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For New York to Get Better, Times Square Has to Get Worse

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For New York to Get Better, Times Square Has to Get Worse

The sensory-overloaded tower will provide guests the prospect to do rather a lot, multi function place: They’ll be capable to sing together with a hologram of their favourite pop star, spend their cryptocurrency, marvel at ever-changing digital artwork on the partitions and dine on a ten,000-square-foot out of doors terrace. Will probably be an enviable perch to gaze out at Instances Sq., a neighborhood that earlier than the pandemic represented 15 p.c of the town’s financial output in simply 0.1 p.c of the land space.

If it seems like an amusement park in the midst of Manhattan, that’s the level. The developer, David Levinson, has described the brand new constructing as a “vertical Disneyland.”

In an interview, he mentioned this 46-story leisure venue and luxurious lodge, referred to as TSX Broadway, could be like “the metaverse intersecting with Instances Sq. and Las Vegas,” however with out the playing.

And on the coronary heart of that intersection is the famed Palace Theater, which has been lifted 30 ft into the air as a part of the $2.5 billion TSX improvement, presiding over a Instances Sq. that’s grappling with its post-pandemic future.

The theater’s evolution is a tidy encapsulation of the evolution of the town’s leisure scene, an financial engine that has all the time drawn guests to New York. The Palace opened as a vaudeville venue in 1913, at a time when the invention of neon lights was turning the world right into a nighttime theater district. It turned a film home, then a Broadway theater.

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Within the Nineteen Nineties, an effort to wash up the seedy picture of Instances Sq. introduced new workplace buildings to the world. A Doubletree Resort was constructed on prime of the Palace Theater, heralding a booming period for tourism within the metropolis. The theater the place Judy Garland and Liza Minnelli as soon as carried out was now displaying “SpongeBob SquarePants,” the musical.

The revitalization of Instances Sq. was nearly too profitable at attracting folks, turning the sidewalks right into a live-action online game the place attorneys and accountants had been pressured to push previous selfie sticks and costumed Elmos to get inside their workplaces 5 days per week. However that was Instances Sq. because it was supposed to be — a vacation spot for each work and play.

In March 2020, all the ecosystem collapsed. Photographs of the eerily empty sq. ricocheted around the globe and have become a logo of the town’s devastation as an epicenter of the pandemic.

Early within the pandemic, an existential query dealing with New York Metropolis was what would nonetheless entice folks to neighborhoods like Instances Sq..

Because it turned out, the Palace Theater would symbolize a key piece of the reply: Individuals come to New York to have enjoyable.

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The issue is that’s solely half the equation. The extra crowded Instances Sq. turns into with guests, the extra off-putting it’s for the white-collar workplace staff who now have the selection to make money working from home.

Greater than 300,000 individuals are frequently strolling by way of the neighborhood every day, about 20 p.c beneath prepandemic ranges, based on the Instances Sq. Alliance, which represents the world’s companies. On some days this month, there was much more foot visitors than on the identical day in 2019.

However at the same time as eating places, Broadway exhibits and live shows are feeling crowded once more, the workplace is just not. As of late April, 38 p.c of Manhattan’s workplace staff had been at their desks on a typical weekday, based on a survey launched this month by the enterprise advocacy group Partnership for New York Metropolis. Solely 8 p.c had been again 5 days per week.

These days, the dialog round returning to the workplace has centered on public security following a string of violent crimes on the subway. Daniel Enriquez, a Goldman Sachs worker, was fatally shot on a subway final Sunday on his method to brunch. 4 months earlier, Michelle Go, a Deloitte worker, was pushed to her dying on the subway tracks on the Instances Sq. station.

That is unhealthy information for Instances Sq., the place 20 p.c of storefronts are nonetheless closed. The encircling blocks are residence to greater than two dozen workplace buildings. Many companies depend on commuters to spend cash across the workplace on espresso, lunch, dry cleansing and completely happy hour. Resorts depend upon close by workplace buildings to carry enterprise vacationers in for conferences, serving to to replenish rooms on weekdays.

