What Are The IRS Tax Filing Changes For 2020?
The Article Reviews The Most Important Updates To IRS Code
Transcript For Tax Answers Advisor
Marcelino: Hi there, and good day. This is Marcelino Dodge with The Tax Answers Advisor. Just a quick quote here that Plato said, “When there is an Income Tax, that just man will pay more, and the unjust man will pay less, on the same amount of income.” That is, believe it or I believe it’s really true, because men. Or people will come up with different amounts, I owe, on the same amount of income, it’s amazing what happens in this business. If you are interested in more information about me and my services go to the home page of our website at Cash Track Financial.
So what we’re going to go ahead and do is stop and take a look and thank you first of all, for those who are listening around the world here in the US, China, Germany, Ireland and other lands. We certainly appreciate everyone looking into this and getting into it, we certainly appreciate your taking the time to listen to this podcast as a few updates as we look around the IRS this week is having National Tax Security Awareness Week.
And one of those suggestions is does your preparer or the person preparing your tax return use multi factor authentication. Now, that is an excellent security tool to be using which is a tool that is used in this office for our logging into various programs which basically not only is a password required but, either you need to have, and many people have this. Especially a lot of banks do it where they’ll have text you like a code, or on a lot of this factors that I use will use like some type of authentication app, which will then you pull up on your phone, and you’ll enter in that number right off of your phone.
Which I find that to me works really good because it’s usually faster than the text messaging, you don’t have to wait for the messages coming because it’s just right there on your phone and it’s excellent because it is very unlikely that anyone trying to hack into a system. Will not only have get your password, but also have your device so, it’s a very excellent thing and it’s some good to ask your tax preparer if they use that type of action.
Also this is a good time of year. If you have moved during the year. It is good to notify the IRS, there’s a form you can download from irs.gov, let them know get that done. That way if there’s any communication between now and when you file your taxes. You have it ready. And I hear something that I was really excited about so far, is the fact that the IRS expanding the ID Protection opt-in program to taxpayers nationwide.
While the ID Protection Program is something I’ve used for years with clients, because of identity theft issues that have happened with them, because nothing is more irritating you go to file your tax return and then you get a rejection on the electronic filing, because it says, someone’s already filed using your Social Security number. And so, we’ve had to fill out a form, submit ID documents, and I have several clients who actually get this six-digit pin each year from the IRS that they have to have.
Whether they file their tax return on paper, and you have to have it on electronic filing, because what happens if it’s not there is that it will reject, and you’ll have to get that pin number from the IRS. Now that used to be previously only available if you actually had an identity theft case now, the IRS though as analysis actually came out today, that they’re gonna allow taxpayers who can verify their identity, beginning in 2021 to go ahead and opt in to the ID Protection Program to give you another layer of protection.
Now I’m gonna explain this to the people who, to whom I serve, and just let him know it’s an option available. It certainly not required, but it gives an additional layer of protection if a taxpayer is really concerned about that. Now going into what our topic today about is in fact of talking about 2020, looking at what happened this year as we prepare for 2021. Now as we take a look and really go after the information for this year, and everything else.
We want to keep in mind that part of what Cash Tracks Financial does is helping ones to adjust through these areas and to understand these changes, so that you as our client doesn’t necessarily need to understand it, but just know that you are getting taken care of, when you’re enrolled in one of our programs here. And so to learn more about these to get a hold of us, you can always visit cashtracksfinancial.com. You can email me at success@cashtracksfinancial.com, or just give a call 844-394-487.
Sep 2020 we thought at the beginning was going to be a simple year. Well, usually election years are pretty simple years but, there were several bills that came through that affect the taxes. There’s also, even today where we have the Tax Cuts and Jobs Act passed in Acts 17 which benefited so many taxpayers on so many levels despite what is often explained out there. It has benefited taxpayers from the 10% tax bracket which are those who have like less than $10,000 a year taxable income, all the way up to the millionaires and billionaires.
