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Author: Service2Client
IRS Tax Tip 2026-45: Is that activity just a hobby or a business?
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6 Financial Changes to Make in 2026
6 Financial Changes to Make in 2026
4 min read
Summer’s here, school’s out and vacations are ahead. That’s why now might be the perfect opportunity to carve out some time to make some positive changes in your financial life. Here’s a few ideas to get you started that are are significant, not too big or too small, and well within your reach.
Set Up a Safety Net
Rising costs and an uncertain geopolitical landscape make this more important than ever. If you already have sturdy savings, great. Having a three-to-six-month surplus is super smart. You never know when your fridge might go out, or you might have unexpected medical expenses. That said, consider increasing your contribution amount. If you’re living paycheck to paycheck, look where you might cut costs and get started. Putting away a little each month goes a long way. One smart way to boost this money is to open a high-yield savings or checking account. You can make balance transfers from your brick-and-mortar bank and glean higher interest rates from online funding sources.
Save 10K a Year with the $27.40 Rule
Talk about doable, this rule takes a daunting task and boils it down to an easy equation: $27.40 (a day) x 365 = $10,001 a year. Now, if you’re not sure how to achieve the strategy, you might start smaller by saving this amount every few days. The point is, after employing this simple habit, you’ll accumulate a little nest egg, which relates to the first idea of setting up a safety net. But you could also be saving for a dream vacay. It’s up to you!
Rebalance and Diversify Your Portfolio
If the rise and fall of the market have affected your assets by creating an imbalance, causing you to over-index certain investments, you can straighten this out. One way is to rebalance, which involves buying and selling holdings to change the ratio of the amount you have in stocks, bonds, and cash. In essence, you’re righting the equilibrium of your assets. The other is to diversify – mix things up – which is admittedly not new news, but it bears looking into from time to time. Otherwise, you might miss out on some significant growth opportunities.
Use the Snowball Method for Debt
To whittle away at your balances, list your debts from the smallest to the largest. Then make small, minimum payments on every account. But focus on the smallest and move your way up the list. When you can eliminate low-hanging fruit and experience quick wins, you’ll create momentum to keep going and ultimately live debt-free.
Dig Around for Lost Retirement Accounts
According to Yahoo! Finance, there are about 32 million forgotten or left-behind retirement accounts in the United States. Crazy, right? If you’ve been employed for a substantial amount of time, take some time to find them and roll them over. There’s a huge chance that your current employer’s retirement account or a personal IRA will offer smarter investments and lower fees/expenses. It’s worth a look.
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When you keep current on market changes and become proactive, not just let your assets sit there and earn interest, you are better able to maximize your net worth. If you don’t know where to start, consult your tax professional. They’ll be able to point you in the right direction. Reviewing relevant sources while enjoying your morning coffee just might be the best thing you do all day.
These are just a few tactics you can pursue mid-year. So, take a beat and review your assets. Time is money, and using it wisely is one of the smartest investments you can make.
Sources
How to make your money work for you: 9 ways to grow money | Fidelity
How to Pay Off Debt Fast: 8 Smart Strategies | 1st Ed CU
Understanding Cost of Goods Manufactured
Understanding Cost of Goods Manufactured, What is Cost of Goods Manufactured, what is COGM
5 min read
When it comes to the latest report for March 2026 manufactured goods orders, according to the United States Census Bureau’s May 4 report, the government agency reported a 1.5 percent bump in orders for the nation’s manufacturers, growing to $630.4 billion. Understanding concepts like Cost of Goods Manufactured (COGM) is essential to smooth operations.
The cost of goods manufactured (COGM) reflects the total manufacturing costs a company incurs during a particular accounting period to complete goods. It includes direct materials used, direct labor, and manufacturing overhead. COGM helps businesses manage inventory levels and serves as a key input for calculating the cost of goods sold (COGS) reported on the income statement.
COGM Formula:
The standard formula is:
COGM = Beginning Work-in-Process (WIP) Inventory + Total Manufacturing Costs – Ending Work-in-Process (WIP) inventory
Defined as:
Total Manufacturing Costs = Direct Materials Used + Direct Labor + Manufacturing Overhead
Hypothetical Example:
Based on the following numbers, the COGM would be calculated as follows:
- Direct Materials Used: $200,000
- Direct Labor: $75,000
- Manufacturing (Production) Overhead: $120,000
- Beginning WIP Inventory: $20,000
- Ending WIP Inventory: $60,000
First, calculate Total Manufacturing Costs: $200,000 + $75,000 + $120,000 = $395,000
Then:
COGM = 20,000 + 395,000 – 60,000 = 355,000
So, the Cost of Goods Manufactured is $355,000.