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Instances Sq. is significant to New York Metropolis’s restoration, given its focus of workplace buildings, vacationer points of interest and lodge rooms across the metropolis’s busiest subway station. In 2016, Instances Sq.’s economic system was the identical dimension as the town of Nashville’s.

A lot of New York Metropolis’s political and enterprise leaders are determined for workplace staff to return again. The pandemic worn out greater than $28 billion in worth from the town’s workplace buildings, based on a report final 12 months from the New York State Comptroller’s workplace, a possible risk to the town’s tax base and financial well being.

“Think about if only a piece of that disappeared, how we must fill that hole,” mentioned Seth Pinsky, who was an financial improvement adviser to former Mayor Michael Bloomberg’s administration. “We must increase taxes or lower providers, and that’s precisely the lure that we wish to be certain we don’t fall into.”

At a information convention in Instances Sq. this month, Mayor Eric Adams declared in a speech that “the comeback of America begins right here on this sq..”

Tom Harris, the president of the Instances Sq. Alliance, thanked the mayor after which mentioned: “You’re in Instances Sq. greater than most of our workplace staff, so our workplace staff have to step up and present up.”

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Instances Sq. is probably the most Instagrammed landmark in America, based on an evaluation by the photograph printing firm Printique.

On a current Friday, that designation appeared to be holding sturdy: Aspiring influencers posed on the pink staircase above the TKTS sales space that sells discounted Broadway tickets, framed by screaming billboards. A gaggle of vacationers pointed excitedly at an enormous chocolate bar contained in the Hershey’s retailer. On the sidewalk, males dressed as monks tried to foist bracelets onto pedestrians, as different avenue distributors hawked sliced mangos and tour bus tickets.

They joined the swarm of 303,256 individuals who walked by way of Instances Sq. that day, based on the Instances Sq. Alliance.

Cilou Schalkwijk, 21, a university pupil within the Netherlands who lately visited the world with pals, mentioned the brilliant lights made for an irresistible backdrop. “It’s the picture folks get of the American dream,” she mentioned. “That’s simply how I understand it. It’s displaying off how good your life is.”

Ms. Schalkwijk was posing for images close to the positioning of the lifted Palace Theater, for which building started in 2019, when New York Metropolis hosted a report 66.6 million guests.

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The stakes are a lot greater now.

Vacationer numbers usually are not anticipated to return to prepandemic ranges till 2024, based on official forecasts from NYC & Firm, the town’s tourism promotion company, which tasks that 56.6 million folks will go to this 12 months.

For the tourism business, the drop in international vacationers is very regarding as a result of they have a tendency to remain longer and spend extra money than home guests.

With TSX, Mr. Levinson, who’s the chief govt of L&L Holding Firm, is betting that after the pandemic, all vacationers will need is the comfort of watching a Broadway present, consuming at an outside restaurant, partying at a nightclub and returning to their lodge rooms, with out ever leaving the constructing.

He mentioned the density of foot visitors on the TSX web site, on the nook of forty seventh Road and seventh Avenue, close to the ball drop on New 12 months’s Eve, makes it “crucial nook in North America.”

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Resort occupancy is edging nearer to prepandemic ranges. In mid-Might, about 76 p.c of the obtainable lodge rooms round Instances Sq. had been crammed, in contrast with 90 p.c earlier than the pandemic, based on STR, an business analysis agency.

Nonetheless, with no sturdy return of worldwide guests or enterprise vacationers, the outlook for a lot of inns is a query mark. The Sheraton New York Instances Sq. Resort, the third-largest in New York Metropolis by room rely, offered this 12 months for about half its buy worth in 2006.

Throughout the pandemic, NYC & Co. redoubled its efforts to market Instances Sq. in promotional movies, looking for methods to fill the town’s surplus of lodge rooms.

Matt Cross, 27, a monetary adviser in London, took his first flight of the pandemic final month to trip in New York. He walked by way of Instances Sq. at evening, which he mentioned was a “ceremony of passage” for any vacationer. As if to show his level, he mentioned, a gaggle of topless girls painted with American flags requested if he wished to take a photograph with them.