It’s benefited everybody, no matter what anybody says in the media, it’s benefited a large swath of taxpayers and I know that for a fact. Because, I’ve seen lower tax bills on just about every single one of my clients, so that was a tremendous, tremendous bill that did wonderful things, especially when it takes tax bracket, from 15%, down to 12%. That’s a 30% tax cut. So, don’t let anybody tell you different. That it only benefited people of a certain $400,000 more. Don’t let anybody tell you that, it benefited people of every income level. This year, we had the Cares Act the Coronavirus Relief Act which also affected many areas, and also had much information that we’re going to consider some of that today and the Secure Act also, is an another act that affects a lot of that was actually passed in 2019 but yet still affects us today.
And certainly we’re going to consider these. First of all, looking at how our 2020 tax returns are going to be affected as we looked ahead to planning into 2021 but there’s some things to keep in mind just to be able to make some adjustments. Our tax rates, for example, the Tax Cut and Jobs Act. Those range now anywhere from 10% on the lower end up to 37%. So that’s where those rates come in, which is, which varies according to income just too many figures to try to go through on a program like this but yet, that’s where the writing from and a lot of people benefit from it.
As I mentioned earlier, capital gains taxes. So if you have some Capital Gains that you’ve made during the year which can is very possible, you can have anywhere from 0% Capital Gains tax rate up to 20%, capital gains tax rate. So, those are still there and it’s really interesting because depending on your tax bracket. I’ve had some people actually make several $1000 on a capital gain on sale of a property, and yet pay no capital gains tax just because of where their taxable income is and where their tax bracket is so that that does happen, I know that I’ve done it several times.
Now, because of the Tax Cut and Jobs Act, we still have a $0 dependency exemption that’s actually going to be in effect under current law through 2025, but yet of course as remember they also doubled the standard deductions and there’s a lot of credits, particularly the Child Tax Credit, which they happen from 1000 up to $2,000 per child age 16 and under. Now, I get asked this question. And I’m confused about it, frankly, to this day and all the years I’ve been doing taxes.
Where did they come up with this random age of 16 because people are still in the home, usually 17 and 18. Anyway, but that’s what the law is who knows? Now of the $2,000, that’s a $1,400 of that is refundable, which I have some people that actually get the refundable part of that which is a very nice provision, and certainly that can once can very much, so take advantage of. And then for the 17 and 18 year olds that are still in your home, as well as other dependents that you may qualify it’s called them other dependent credit, that’s a $500 credit.
But yet, it also phases out starts phasing out when you have income $200,000 or more and adds up depending on filing status as well so that’s also something that’s affected from 2020 effects 2020 from the Tax Cut, and Jobs Act or medical expenses, which is was a real it was a good fix this went goes. This because of Tax Cut and Jobs Act actually went out, that actually fixed this I’m sorry, before the Tax Cut and Jobs Act. The medical expenses were itjhay had a 10% limitation.
And that was prior to the Affordable Care Act but, that was because of the Affordable Care Act, I’m sorry, before the Affordable Care Act, that was at 7.5%. Well, the Tax Cut and Jobs Act did a very nice law change, making a 7.5% limitation on medical expenses for 2020. Now, while we do encounter once again because of this, of the doubling of the standard deduction is that not as many people are taking medical expenses.
So what you want to make sure you’re doing if you’re doing medical expenses is try to do as much as you can that you’re paying out of pocket for a year. So this year, there could be some possibilities with the, with the pandemic and the Coronavirus treatments and maybe you had to maybe put something off into 2021.
So it’s something to maybe, perhaps plan for be trying to punch those expenses in the 2021, if at all possible, because of how some medical treatments were delayed because of the Coronavirus. So, that’s something to possibly consider and look at, to maybe be bunching those. Now medical expenses, also includes not just your doctor’s, your hospitals, prescription drugs, chiropractors, dental, vision. It also includes what you pay for out of pocket, health insurance.
Now I do know there’s some people. And I have some clients who do not go and buy their health insurance on the exchange, they go and buy it direct from a company so they don’t worry about the tax credits but they go and buy it directly from a company and they pay that company for directly for their health insurance.
And as those amounts could help them make good go up to that 75 percent and maybe, depending on other medical expenses, maybe they’ll be able to actually take a deduction or be able to itemize their deductions with medical expenses and other expenses that come in. Which one of those, of course is the state and local income taxes are state and local taxes, which has been a source of big controversy with some states because that’s capped at $10,000 per year.
