Ask Dr. Per Cap

Ask Dr. Per Cap is a program funded by First Nations Development Institute with assistance from the FINRA Investor Education Foundation. Nimiipuu Community Development is happy to share this column as partner with Native Financial Learning Network funded by Northwest Area Foundation.

More Covid-19 Relief

Dear Dr. Per Cap: 

How do I know if I’m eligible to receive the new Covid-19 monthly relief payments that were just announced?


Arizona Mom 

Dear Arizona Mom

It’s official.  Starting in July the IRS will begin making monthly payments to families that qualify for a recently expanded child tax credit.  This Covid-19 related benefit is part of the American Rescue Plan, a nearly $2 trillion dollar relief package signed into law in March.  It’s the latest round of numerous federal relief packages since the virus hit last spring.

The first step to qualify is to file a 2020 tax return.  The filing deadline has been extended to May 17th but don’t wait that long.  The credit is based on your 2020 federal return so the sooner you file the sooner you can qualify for the direct payments.

The child tax credit is nothing new; however, it’s ordinarily capped at $2,000 a year for each child under seventeen for families under a certain income level.  The new and expanded credit increases this amount to $3,600 for each child six and under and $3,000 for older kids of families earning less than $75,000 a year or $150,000 for married couples.

Similar to the three Covid-19 Economic Impact payments, the last of which was paid earlier this year, the amount of the expanded child tax credit is gradually reduced for higher income families and completely phases out for families earning $95,000 annually or $170,000 for married couples.

As mentioned, a unique feature of the credit is that rather than wait until next year to claim it, payments begin in July.

Also remember that this is a one year expansion of the child tax credit that only applies to 2021.  For families that qualify for the full credit monthly payments will amount to $300 for each child six and

under and $250 for ages seven and up.  Payments will be made by check, direct deposit, or debit card through December.

If that math doesn’t add up, it’s because it doesn’t.  Six months of payments only equals $1,500 and $1,800 respectively or half the full credit amount.  The remaining half will be claimed next year when filing your 2021 tax return.

As always, keep tabs on your available tribal Covid-19 benefits too.  The American Rescue Plan provides specific funds to support tribal nations in their ongoing efforts to provide expended services and benefits to tribal citizens.  In the meantime stay safe.  We’re in a lot better shape than a year ago but we need to stay vigilant.

Family Matters

Dear Dr. Per Cap: 

My cousin has a habit of not paying back loans, but just asked to borrow more money.  How can I help without getting burned? 


Twice Burned

Dear Twice Burned:

I’ve learned over the years that money lent to friends and family has a bad track record of not getting paid back in full, not getting paid back on time, or a combination of both. Let me share a little story that I hope offers a fair solution.

About ten years ago a really good friend was in a pinch and asked me for a loan.  He wanted to borrow more money than I felt comfortable lending so I offered the following alternative.  Rather than extend a personal loan I’d give him a lesser amount of money.  That’s right.  I offered to give him half the amount he wanted to borrow.  He was grateful but said he didn’t want charity and would pay me back.

I made a quick detour down tough love highway.   

“Look” I said in a respectful yet serious tone.  “When you come to me and ask for a no interest, no collateral, nothing down loan without a formal agreement – just your word and a hand shake.  I’m sorry, but in my book that’s charity.”

I then told him that I wouldn’t risk our friendship over a loan and that I’d sleep a whole lot better giving him money that I knew I’d never see again rather than lending money with so many uncertainties.  I also said I’d only do it one time.

He saw my point of view, accepted the gift, and we’ve remained great friends ever since.

I know this solution might not work for everyone.  For starters you need to decide how much money you can afford to give rather than lend.  50%, 30%, or 10% of the ask are all fair offers, but that’s for you to decide.

I swear by this strategy and use it whenever the need arises.  I really think offering a no strings attached cash gift while still requiring a friend or family member to take responsibility for securing the remaining money forces the person to think through their dilemma a little more thoroughly and consider other options – do I really need to borrow such a large amount, is it possible to earn some extra cash on my own?

Give this one a try and remember – no amount of money can buy a great friendship but a broken promise can destroy one.

Why Tip?

Dear Dr. Per Cap: 

I’m a server at a restaurant and get frustrated when Native customers don’t tip. I work hard to provide good service and it’s not only insulting but tough financially when my own people stiff me. What’s up with Natives who don’t tip?

Signed, Tips Please

Dear Tips,

Although I’ve heard this complaint before, calling Native people out publicly as bad tippers is a stereotype we want to avoid. I also worked for tips back in the day and it was a common gripe among coworkers that Native people were notoriously bad tippers, even when the server was Native too. I always tried to not take it personally because some customers tipped insanely well which balanced out the stiffs.

I really don’t know why some Natives have a reputation for not tipping although I have heard friends say they don’t feel obligated to pay extra for a meal by leaving a tip. I also think there might be some confusion over the unwritten rules of tipping. You’re expected to tip a server, a food delivery driver, and a blackjack dealer for a winning hand. However, you don’t tip a mail carrier for delivering your tax refund check or a janitor for throwing out the trash. When Uber started the ride hailing revolution a few years ago they boasted a no tip policy, but later switched gears and now encourage riders to tip.

Then again maybe some Natives are just taking penny-pinching to the extreme and need to be reminded to leave a few bucks on the table after a good meal. There I said it.