For workplace staff, Instances Sq. has been a harder promote.

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At 5 Instances Sq., the developer, RXR Realty, is including a gymnasium, bar, restaurant and subway entrance contained in the constructing — in order that the one publicity workers must Instances Sq. might be at a take away, from excessive up, wanting down by way of a window.

Beginning in 2017, the Durst Group rebranded its 4 Instances Sq. workplace constructing as 151 West forty second Road, distancing its affiliation with a neighborhood that workplace staff dreaded strolling by way of.

Within the Nineteen Seventies, as New York Metropolis confronted a fiscal disaster, cuts to metropolis providers and rampant crime, a successive line of mayors made the revitalization of Instances Sq. a cornerstone of their financial improvement plans. The neighborhood had change into synonymous with medication and prostitution, dramatized in films like “Taxi Driver.”

Lured by new tax incentives, a crop of builders started constructing the primary workplace skyscrapers there, and main firms just like the journal writer Condé Nast moved in beginning within the Nineteen Nineties. The hope was that the workplace staff would act as an anchor for Instances Sq., filling its eating places and theater seats in the course of the week.

However as metropolis officers wish to say, Instances Sq. turned a sufferer of its personal success. The tourism business within the 2000s turned a serious financial driver and created lots of of hundreds of recent jobs, but in addition turned Instances Sq. right into a mosh pit of vacationers.

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Earlier than the pandemic, with their leases expiring, lots of the first firms that moved to Instances Sq., together with the regulation agency Skadden Arps and the accounting agency Ernst & Younger, determined to relocate to different neighborhoods.

A brand new mixture of tenants have taken benefit of pandemic reductions. Corporations like TikTok, the video-sharing app, and Roku, the digital media participant producer, have introduced plans to maneuver to Instances Sq..

Although leasing is choosing up, Midtown Manhattan’s workplace buildings nonetheless have the best vacancies on report, at 18.2 p.c, based on Newmark, an actual property providers firm.

To lure workplace staff again, the Instances Sq. Alliance is making an attempt to make any given workday afternoon an unmissable occasion, with new programming within the plazas, together with jazz musicians, Broadway performers and artwork installations.

That hasn’t labored for Eileen Ng, 33, a tech guide who has stepped inside her Instances Sq. workplace only a handful of instances within the final two years, regardless that her commute is simply a 20-minute stroll.

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Ms. Ng mentioned she typically tries to expire of Instances Sq. as shortly as doable. “If I requested a pal in the event that they wished to sit down within the plaza in Instances Sq., they’d be like, why?” she mentioned.

Ms. Ng mentioned she was confused about wading by way of the crowds once more to seek out lunch. And he or she expressed considerations about rising stories of assaults in opposition to Asian Individuals in the course of the pandemic.

Round Midtown, builders are renovating their workplace buildings to make them extra interesting to staff, pitching issues like wellness rooms with masseuses and foyer concierges the place workplace staff can order lunches for supply.

For some constructing homeowners, the pandemic pressured them to embrace outside-the-box tenants. In an particularly uncommon deal, Touro School introduced that it might quickly transfer its new important campus to Instances Sq.. The workplace constructing that was beforehand utilized by Thomson Reuters, the media group, will now be residence to hundreds of scholars.

“Dancing cowboys is just not essentially the picture of an academic establishment, however we thought that was overshadowed by some great benefits of the neighborhood,” mentioned Alan Kadish, president of Touro School, citing the accessibility of subway traces for the college’s primarily commuter pupil base.

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When the Palace Theater’s decorative inside was designated a historic landmark in 1987, the town’s preservation fee mentioned the theater was “nearly uncontested” as probably the most well-known Broadway stage, with a legacy that had outlined the encircling neighborhood.

So it’s maybe becoming that the Palace, with its inside preserved, has been lifted inch by inch to make method for an augmented-reality playground for vacationers.

A web based rendering of the TSX entrance confirmed an enormous hologram of a sneaker beamed down from the ceiling. Some areas might be accessible solely to guests who buy sure NFTs, or nonfungible tokens. There might be hidden levels and speakeasies. The corporate in control of programming the inside house has employed a D.J. as its “chief metaverse officer.”