Which for some states, I can see where that can be an issue because they do have perhaps more income taxes or higher property taxes, other states. It’s not so much of an issue. So, it just kind of varies, what state you’re in, and what taxes you are whether you’re in a high tax state or a low tax state, that can be an issue but if you have those amounts that can certainly get you closer to the standard deduction. Maybe you can be able to itemize our more mortgage interest deduction, that is for buying a home, that’d be up to $750,000.
What you can deduct in mortgage interest which in some of these cases obviously, you buy a home for a few $100,. You probably have enough mortgages that’ll take you beyond whatever your standard deduction is for the year, depending on your filing status. And actually that’s for mortgages after December 15th 2017. So just a little thought there to keep in mind now also, one other item from the tax that changed this year as a result of the law changes is our charitable donations.
Yes, with charitable donations, we keep in mind that up to $300 this year, because that was one of the changes that came into this year is that you can deduct, it’s called an above the line deduction cash deduction, it’s not donations of clothing or other items that you donated to a charity or physical items but it’s cash donations, up to $300. That’s per return by the way up to $300 for individuals who do not itemize, which is going to be the vast majority of taxpayers who will not be itemizing.
Thus, you will be able to take that. Now if you do itemize, you have to take it as a part of your itemized deduction. And of course, we keep in mind there’s still a $250 deduction for educators, which is very nice deduction. As well it’s a small one but, you know hey every little, you can dig is, is definitely worth that we want to also keep in mind that, another above the line deduction, which certainly encourage one to take care of, take advantage of as much as they can, depending on your employment status and other eligibility is make your IRA contribution for the year.
You have till April 15th of 2021 to actually make your contribution for 2020. And then some other items that keep coming out is that if you by chance. This year, see where it was that. If you have a distribution you have taken from your IRA for a new addition to the family, so if you had a child during this year, and one opinion I have is that, as a result of many people stay in homes that we may have a baby boom coming up. So, this is going to be something to keep, keep everybody in mind and we may have this start starting here in December.
So, if you happen to be having a new addition to the family. You can take a distribution from your retirement plan of up to $500, and you will not pay the 10% penalty. That is certainly very nice thing you pay regular income tax, but not the additional 10%. So that is something very nice that they also allowed within the law. Another area, to think about is that part of what was allowed or done this year. As a result, we’ll come back to that later. Let’s keep going here.
Disasters, this is another area that fits in this year is with disasters, and casualty losses gotta keep in mind those are in the year of the disaster which, if you have been a victim of one of the hurricanes in particular, and had damage to your home, or other belongings. Now this deduction, mainly does come in if you have not been reimbursed by insurance. Now with that. And you may be able to take it even if you have been reimbursed but it really depends how much you’ve been reimbursed by insurance for a disaster.
So, but if you have it this year you can possibly take a dick sooner here and there’s some other rules that come in, but definitely need to consult with a tax professional like myself to really discuss that and figure out what advantage is going to be better for you on that. Just a reminder a gambling. Some individuals do gamble and they get some losses, and you can take gambling losses up only to what you actually win so just because you lose and you’re a very bad gambler, and you never win.
You can’t take your gambling losses you actually have to have some winnings to be able to take your gambling losses. Also our alimony, as a result of a Tax Cut and Jobs was no longer a deduction for divorce decrees that were executed after December 31th 2018, or remanded after that date. Now even before that. Because alimony was, you could take it as a deduction which those who paid it out. Were taking as a deduction that was income for whoever the ex-spouse was receiving it.
But even before that time, that was a challenge to be able to accurately do that because the divorce decree that talked about that, had to be very specific and had to have some very specific criteria in order to be able to even take the deduction. So, it’s vitally important that we keep in mind, that if you still have a decree that you’re doing alimony on that was dated prior to December 31th, 2018.
Got to make sure it’s worded correctly and I always ask when it comes neither one of those deals that when I visit with some when they talk about that I say, give me a copy of the divorce decree. I need to read it over I need to see how it fits in with tax law, and we’re gonna go ahead and take a break, on that note here. As we return in a couple minutes, this is Marcelino Dodge on The Tax Answers Advisor here on The Voice America Business Channel.
