TurboTaxed

Turn the dial on the Wayback Machine to 1849, and join us in California, where "there's gold in them thar hills!" Two kinds of people are getting fabulously rich. Obviously, there are the prospectors, grabbing their shovels and racing for the latest strike. Then there are the shovel sellers getting rich on the prospector's dreams. 170 years later, shovel-selling is still big business. In fact, the richest gold-rush descendants started out as shovel sellers: the billionaire Haas family, heirs of the original Levi Strauss.

You'd probably be happy to pony up for a shovel if your neighbor found gold in their backyard. But what would you do if you learned that someone was working overtime to make one of your least-favorite jobs harder, just to make a few bucks selling you the shovel to do it? (Or force you to hire someone to do it?) That someone is called Intuit, and an ongoing investigation blows the whistle on their continued scheming to make tax-filing season "Christmas in April" for the company headquartered less than 200 miles from the original gold strike at Sutter's Mill.

Columnist Dave Barry once described April 15 as "time to gather up those receipts, get out those tax forms, sharpen up that pencil, and stab yourself in the aorta." Then Intuit came along with TurboTax and moved the whole messy exercise to your laptop. It's hardly foolproof — back in 2009, former Treasury Secretary Tim Geithner blamed TurboTax for his failure to pay tax on his International Monetary Fund income. But it sure beats turning your dining-room table into a paper-choked war room every year.

That may sound like state-of-the-art DIY tech in an age when most Americans count Dr. Google as their primary care physician. But millions of taxpayers with simple returns could skip the tax-filing hassle entirely. How? Just let the IRS take the information they already get from employers and fill out the forms for them. That's how it works in much of Europe. But it would cost Intuit millions of customers. So, Intuit spends millions lobbying Congress to keep the IRS out of the 21st century.

Intuit helped establish the IRS's own Free File program, which offers free filing for some families in exchange for an IRS promise not to compete for the rest. But if you visit TurboTax's "Free Edition" page — the one advertising "free, free, free" — you'll discover it doesn't even link to the IRS system. In fact, they've even dropped code into that site to hide it from Google. Back on their own turf, they use programming "dark patterns" to reinforce "fear, uncertainty, and doubt" and upsell users to paid add-ons like state returns and audit defense. (Bait & switch, anyone?)

Intuit is even more aggressive on Capitol Hill. The company's longtime chief lobbyist describes himself as a Darth Vader character, and he supervises an operation that contributes millions to elected officials and interest groups. And just like that, millions of filers wind up "Turbotaxed" when they don't even use the software!

Here's the ironic bottom line: sometimes, just having the tool to do something doesn't mean you should actually use it. Fire up amazon.com and search for "orthopedic bone saw." You'll see them for as low as $12, with two-day shipping included. But just because you can buy the tool to, say, amputate your injured dachshund's leg, doesn't mean you have any business doing it. And when it comes to taxes, that's where we come in. We don't just have the tools. We have the know-how to put them to work to create the savings you really want.

Couples Therapy

Reddit's r/relationships forum is one of the internet's favorite soap operas. Posters sum up their angst in a snappy shorthand: "I (22M) have fallen in love with the woman I serve (21F). I left to seek my fortune. But now she thinks I'm dead so she agreed to marry a pompous jerk (30sM). How do I make her love me?" They add a few paragraphs to fill in the gory details, then wait for responses. Clearly none of the readers weighing in are trained therapists, which leads to much hilarity and maybe explains why so much of their advice involves lawyers, guns, and money.

If that sounds like the plot of The Princess Bride, well, that's because it is. Last month, a particularly clever Twitter user asked her followers to describe their favorite movie written as an r/relationships post. Like, for example: "I (17M) am trying to get my parents (17M, 17F) back together but my mom has the hots for me. TIME SENSITIVE!" The thread went viral, as the cool kids say, and millions enjoyed the joke. "I (42M) am in love with my boss (34F), trapped in a small town reliving the same day over and over. It's been 10,000 years — how do I make her love me?"

Naturally, this got us wondering, what if we reimagined some of our favorite tax planning challenges as r/relationships threads? Have we discovered comic gold here? Or should we stick with our day jobs? You be the judge!

