The Discerning Investor

April 15 is not just the deadline for the 2024 tax-year filing; it's also the deadline for more than a million people to submit their tax returns for unclaimed refunds totaling more than $1 billion for tax year 2021.

As noted on the IRS webpage "Time you can claim a credit or refund" (tinyurl.com/7kprhaac): "You can't get a credit or refund if you don't file the claim within 3 years of filing your original return, or 2 years after paying the tax, whichever is later, unless you meet an exception that allows you more time to file a claim."

The IRS notes that the estimated median refund amount for 2021 is $781 and adds that the estimate does not include the Recovery Rebate Credit and other credits that might be applicable.

It's probably not surprising that of the estimated 1.1 million people who are eligible to submit tax returns for 2021 refunds, more than 31% of them come from the four most populated states: California (116,300), Texas (102,200), New York (73,000) and Florida (69,800).

The IRS does point out that taxpayers could have a 2021 tax refund held if they have not filed tax returns for 2022 and 2023. Additionally, a 2021 refund will be applied to amounts still owed to the IRS or a state tax agency, and it may be used to offset unpaid child support or other past due federal debts, including student loans (tinyurl.com/2hcncsu2).

If you are planning to file for a 2021 tax refund, the forms for that year can be found at the IRS.gov "Prior year forms and instructions" webpage (tinyurl.com/mrxaz3tf). You can also call 800-TAX-FORM (800-829-3676).

If you are missing key documents, such as Forms W-2 and 1098, you can request them from your employers. The IRS webpage "Get your tax records and transcripts" also provides options.

Now, let's turn to 2024. If you haven't filed your taxes yet, you may be eligible to use a new tax program called Direct File, a web-based service that allows you to file directly with the IRS for free.

Direct File began as a pilot program last year and received positive reviews from taxpayers. This year, it is available in 25 states. You can see a complete listing at the IRS Direct File webpage at IRS.com (tinyurl.com/3abk7tc3).

Some key aspects of Direct File include:

-- It works on mobile phones, desktop computers, laptops or tablets.

-- Once the federal tax return is complete, Direct File will automatically guide users to complete their state filings if needed.

-- Taxpayers can use a data import tool to automatically import information from their IRS account. The data includes personal information, a taxpayer's Identity Protection PIN and some information from a taxpayer's W-2.

-- Taxpayers who are reporting retirement income, contributions or rollovers can use Direct File.

Not all taxpayers are eligible to use Direct File in the 25 participating states. For example, if they have rental income, business income or income from the gig economy, they are not eligible. Also, they cannot use Direct File if they itemize deductions or claim other tax deductions.

To see if you are eligible to use Direct File, go to the Direct File website at directfile.irs.gov and click the "Check eligibility now" box. It will guide you through a series of tax categories to help you determine your eligibility.

Keep in mind that if Direct File is not an option, there are other choices for filing with the IRS for free.

IRS Free File is in its 23rd year and offers free tax preparation software from eight companies as part of a public-private partnership (tinyurl.com/yu8vbbn6). The software is available for those taxpayers with an adjusted gross income of $84,000 or less.

The Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs offer free basic tax return preparation to qualified taxpayers (tinyurl.com/wcfxxvd3), while MilTax is available for all military members, as well as some veterans. Eligibility can be verified at the MilTax website (tinyurl.com/mrwcctud).

DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION

If you are a director, officer or friend of a nonprofit, what are the best ways to go about raising money for the organization? Donations can come from different sources.

According to “Giving USA 2024: The Annual Report on Philanthropy for the Year 2023,” Americans gave $557.16 billion in 2023, with the largest source of giving coming from individuals ($374.40 billion) (tinyurl.com/2evmjh6v). The next largest source for giving was foundations, at $103.53 billion. The report is published by the Giving USA Foundation, which is a public-service initiative of The Giving Institute.

Among the top recipients of charitable giving, according to the report, were religion ($145.81 billion), human services ($88.84 billion) and education ($87.69 billion).

As for individual donors, curated charitable giving statistics found at the National Philanthropic Trust (NPT) website indicated that the average yearly charitable donation given by middle-income earners is $3,296, and the average charitable donor in the U.S. is 64 years old (tinyurl.com/jkd9szna).

There is competition for those dollars, as IRS statistics indicated there were more than 1.8 million recognized 501(c) charitable organizations in the U.S as of 2023 (tinyurl.com/37b6pbx3).

As for strategies for raising funds, there are a wealth of options –- and resources. For example, Kindful.com (tinyurl.com/3jfrfw66) offers 14 online fundraising ideas for nonprofits, from virtual events and pledge drives to social media contests and corporate partnerships.

The Double the Donation website provides 22 ideas, including direct mail donations, matching gifts, recurring donations and corporate grants (tinyurl.com/9k2bm43y).

Bloomerang, which creates donor management software, presents a discussion of donor segmentation, which it describes as “the process of separating your nonprofit supporters into groups based on common qualities and characteristics they share” (tinyurl.com/nh9st8rx). Among the suggested segments are frequency, type (how people are donating) and interest (what topics are they most interested in).

If you are seeking help for your nonprofit, one avenue could involve receiving grants. NerdWallet provides a list of possible options in its article “Grants for Nonprofits: How to Get Free Funding in 2025” (tinyurl.com/4btfte5p). Among the options listed (with links) are Grants.gov, the Walmart Foundation, Amazon and Google Ad Grants.