Become our friend on Facebook, post your thoughts about our shows and network on our timeline, visit facebook.com/voiceamerica.
Today’s tax and financial environment is constantly changing tax laws change rapidly, the traditional reactive approach to tax preparation and taxes, no longer works. To deliver the best possible outcomes in today’s world, you need a year-round approach to take advantage of tax law changes, and to pay as little tax as possible. Marcelino Dodge of Cash Tracks Financial helps his clients to implement proactive tax strategies throughout the year to limit his client’s tax liability. Plus, with this year -approach clients can increase their cash flow and be as prepared for the future as they can be. Email Marcelino at success@cash tracksfinancial.com or call 844-394-4287.
Have you become a member yet? Sign up now to become a member of voice America, it’s always free and easy. Plus, you get to take advantage of some great member benefits, get unlimited access to millions of hours of on demand content across all of our channels, keep track of your favorite episodes of shows and hosts in your own customizable library, find out what shows you might be interested in based on your favorites. Plus, you get insider access with our newsletter, membership gives you more. Sign up at voiceamerica.com, and click register at the top right.
Voice America Business Network. The bottom line in business
This is The Tax Answers Advisor with host, Marcelino Dodge. To reach our program today, please call in the number is 1-866-472-5790. That’s 1-866-472-5790. You may also send an email to success@cashtracksfinancial.com. Now, back to The Tax Answers Advisor.
Marcelino: Welcome back to The Tax Answers Advisor. This is Marcelino Dodge on the Voice America Business Channel, really appreciate you listening to the program today as we talk about some of the updates from 2020, as we look at these planning into 2021, as we look forward because we don’t know what’s going to happen after when January comes along. But yet, we’re going to take a look at these things now, perhaps here some planning ideas as well as we just keep in mind that this is what we do at Cash Tracks Financials help you to prepare for the unexpected.
By helping you to know what your goals are and helping to direct you to those goals and yes please. You’re always welcome to contact me at success@cashtracksfinancial.com, or you can call at 844-394-4287. And we can certainly discuss a mutual exploration session in for free just to see if our services or what you’re looking forward to help you to be successful overall. We’re looking at our moving expenses.
Now, just a quick reminder those used to be deductible but now, they’ve since Tax Cut and Jobs Act they’re allowed only for armed forces moving due to some type of change in orders that they receive. Now, we still also have a qualified tuition and fees deduction that’s good through 2020, and one of those items that you know could always end up getting renewed it seems like it goes away and it comes back, such a quite an interesting fact that Congress always makes when they do these.
Now, a very nice provision is that for those who have 529 plans that they’ve been saving mainly for college. Very good provision, which I thought this was a good provision that came out was a $10,000 a year could be used to educate at a public, private, or religious elementary or secondary school. So that is, that is just tremendous that parents have that option available to use a 529 plan, if they’re not wanting to necessarily wait to college, but they can do it for their child. Now, it’s also interesting we keep on 529 plans that the parents always maintain ownership of that and they can alternate, they can change the beneficiary of it.
So if like one child had to set aside for one child for college, they can always move it over to another child. If that child chooses not to go to college so it’s very, very interesting but we just kind of let each parent. With that they decide what they want to do but yeah we can also help of course, setting those up as well. Student loan debt is discharged due to a permanent disability. So, this is nice.
This is a very nice provision it is excluded from income, because many times, student loan debt is discharged you get it back as income, but if you’re permanently disabled is not included in your income, of course you need some type of certification that you are permanently disabled. I haven’t actually encountered this yet, or had someone to have to deal with this but you know, it is something though that is a very nice provision that came out with the Tax Cut and Jobs Act.
And then also, we keep in mind that our current Estate Tax Exclusion is 11,580,000. A lot of the big argument about the Estate Tax Exclusion. So what’s right, what’s wrong but, it’s at 11,000,500 right now. May change depending on what happens in Congress, but that’s where we are right now. As we take a look at some other additional information that came up this year, looking particularly now at the Cares Act.