• I (36F) hired my husband (38M) to work for my business to establish a medical expense reimbursement plan and write off my LASIK surgery as a business expense. That makes ME the boss in a real and legally binding sense, which of course I love. But managing him is a bigger challenge than I expected, and now I have to fire him.
  
• My wife (42F) and I (39M) rented our home to our business to host an employee offsite retreat. Our dog Walter (7Pug) decided that would be a fine day to drink dirty creek water, and threw up on the office manager's linen trousers. Do we write off the dry cleaning under "employee benefits" or "maintenance and repairs"?
  
• My husband (72M) and I (70F) want to wait as long as we can before cracking open our retirement accounts (401k), but the IRS is telling us we have to start taking distributions now or start paying tax on them anyway. How can we use the gifts we make to support our local minister (43M) to help convert those accounts to Roths?
  
• My wife (26F) and I (26M) left Boston for Memphis to work for a white-shoe tax law firm. But it turns out the firm is a front for the mob, and now the Quaker Oats guy and his creepy albino henchman are chasing me with guns. How do I make the Morolto brothers (64M, 62M) love me?" (Okay, so that's the plot of The Firm.)

What sort of relationship do you have with the IRS? Is it like the boring guy your mother likes (but you don't, not really)? Or more like the crazy clingy girl who rocks your world, then keys your car when you break up with her? The planning you do now is the key to that relationship. So call us now before you and your taxes wind up in therapy!

Deductible Man

"Burning Man" is a celebration of creativity and community that pops up for nine days every year before Labor Day in the Nevada desert. (Turn right at Reno, go about 100 miles, and when it looks like you're actually driving on the moon, you're there.) It started as a simple bonfire for a handful of creatives on San Francisco's Baker Beach. Since then, it's become a see-and-be-seen destination for 70,000 social media influencers, celebrities, and Silicon Valley billionaires, with $425 tickets and the "guest of honor" standing up to 105 feet high before the ceremonial Saturday night burn. Burning Man champions decidedly anti-capitalist values like "decommodification," "giving," and "communal effort." "Burners" have to schlep in their own food, water, and shelter, and leave no trace when they leave. They can't use cash with each other at the event. (Cash? It's 2019.) But those rules don't stop tech titans like Jeff Bezos and Elon Musk from dropping millions to helicopter in for luxury RVs, private chefs, and even concierge services to set up camp, then break it all down. Imagine "the Real Housewives of Beverly Hills go camping," and you get the picture. If that sort of flamboyant spending sounds like something our friends in Camp IRS would frown on, well, trust your gut. But like it or not, the IRS is helping foot the Burning Man bill, as Bloomberg magazine suggests in a recent article, "Going to Burning Man — and Expensing It." Plenty of Bay Area companies send staffers to pitch camp for CEOs and higher-level execs who attend the event for networking, PR, and business development. Bloomberg quotes one organizer whose first job at a social network startup involved buying tickets, renting trucks and RVs to build a camp, and arranging for 11 people to fly in from London to the event. Those are generally deductible business travel expenses, so long as they aren't lavish or extraordinary. (It's hard to argue that a desert camp without water is "lavish.") But now some companies are encouraging employees to attend together simply to spur creativity and community at work. They even invite employees to file the tickets on their expense reports. We can assume those same companies will wind up passing those expenses on to the reports they file with the IRS. But hey, if stuffy Fortune 500 giants can write off sending cube monkeys to mind-numbing HR training in drab hotel conference rooms, why shouldn't hip tech startups get to write off sending the "talent" into the desert? These companies see Burning Man as a valuable team-building exercise. But Bloomberg suggests they might want to keep a close eye on how far they take those teams. One camp offers clothing-optional group showers which, admittedly, sound like a real luxury in a community with no running water. Of course, any manager who sends his team to that camp is probably begging for a #MeToo violation, and paying extra to have it overnighted. (They might want to steer employees away from the recreational psychedelics, too.) Having said all that, the IRS may actually break even now that gentrification has reached the white-hot Burning Man sands. Any time the tech bros start flying in models from New York, you can be sure there will be too much income flying in, too. And the IRS will be happy to claim their share. You just don't want them claiming it from you. We can help you create some nice new deductions before your next employee retreat. So call us before you spend, and don't be shy about inviting us, too!