There might be a podium stage that juts over Instances Sq., the place a pop star may unveil a clothes line because the efficiency is live-streamed onto surrounding billboards. The builders had explored constructing a on line casino in TSX, however that plan is off the desk. (One other developer can also be pitching a on line casino within the coronary heart of Instances Sq..)

Because it all the time has, the Palace is pointing the best way for the way forward for leisure in Instances Sq..

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Close by at 1 Instances Sq., the 118-year-old constructing that was the unique headquarters of The New York Instances is present process a $500 million makeover. The renovation is pitching lots of the identical buzzwords as TSX has: immersive, technology-enabled mixing with the digital world.

Brooklyn Chop Home, the Manhattan steakhouse, simply opened an outpost in Instances Sq. that plans to offer V.I.P. visitors entry to an “NFT cellar” later this 12 months. An early draft of the menu choices confirmed a $1 million membership stage that gives chauffeurs to choose up visitors from their personal jets, however the restaurant mentioned it was now revamping the concept, pending approval from attorneys.

However taking a look at a listing of restaurant openings in Instances Sq., some issues won’t ever change.

Elevating Cane’s, a hen fingers chain, introduced a large new flagship in Instances Sq.. Jollibee and Popeyes Louisiana Kitchen, two different fried hen chains, are additionally increasing there.

It helps that retail rents in Instances Sq. have fallen beneath $1,200 per sq. foot for the primary time in a decade, based on the true property firm CBRE Group. Rents had been round $2,000 per sq. foot proper earlier than the pandemic.

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Not one of the bustle bothers Bianca Reyes, who works in authorized advertising and comes into her Instances Sq. workplace each week.

Her morning commute is greater than two hours as a result of she moved to upstate New York in the course of the pandemic. She generally books a lodge room in the course of the week to keep away from the lengthy practice trip, which she mentioned was nonetheless cheaper than paying New York Metropolis rents.

However for her, the enduring enchantment of Instances Sq. is that it’s a spot to eat, to drink, to assemble. And the pandemic gave her a recent sense of urgency to reap the benefits of all of it.

“We’re dwelling in an age of uncertainty,” Ms. Reyes mentioned. “To the extent that the entire Broadway exhibits and eating places may very well be closed tomorrow, you wish to ensure you take pleasure in it.”

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How Poshmark Is Trying to Make Resale Work Again

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How Poshmark Is Trying to Make Resale Work Again

Lauren Eager got into thrifting in high school. It was a way to find cheap, interesting clothes while not contributing to the wastefulness of fast fashion.

In 2015, in her first year of college, she downloaded the app for Poshmark, a kind of Instagram-meets-eBay resale platform. Soon, she was selling as well as buying clothes.

This was the golden age of online reselling. In addition to Poshmark, companies like ThredUp and Depop had sprung up, giving a second life to old clothes. In 2016, Facebook debuted Marketplace. Even Goodwill got into the action, starting a snazzy website.

The platforms tapped into two consumer trends: buying stuff online and the never-gets-old delight of snagging a gently used item for a fraction of the original cost. During the Covid-19 pandemic, as people cleaned out their closets, enthusiasm for reselling intensified. It was so strong that Poshmark decided to go public. On the day of its initial public offering in January 2021, the company’s market value peaked at $7.4 billion, roughly the same as PVH’s, the company that owns Calvin Klein and Tommy Hilfiger, at the time.

Then, the business of old clothes started to fray.

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Using the Poshmark app, Ms. Eager and others said, started to feel like trying to find something in a messy closet. The app was cluttered with features that did not work or that she did not use, and it felt “spammy,” she said, sending too many push notifications.

Many platforms found selling used items hard to scale. Now, online resellers are trying to recalibrate. Last year, ThredUp decided to exit Europe and focus on selling in the United States. Trove, a company that helps brands like Canada Goose and Steve Madden resell their goods, purchased a competitor, Recurate. The RealReal, a luxury consignor, appointed a new chief executive as the company tried to improve profitability.