This is something that is very, very nice provision that came out of it is that if you take an early withdrawal from your retirement plan up to 100,000. This would be if you did this, after March 27th of 2020. Now if you had to do it because of, like for example if your state had a stay at home order, which 45 of the 50 states have had some type of stay at home order or if, in one of the, if you had one of the states that did not have a state home over to maybe it was done on the local level in the city, or the county.
A really nice provision that was made there as a fact that the retirement plans, or your IRAs, you can take 100,000 up to $100,000 out after March 27th, and have the 10% early withdrawal penalty waved. What a wonderful, wonderful gift that was to those who need to draw upon their retirement plans early because of perhaps having to stay home because of a stay at home order or even unable to work from home.
Now a lot of people were able to work from home, but however if some got laid off as needed to draw on that after March 27th. It’s a very beautiful thing you’re able to do that and not have to pay that extra 10% penalty so basically, if you had to take out like 25,000 out of your retirement plan. Normally, you would have to pay like a $2,500 early withdrawal penalty under this provision. You don’t need to. And you won’t have to. So it’s there, still trying to see maybe how that’s going to be on the tax forms reflected or maybe it’s going to be on the 1099 Rs.
But either way, as I work with people, we’re going to make sure that applies appropriately, so that ones don’t have to pay that 10% penalty. Of course, big talk but the Cares Act was the stimulus payments for adults $1,200 per adults and $500 per qualifying child 16 and under, a big topic of debate. This was a lot of clients. Most of my clients got these and some of them, of course, had the direct deposits if they had direct deposit on their refunds if you had owed money you had probably received a check.
Now, the biggest part of this that caused a lot of controversy for my clients is when they sent out the debit cards with the stimulus on the debit card, some people I know, threw them away because they thought it was a scam. I had a client come into the office and asked me about it and I said, Oh, this was the debit card, so yeah, and he said. I said yeah, this is a debit card is how you got your savings, he’s like, oh okay well and so he went and took care of it there.
So, and then some people, because I’ve worked with a lot of different people who some, who actually hadn’t thought wasn’t gonna have a filing requirement for 2020 which was very nice with this stimulus payment they said it also based on 2019 tax return, and some of these people had filed in 2019. And they got their stimulus payments, still because they had filed a tax return.
So, that’s an excellent reason see this is there’s a lot of interesting things people, non-filers in particular are the ones that were like all of a sudden rushing to go get their taxes done because they hadn’t filed or they were behind for whatever reason. Now this here this stimulus payment is an excellent example that I say is that why you need to always be filing your taxes not be procrastinating on them, but get them done.
That way, you can get your tax stimulus because you never know when this is going to happen. Time, unexpected events, which what happened with this Coronavirus was an unexpected event. So, you gotta get just do your taxes get filed on time, if you are behind you need to get caught up, and we can certainly do that for appropriate fees to help you to get caught up yet, it’s something you need to do and as I mentioned in a previous episode. That it’s important to do because if you don’t file your taxes, there’s no statute of limitations.
At least if you file your tax return you start at the statute of limitations on your tax return, so it’s ideal to do it, not just for the statute but also so that if, if another stimulus payment comes out or who knows what happens in the future with this, you get them filed it you do not have a delay in getting such payments. Now, if you don’t have a filing requirement then of course, I’ll do it but if you do have a filing requirement, then definitely get it done, don’t hesitate do it.
Now these stimulus payments which is very nice, is that they are not considered taxable income, it’s actually an advance credit for 2020, which, if you did not keep that notice that came with President Trump’s signature on it. You were supposed to keep it and put it on your, with your tax information. But you must remember how much that you received because, there is a reconciliation that will be done on the 2020 tax return, so it’s vital that you do have that information available.
How much that you received in a stimulus payment? Because what is interesting, and is really nice is that if for some reason, who knows why, because there were some that still hadn’t gotten it. Up until November 21st, which is the IRS had finally cut off the things for ones the owner registered and get their payment. But, if you didn’t receive a stimulus for 2020. When you go back in 2020 when we file the 2020 tax return. Because you’re going to show well, no I didn’t get this.
You could very well get it as part of your 2020 tax return. Now if you happen to be overpaid on it. You don’t have to pay it back. Which, based on what your income is for 2020. You may actually have and have had an overpayment because there was a phase out that kicked in, above certain income levels. The other side of that, is that if you’re because what they did is that they issued it out based on likes if you had your 2019 tax return file that was issued out based on that, that amount.
And so, some people may have actually gotten a reduced payment because of where their income occurred in 2012, in on the 2019 tax return. But if your income dropped in 2020, and you were, and you only received a partial one. There’s a very good chance you could get the remainder likes the remainder of $1,200 payments, we’ll say, if due to your 2019 income you only got like a $700 stimulus on the 2020 tax return, your income drops below that threshold, you could very well get that extra $500.
So that’s something as well to look forward to from the Cares Act. As we look at the secure act a little bit here. Nice provision that came out of that is the fact that required minimum distribution age, jumped up to age 72. So, if you have an IRA, or another retirement plan, and you’re still working, and you don’t want to take money out of your IRA, and you’re approaching these ages, you have to know that you now wait till 72 to add to take it out.
Now, you can always, always start early if you want to, but you can wait if you’d like. Now, a fine deal that I really enjoy is that many people. And there are some, that will keep working for as long as they like. We’re up to whatever age or they basically get tired of working. But yet, and under prior law. If you prior to the secure act if you got above a certain age you had to stop, you couldn’t contribute to an IRA, or retirement plan. Now, though, because it’s secure act very nice, as long as you have earned income.
You can contribute to an IRA, and that is wonderful. As far as I’m concerned, is that there are some individuals who are out there, still working, they enjoy work, they like what they’re doing, they’re able to do it, and they still want to contribute to their IRA. Now, they can do it as a result of the secure act and so that’s just a wonderful another wonderful provision that came out. Some other items that we’re going to touch on here, is that there was an option that if that came out of the legislation this year, where the employers could defer withholding the employees portion of Social Security tax.
Now, I don’t know of any employers that actually did that because as a tax professional and working with people on payroll. I didn’t actually recommend doing that, and the reason is that all it was, is was a deferral, which meant that at some time that withholding would have to be paid. And to avoid a bookkeeping nightmare, I recommended to my clients, let’s not worry about this list, let’s just do this, keep it as it is, and certainly for the employers I’ve worked with, it’s worked out good.
Because if you had done that withholding or deferred that withholding, you had to pay it at some time, because those amounts were still going to be due between January 1st and April 30th of 2021. So it was to, at least in my opinion as professional that was not a good idea to do, defer the withholding portion of employee, the employees portion of Social Security tax. Other items here, is when it comes to scams.
Oh man, the last few years, this has been awful. People, I remind everyone, you guys, be vigilant on this. Yes, be vigilant on these, you have these people calling saying, they’re gonna send the county sheriff over to you, because you owe the IRS money and they’re going to arrest you. That is the biggest lie, that is out there. So, some if you ever get a phone call like that you just hang up. You can report it to the Federal Trade Commission as well, because the IRS does not, does not, make any phone calls demanding immediate payment.
So it’s nothing to be afraid of, because we keep in mind, that the IRS actually sends you numerous letters if you owe them money. Some of them, it gets when it gets to the point they’ll even send them certified, where you have to sign for the letter. If you owe the IRS money. So yes, they never make that kind of demanding call. Now, there’s also some private debt Collecting Agencies that the IRS is using to collect tax debt. Has got to be very careful with those but still keep in mind, there’s no demand calls, several, several notices you need to get in the mail, before they even get to the point where they’re going to do, or they’re going to make a phone call.
Now of course, you know there’s and one thing is going to happen, if you really have a serious tax debt with the IRS. Well there’s something really serious going on, they’re not going to send the local sheriff. The IRS has their own individuals, which they’ll send with a badge and a gun. That’s where you know you’re in trouble with the IRS. So, otherwise, don’t worry about it, be vigilant on these, don’t let these scams.