Something to Celebrate

It's okay if the name "Andrew Yang" doesn't ring a bell. His biggest accomplishment so far was creating a program called Venture for America that trains entrepreneurs to work at startups in developing cities across the country. Now he's running for President, and polling at a rockin' 2% among Democrats. But he's scored enough contributions from online donors to make it to the stage at the next Democratic presidential debate, which means there's a chance he could still break through to the front rank of contenders. How is Yang different from the other 59 Democrats running for President? His unique selling proposition is his support for a universal basic income — which he calls a "freedom dividend." His plan gives every American over age 18 a $1,000 check every month. Paying for it would be easy-peasy: he'd implement a 10% value-added tax, eliminate the Social Security wage base, throw in a financial transactions tax (look out, day traders), and tax long-term capital gains at ordinary income rates. He'd also eliminate the current maze of welfare programs like food stamps and housing subsidies. The universal basic income is an exciting intellectual concept. Politicians as diverse as Bernie Sanders and Richard Nixon have supported it. Having said that, do we need to tell you what chance it stands of passing Congress? Reader, we do not. But Yang has another proposal that stands a slightly better chance of becoming actual law: his promise to make Tax Day, April 15, a day of joy and celebration. Can you even imagine all the fun? He argues that Revenue Day should be a federal holiday. Not only that, but there should be celebrations. Everyone should be allowed to direct 1% of their taxes to a special project, department, or activity. On Revenue Day, we would highlight those projects to see what we accomplished, and roll out next year's projects to start getting excited for them. Of course, if we're going to make Revenue Day a holiday, we should do it right. There should be cake. (As Julia Child once said, "a party without cake is just a meeting.") There should be caroling. ("Oh little tax of dividends, how high we see thee fly!") Best Buy should throw open the doors at 5AM so you can line up and blow your refund on a new TV. If Yang really wants to give taxpayers a reason to celebrate, he should make Tax Freedom Day a holiday. That's the day of the year when we stop working just to pay taxes and start working for ourselves. For 2019, it fell on April 16, meaning the average citizen worked the first 105 days of the year just to pay federal, state, and local taxes. Kicking taxpayers in the head with that little info-nugget would be a gangster move. Other countries have created traditions to make paying tax fun. In Finland, the government makes tax returns public at 8:00AM on November 1 — a day the New York Times dubbed "National Jealousy Day" — and newspapers send half their staff out to cover who made what. In North Korea, tax collectors snatch your last potato and smack you with a ceremonial quan-ti truncheon. (One of those is actually true.) Call us crazy, but we think the best way to celebrate April 15 is to pay less tax. The best part is, you don't have to wait until the next election to do it. Call us for a plan, and make that day a celebration!

By the Time We Got to Woodstock . . .

Fifty years ago, a dairy farmer named Max Yasgur thought it would be a rockin' idea to rent his field to a bunch of kids who wanted to throw a concert. From August 15-17, 400,000 hippies, peaceniks, and plain old music fans converged on the scene. If you're a 60s fan, Woodstock represents the high point of that era, a giddy celebration of peace, love, and good vibrations. If you're a hung-up Mr. Normal, you might dismiss it as three days of mud-soaked filth, drugs, and public nudity. And while Woodstock Nation may not have managed to save the world, they managed to leave quite a legacy!

Woodstock Ventures hoped 200,000 fans would pay $6-18 for passes — about $41-124 in today's dollars. (By contrast, tickets to this year's Lollapalooza started at $340 and ran to $4,200.) In the end, organizers grossed $1.8 million, suggesting state and local tax collectors shared a groovy $108,000 in sales taxes (3% for the state and 3% for New York City, where most of the tickets were sold).

Sadly for the squares at the IRS, there was nothing left over for them to tax. It wound up costing $3.1 million to rent the farm, book the performers, and charter the helicopters to lift the musicians over the stalled traffic. At the height of the crush, some acts were demanding twice their usual fee to perform — in cash. The Woodstock documentary, edited in part by then-unknown Martin Scorsese, helped start recouping those losses. But it took until Ronald Reagan (!) was president to finally break even — an irony that shouldn't be lost on counterculture fans.