Poshmark is undergoing perhaps the biggest reinvention. In 2023, Naver, South Korea’s biggest search engine as well as an online marketplace, bought the company in a deal valued at $1.6 billion, less than half its IPO price.

Something of a mash-up of Google and Amazon, Naver is betting it can rebuild Poshmark, which has 130 million active users, with the same technology that made Naver dominant in its own country.

It may also help breathe new life into the resale market. Analysts think the resale fashion market still has room to grow in the United States, with revenue expected to increase 26 percent to $36.3 billion by 2028, according to the retail consultancy firm Coresight Research.

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New legislation in California could help. The law, passed last year, requires brands and retailers that operate in the state and generate at least $1 million to set up a “producer responsibility organization” to collect and then reuse, repair or recycle its products. Resale platforms like ThredUp and Poshmark could be in a position to help brands carry out that mandate.

At the moment, though, Naver’s focus for Poshmark is more basic: Make it a better place to sell and shop. The company has the “operating know-how” to do that, said Philip Lee, a founder of the media outlet The Pickool, which covers both South Korean and U.S. tech companies.

“They’re trying to renovate Poshmark and then expand the market share,” he said.

Poshmark, which is based in Redwood City, Calif., was founded in 2011 by Manish Chandra, an entrepreneur and former tech executive, and three others. In trying to expand, Poshmark faced a problem common to resellers: Capturing the excitement of the secondhand-shopping treasure hunt while not frustrating buyers with an endless scroll. The company knew it needed better search, as well as interactive elements that gave people more reasons to come beyond paying $19 for a J. Crew sweater.

For its part, Naver was looking for ways to push beyond South Korea, where its commerce and search businesses were already mature. The growing online resale market in the United States presented an opportunity, and also gave the company access to the largest consumer market in the world.

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Commerce is a big growth engine for us,” Namsun Kim, Naver’s chief financial officer, said. And the peer-to-peer sector, where users sell to one another, was still in its infancy, with room to expand. But, Mr. Kim added, “it’s a more challenging segment, and that’s why it’s harder for a lot of the larger players to enter.”

There are two common business models for resale: peer-to-peer and consignment. With consignment, a platform collects and redistributes physical goods. Poshmark uses the peer-to-peer model, which relies on scores of people — many of them novices — haggling over prices and then mailing items to one another. This decentralization can be a headache for brands, which like to maintain a certain level of control of their products. And platforms like Poshmark must make buyers comfortable with trusting the sellers on their site.

Before the Naver purchase, it was difficult to push through needed technological changes, said Vanessa Wong, the vice president of product at Poshmark.

“I would always talk to my engineers and ask, ‘What if we do this or do that?’ They’re like, ‘That’s hard. The effort’s really high,’” Ms. Wong said.

Naver’s purchase offered both the investment and the expertise to pull off the changes. Founded in 1999, the company is everywhere in South Korea.

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“We are not just a simple search technology or A.I. service,” said Soo-yeon Choi, the chief executive of Naver, whose headquarters are near Seoul. The company, she said, “alleviates the frustrations of people, which is what is needed to help growth.”

Search built Naver “into the massive power that they are in Korea,” said Mr. Chandra, who stayed on as chief executive after Naver’s purchase. It was the top priority when the company bought Poshmark.

Several new elements for users and sellers have been introduced. With a tool called Posh Lens, users can take a photo of an item and, using Naver’s machine-learning technology, the site populates listings that are the same or similar to the shoe or tank top that they’re searching for. A paid ad feature for sellers called “Promoted Closet,” pushes listings higher on customer feeds.

Poshmark also introduced live shows, some of which are themed, to draw in the TikTok generation and increase engagement. One party auctioned off clothing previously worn by South Korean celebrities, a connection that was made with the help of Naver.

Still, the resale market is going through growing pains and has not quite found its footing since the height of the pandemic. It’s not clear whether the changes taking place at Poshmark will be enough. In May, Mr. Kim, Naver’s finance chief, said in an earnings call that Poshmark’s profitability was improving, but by November, the company was cautioning that growth had slowed because of weakness in the peer-to-peer resale market in North America.