These ones who are trying to, keep in trying to get your money. And the other thing is another one common out there, that we’ve heard about a lot of last year is gift cards, they want you to go down and get a gift card. IRS doesn’t take payments on gift cards, talked about that a little bit before as well. We also see that many banks, at this point are having ones apply for a PPP Loan Forgiveness. I have several clients who went to the banks. Many of my local banks here, which they have been great overall.
Applying for that Payroll Protection Law, which worked out really good. Right now, currently applying for these amounts what’s going to be forgiven. And with this, we also got the idle, what’s known as the Idle Loan Advance which was up to $10,000. Depending on the number of employees that you had, that’s another item is going to be important to know as we go forward on tax, in preparation for taxes, and looking at what we need to do for 2021.
Now, we don’t sure I haven’t seen any of these yet, I’m not sure if they’re coming out but I haven’t seen it, at least in my area yet, as far as any PPP loans being forgiven. But, if you do have one that is forgiven. We need to know the amount of that loan that is forgiven, that is absolutely essential. Which usually, most clients and most people are going to have it forgiven, up to the amount up to whatever they got the loan advance from the Idol Loan Advance.
So, say if you had like a $65,000 PPP loan, but you got a $10,000 Idle Advance. More than likely, as long as all your criteria is met, you’re going to have like $55,000 of that PPP loan forgiven. So that keeps in mind as well, maybe as going through the COVID-19 different trials and stuff happening. Maybe you add some new file and got some employee retention credits if any, we need to know those as well. And some of these areas as we look at some of these things somebody increased taxable income.
Now, keep in mind where the tax part on that PPP loan comes in is that under current IRS guidance is that expenses paid with the PPP loan are not deductible expenses, so wages, utilities, some other operating expenses that you may have paid with a PPP loan. So if you got like a $25,000 PPP loan, you may have $25,000 and nondeductible expenses. And that basically, has to do with the fact that under current law, where we are right now, as of the date of this recording, that those, because it’s going to be forgiven.
If they’re not considered expenses, now the other key point with the PPP loan forgiveness is that that amount that’s going to be forgiven, will also not be considered income. And usually, when a loan of some type is forgiven. What we see is the fact that what they call is a 1099 C for cancellation of debt, while those are not going to be issued out. So we see that, that’s where we are right now in regards to PPP loans.
I want to give a quick reminder also is that if you received, unemployment this year, and millions and millions of people did. Wait, till you get that 1099 G from the Department of Labor in your state whether you can pull it off on online account or if you’re going to get one in the mail. Keep in mind with that, we had a whole show on this a few weeks ago, is that if you didn’t have them do withholding on that. You may end up owing taxes or greatly reduce your refund, whatever the case may be.
So, but make sure to wait for that 1099 G. Don’t get that 1099 or your W-2 from your work, and then run to your tax preparer and get it done. But wait, you have all your forms particularly that 1099 G, because an amended return is what needs to be avoided in this particular case. The W-4 form, as we’re planning looking to what’s going to go into 2021. We had a new one come out this year. It is very confusing.
We consult with ones and helping to complete that, because what it does do, it’s completely different. As what used to be done in the past, and I. And to me, you need to consult a tax professional when doing, because your employer may or may not be able to help you I don’t know, but I would say, consult a tax professional. When you do it. We have some tools on our website, cashtracksfinancial.com that can definitely be helping you do this.
Now, other items that came out this year, one other item here is very nice. Is that beginning in 2020. If you had student loan debt, and you have some 529 funds in that 529 Plan, you can actually beginning this year use some of those 529 Funds to pay down a student loan. Boy, what a generous, generous offer they made. And then again, as I mentioned a little bit earlier, is that if you’re a new parent, and congratulations to you if you are a new parent, you can take up to a $5,000 distribution penalty free for a birth or an adoption from your IRA retirement plan.
That way, you take $5,000 out, you’ll just pay regular income tax and I, $500, in additional tax for that. That’s a lot to take in this year but, as we look toward 2021, a lot of different changes that we’ve gone over. And we have considered at this point, and we certainly are not sure what the future with the new Congress coming in, in January. What is going to happen or what’s going to change, it just really depends. But, this is where we are now, which is why, we stress is that as we look at solutions.