As the unticketed hordes grew closer, organizers realized there would be no way turn them back, so they declared it a free festival. The crowds turned Yasgur's farm into the third-largest city in New York, and even created their own sharing-based economy. We're talking, of course, about the pop-up pharmacies dispensing various psychoactive adventures, including the brown acid that emcee Chip Monck famously warned was "not specifically too good." Sadly for New York authorities, we suspect none of those unregulated commodity traders bothered filing Forms DTF-17 or ST-101.

Fun fact: members of the Hog Farm commune, led by Hugh Romney (aka "Wavy Gravy") were running a free kitchen on the premises. On Saturday morning, they served "breakfast in bed for 400,000 people" and introduced the hippies to a brand-new food called "granola" [gru-noh luh]. This has nothing to do with taxes, but it'll impress your friends when the topic of Woodstock comes up over the next few days.

Today, Yasgur's farm is still finessing taxes like Jimi Hendrix shredded the national anthem. That's because it's owned by the nonprofit Bethel Woods Center for the Arts, home to a 15,000-seat amphitheater and museum. Local sales tax collectors still take a piece of ticketing and merchandise. But income tax collectors are no-shows (just like concert no-shows Joni Mitchell, the Doors, and others). And while property taxes in Sullivan County generally range from $25-65 per thousand of assessed value, the center's nonprofit status takes 800 acres off the property tax rolls.

Today's music festivals, like Coachella and Burning Man, all try to recapture a bit of that Woodstock magic. Sadly for the fans, the acts are a bit more corporate, the facilities are a bit cleaner, and even the drugs are a bit tamer. (Legal marijuana . . . where's the rebellion in that?) So for this week we'll leave you with a pipeful of gentle hippie sentiments, and hope you enjoy the rest of your summer. Next month after Labor Day, official tax planning season starts, so get ready to save!

Now We Know Why They Call It A "Joy" Stick!

Parenting is full of special moments that create lifelong memories. Your heart bursts in joy as you watch them take their first steps, ride their first bike, and bring home their first report card. When they get a little older, there's the pride you feel when they bring home their first "real" paycheck, tear into the envelope, and listen to them wail in distress, "hey, what the &#@* is FICA?!?"

Glenn Giersdorf, who lives an hour outside Philadelphia, didn't experience that moment quite the same way as most parents. That's because his son Kyle spends six to ten hours per day sitting in his room playing Fortnite, an online video game where players meet on a virtual island and battle it out to be the last one standing. (Some fans describe it as "Minecraft with guns.") But Kyle is no average teenage slacker, and he had his sights set higher than just flipping burgers or scooping ice cream like his classmates.

If you don't have gamers of your own at home, you may not realize how big "e-sports" have become. Yes, professional video games are finally here. With spectators, even. In 2018, 380 million viewers watched 6.6 billion hours of competition on platforms like Twitch and Youtube. There were nearly 3,500 tournaments offering more than $1.5 billion in prizes. E-sports generated another $906 million in revenue from sponsorships, advertising, media rights, game publishing, merchandising, and tickets.

(Look, before we go any further, we know it's a stretch to call sitting in a recliner with a joystick a "sport." But you can play golf from an electric cart with a cigarette in one hand and a highball in the other, and millions of players call that a "sport," so who's to judge? Not Uncle Sam — in 2013, the U.S. issued a P-1A visa, reserved for internationally recognized athletes, to a Canadian League of Legends champ. Even the Olympics are looking to get into the action!)

So . . . earlier this summer, forty million players entered online qualifiers to compete in the inaugural Fortnite World Cup. Last month, 100 survivors met for the live finals in front of 23,000 fans at New York's Arthur Ashe Stadium. When the shooting was over, Kyle — who competes under the screen name "Bugha" — had taken down the largest single score in e-sports history . . . $3 million. That's a million bucks more than Tiger Woods made for winning the Masters!

Now comes the real battle — fighting off the hordes coming after Kyle's prize! The first $600,000 goes to his management team, Sentinel Sports. He can expect to pay roughly $850,000 in federal income tax, $116,000 to self-employment tax, and $212,000 to New York. Fun fact: he'll be the only kid in his class cursing the 2017 tax reform, which costs him over $200,000 in state tax he can't deduct anymore. In the end, he'll wind up with just $1.2 million. He says he wants to use his winnings to buy a new desk for his room.