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The company has already done some backpedaling on unpopular decisions.

In October, Poshmark introduced a new fee structure, which increased costs for buyers. Sellers, fearing that higher costs would make consumers bolt, revolted. Within weeks, the company scrapped the new fee structure.

And there are still user headaches: tags and keywords that help users find what they’re looking for can be miscategorized. Sellers sometimes tag their products incorrectly to get more eyeballs on their less popular products. (Hard-to-offload Amazon leggings, for example, may be listed as Free People apparel.)

The company is beta testing changes with its frequent sellers — people like Alex Mahl, who sells thousands of dollars in apparel on the site each year. And within dedicated Facebook groups related to Poshmark, there’s a lot of chatter about the changes that sellers and buyers would still like to see.

“The only way for it to do well is there’s going to be constant changes,” Ms. Mahl said about the tweaks on Poshmark. “If you were just on an app that never changed — one, it would be boring, and two, the opportunity to just do better wouldn’t be there.”

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One recent morning, Ms. Eager, the seller who joined Poshmark back in college, was pleasantly surprised to find that the app had some new features she actually liked. She snapped a photo of her Aerie gray tank top with Posh Lens. Within seconds, the app populated listings of similar products. It was so much better than conjuring up the adjectives needed to describe it.

“Love it,” Ms. Eager exclaimed.

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When receipts of home renovations are lost, is the tax break gone too?

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When receipts of home renovations are lost, is the tax break gone too?

Dear Liz: I have sold my family home recently after almost 50 years. I had done lots of improvements throughout those years. Due to a fire 15 years ago, all the documentation for these improvements has been destroyed. How do I document the improvements for the capital gains tax calculation?

Answer: As you probably know, you can exclude $250,000 of capital gains from the sale of a principal residence as long as you own and live in the home at least two of the previous five years. The exclusion is $500,000 for a couple.

Once upon a time, that meant few homeowners had to worry about capital gains taxes on the sale of their home. But the exclusion amounts haven’t changed since they were created in 1997, even as home values have soared. Qualifying home improvements can be used to increase your tax basis in the home and thus decrease your tax bill, but the IRS probably will demand proof of those changes should you be audited.

You could ask any contractors you used who are still in business if they will provide written verification of the work they performed, suggests Mark Luscombe, principal analyst for Wolters Kluwer Tax & Accounting. You also could check your home’s history with your property tax assessor to see if its assessment was adjusted to reflect any of the improvements.

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At a minimum, prepare a list from memory of the improvements you made, including the year and the approximate cost. If you don’t have pictures of the house reflecting the changes, perhaps friends and relatives might. This won’t be the best evidence, Luscombe concedes, but it might get the IRS to accept at least some increase in your tax basis.

If you’re a widow or widower, there’s another tax break you should know about. At least part of your home would have gotten a step-up in tax basis if you were married and your co-owner spouse died. In most states, the half owned by the deceased spouse would get a new tax basis reflecting the home’s current market value. In community property states such as California, both halves of the house get this step-up. A tax pro can provide more details.

Other homeowners should take note of the importance of keeping good digital records. While documents may not be lost in a fire, they may be misplaced, accidentally discarded or (in the case of receipts) so faded they’re illegible. To make sure documents are available when you need them, consider scanning or taking photographs of your records and keeping multiple copies, such as one set in your computer and another in a secure cloud account.

When an employee is misclassified as contractor

Dear Liz: A parent recently wrote to you about a son who was being paid as a contractor. I know someone else who got a job that did not “take out taxes from his paycheck.” Such workers believe they are pocketing more money, but unfortunately, too many do not know about the nature of withholding. They only learn if they choose to file for their expected refund, but instead discover an exorbitant tax liability that a paycheck-to-paycheck worker cannot pay.

The sad fact is that many of these employers improperly classify their workers, who are truly employees, as independent contractors! And they do this to avoid paying their own portion of Social Security and unemployment taxes and also workers compensation insurance.

