Monthly Archives: December 2014

Tax cheating is not OK

Tax filing season is just around the corner.

Savvy taxpayers are taking advantage of year-end tax moves to lower what they will owe Uncle Sam when they file their 2014 returns.

© Sean Locke Photography/

Others, however, might turn to a little tax sleight of hand to trim their upcoming Internal Revenue Service bills.

But if a recent survey is right, there won’t be many potential tax cheats this coming year.

The IRS Oversight Board’s annual survey of taxpayer attitudes found that 94 percent of taxpayers agree it is every American’s civic duty to pay their fair share of taxes.

Fair share tax standard

We aren’t going to debate what “fair share” means here; something needs to be left to the politicians! But the overall public perception is that we’re all in this together and need to chip in to pay for the government programs that benefit us and our friends and families.

That percentage, however, has been trending down since the 2010 high point. Four years ago, 97 percent of those surveyed by the Oversight Board said all U.S. taxpayers should pay their fair share to the U.S. Treasury.

Tax cheating is unacceptable

To ensure that taxes are properly paid, a majority of survey respondents also believe that tax cheats should be held accountable. The 93 percent who want tax scofflaws caught and punished is the same percentage as last year’s survey.

Again, 2010 was the high point for this question, too. That year, 96 percent of survey participants approved of fully enforcing tax evasion laws.

And this year 86 percent told the Oversight Board pollsters that it’s not at all acceptable to cheat on income taxes. Six percent said a little cheating here and there is acceptable. Five percent go for broke, saying cheating as much as possible is fine with them.

Integrity or fear?

Of course, cynics will say that aside from that five percent segment, people tend to say they’re in favor of punishing tax cheats. Otherwise, you sound like you are a cheater if you say it’s OK to fudge your Form 1040 entries.

But when it comes to filling out your forms in private, well, most folks will likely tweak a number or two.

While I’m typically skeptical of most human actions, I cling to the idea that most of us are honest in our IRS interactions. Maybe it’s fear of being caught. Or maybe, as the poll also indicated, it’s plain old personal integrity.

Whatever the reason for accurately filing our taxes, since we follow the tax laws, we want our neighbors to be law-abiding, too.

What do you think? Is it ever OK to cheat on your taxes? Have you ever tried to slip something past the IRS? Have tax auditors ever caught one of your questionable entries?

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Herman and Company CPA’s proudly serves Bedford Hills NY, Chappaqua NY, Harrison NY, Scarsdale NY, White Plains NY, Mt. Kisco NY, Pound Ridge NY, Greenwich CT and beyond.

Supersizing your charitable contribution deductions

You might want to consider three charitable giving strategies that can help boost your 2014 charitable contribution deduction. DeathtoStock_SlowDown3

1. Use your credit card. Donations charged to a credit card are deductible in the year charged, not when payment is made on the card. Thus, charging donations to your credit card before year end enables you to increase your 2014 charitable donation deduction even if you’re temporarily short on cash or just want to put off payment until later.

2. Donate a life insurance policy. A number of charities are asking their donors to consider donating life insurance policies rather than (or in addition to) cash in order to make substantially larger gifts than would otherwise be possible. The advantage to donors is that they can make a sizable gift with relatively little up-front cash (or even no cash, if an existing policy is donated). The fact that a charity may have to wait many years before receiving a payoff from the gift is typically not a problem because charities normally earmark such gifts for their endowment or long-term building funds.

If handled correctly, a life insurance policy donation can net the donor a charitable deduction for the value of the policy. A charitable deduction is also available for any cash contributed in future years to continue paying the premiums on a policy that was not fully paid up at the time it was donated. However, if handled incorrectly, no deduction is allowed. For this reason, we encourage you to contact us if you are considering the donation of a life insurance policy. We can help ensure that you receive the expected income or transfer tax deduction and that the contribution works as planned.

3. Take advantage of a donor-advised fund. Another charitable giving approach you might want to consider is the donor-advised fund. These funds essentially allow you to obtain an immediate tax deduction for setting aside funds that will be used for future charitable donations.

With donor-advised funds, which are available through a number of major mutual fund companies, as well as universities and community foundations, you contribute money or securities to an account established in your name. You then choose among investment options and, on your own timetable, recommend grants to charities of your choice.

The minimum for establishing a donor-advised fund is often $10,000 or more, but these funds can make sense if you want to obtain a tax deduction now but take your time in determining or making payments to the recipient charity or charities. These funds can also be a way to establish a family philanthropic legacy without incurring the administrative costs and headaches of establishing a private foundation.

Seniors age 70 1/2+: Take your required retirement distribution

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation! 

The tax laws generally require individuals with retirement accounts to take annual withdrawals based on the size of their account and their age beginning with the year they reach age 70½. Failure to take a required withdrawal can result in a penalty of 50% of the amount not withdrawn.

If you turned age 70½ in 2014, you can delay your 2014 required distribution to 2015. Think twice before doing so, though, as this will result in two distributions in 2015 — the amount required for 2014 plus the amount required for 2015, which might throw you into a higher tax bracket or trigger the 3.8% net investment income tax. On the other hand, it could be beneficial to take both distributions in 2015 if you expect to be in a substantially lower tax bracket in 2015.










Herman and Company CPA’s proudly serves Bedford Hills NY, Chappaqua NY, Harrison NY, Scarsdale NY, White Plains NY, Mt. Kisco NY, Pound Ridge NY, Greenwich CT and beyond.

Any U.S. tax advice contained in the body of this website is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.