AdaptFirst Tax and Investments

07/17/2026

From my latest tax newsletter -

THE IRS ROBOTS ARE HERE

AI is already at work across every industry, and the IRS seems to be leading the charge. In 2025, the IRS cut approximately 20% of its staff. This has accelerated the agency's shift toward AI for operational "efficiency," taxpayer services, and tax compliance and fraud detection. The IRS AI robots, or bots, aren't coming— they're already running.

Tax compliance and fraud detection is the piece to watch closely. Remember, the US has a massive debt problem and needs tax revenue from as many sources as possible. AI is now reviewing tax returns for inaccuracies and potential fraud, and these reviews are dramatically more precise and larger in scale than anything human staff could do. Humans are limited by hours in the day — IRS AI can scan hundreds of thousands of returns 24 hours a day.

This means items that might have gone unnoticed before are now much more easily flagged. And an IRS letter is automatically sent to the taxpayer asking for clarification or additional documentation to support positions taken on a return (child or education credits, business profits, etc.)

Every CPA in my network has noted the unusual volume of IRS letters their clients are receiving, and it's likely to increase as more of these AI tools get deployed. Any tax preparer not adapting to this shift is putting clients at risk.

We're paying close attention to these changes, and we're working to help you respond when questions come up. We're already using technology in our own internal review of returns to help ensure accuracy, and we'll continue building on those tools this year as scrutiny increases. There's more change coming, and we intend to keep pace with it.

Thank you for allowing us to be a resource for you and your family!

Best regards,
Charles Freeman, CFA, EA

08/21/2025

Check your tax withholding on your paycheck right now -

One prominent thing we have found this past tax season is company payroll programs are often NOT taking out enough withholding taxes from people's paycheck to cover their taxes.

Why? My research suggests it's a combination of inflation adjustments made by the IRS on income brackets and an increase in the standard deduction.

Short story is that if you are not withholding enough in your paycheck, you will have a surprise and have to pay come tax time. Check your withholding now to confirm whether or not you are on track.

Hope this helps
www.adaptfirst.com

11/02/2024

Join us to learn more about long term medical care options for you or your loved one with Dr. Corinne Aumen! Nov 19 @ 6:30 pm Shephard's Center in Kernersville

Kernersville Chamber of Commerce

Our parents and ourselves are aging and will need care in the future, join us to learn what care options are available for your loved ones.

10/18/2024

AdaptFirst Weekly Tax and Investment Update -

Get tax tips, investment insights, company events, and more in this weekly update.

10/13/2024

Support local and come visit our vendors at today’s grand opening!

1-5 pm

109 East Mountain St, K-Vegas

Bring chairs and enjoy some live music as well on this beautiful afternoon!

10/08/2024

Grand Opening and Community Showcase -

Get tax tips, investment insights, company events, and more in this weekly update.

08/07/2024

The Most Important Chart
IMHO this is the most important chart right now to follow. Employment has been the glue holding everything together. It tends to be one of the last things to break before a recession. But do we have confidence in the data?

Distortion #1 - The pandemic created a mass distortion with shut downs and staggered reopening , yet wages increased due to massive government stimulus, not exactly the normal script.

Distortion #2 - The free money gift ignited a demand spike like we've never seen while supply chains were crippled. Employers were desperate for help because many older workers opted for an early retirement and didn't want to come back. So employers have been hesitant lay anyone off even as demand has started to soften.

Distortion #3 - Let's be honest, our systems for "monitoring" the economy are not perfect. In fact, we've been reminded of how IM-perfect they are since the pandemic. But despite those shortcomings, we need to have data to make policy decisions. The response rates for collecting this data have fallen dramatically in the last decade, accelerating with Covid. So how do we know if we have the right information?

So where are we today?

Distortion #1 - Unemployment has returned to the pre-pandemic trend suggesting labor markets have somewhat normalized. Meanwhile, pandemic spending has been spent and no longer available.

Distortion #2 - The total participation rate has also returned near pre-pandemic levels. While the 55 and older group never came back, there was a surge in participation in the 25-54 yr old group to fill the gap. So again, we are near "normal" levels even if the mix of workers has changed.

Distortion #3 - Response rates continue to fall. I don't know if it's apathy or a lack of accountability, but it's an issue. What we do know is there is a widening gap between headline numbers and the revisions, and not in a good way. It seems many less jobs were created over the last year than were first reported.

I can run this chart back to the 1960's with the same result, when we see an accelerating unemployment rate, that tends to be bad. (not exactly rocket science) Friday's report clearly shows an uptick, so this needs to be monitored carefully.

Rising unemployment can trigger a domino effect and negative feedback loop because you can't buy toys nor pay bills if you don't have a job. And that lower demand causes other people to lose their jobs, etc. This is why the chart shows unemployment start slow and then spike.

Keep an eye on this.