Interpreting COGM:
The first step is to analyze how each input contributes to the result. This involves reviewing direct materials, direct labor, and overhead to determine the complete production costs for the accounting period. By evaluating each component’s contribution, companies can better project manufacturing capacity and cost-effectiveness.
Direct Materials Used in Production
Direct Materials Used = Beginning Raw Materials Inventory + Purchase of Raw Materials – Ending Raw Materials Inventory
This amount is then incorporated into the Total Manufacturing Costs (and ultimately the WIP inventory) shown above.
Calculating Direct Labor and Manufacturing Overhead:
Direct labor costs are determined from time logs or clock-ins (hours worked × hourly rate). Manufacturing overhead includes indirect production costs such as factory utilities, depreciation, and supervision.
Translating COGM to Cost of Goods Sold:
Once calculated, COGM is transferred to the Finished Goods Inventory account. Finished Goods Inventory consists of completed products ready for sale to customers. The standard relationship is:
COGS = Beginning Finished Goods Inventory + COGM – Ending Finished Goods Inventory
(or equivalently: Ending Finished Goods Inventory = Beginning Finished Goods Inventory + COGM – COGS)
Conclusion:
COGM shows whether production costs are too high or too low relative to sales. For example, if one business generates $2,000,000 in revenue with $1,500,000 in COGS (25% gross margin), while another has $1,500,000 in revenue but only $750,000 in COGS (50% gross margin), the second company demonstrates stronger profitability.
Understanding COGM enables businesses to optimize costs related to labor, overhead, and materials, ultimately improving net income and operational efficiency. When calculating and reporting COGM, it is essential for businesses to apply these concepts accurately in their accounting and bookkeeping practices.
What is Cost of Goods Manufactured?
When it comes to the latest report for March 2026 manufactured goods orders, according to the United States Census Bureau’s May 4 report, the government agency reported a 1.5 percent bump in orders for the nation’s manufacturers, growing to $630.4 billion. Understanding concepts like Cost of Goods Manufactured (COGM) is essential to smooth operations.The cost of goods manufactured (COGM) reflects the total manufacturing costs a company incurs during a particular accounting period to complete goods. It includes direct materials used, direct labor, and manufacturing overhead.
COGM Formula
The standard formula is:COGM = Beginning Work-in-Process (WIP) Inventory + Total Manufacturing Costs – Ending Work-in-Process (WIP) inventoryDefined as:Total Manufacturing Costs = Direct Materials Used + Direct Labor + Manufacturing Overhead
Hypothetical Example
Based on the following numbers, the COGM would be calculated as follows:Direct Materials Used: $200,000Direct Labor: $75,000Manufacturing (Production) Overhead: $120,000Beginning WIP Inventory: $20,000Ending WIP Inventory: $60,000First, calculate Total Manufacturing Costs: $200,000 + $75,000 + $120,000 = $395,000Then:COGM = 20,000 + 395,000 – 60,000 = 355,000So, the Cost of Goods Manufactured is $355,000.
Interpreting COGM
The first step is to analyze how each input contributes to the result. This involves reviewing direct materials, direct labor, and overhead to determine the complete production costs for the accounting period. By evaluating each component’s contribution, companies can better project manufacturing capacity and cost-effectiveness.
Direct Materials Used in Production
Direct Materials Used = Beginning Raw Materials Inventory + Purchase of Raw Materials – Ending Raw Materials InventoryThis amount is then incorporated into the Total Manufacturing Costs (and ultimately the WIP inventory) shown above.
Calculating Direct Labor and Manufacturing Overhead
Direct labor costs are determined from time logs or clock-ins (hours worked × hourly rate). Manufacturing overhead includes indirect production costs such as factory utilities, depreciation, and supervision.