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If workers believe that they have been misclassified (the IRS website provides all criteria), they can file IRS Form SS-8 and Form 8919, which will allow them to pay only their allocated half of their Social Security taxes. Hopefully the IRS will then contact these employers to correct their wrong classifications. And finally, it should be a law that, when hired, all true independent contractors should be given a clear form (not fine print on their employment agreements) that informs them of their status and the need to make estimated tax payments.

Answer: A big factor in determining whether a worker is an employee or contractor is control. Who controls what the worker does and how the worker does the job? The more control that’s in the employer’s hands, the more likely the worker is an employee.

However, the IRS notes that there are no hard and fast rules and that “factors which are relevant in one situation may not be relevant in another.”

The form you mentioned, IRS Form SS-8, also can be filed by any employer unsure if a worker is properly classified.

Liz Weston, Certified Financial Planner®, is a personal finance columnist. Questions may be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact” form at asklizweston.com.

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Inside Elon Musk’s Plan for DOGE to Slash Government Costs

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Inside Elon Musk’s Plan for DOGE to Slash Government Costs

An unpaid group of billionaires, tech executives and some disciples of Peter Thiel, a powerful Republican donor, are preparing to take up unofficial positions in the U.S. government in the name of cost-cutting.

As President-elect Donald J. Trump’s so-called Department of Government Efficiency girds for battle against “wasteful” spending, it is preparing to dispatch individuals with ties to its co-leaders, Elon Musk and Vivek Ramaswamy, to agencies across the federal government.

After Inauguration Day, the group of Silicon Valley-inflected, wide-eyed recruits will be deployed to Washington’s alphabet soup of agencies. The goal is for most major agencies to eventually have two DOGE representatives as they seek to cut costs like Mr. Musk did at X, his social media platform.

This story is based on interviews with roughly a dozen people who have insight into DOGE’s operations. They spoke to The Times on the condition of anonymity because they were not authorized to speak publicly.

On the eve of Mr. Trump’s presidency, the structure of DOGE is still amorphous and closely held. People involved in the operation say that secrecy and avoiding leaks is paramount, and much of its communication is conducted on Signal, the encrypted messaging app.

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Mr. Trump has said the effort would drive “drastic change,” and that the entity would provide outside advice on how to cut wasteful spending. DOGE itself will have no power to cut spending — that authority rests with Congress. Instead, it is expected to provide recommendations for programs and other areas to cut.

But parts of the operation are becoming clear: Many of the executives involved are expecting to do six-month voluntary stints inside the federal government before returning to their high-paying jobs. Mr. Musk has said they will not be paid — a nonstarter for some originally interested tech executives — and have been asked by him to work 80-hour weeks. Some, including possibly Mr. Musk, will be so-called special government employees, a specific category of temporary workers who can only work for the federal government for 130 days or less in a 365-day period.

The representatives will largely be stationed inside federal agencies. After some consideration by top officials, DOGE itself is now unlikely to incorporate as an organized outside entity or nonprofit. Instead, it is likely to exist as more of a brand for an interlinked group of aspirational leaders who are on joint group chats and share a loyalty to Mr. Musk or Mr. Ramaswamy.

“The cynics among us will say, ‘Oh, it’s naïve billionaires stepping into the fray.’ But the other side will say this is a service to the nation that we saw more typically around the founding of the nation,” said Trevor Traina, an entrepreneur who worked in the first Trump administration with associates who have considered joining DOGE.

“The friends I know have huge lives,” Mr. Traina said, “and they’re agreeing to work for free for six months, and leave their families and roll up their sleeves in an attempt to really turn things around. You can view it either way.”

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DOGE leaders have told others that the minority of people not detailed to agencies would be housed within the Executive Office of the President at the U.S. Digital Service, which was created in 2014 by former President Barack Obama to “change our government’s approach to technology.”

DOGE is also expected to have an office in the Office of Management and Budget, and officials have also considered forming a think tank outside the government in the future.

