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The IRS Data Theft Problem

Here's how to minimize your risk

What better place for online thieves to target than a database that contains 300 million+ Social Security numbers and a treasure trove of financial information?

The IRS has 52 Internet applications to help U.S. citizens comply with their tax obligations. But these online portals, which collect, process and store large amounts of personal information and tax data, are also a potential gateway for online criminals and identity thieves.

While the IRS’s electronic authentication security controls have improved, the Treasury Inspector General recently said that the IRS’s internet applications are not yet compliant with the National Institute of Standards and Technology guidelines.

Here’s what you can do to protect your tax-related identity and information while the IRS tries to improve its security controls:

• Use the IRS’s Internet applications judiciously. Think you need to use one of the IRS’s online applications? Consider requesting or obtaining certain information via the U.S. Postal service. Simply decide if you’re willing to take a risk using an application that isn’t compliant with the National Institute of Standards and Technology.
• Get an IP PIN. An Identity Protection PIN (IP PIN) is a six-digit number that helps prevent filing fraudulent federal income tax returns. If you are a confirmed victim of identity theft, the IRS will mail you an IP PIN after the fraudulent tax issue has been identified. If you are not the victim of tax-related identity theft, you can voluntarily ask the IRS to issue you an IP PIN if you live in certain states. Additional states will be added until the IP PIN program is available nationwide.
• Review your credit report once a year. Check your credit report for any unauthorized activity or errors. This periodic review can often be the earliest warning that your private information is compromised.

Live Streaming Entertainment is Changing!

If it’s between 9:30 am and 6 pm CST, a 28-year-old named Tyler Blevins—better known as Ninja—is most likely broadcasting himself playing video games. He’s also making an estimated $500,000 a month doing it.

Blevins represents the new wave of visual entertainment and video game streaming. His popularity started to soar in late 2017 when he and other video game streamers began playing a game called Fortnite. Fast forward to 2019, and Blevins is now the most recognized name in the video game streaming industry with nearly 15 million followers.

But it's not just Blevins and the video game streaming industry that are racking up huge audiences. The entire streaming industry is estimated to reach $125 billion by 2025, according to findings from Grand View Research.

Here are three of the most popular social media platforms that are currently dominating the live, visual entertainment market.

• Twitch: Live game streaming
  Twitch (purchased by Amazon in 2014 for $1 billion) is the most popular streaming (sharing live video) platform in the world and where Blevins first started growing his followers. It has 15 million daily active users and 27,000 partners—streamers who have met certain conditions to access more features and monetize their channels. Twitch is most associated with watching people play video games, but has everything from live educational streams to broadcasting events for eSports, an industry with revenues over $1 billion. While users are attracted to the service by individual gamers and the games they play, Twitch relies on an audience in the 18- to 34-year-old age range to patronize advertisers, make in-app purchases, and subscribe to premium services.

• Mixer: Microsoft competitor to Twitch
  Purchased by Microsoft in 2016 for an undisclosed amount, Mixer is currently a distant 2nd to Twitch in the streaming space, but quickly gaining traction. Boasting a better overall gaming and watching experience than Twitch, Mixer was able to lure Blevins away from Twitch in 2019, signing him to a $50 million contract. Like Twitch, Mixer is banking on both establishment backing and being able to move traditional revenue streams into a new model.

• TikTok: The lip-synching video phenomena
  If video games aren't your thing, then maybe lip-synching with TikTok is worth a look. Backed by the Chinese company ByteDance, TikTok's app boasts 150+ million downloads across every major market in the world, a level of adoption only matched by the biggest names in tech. TikTok lets users create 15-second videos and share them, and then the platform uses advanced artificial intelligence (AI) to directly feed those videos to users it deems will enjoy them. This is different than apps which suggest content, as TikTok directly presents the content to users. Videos are often of individuals participating in viral dance trends or of short comedic skits. The AI behind the app is constantly learning from user videos and is able to better curate content.

