Next month, the U.S. Postal Service will be busier than usual. Not because of late Christmas cards or thank-you letters, but because of the extra Form 1099-Ks the IRS will be mailing out.
Under the American Rescue Plan, third-party payment facilitators like Venmo, eBay, Etsy, and Airbnb are now required to send Form 1099-Ks to individuals reporting 2022 gross annual income of as little as $600. That’s $50 a month.
The previous annual reporting threshold was $20,000. The lower reporting threshold shouldn’t affect people’s tax liability—at least in theory.
Income that was untaxable before the reporting change should still be untaxable. However, simply receiving a Form 1099-K will make many taxpayers believe they have a tax obligation, even when they don’t.
Some personal transactions between friends, family members, and roommates—such as reimbursements for shared rides, rent aggregation, and gifts—will be mistakenly classified as business transactions and reported on 1099-Ks.
Or a taxpayer who sold, say, $800 worth of used books and electronics on eBay in 2022 may wrongly assume he owes tax on the full gross income reported on his 1099-K. But if the taxpayer sold the used goods for less than he paid for them, he should be able to deduct those costs and avoid additional taxes.
The IRS claims the new 1099-K reporting will allow the agency to identify unreported income, increase tax collections, and reduce the tax gap.
Government reports have suggested that small businesses and gig workers account for a disproportionate share of the tax gap; that is, the total amount of tax underpayments and nonpayments. Lowering the 1099-K reporting threshold to $600 per month is clearly meant to address that perceived gap.
To which one may respond, “But isn’t closing the tax gap about stopping millionaires and big corporations from cheating on their taxes? After all, that’s why the Biden administration sought and received $80 billion, so the IRS could expand audits and enforcement.”
The short answer is no.
Treasury Secretary Janet Yellen did send a letter to the IRS commissioner directing that the new funding not be used to increase audit levels on small businesses or households earning less than $400,000 relative to historical levels. But Yellen’s directive doesn’t carry the weight of law or even regulation. It’s mere political theater.
The IRS can require payment facilitators to send millions of additional Form 1099-Ks to middle-class taxpayers and small businesses and still honestly say that it hasn’t increased its audit level.
The agency can even send more notices to middle-class taxpayers informing them of underreported income discrepancies that must be resolved within 30 days, and this also wouldn’t count as increasing the audit level.
In fact, the IRS could increase the audit level of middle-class Americans to the historically far higher rates from 1980 and make each audit more painful, while still arguing that it technically didn’t raise audit levels relative to historical levels.
There’s a reason the rhetoric about the IRS only cracking down on the wealthy doesn’t match the reality.
Big-government advocates and politicians need Americans to believe that higher taxes will only affect “the other guy”—specifically, the very wealthy and big corporations. That’s how they get their agenda passed.
But there just aren’t enough superwealthy people to soak to afford a big-government spending agenda for long, and countries that do soak the rich have a funny habit of driving out most of their wealth.
So, eventually, they resort to more and more taxes on the middle class.
Western European countries with expansive welfare states tax the middle class far more heavily than the U.S. does. U.S. expansions of social spending and green-energy boondoggles also must ultimately come on the backs of the middle class, one way or another.
The American middle class paid for the 2020-2022 spending spree with the inflation tax and massive new debt—i.e., future taxes. And there are many other direct and indirect ways that taxes ultimately harm the middle class.
One unfortunate consequence of cracking down on $600-per-year Venmo and eBay accounts is that it drives people off these platforms to avoid the IRS hassle, not to mention the identity security concerns of sharing their Social Security numbers with payment facilitators.
This is bad for those companies. Many have seen their stock prices drop 50% to 70%. But it’s also bad for consumers. Those companies facilitate entrepreneurship and the gig economy, and they give small businesses tools to compete against large corporations.
Coffee the Christian way: Promised Grounds
A bigger, more powerful IRS accessing more private information will stifle innovators and small businesses struggling in a slowing economy. It would be nice if Washington would stifle its own runaway spending instead.
Article cross-posted from Daily Signal.
Five Things New “Preppers” Forget When Getting Ready for Bad Times Ahead
The preparedness community is growing faster than it has in decades. Even during peak times such as Y2K, the economic downturn of 2008, and Covid, the vast majority of Americans made sure they had plenty of toilet paper but didn’t really stockpile anything else.
Things have changed. There’s a growing anxiety in this presidential election year that has prompted more Americans to get prepared for crazy events in the future. Some of it is being driven by fearmongers, but there are valid concerns with the economy, food supply, pharmaceuticals, the energy grid, and mass rioting that have pushed average Americans into “prepper” mode.
There are degrees of preparedness. One does not have to be a full-blown “doomsday prepper” living off-grid in a secure Montana bunker in order to be ahead of the curve. In many ways, preparedness isn’t about being able to perfectly handle every conceivable situation. It’s about being less dependent on government for as long as possible. Those who have proper “preps” will not be waiting for FEMA to distribute emergency supplies to the desperate masses.
Below are five things people new to preparedness (and sometimes even those with experience) often forget as they get ready. All five are common sense notions that do not rely on doomsday in order to be useful. It may be nice to own a tank during the apocalypse but there’s not much you can do with it until things get really crazy. The recommendations below can have places in the lives of average Americans whether doomsday comes or not.
Note: The information provided by this publication or any related communications is for informational purposes only and should not be considered as financial advice. We do not provide personalized investment, financial, or legal advice.
