I truly hope your weekend wasn’t spent anticipating a weather report from a certain notorious rodent. Because Punxsutawney Phil hasn’t had the most reliable track record in the past – 70 percent of his predictions have been wrong in recent years.
You know how the old saying goes: never trust a rodent to do a meteorologist’s job. Or something like that.
On a more serious note about something else that happened over the weekend – Elon Musk’s team took control of the US Treasury’s payment system.
I have held off writing about this because each morning I wake up and there is more information. I am attempting to write about this in as apolitical manner as possible. Last night, my wife told me that if I write about this, it may cause you to panic. She is correct, and I apologize in advance for that possibility. That said, governments throughout history have used the possibililty of causing as an excuse to withhold information, hurting their constituents in the process.
My job is to inform you about what affects your money. This affects your money.
What has happened is unprecedented. We do not know the full consequences of what we have learned. And, as a Financial Professional, I am writing solely about the Treasury Department, which houses the Internal Revenue Service.
What has happened instead is that the Treasury Department has been compromised.
What we know so far is that people working for Elon Musk, ages 19-25, the youngest a freshman at Northwestern University, apparently now have the privileges to write code on the programs at the Bureau of Fiscal Service that control admin privileges on systems which directly control and pay out roughly 95% of payments made by the U.S. government, including Social Security checks, tax refunds, government payments of veterans’ benefits, and veterans’ pay. The admin privileges they have typically permit a user, according to Wired Magazine, “to log in to servers through secure shell access, navigate the entire file system, change user permissions, and delete or modify critical files. That could allow someone to bypass the security measures of, and potentially cause irreversible changes to, the very systems they have access to.”
In fact, they have “already made extensive changes to the code base for the payment system.” changes which “all seem to relate to creating new paths to block payments and possibly leave less visibility into what has been blocked.”
There is more. I’m sure you that you have heard or read most of it by now through other sources.
Do I know what changes will occur as a result of this infiltration of the US Treasury?
No. No, I don’t.
There is much talk, and it is hard to separate fact from hyperbole.
“It is extraordinary how much access Elon Musk and his sort of creepy 22-year-old henchmen have to all of our data,” Senator Chris Murphy (D-CT) told MSNBC yesterday. “They have information that would allow them to shut down your tax refund, your Medicare payment…. Potentially, they know everything about you and your family, and the reality is that this could get dystopian very quickly…. If you were to start speaking ill of Elon Musk on social media, Elon Musk might be able to stop or delay your tax refund, or your mom’s Social Security benefit, in part because we have no window into what’s happening inside the Department of [the] Treasury right now.”
Again, how much is fact, and how much is hyperbole?
We don’t know.
We do know that the White House has felt enough pressure to “hit the pause button”, limiting Musk in the future, but how much information has he already accessed? How much information has already been downloaded of your finances? How much code has already been changed and camouflaged?
We don’t know.
The only thing I do know is that we won’t know until something we expect to happen doesn’t happen, and/or something that was not supposed to happen, happens anyway.
And I haven’t even mentioned tariffs, most of which look like they are on hold, though the tariff on China could raise prices on goods considerably. We shall see.
And if tarifffs do eventually come between us and our immediate neighbors north and south, unfortunately, that means prices are likely about to go up on your daily needs, like gas and food.
It’s easy to feel frustration and helplessness in this kind of moment (among other feelings). You’ve been seeing prices consistently going up over the past few years and feeling its effects on trips to your favorite grocery store. While we are all in a wait-and-see pattern with what’s happening at the presidential level, the one thing I can speak to right now is being intentional with your taxes…. as intentional as we can with all of this happening even as I write this.
Our job is to be intentional with your taxes. That’s why we are focusing on Advisory Services this year. Providing only compliance – i.e., just the filing of a physical tax return – is no longer enough. We believe that our clients need to have the ability to ask us questions throughout the year without fear of an additional fee for asking, and to be able to receve advice and additional education about their taxes situation. Please be sure to fill out your client organizer on Tax Dome if you can, so you can better understand our Advisory Services.
And yes, the investment in our services have gone up, as has the price of eggs. I suppose if your goal is to find the cheapest tax retrun, with no services included, you can go shop around, just as you can go from market to market to try to find the cheapest eggs. But eggs don’t come with services and advice. And, as much as we might want to, we cannot tell the grocer what price they have to charge for the eggs so that you can purchase them at the cost you prefer.
That said: Your Tax Professional has some discretion over your investiment in our service. We can make exceptions. Still, you will be hard pressed to find a place that will sell you eggs for the same price they cost last February. Your investment in our services will increase. The only question is by how much.
With all that’s happening right now, making moves can feel like a one-step-forward, two-steps-back kind of rhythm. But ultimately, that’s all you can control – taking that one step forward at every opportunity you get. We are here to help you do that at your appointment with us (which you’ll want to get secured on my calendar as soon as you can): 212-247-9090
Now, that’s not to say being tax-savvy doesn’t have a legal compliance element as well. This is the part that can get very messy, depending on your individual circumstances.
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Okay. That was a lot, I know. I am now going to switch gears to a lighter topic, the one I was planning to write about, before the we discovered what was happening above. Even though there’s a migration back to the office happening (mostly spearheaded by big companies and the government), about 32 million people still work remotely. If you happen to be one of them, I want to help give you some tax clarity today.
TaxMaster Financial Service Corporation’s
“Real World” Personal Strategy Note
Remote Work Taxes: What You Need To Know to Avoid Penalties
“When one door of happiness closes, another opens, but often we look so long at the closed door that we do not see the one that has been opened for us.” – Helen Keller
Working in an office is feeling more like a fossilized concept post 2020 – which, strangely, makes me sentimental. Think of how many Jim Halperts might never meet their Pam Beeslys.
Having some kind of work-from-home configuration in your schedule can be very convenient… until it comes to your taxes.
And if the company you work remotely for is in another state, you get the delight of dealing with state taxes twice over (and tracking the changes that happen with them). But before you get 37 browser tabs deep into tax legislation research, let me save you the effort and sum up what you need to know to stay compliant.
What’s new with remote work and your taxes?
Some state tax rates changed at the start of 2025 and that can affect your tax filing (which, might I remind you, is coming up fast). I serve clients from all over, not just in the New York City area. So if you’re one of those living in another state, here are the most recent updates:
- Missouri has restructured its income tax brackets and added a new 4.3 percent bracket for taxpayers earning between 16.5K and 33.5K individually or between 25K and 50K jointly.
- Nebraska reduced its top marginal income tax rate from 5.8 percent to 5.2 percent.
- Iowa is transitioning to a flat income tax system, with a new rate of 3.8 percent that became effective as of January 1 of this year.
- Louisiana has also implemented a flat income tax rate of 3 percent (as well as a 12.5K standard deduction), replacing its previous graduated system.
- Mississippi reduced its top income tax rate from 4.7 percent to 4.4 percent.
- New Mexico has restructured its income tax brackets to lower taxes for all taxpayers in the state, and a new 6th bracket will be added for filers in the low-level income ranges.
- North Carolina reduced its flat income tax rate from 4.5 percent to 4.25 percent.
- West Virginia lowered its top marginal income tax rate from 5.1 to 4.8 percent.
- Hawaii has widened its income tax brackets (but if you’re working remotely for a company in Hawaii, I sincerely hope you get to work in person one day!).
- South Carolina made the temporary reduction of the top marginal income tax rate (from 7 to 6.2 percent) permanent.
The recent trend for employers has been the implementation of the “convenience of the employer” rule. Put simply: If you work from home because you want to (when you “could” be working from the office) then your employer’s state gets the say on your remote work taxes. (Though there are reciprocal agreements that can affect how this rule applies, and you might be able to claim a tax credit in your state of residence to avoid double taxation.)
Currently, Connecticut, Delaware, Nebraska, New York, and Pennsylvania enforce this rule, with New Jersey adopting it as of Jan 1. Something to note if you’re living in one of these states.
Doing your part with your remote work taxes
State-to-state tax issues can get messy quickly. And if you underpay because your employer didn’t withhold the right amount, the IRS can (and likely will) impose penalties. My advice is…
1. Look up your (and your employer’s) state’s tax rules. Check if your employer uses the “convenience of the employer” rule and how each state taxes remote income. Each situation is different.
2. Update your W-4. Check that your W-4 is accurate to those rules before you file your taxes to be safe.
3. Check your pay stubs. Make sure the withholding reported there reflects the correct state.
4. Track your locations. If you do a hybrid in-person-remote-work situation, you need records of when you work at each location, so you have justification for how much you’re taxed. And keep your employer in the know so they can withhold your remote work taxes correctly.
5. File correctly. You’ll likely need to file a non-resident return in your employer’s state (if your state requires it) and a resident return in your state, where you can claim the credits for those out-of-state taxes.
6. Make up the difference. If your employer’s withholding doesn’t cover all your tax liabilities (like in a dual-taxation situation), you may need to make up the difference with quarterly estimated payments.
Tax season is happening right now. This is the time to get these details sorted out – when mistakes (accidental or intentional) can bring the IRS to your door. With something like this, I would advise you not to try mustering through on your own. The possibility for oversight is too great. Let our team and I help you get this sorted out:
212-247-9090