While these new forms of visual entertainment are not necessarily something you wish to spend time viewing, knowing what is happening with your kids and grandchildren makes sense for all of us.

Should You Buy or Rent a Home?

The pros and cons of renting versus buying

For many folks, the lyrics of a 1960s rock song summarize the American dream: "Our house is a very, very, very fine house." According to U.S. Census figures, about two-thirds of American families are homeowners.

But buying a house or condo may not be the best choice for every family in every situation. Renting offers the following advantages:

• Greater flexibility. When renting a house, apartment, or condo, you have the option of moving at the end of the lease term. No need to contact a realtor, no hassle with buying or selling. For those who want to keep their options open, especially in terms of job location or dwelling size, renting may prove the better choice.
• Opportunities to invest elsewhere. Instead of plowing your savings into a home, you might get a better return by contributing to mutual funds or other investments. Depending on the housing market in your city, the annual increase in your home's value may barely outpace inflation.
• Lower costs. Apartments are often smaller than homes, so heating and cooling expenses tend to be lower. If you don't have a lawn, you won't incur the cost of water to keep it green. Roof leaking? Appliances on the blink? Call the landlord. Home repair and maintenance aren't normally your responsibilities.

Of course, as many realtors and financial analysts rightly point out, homeowners also enjoy significant advantages:

• Greater flexibility. Ironically, homeowners enjoy certain freedoms denied to renters. If a homeowner wants to paint a wall or hang a picture, he or she doesn't answer to a landlord. Installing a doggy door isn't a problem. Hiring a remodel contractor to tear out a wall is perfectly acceptable. Don't try this if you're a renter.
• Increasing equity. One of the greatest advantages to buying a home is the likelihood of increased equity over time. As long as your mortgage is being whittled down by monthly payments, you're building equity—even if your property value remains stable.
• Lower taxes. The ability to deduct mortgage interest and property taxes (if you itemize) can significantly lower your end-of-year tax bill. Renters must forgo this benefit.

Clearly, the choice to rent or buy a home depends on individual circumstances and tastes. If you'd like help with this important decision, give us a call.

How to Succeed as an Independent Contractor

Are you one of the now 33% of Americans who work as either an independent contractor or freelancer?

If you answer yes, you are now a participant in the gig economy, a modern term for an economy characterized by workers who earn money through short-term contracts or freelance work.

Succeeding as an independent contractor can be challenging because it requires understanding a different set of key success factors than being a full-time employee. Here are some tips on developing your skill set as an independent contractor and where to turn to if you need help.

• Contract for companies with generous payment terms. The time required for companies to pay its bills to contract workers varies from business to business. Investigate a company's policy for paying its contract workers to make sure it's what you're expecting. Remember, cash is king!
• Market your services by creating an online portfolio. If being a contract worker is your full-time job, you’ll need to always be looking for your next gig. One great way to market yourself to prospective businesses is to create an online portfolio that showcases the work you can perform. You can choose to build a website using a do-it-yourself service or hire a developer to create a custom website.
• Stick to a budget. As a full-time employee, you know the exact date you’ll receive your paycheck and usually the exact dollar amount. As a participant in the gig economy, however, you could earn a bunch of money in one month and hardly any money the following month. Prepare a financial budget so you can use income earned during your good months to cover costs during low income months.
• Stay one step ahead of the IRS. Paying taxes is now your responsibility. Participating in the gig economy requires more knowledge about how to meet your tax obligations. So ask for professional help. Plus use other tools at your disposal. For instance, the IRS Gig Economy Tax Center gives guidance on how to figure out what you may owe the IRS. The website is https://www.irs.gov/businesses/gig-economy-tax-center.
• Get advice from others. Working primarily by yourself can leave you isolated from fellow workers. Join a local group of self-employed workers that meets on a regular basis to network and learn what other workers are doing to be successful.

Remember that you are not alone. The complex nature of tax obligations for contractors can easily be navigated with professional help.