E-sports are growing fast, which means Kyle Giersdorf won't be the only underage winner grappling with taxes. Take "H1ghSky1" from Seattle, for example, the youngest player on the FaZe Clan team. He's won over $200,000 since March, and he's not old enough to watch PG-13 movies on his own!

Kyle's story has us looking forward to the day when tax planning finally becomes the spectator sport it deserves to be. Can you imagine thousands of cheering fans scalping tickets to watch us take on tangible property regulations, rental real estate loss allowance phaseouts, and the step-transaction doctrine? So call us before your kid hits the big time . . . we've got the trick shots you need to help him keep what he wins!

One Small Step . . .

Fifty years ago this weekend, in what many people consider the crowning accomplishment in all of human history, astronaut Neil Armstrong stepped foot on the moon. Eight years earlier, President Kennedy had challenged the nation, before the end of the decade, to land a man on the moon and return him safely to earth. An army of 400,000 scientists, engineers, administrators, and other dreamers assembled to take up the challenge — and did it with five months to spare. Who thinks we could get a lousy highway overpass built in eight years today? Anyone?

A lot has changed in the 50 years since 650 million people (a fifth of the world's population!) watched Armstrong take his giant leap for mankind. There's more computing power in your home wi-fi router now than there was in the car-sized mainframe NASA used to guide Apollo. (Such a shame that people waste most of it checking Facebook and streaming Friends reruns on Netflix.) We even eat differently today: we don't drink Tang, or send our kids to school with Space Food Sticks in their lunch boxes.

You know what else has changed since Armstrong touched down at the Sea of Tranquility? Taxes, of course. NASA spent over 25 billion taxpayer dollars on Apollo — a planet-size chunk of change, considering Uncle Sam collected just $187 billion the year he landed. Skeptics mocked the mission as a "moondoggle," begging Congress to spend the money closer to home. Imagine dropping $467 billion of today's dollars on a mission to Mars, and you'll see just how big a commitment Apollo represented.

As for individual taxpayers, they faced 25 separate brackets in 1969 (33 for heads of households). Joint filers paid 14% on their first thousand of taxable income and topped out at 70% over $200,000 (roughly $1.4 million in 2019). Taxes on capital gains were capped at 27.5%. Folks who filed their own returns used something called a "pencil" to fill out the forms. Form 1040 looked a lot like today's version, although you didn't have to list your kids' social security numbers, and you could pay your bill with a money order.

Armstrong paid the same tax on his $20,000 salary as anyone else. That's because we're one of the few countries on this blue marble we call Earth that taxes citizens on all income, even if they earn it on the moon. (Hardly seems fair.) After Armstrong returned from the moon's magnificent desolation, he taught engineering at the University of Cincinnati (where he was a tough grader), investigated the Apollo XIII and Challenger accidents, and advertised cars for Chrysler. Can you even imagine the endorsements he'd be offered if the moon shot happened today?

Did taxpayers get their money's worth from it all? Consider some of the spin-off technologies, first developed for the Apollo program, that still generate tax dollars today: digital fly-by-wire controls that guide today's airliners and cars, food safety systems that keep our meat and poultry clean, earthquake-proofing shock absorbers for buildings and bridges, and rechargeable silver-zinc hearing aid batteries. And how many more scientists and entrepreneurs have been inspired by the Apollo's can-do spirit and legacy of dreaming bigger than ever before?

Today's space heroes aren't astronauts anymore. They're capitalists like Jeff Bezos, Elon Musk, and X Prize creator Peter Diamantis, hoping to tame the wilds of space for taxable gain. How long will it be before they makes space exploration a profit center for the IRS? Keep your eyes on the future, and we bet it will arrive sooner than you expect!

Blimey!

Great Britain's new Prime Minister, Alexander Boris de Pfefel Johnson, inspires the same sort of love/hate relationship as a certain novice head of state on our side of the pond. Johnson's fans celebrate him as a self-deprecating man of the people, happy to zip-line across a park waving Union Jacks to celebrate Olympic gold. His opponents mock him as a dangerous buffoon, a gaffe machine, and a bitter chutney of ignorance, racism, and lies. With a "hard Brexit" looming just three months away, we'll soon see if he rises to the occasion like his hero Winston Churchill.