Double the Donation also gives insight into corporate philanthropy trends for 2025 (tinyurl.com/3tba7epc), as well as corporate giving and matching gift statistics (tinyurl.com/3mvee9cj).

Nonprofit Megaphone offers a list of more than 77 donation opportunities for nonprofits along with how to apply at tinyurl.com/yjsrzky5.

Nonprofit consultants may also be of help. You can check out Prosper Strategies (which provides tips on how to find a nonprofit consultant, along with a list of consultants at tinyurl.com/2k6sspn5) and Management Consulted (which lists the top 10 nonprofit consulting firms at tinyurl.com/45n96t4n).

You’ll also want to look at what other nonprofits are doing. For example, the Commonbond.org website offers a guide to the types of donations made to nonprofits (tinyurl.com/sd9bedan). Meanwhile, the IRS has a charitable contributions webpage (tinyurl.com/344nu83w) that includes helpful information.

Among other things, individuals can write a check or give money online, donate goods or stock, or name the nonprofit in their wills or beneficiary designations of their retirement accounts. Or they can even use IRA money to donate, if they are over age 70 1/2, through a Qualified Charitable Donation (QCD).

On that note, if you are working on fundraising for your nonprofit and you’d like to know more about QCDs, I’m doing a short interactive discussion on the subject next week (March 19) in Greenwich, Connecticut. The topic is “Non-Profit Insight: Raising Funds Using QCDs.” There is no cost for the event, but space is limited. See tinyurl.com/57zn6dce to reserve your spot. Full disclosure: Neither I nor my firm are compensated for this pro bono financial literacy event.

DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION

A question often considered in financial literacy circles is: "What makes people vulnerable to being scammed?"

A new financial capability study recently released by the FINRA Investor Education Foundation (which included researchers from the University of Minnesota and RTI International, a nonprofit research institute) addressed this question. The study sought to get a better understanding of "which social and behavioral factors are tied to fraud victimization," especially when it involves scammers who target older adults (tinyurl.com/36ffub2x).

For the study, researchers used data on 905 known fraud victims (mean age of 75) identified by the U.S. Postal Inspection Service.

The victims were asked about mass-marketing solicitations that involved "promises of positive financial opportunities or social rewards." These are known as opportunity-based scams (as opposed to threat-based scams). Forty-nine percent of the victims self-reported a prize or grant fraud, 43% reported a product or services fraud, and 31% reported an investment fraud.

The study found that "engaging in activities that increase fraud exposure -- such as opening junk mail, entering sweepstakes drawings to win prizes, answering unknown calls and interacting with telemarketers -- was tied to a greater number of different fraud victimization experiences."

The study used the Routine Activities Theory (RAT), an approach to analyzing crime that involves "likely offenders, suitable targets and the absence of capable guardians against crime," as detailed in a paper published by the American Sociological Review in August 1979 (tinyurl.com/2nkwc94p).

What makes a target "suitable"? The FINRA study focused on several possible characteristics and behaviors:

-- Older age.

-- Risky activities (things like entering sweepstakes drawings, not hanging up on telemarketers and answering unknown calls).

-- Financial risk preferences and behaviors (such as playing lottery games).

-- Loneliness (those who might have "unmet needs for social stimulation, emotional validation and companionship").

-- Financial fragility (people who indicated they would struggle to cover a $2,000 emergency expense).

There were two surprises discovered during the study: "[E]ngaging in more regular online activity (e.g., active internet use, online shopping and social media use) was associated with a lower number of unique fraud victimization incidents." Also, "Unlike the theoretical framework of RAT, the absence of capable guardians was unrelated to the number of victimization incidents." In both cases, FINRA concluded that more research in these areas was needed.

As for combating elderly fraud efforts, the results "indicate that certain factors might make individuals more susceptible to financial predators who use persuasive messages promising to address unmet needs," adding that consumer education programs "may want to focus on certain risk factors and characteristics, as scammers often exploit these vulnerabilities with promises of financial gains, social connection or emotional support."

FINRA recommended these educational topics:

-- Address loneliness.

-- Enhance financial knowledge so that older individuals know "how to make informed financial decisions and identify scam messages."

-- Provide education to reduce exposure to pitches contained in telemarketing offers and junk mail.

-- Assist older people with budgeting and debt management.

-- Reduce risky financial behaviors. "Educational efforts should teach consumers how to distinguish between legitimate and fake lotteries and sweepstakes and highlight the risks of entering competitions and prize drawings, particularly those that involve an upfront fee or that collect personal information."

Fraud won't be eradicated. Consumers reported losing more than $10 billion to fraud in 2023, according to Federal Trade Commission data based on reports from 2.6 million consumers (tinyurl.com/ydx5r3es). The monetary loss was a 14% increase over the previous year and the first time that fraud losses reached that benchmark. The top two categories for financial loss were investment scams (more than $4.6 billion) and imposter scams (nearly $2.7 billion).

Can fraud be controlled or lessened? Education is essential, and resources are available.

The Office for Victims of Crime, part of the U.S. Department of Justice, has a section on elder fraud and abuse at tinyurl.com/mr25dxrs. Among the resources is the National Elder Fraud Hotline (833-372-8311), which is available Monday through Friday.

The FBI's elder fraud section (tinyurl.com/55yzyswe) lists common elder fraud schemes and provides a link for filing reports about elder fraud to the Internet Crime Complaint Center at ic3.gov.

In the end, it's all about awareness of potential traps.

DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION