRS is required to notify an ex-spouse that relief has been requested so that he or she can elect to participate. There are no exceptions, even for victims of domestic violence.

Advice: Don’t count on innocent spouse relief if you know your spouse is cheating on tax returns. The IRS often denies relief.

Consider filing separate tax returns — especially if you’re in the process of a divorce. It could save you a bundle in the future. For more information about your situation, consult with your tax adviser.