At first glance, Johnson seems the ultimate British toff. He studied classics and played rugby at Oxford, where he struck classmates as a modern-day lord out of Downton Abbey. (Honestly, with a name like "Alexander Boris de Pfeffel," where else could he have gone?) He belongs to London's exclusive Beefsteak Club, where, by tradition, diners address all the stewards and waiters as "Charles." He once said about himself, "You can't rule out the possibility that beneath the elaborately constructed veneer of a blithering idiot, there lurks a blithering idiot."

So why on earth are we writing about Johnson here? Funny you should ask. It turns out he was born in New York City, when his English father Stanley was studying economics on a Harkness Fellowship. And he lived there, in a one-room loft across the street from the famed Chelsea Hotel, until he was five. That meant enjoying dual American and United Kingdom citizenship. And that, in turn, makes him subject to U.S. tax on all his worldwide income, wherever he earns it.

We have no idea how Johnson handled his U.S. taxes for most of his career. But it finally became a sticky wicket in 2009. London real estate was flying higher than a nanny with an umbrella, and Johnson and his wife had just sold their house for a £730,000 gain. Now, her Majesty's Revenue and Customs doesn't tax home sale gains. No problem there. But the IRS wants a piece of anything above a $500,000 allowance — even for taxpayers living abroad!

Naturally, Johnson was not amused, and he had a hard time keeping a stiff upper lip. One reporter asked him point-blank if he would pay Uncle Sam, and he literally sputtered: "No, is the answer. I think, it's absolutely outrageous. Why should I? I think, you know, I'm not a . . . I, you know, I haven't lived in the United States for, you know, well, since I was five years old." That's an uncharacteristically tongue-tied response from a guy who headed up the Oxford Union debating society.

Like most politicians, though, Johnson's promise proved . . . "flexible." In 2015, he paid the American tax to avoid embarrassment before setting out on a U.S. tour. A year later, he renounced his U.S. citizenship entirely, a process which includes paying an "exit tax" on the value of his appreciated assets as if he had sold everything the day before surrendering his passport. Maybe his experience giving up his citizenship helps explain why he thinks pulling Britain from the European Union should be so easy?

Today, Johnson is settling into a far tonier hundred-room house at Number Ten Downing Street, one that comes with everything a modern minister could want. (There's even a Chief Mouser to the Cabinet Office, a cat named Larry.) Even better, he won't owe any tax on the place when he leaves. That's the sort of result we work to create for you. So let's all sit back and enjoy a cuppa while we watch Johnson take on Brexit!

The Perfect Crime

Everybody needs money. That's why they call it money. Maybe that's why the heist movie is still a Hollywood staple. It's been a while since we thrilled to classics like Heat, or Oceans 11, or The Sting. But who can resist the heist film's enticing promise: the coolest crew coming together to take the ultimate shortcut to the American Dream, the one huge payday that means never working again?

They say Washington is Hollywood for ugly people, so it shouldn't surprise you that Washington likes a good heist, too. Except, in Washington, the thieves aren't

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Everybody needs money. That's why they call it money. Maybe that's why the heist movie is still a Hollywood staple. It's been a while since we thrilled to classics like Heat, or Oceans 11, or The Sting. But who can resist the heist film's enticing promise: the coolest crew coming together to take the ultimate shortcut to the American Dream, the one huge payday that means never working again?

They say Washington is Hollywood for ugly people, so it shouldn't surprise you that Washington likes a good heist, too. Except, in Washington, the thieves aren't eyeing priceless art, jewels, or stacks of bearer bonds. (Why do bearer bonds even exist other than to get stolen in heist movies, anyway?) In Washington, they're after your money — and they're tiptoeing as carefully after it as the stealthiest cat burglar.

On May 12, the House voted 417-3 to pass the "Setting Every Community Up for Retirement Enhancement" (SECURE) Act. (Someone on the Government Office Acronym Team worked overtime on that.) Now, "SECURE Act" probably conjures up images of happy seniors sipping lemonade on the porch, watching the grandchildren frolic in the sprinkler. And the bill includes a grab-bag of provisions designed to keep Grampy and Nona smiling, like adding annuity options to defined contribution plans and pushing back the required minimum distribution age from 70½ to 72.