Translating COGM to Cost of Goods Sold
Once calculated, COGM is transferred to the Finished Goods Inventory account. Finished Goods Inventory consists of completed products ready for sale to customers. The standard relationship is:COGS = Beginning Finished Goods Inventory + COGM – Ending Finished Goods Inventory(or equivalently: Ending Finished Goods Inventory = Beginning Finished Goods Inventory + COGM – COGS)
Conclusion
COGM shows whether production costs are too high or too low relative to sales. For example, if one business generates $2,000,000 in revenue with $1,500,000 in COGS (25% gross margin), while another has $1,500,000 in revenue but only $750,000 in COGS (50% gross margin), the second company demonstrates stronger profitability.Understanding COGM enables businesses to optimize costs related to labor, overhead, and materials, ultimately improving net income and operational efficiency.
The IRS Could Owe You Money Thanks to a Pandemic-Era Court Ruling
IRS Could Owe You Money, COVID Court Ruling
4 min read
Here’s something that flew under the radar for most people: a court decision from late last year could put money back in your pocket if you got hit with IRS penalties during COVID. But you need to act fast! For some taxpayers, the deadline to file a claim is July 10.
What This Case Is Actually About
Remember when COVID was declared a federal disaster? That designation wasn’t just symbolic. It triggered real protections under the tax code, specifically Section 7508A, which lets the IRS push back deadlines and waive penalties when taxpayers are caught up in a disaster. We’re talking about failure-to-file and failure-to-pay penalties here, and those fees can add up to almost 50 percent of what you already owe, which is brutal!
The Kwong v. United States decision came down from the Court of Federal Claims in November 2025, and it changed the game. The court said the nationwide COVID emergency created a mandatory postponement running from Jan. 20, 2020, through July 10, 2023. Everything that came due in that window should have been bumped to July 11, 2023. In other words, a lot of people may have been penalized when they shouldn’t have been.
This Got Real on April 30
The case had been percolating quietly until the National Taxpayer Advocate (NTA) made some noise about it on April 30. That’s when things got interesting. According to the NTA, tens of millions of taxpayers could be eligible for refunds. Not just on the penalties themselves, but on the interest that piled up on top of those penalties.
The NTA isn’t being shy about this either. The office has pushed hard for the IRS to apply relief broadly instead of making people jump through hoops. They want systemic fixes, not case-by-case battles. And they’ve asked Congress to make sure procedural red tape doesn’t rob people of money they are owed.
There’s another wrinkle worth knowing about. Some refunds issued during 2020 through 2023 may have shortchanged taxpayers on interest because the IRS treated their returns as late. If Kwong holds up, you might be able to claim that missing interest, too.
Expats Had It Especially Rough
If you were living overseas when the pandemic hit, you know the chaos was next level. Borders slammed shut with no warning. People got stranded in countries they were just passing through. Others couldn’t get back to the places they’d been living for years.
Good luck reaching your accountant when consulates are closed, mail isn’t moving, and you’re dealing with a 12-hour time zone difference. Some folks couldn’t access their bank accounts. Others couldn’t get basic documents. And plenty of people were simply stuck, unable to go anywhere, when their filing deadlines rolled around.
Slapping penalties on taxpayers who were dealing with all of that? It misses the point entirely. The disaster relief rules exist for exactly these situations. The NTA has been clear: fair treatment means recognizing what people were actually going through.
You Need to File a Protective Claim
Here’s the practical part. If you want to preserve your right to get this money back, you have to file something called a protective claim. Think of it as a placeholder that keeps your options open while the legal dust settles.
For many people, the deadline is July 10, 2026, though it depends on the tax year involved. Don’t wait until the last minute to figure this out.
The good news is the paperwork isn’t complicated. You can use IRS Form 843 or just file an amended return. You need to list the tax years you’re claiming and note that your refund depends on how the Kwong case plays out. You don’t have to calculate the exact dollar amount right now. The whole point is just to get yourself on record before time runs out.
A Few Limitations to Know About
This relief is specifically about federal income taxes under the Internal Revenue Code. If you’re worried about Report of Foreign Bank and Financial Accounts (FBAR) penalties, that’s a different animal. FBARs fall under the Bank Secrecy Act, so Kwong doesn’t automatically help there. That said, you might still have a reasonable cause argument based on the same COVID disruptions.
State taxes? Every state did its own thing. Most offered some pandemic extensions, but those programs were separate and usually more limited than what we’re talking about here.
Conclusion
If there’s any chance this applies to you, file that protective claim now. Especially if you were overseas during the pandemic years. Once that deadline passes, the door closes for good.