Deregulation of the energy industry was intended to give consumers a choice of electricity and natural gas providers — and an opportunity to save money. But many homeowners in deregulated states are receiving higher energy bills thanks to deceptive, and even fraudulent, door-to-door sales practices.
Deception and fraud
Not all states have deregulated. If yours has, you probably know it because you’ve received mailings, phone calls and sales rep visits from companies asking you to switch from your current provider. In most cases, traditional utilities continue to transmit the energy; the new providers, offering discounts and other incentives, deliver it to customers.
Many such offers are legitimate and can potentially save you money. But others are deceptive, designed to get you to agree to switching without a full understanding of the terms. For example, a company may offer an attractive introductory rate that becomes outrageously high after the introductory period ends. These companies usually ask you to sign a long-term contract, and getting out of one is likely to involve cancellation fees and a lot of hassle.
Then there are the cases of outright fraud. In the most common scam, slamming, a salesperson claims to represent your current utility company and tells you that there’s a problem with your account. The rep asks to see a current bill to “straighten out” the issue. Instead, the crooked rep copies down your account number and uses it to change your provider, claiming that you requested the switch. You may not even notice you’ve been conned until your bills suddenly skyrocket.
Prevention starts with knowledge
As with all consumer choices, a little knowledge can go a long way. First, find out what company currently delivers and provides energy to your home. Then learn which providers operate in your city by visiting the American Coalition of Competitive Energy Suppliers site at http://competitiveenergy.org or by contacting your state’s utility regulatory commission.
If someone comes to your door purporting to represent one of these companies, ask to see a business card and personal ID. Before inviting the rep into your home, call his or her office to confirm the individual’s identity.
Even if an offer seems above-board, never provide a door-to-door rep with:
- A utility bill containing your account number,
- Payment information such as credit card numbers, or
- Personal information such as your Social Security number.
A legitimate alternative energy salesperson should be willing to leave materials so you can review them at your leisure and research your options. Be particularly suspicious of any high-pressure tactics such as special rates if you “sign today.” And, of course, if a rep makes threats or simply makes you uncomfortable, shut the door and call the police. Call us for more at 205-345-9898.
© 2019 Covenant CPA
Now that 2019 has begun, there isn’t too much you can do to reduce your 2018 income tax liability. But it’s smart to begin preparing for filing your 2018 return. Because the Tax Cuts and Jobs Act (TCJA), which was signed into law at the end of 2017, likely will have a major impact on your 2018 taxes, it’s a good time to review the most significant provisions impacting individual taxpayers.
Rates and exemptions
Generally, taxpayers will be subject to lower tax rates for 2018. But a couple of rates stay the same, and changes to some of the brackets for certain types of filers (individuals and heads of households) could cause them to be subject to higher rates. Some exemptions are eliminated, while others increase. Here are some of the specific changes:
- Drops of individual income tax rates ranging from 0 to 4 percentage points (depending on the bracket) to 10%, 12%, 22%, 24%, 32%, 35% and 37%
- Elimination of personal and dependent exemptions
- AMT exemption increase, to $109,400 for joint filers, $70,300 for singles and heads of households, and $54,700 for separate filers for 2018
- Approximate doubling of the gift and estate tax exemption, to $11.18 million for 2018
Credits and deductions
Generally, tax breaks are reduced for 2018. However, a few are enhanced. Here’s a closer look:
- Doubling of the child tax credit to $2,000 and other modifications intended to help more taxpayers benefit from the credit
- Near doubling of the standard deduction, to $24,000 (married couples filing jointly), $18,000 (heads of households) and $12,000 (singles and married couples filing separately) for 2018
- Reduction of the adjusted gross income (AGI) threshold for the medical expense deduction to 7.5% for regular and AMT purposes
- New $10,000 limit on the deduction for state and local taxes (on a combined basis for property and income or sales taxes; $5,000 for separate filers)
- Reduction of the mortgage debt limit for the home mortgage interest deduction to $750,000 ($375,000 for separate filers), with certain exceptions
- Elimination of the deduction for interest on home equity debt
- Elimination of the personal casualty and theft loss deduction (with an exception for federally declared disasters)
- Elimination of miscellaneous itemized deductions subject to the 2% floor (such as certain investment expenses, professional fees and unreimbursed employee business expenses)
- Elimination of the AGI-based reduction of certain itemized deductions
- Elimination of the moving expense deduction (with an exception for members of the military in certain circumstances)
- Expansion of tax-free Section 529 plan distributions to include those used to pay qualifying elementary and secondary school expenses, up to $10,000 per student per tax year
How are you affected?
As you can see, the TCJA changes for individuals are dramatic. Many rules and limits apply, so contact us to find out exactly how you’re affected. We can also tell you if any other provisions affect you, and help you begin preparing for your 2018 tax return filing and 2019 tax planning. Call us today at 205-345-9898.
© 2019 Covenant CPA