But the bill sneaks in one move that even Danny Ocean would admire. Under current law, your nonspousal beneficiaries can keep your retirement accounts on life support, even after your death, for as long as their own life expectancy. It's called a "Stretch IRA," and it can mean decades of extra tax-deferred compounding. The SECURE Act forces them to take everything out — and of course pay tax on it — over just 10 years. Maybe they should have called that provision the Hidden Efforts Imposing Stealth Taxes (HEIST) Act!

The SECURE Act won't just make your beneficiaries pay tax faster. It's probably going to make them cough up more. That's because they'll have to pile those forced distributions on top of their regular income. Imagine a six-figure executive or professional inheriting a significant IRA. The extra cash could easily push them into higher tax brackets at both the federal and state levels.

Had enough? It gets worse. Right now we're enjoying the lowest tax rates in a generation, thanks to the Tax Cuts and Jobs Act of 2017. But those rates are scheduled to self-destruct after 2025, making SECURE Act distributions even pricier. (While we're at it, if your grandchildren are heading to college, the extra cash could blow up their FAFSAs, too.)

Right now, the Act is stalled in the Senate. Texas Senator Ted Cruz, who's never been afraid to irritate his colleagues if it means scoring brownie points with his base, is the roadblock. He's holding it hostage because it doesn't let families raid their kids' 529 accounts to pay for home schooling costs. It's almost a shame . . . in today's Congress, a 417-3 agreement is more precious than the Monet Pierce Brosnan targets in The Thomas Crown Affair. Still, the Capitol Hill Bandits will probably wind up taking down the score.

The greatest trick the devil ever pulled was convincing the world he didn't exist. And just like that, your money's gone. Good thing you've got us to keep an eye on Congress. So call us whether Washington gets away with this one or not — either way, we'll have your plan!

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priceless art, jewels, or stacks of bearer bonds. (Why do bearer bonds even exist other than to get stolen in heist movies, anyway?) In Washington, they're after your money — and they're tiptoeing as carefully after it as the stealthiest cat burglar.

On May 12, the House voted 417-3 to pass the "Setting Every Community Up for Retirement Enhancement" (SECURE) Act. (Someone on the Government Office Acronym Team worked overtime on that.) Now, "SECURE Act" probably conjures up images of happy seniors sipping lemonade on the porch, watching the grandchildren frolic in the sprinkler. And the bill includes a grab-bag of provisions designed to keep Grampy and Nona smiling, like adding annuity options to defined contribution plans and pushing back the required minimum distribution age from 70½ to 72.

But the bill sneaks in one move that even Danny Ocean would admire. Under current law, your non spousal beneficiaries can keep your retirement accounts on life support, even after your death, for as long as their own life expectancy. It's called a "Stretch IRA," and it can mean decades of extra tax-deferred compounding. The SECURE Act forces them to take everything out — and of course pay tax on it — over just 10 years. Maybe they should have called that provision the Hidden Efforts Imposing Stealth Taxes (HEIST) Act!

The SECURE Act won't just make your beneficiaries pay tax faster. It's probably going to make them cough up more. That's because they'll have to pile those forced distributions on top of their regular income. Imagine a six-figure executive or professional inheriting a significant IRA. The extra cash could easily push them into higher tax brackets at both the federal and state levels.

Had enough? It gets worse. Right now we're enjoying the lowest tax rates in a generation, thanks to the Tax Cuts and Jobs Act of 2017. But those rates are scheduled to self-destruct after 2025, making SECURE Act distributions even pricier. (While we're at it, if your grandchildren are heading to college, the extra cash could blow up their FAFSAs, too.)

Right now, the Act is stalled in the Senate. Texas Senator Ted Cruz, who's never been afraid to irritate his colleagues if it means scoring brownie points with his base, is the roadblock. He's holding it hostage because it doesn't let families raid their kids' 529 accounts to pay for home schooling costs. It's almost a shame . . . in today's Congress, a 417-3 agreement is more precious than the Monet Pierce Brosnan targets in The Thomas Crown Affair. Still, the Capitol Hill Bandits will probably wind up taking down the score.

The greatest trick the devil ever pulled was convincing the world he didn't exist. And just like that, your money's gone. Good thing you've got us to keep an eye on Congress. So call us whether Washington gets away with this one or not — either way, we'll have your plan!