Mr. Musk’s friends have been intimately involved in choosing people who are set to be deployed to various agencies. Those who have conducted interviews for DOGE include the Silicon Valley investors Marc Andreessen, Shaun Maguire, Baris Akis and others who have a personal connection to Mr. Musk. Some who have received the Thiel Fellowship, a prestigious grant funded by Mr. Thiel given to those who promise to skip or drop out of college to become entrepreneurs, are involved with programming and operations for DOGE. Brokering an introduction to Mr. Musk or Mr. Ramaswamy, or their inner circles, has been a key way for leaders to be picked for deployment.

That is how the co-founder of Loom, Vinay Hiremath, said he became involved in DOGE in a rare public statement from someone who worked with the entity. In a post this month on his personal blog, Mr. Hiremath described the work that DOGE employees have been doing before he decided against moving to Washington to join the entity.

“After 8 calls with people who all talked fast and sounded very smart, I was added to a number of Signal groups and immediately put to work,” he wrote. “The next 4 weeks of my life consisted of 100s of calls recruiting the smartest people I’ve ever talked to, working on various projects I’m definitely not able to talk about, and learning how completely dysfunctional the government was. It was a blast.”

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These recruits are assigned to specific agencies where they are thought to have expertise. Some other DOGE enrollees have come to the attention of Mr. Musk and Mr. Ramaswamy through X. In recent weeks, DOGE’s account on X has posted requests to recruit a “very small number” of full-time salaried positions for engineers and back-office functions like human resources.

The DOGE team, including those paid engineers, is largely working out of a glass building in SpaceX’s downtown office located a few blocks from the White House. Some people close to Mr. Ramaswamy and Mr. Musk hope that these DOGE engineers can use artificial intelligence to find cost-cutting opportunities.

The broader effort is being run by two people with starkly different backgrounds: One is Brad Smith, a health care entrepreneur and former top health official in Mr. Trump’s first White House who is close with Jared Kushner, Mr. Trump’s son-in-law. Mr. Smith has effectively been running DOGE during the transition period, with a particular focus on recruiting, especially for the workers who will be embedded at the agencies.

Mr. Smith has been working closely with Steve Davis, a collaborator of Mr. Musk’s for two decades who is widely seen as working as Mr. Musk’s proxy on all things. Mr. Davis has joined Mr. Musk as he calls experts with questions about the federal budget, for instance.

Other people involved include Matt Luby, Mr. Ramaswamy’s chief of staff and childhood friend; Joanna Wischer, a Trump campaign official; and Rachel Riley, a McKinsey partner who works closely with Mr. Smith.

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Mr. Musk’s personal counsel — Chris Gober — and Mr. Ramaswamy’s personal lawyer — Steve Roberts — have been exploring various legal issues regarding the structure of DOGE. James Burnham, a former Justice Department official, is also helping DOGE with legal matters. Bill McGinley, Mr. Trump’s initial pick for White House counsel who was instead named as legal counsel for DOGE, has played a more minimal role.

“DOGE will be a cornerstone of the new administration, helping President Trump deliver his vision of a new golden era,” said James Fishback, the founder of Azoria, an investment firm, and confidant of Mr. Ramaswamy who will be providing outside advice for DOGE.

Despite all this firepower, many budget experts have been deeply skeptical about the effort and its cost-cutting ambitions. Mr. Musk initially said the effort could result in “at least $2 trillion” in cuts from the $6.75 trillion federal budget. But budget experts say that goal would be difficult to achieve without slashing popular programs like Social Security and Medicare, which Mr. Trump has promised not to cut.

Both Mr. Musk and Mr. Ramaswamy have also recast what success might mean. Mr. Ramaswamy emphasized DOGE-led deregulation on X last month, saying that removing regulations could stimulate the economy and that “the success of DOGE can’t be measured through deficit reduction alone.”

And in an interview last week with Mark Penn, the chairman and chief executive of Stagwell, a marketing company, Mr. Musk downplayed the total potential savings.

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“We’ll try for $2 trillion — I think that’s like the best-case outcome,” Mr. Musk said. “You kind of have to have some overage. I think if we try for two trillion, we’ve got a good shot at getting one.”

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