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

Episode 594

Albert Einstein reportedly once said, “The hardest thing in the world is to understand the income tax.”

Well, if Einstein thought the U.S. tax code was mysterious, imagine how difficult it is for the rest of us. So, it’s a real blessing that Kevin Cross joins us today with some much-needed tax tips.

Kevin Cross is a Certified Public Accountant (CPA) who has headed CPA firms in Florida and now Georgia. He has studied the tax code extensively and specializes in representing taxpayers before the IRS.

Key Tax Changes When Filing 2024 Taxes

With W-2s and 1099s now in hand, taxpayers are beginning to file their returns. Here are some important updates to keep in mind:

1. Crypto and Stock Reporting is More Sophisticated

If you’ve traded stocks or cryptocurrency, be aware that financial institutions are now required to provide more detailed and structured reporting to the IRS. Trying to avoid reporting crypto losses or small transactions? That’s not an option anymore. Even if you had minimal gains or losses, it’s crucial to report them accurately.

2. Gig Workers Need to Track Expenses Carefully

More people than ever are working in the gig economy—driving for rideshare services, delivering food, and freelancing. If you received a 1099 and saw a higher-than-expected income total, remember that you can deduct legitimate business expenses.

Some key expenses to track include:

Mileage driven for work
Equipment or tools used for the job (like delivery bags or ride-sharing accessories)
Home office expenses, if applicable

3. Home Office Deduction Made Simple

For those working from home, the simplified home office deduction remains available. Instead of complex calculations, the IRS offers a straightforward option: you can deduct up to $1,500 based on the square footage of your home used for business. This method, sometimes called the "tax court method," makes claiming a home office deduction much easier.

Beware of Tax Scams: A New Threat Emerges

Unfortunately, tax season also brings an increase in fraudulent activity. One of the most concerning scams right now involves Merrill Lynch accounts, and it’s catching even savvy investors off guard.

The Merrill Lynch Phishing Scam

Here’s how it works:

Scammers deposit a small amount of money into a Merrill Lynch brokerage account.
Merrill Lynch detects the fraudulent deposit and contacts the account holder.
The next day, the victim receives an email from what appears to be Merrill Lynch, stating they need to transfer their money due to a security breach.
Thinking it's a follow-up to a legitimate issue, the victim complies—only to have their money stolen.

This scam is particularly dangerous because it plays off real events, making it feel credible. Tragically, one victim lost $900,000 in savings and was so devastated that he took his own life.

How to Protect Yourself

Scammers rely on urgency and deception. Here’s how you can stay safe:

Never respond to unsolicited emails or phone calls requesting personal or financial information.
Always initiate contact with financial institutions directly through their official website or customer service number.
Know the IRS Rules: The IRS will never text, email, or call you to demand payment. If you receive such a message, it’s a scam.

As you prepare your taxes this year, keep these key points in mind:

Report all taxable income, including crypto and gig work, and track eligible deductions.
If you work from home, take advantage of the simplified home office deduction.
Stay vigilant against tax scams—verify any financial communications by reaching out directly to the institution.

If you need more tax guidance, you can learn more at Published on 10 months ago

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