Secured Wealth
Whether in the bank or held in a retirement account, most Americans feel that their life’s savings is relatively secure. At least they did until the last couple of years when de-banking, geopolitical turmoil, and the threat of Central Bank Digital Currencies reared their ugly heads.
It behooves Americans to diversify their holdings. If there’s a triggering event or series of events that cripple the financial systems or devalue the U.S. Dollar, wealth can evaporate quickly. To hedge against potential turmoil, many Americans are looking in two directions: Crypto and physical precious metals.
There are huge advantages to cryptocurrencies, but there are also inherent risks because “virtual” money can become challenging to spend. Add in the push by central banks and governments to regulate or even replace cryptocurrencies with their own versions they control and the risks amplify. There’s nothing wrong with cryptocurrencies today but things can change rapidly.
As for physical precious metals, many Americans pay cash to keep plenty on hand in their safe. Rolling over or transferring retirement accounts into self-directed IRAs is also a popular option, but there are caveats. It can often take weeks or even months to get the gold and silver shipped if the owner chooses to close their account. This is why Genesis Gold Group stands out. Their relationship with the depositories allows for rapid closure and shipping, often in less than 10 days from the time the account holder makes their move. This can come in handy if things appear to be heading south.
Lots of Potable Water
One of the biggest shocks that hit new preppers is understanding how much potable water they need in order to survive. Experts claim one gallon of water per person per day is necessary. Even the most conservative estimates put it at over half-a-gallon. That means that for a family of four, they’ll need around 120 gallons of water to survive for a month if the taps turn off and the stores empty out.
Being near a fresh water source, whether it’s a river, lake, or well, is a best practice among experienced preppers. It’s necessary to have a water filter as well, even if the taps are still working. Many refuse to drink tap water even when there is no emergency. Berkey was our previous favorite but they’re under attack from regulators so the Alexapure systems are solid replacements.
For those in the city or away from fresh water sources, storage is the best option. This can be challenging because proper water storage containers take up a lot of room and are difficult to move if the need arises. For “bug in” situations, having a larger container that stores hundreds or even thousands of gallons is better than stacking 1-5 gallon containers. Unfortunately, they won’t be easily transportable and they can cost a lot to install.
Water is critical. If chaos erupts and water infrastructure is compromised, having a large backup supply can be lifesaving.
Pharmaceuticals and Medical Supplies
There are multiple threats specific to the medical supply chain. With Chinese and Indian imports accounting for over 90% of pharmaceutical ingredients in the United States, deteriorating relations could make it impossible to get the medicines and antibiotics many of us need.
Stocking up many prescription medications can be hard. Doctors generally do not like to prescribe large batches of drugs even if they are shelf-stable for extended periods of time. It is a best practice to ask your doctor if they can prescribe a larger amount. Today, some are sympathetic to concerns about pharmacies running out or becoming inaccessible. Tell them your concerns. It’s worth a shot. The worst they can do is say no.
If your doctor is unwilling to help you stock up on medicines, then Jase Medical is a good alternative. Through telehealth, they can prescribe daily meds or antibiotics that are shipped to your door. As proponents of medical freedom, they empathize with those who want to have enough medical supplies on hand in case things go wrong.
Energy Sources
The vast majority of Americans are locked into the grid. This has proven to be a massive liability when the grid goes down. Unfortunately, there are no inexpensive remedies.
Those living off-grid had to either spend a lot of money or effort (or both) to get their alternative energy sources like solar set up. For those who do not want to go so far, it’s still a best practice to have backup power sources. Diesel generators and portable solar panels are the two most popular, and while they’re not inexpensive they are not out of reach of most Americans who are concerned about being without power for extended periods of time.
Natural gas is another necessity for many, but that’s far more challenging to replace. Having alternatives for heating and cooking that can be powered if gas and electric grids go down is important. Have a backup for items that require power such as manual can openers. If you’re stuck eating canned foods for a while and all you have is an electric opener, you’ll have problems.
Don’t Forget the Protein
When most think about “prepping,” they think about their food supply. More Americans are turning to gardening and homesteading as ways to produce their own food. Others are working with local farmers and ranchers to purchase directly from the sources. This is a good idea whether doomsday comes or not, but it’s particularly important if the food supply chain is broken.
Most grocery stores have about one to two weeks worth of food, as do most American households. Grocers rely heavily on truckers to receive their ongoing shipments. In a crisis, the current process can fail. It behooves Americans for multiple reasons to localize their food purchases as much as possible.
Long-term storage is another popular option. Canned foods, MREs, and freeze dried meals are selling out quickly even as prices rise. But one component that is conspicuously absent in shelf-stable food is high-quality protein. Most survival food companies offer low quality “protein buckets” or cans of meat, but they are often barely edible.
Prepper All-Naturals offers premium cuts of steak that have been cooked sous vide and freeze dried to give them a 25-year shelf life. They offer Ribeye, NY Strip, and Tenderloin among others.
Having buckets of beans and rice is a good start, but keeping a solid supply of high-quality protein isn’t just healthier. It can help a family maintain normalcy through crises.
Prepare Without Fear
With all the challenges we face as Americans today, it can be emotionally draining. Citizens are scared and there’s nothing irrational about their concerns. Being prepared and making lifestyle changes to secure necessities can go a long way toward overcoming the fears that plague us. We should hope and pray for the best but prepare for the worst. And if the worst does come, then knowing we did what we could to be ready for it will help us face those challenges with confidence.