There’s a lot of uncertainty out there with a lot of different areas, which is why as Cash Tracks Financial, Marcelino Dodge here, as we work. Because there are an infinite amount of solutions, for you all in regards to these areas. And there’s an infinite amount of apps you can use, to help you, or supposedly help you to do it, but you don’t always know what to do, you’re not really sure what you need to look at. Well, we come in and do as we look at solutions for you, is that we help you to establish your goals.
Come to understand what is it you want to accomplish in three months, in six months, in a year, in two years? Take a look at whatever your goals are, help you to reach those goals, help you determined. Let’s get them down in writing. And then what’s going to be an indication of your success, by accomplishing this goal. What are we going to accomplish? What’s going to be, what’s gonna make me feel good about this or the result, what’s going to happen with that.
Certainly, then also we want to sit down, gather your data, sit down, have a good telephone conversation, or a nice video chat meeting where we can sit down, face to face over video chat and be able to gather your key data, business finances, personal finances. Because this works for both business and personal and as we gather these and look at them very closely, identify that threats, work to reduce those threats for you, and then work with you, year-round on your action plan.
And all of that is included in our business, and our personal bundles that help you to be successful. And of course, we always begin with a free mutual exploration session. Now, this session is just a nice session kind of get to know each other kind of session that allows us to get to know each other a little bit better, helps me to understand what your goals are, and where you want to accomplish and what your priority is. We start at the top, whatever your first priority is, get to your second one.
Then move on down, find out how that’s going to benefit you. Now, as we go through all of this. See, we help you to be successful, and we keep you up to date on all of your income tax preparation all for a simple monthly fee, affordable monthly fee that starts at $49 for individuals, and $149 for business. You’re encouraged, and I would certainly like to hear from you as to be able to discuss these with you.
You can visit us, it’s cashtracksfinancial.com or success@cashtracksfinancial.com, or give me a call 844-394-4287. Thank you for tuning in today, your rights as a taxpayer is we’re going to talk about the “Taxpayer Bill of Rights” next week. As we are on The Tax Answers Advisor, I’m Marcelino Dodge, Voice America Business Channel.
Thank you for listening to The Tax Answers Advisor with host, Marcelino Dodge. We’ll be back again next Wednesday at 6pm Eastern Time, and 3pm Pacific time, on The Voice America Business Channel, we’ll have more to share next week.
Cash Tracks Financial Inc.
117 W Beech St
Lamar, CO 81052
Office:(719) 336-8739
Toll Free: (844) 394-4287
Fax: (719) 336-8799
Email: success@cashtracksfinancial.com
Quick Contact
Phone: (719) 336-8739
Toll-Free: (844) 394-4287
Fax: (719) 336-8799
Email: success@cashtracksfinancial.com
Resources
Resources & Articles For Managing Your Finances On Your Own
Tax Law Changes For 2020 That Will Impact Your Tax Return
What Are The IRS Tax Filing Changes For 2020? This article reviews the most important updates to the IRS Code. Article content from the transcript from Tax Answers Advisor with Marcelino Dodge. Find our more at the IRS Tax Filing Changes for 2020 page.
Business Startup Information From Cash Track Financial Inc.
Business startup information from Cash Track Financial Inc. What can I do for a successful business startup? You have the idea & you have the skills for a business for which you are passionate. Find out more at the Business Startup Information page.
Tax Accountant In Lamar Colorado At Cash Tracks Financial Inc.
A tax accountant can help you through the process of paying your taxes and filing tax returns. Tax accountants help individuals, businesses, and corporations with tax filing and handling of tax payments. Find out more on the Tax Accountant web page.
Contact Us
When you need a financial or tax advisor, tax prep, insurance, or business guidance contact Cash Tracks Financial Inc., serving Lamar Colorado.
(719) 336-8739 TOLL FREE: (844) 394-4287 FAX: (719) 336-8799
117 W Beech St, Lamar, CO 81052, USA
https://cashtracksfinancial.com/wp-content/uploads/2021/11/make-payment.png
https://cashtracksfinancial.com/tax-law-changes-for-2020-that-will-impact-your-tax-return/
No comments:
Post a Comment