I’ve also learned that people who have worked for tips tend to be good tippers themselves, probably because they understand the tough nature of many service jobs. Moreover, unless someone has worked in a restaurant they might not know that many servers are paid below minimum wage under the assumption that tips will more than make up the difference. This explains why restaurant employees who serve food earn about three times as much as their coworkers who prepare it. However, this could soon change as a new proposal to raise the federal minimum wage to $15 an hour would also eliminate a sub-minimum wage as low as $2.13 an hour for millions of tipped employees. 

Not sure how I feel about that and I’m not alone. A few years ago a New York City restaurant owner started a “Hospitality Included” aka no tipping policy at his restaurants. However, the results were mixed because he lost customers when he had to raise prices so he could pay his employees more to make up for their lost tips. So a big concern with a higher federal minimum wage is that prices at all restaurants will rise or jobs will be cut as restaurants run leaner staffs to reduce costs.

While I’m certainly a fan of a livable wage I must admit I’m getting a little tired of the tipping culture encroaching on more and more services. I get annoyed when I see tip jars popping up at cash registers everywhere and I steer clear of small coffee shops and food trucks that put your charges on an iPad with a giant “Tip Me” button. Also seems like the percentage we’re supposed to tip keeps going up…15%, 18%, 20%. Where does it stop? Tip inflation is one reason I find myself eating a lot more meals at home these days.

So let’s leave it at this. Regardless of how you feel about the nature of tipping we all need to realize that for better or worse tipping your server is expected when dining out. You pay for the meal and you tip for the service.  So unless your service is absolutely horrible let’s all try to show a little financial appreciation for the person who brings us our food.

Jobless Benefits Fraud

Dear Dr. Per Cap:

I received a 1099-G that lists over $3,000 in unemployment benefits paid by the state in 2020.  I didn’t receive any unemployment last year.  What should I do?


Working through the Pandemic

Dear Working,

Report this as fraud through your state unemployment agency website immediately.  There’s been a huge surge in unemployment insurance fraud nationwide.

These scams are connected to increased unemployment benefits that many states paid to workers who were laid off or furloughed during the pandemic.  With lots of stimulus money available and states struggling to process an unprecedented number of claims, due diligence wasn’t always up to speed.  Criminals took advantage and filed for unemployment using stolen identities.  Crooks steal the benefits – victims get stuck with the bills.

In addition to identity theft you could also be on the hook for taxes owed on the amount listed on that 1099-G, the IRS form to report Certain Government Payments; i.e. unemployment insurance.  A lot of folks don’t realize that jobless benefits are usually considered taxable income – even the expanded benefits related to Covid-19.  The good news is that the latest relief bill the President signed in March allows the first $10,200 of unemployment benefits per spouse to be tax exempt for households that made less than $150,000 last year.

However, that doesn’t carry over to all state income taxes only federal.  Currently thirteen states that include Colorado, Idaho, Minnesota, Hawaii, and New York aren’t excluding unemployment compensation from taxes.  So if you live in one of these states pay extra close attention.  

The IRS recommends people do not include income from bogus 1099-G’s on tax returns and to request corrected forms from your state.  Should you actually need to file for unemployment in the future, this issue could come back to haunt you if you don’t have corrected forms.  The federal tax deadline along with most state tax deadlines has been extended to May 17th so you’ve got an extra month this year to get this all squared away.

It is also a good idea to check your credit report, if you haven’t done so recently, for suspicious activity and consider a credit freeze to prevent someone from applying for a loan or credit card in your name.  

Return Fraud

Dear Dr. Per Cap: 

Someone approached me online with an offer to buy my Amazon account.  It seemed kind of sketchy so I didn’t reply.  Why would someone want to buy an account when they can just open their own?


Pueblo Shopkin

Dear Pueblo Shopkin

People buying Amazon accounts is a shady practice linked to a fast growing scam called “return fraud.”  It’s especially targeted to online retailers for whom it’s often cheaper to let customers keep wrong or damaged items than to process a return.  But before I delve into details I need to add a warning label to this column – Don’t try this at home!

For anyone living on another planet we’re in the midst of a giant E-commerce boom.  This past holiday season the postal service and delivery companies handled a record three billion packages, a modern economic phenomenon being dubbed “Shipageddon.”  Well, now that Santa has set sail back to the North Pole a lot of that merchandise is being returned.  Like the size XXL sweatpants he left me under the tree.

Hey Santa – super baggie clothes haven’t been cool since the aughts when Obama wisecracked “Some people don’t want to see your underwear and I’m one of them.”

If you misuse the following information I’ll call the elf cops, for real.  Return fraud can be shockingly easy to get away with.  A person just orders something online then says it never arrived or was defective.  Not a huge stretch considering how much stuff delivery drivers leave on the porch these days.  The scammer pushes for a refund hoping the seller won’t want the goods sent back.  This can happen with merchandise that costs a lot to ship relative to its price or with bulky stuff that’s difficult to ship.

Naturally, businesses are on to this scam.  Moreover, the policy of letting customers keep refunded merchandise, known in the industry as field scrapping, is nothing new.  It’s just a lot more common now with so many more returns.  Amazon uses computer algorithms to detect return fraud which are more likely to flag recently opened accounts.  And there you have it.  There’s a whole secondary market for dishonest folks looking to buy older, well established accounts to run returned merchandise scams.  

You did the right thing by ignoring that solicitation.  Here’s wishing you a safe, happy, and honest New Year!