TaxMamas TaxQuips: Tax Quips

It’s TaxQuips time from TaxMama.com® – Today TaxMama® wants to remind you about tomorrow’s due date – June 15th.               Dear Family, With two topsy turvy tax years due to COVID19, it’s harder to keep track of deadlines. But, for the rest of this year, all deadlines are the same as they have been historically, unless you live in a federally declared disaster area.  https://www.irs.gov/newsroom/tax-relief-presidentially-declared-disaster-areas So, let’s review what’s due tomorrow https://taxmama.com/tax-calendar/   : more-> Federal and state estimated tax payments for the second quarter. This applies to individuals and to corporations, estates and trusts. Although you can use Form 1040-ES to send in a check, please do NOT! Pay the IRS electronically to ensure they get your payment. Be sure to select 2021 and Form 1040 https://www.irs.gov/payments Your state probably has a similar option – look up your state’s tax agency website here – https://www.taxadmin.org/state-tax-agencies Remember, if you took COVID19-qualified distributions from retirement accounts and are spreading the taxes over 3 years – you need to include those amounts in this year’s estimated tax payments. Form 1040 is due for Americans living outside the US. If you’re not ready, you can still file an extension using Form 4868 – see if you can file this electronically through your software. https://www.irs.gov/pub/irs-pdf/f4868.pdf Gift Tax returns for Americans abroad – your Form 4868 will automatically also extend your gift tax filing. But if you expect to take advantage of the Foreign Earned Income Exclusion (Form 2555) when you file your tax return, you will need to file a separate extension for your gift tax return, using Form 2350 https://www.irs.gov/pub/irs-pdf/f2350.pdf The IRS will be releasing 3 interfaces (links) relating to the new advance Child Tax Credit.  Keep an eye on this page for updates and details. https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021 One for people who want to opt out. Another for people who aren’t already in the database as having children (either due to new births or getting custody or foster custody of children) – and who want to receive the advance funds. And another option to update your banking and/or mailing data. In the meantime, we are nearly halfway through the year. Perhaps it’s time to review your projected income and tax breaks for 2021? Maybe you need to change your withholding – or increase/reduce your estimated tax payments for the year. Those folks who have found yourselves in a position where you owe a tax balance and don’t really know how to pay it, the IRS has a lot of options to help. So don’t just ignore the balance due. https://www.irs.gov/about-irs/irs-offers-new-relief-options-to-help-taxpayers-affected-by-covid-19 Consider scheduling an appointment with your tax professional to help you. https://www.irs.gov/tax-professionals/choosing-a-tax-professional   And remember, you can find answers to all kinds of questions about taxes and business issues, and EA Education, free. Where? Where else? At http://iTaxMama.com/AskQuestion  

  An Ode to April 15! Why is every year the same When we play this taxing game? “May 17th” turns out to be, something we couldn’t really foresee! With estimates still due on April 15. Folks do think the IRS is mean! Costs us more than just one night Making sure that all is right! Until at the latest day, We finally know what we get or pay! Why these taxes have to be Like a nasty little flea? Once they bite you, that’s for sure - Your life will never be like before! Love or hate them, Up to you… but don’t forget: Tax returns are due! And if you don’t know what to do, Ask TaxMama® – she’ll tell you true !   by Sandra Lin and TaxMama®  2021

    It’s TaxQuips time from TaxMama.com® – today TaxMama® wants to talk to you about the upcoming April 15th deadline – sort of…       Dear Family, Well, we are one week away from the traditional filing deadline of April 15th. Do we still care? After all, the IRS moved the filing deadline to May 17th – so can we totally ignore April 15th ? Not really. Some things are still due on April 15th: 2021 first quarter estimated tax payments Your state tax return – if they haven’t complied with the IRS changed date https://www.getcanopy.com/blog/state-tax-deadlines-2021 Payroll tax (and sales tax) returns are still due on April 30th, in case you were wondering (sales taxes are state forms, not IRS). Various other things that the IRS gave us additional time to handle – which are…. Which things ARE extended by the IRS? Personal tax returns (Form 1040) and C corporation returns (Form 1120) and any other filings that were otherwise due on April 15th IRAs, HSAs, etc. (Note: If the state didn’t comply with the extended filing deadline, you MUST fund these accounts by April 15th) Individual retirement arrangements (IRAs) Health savings accounts Archer medical savings accounts Coverdell education savings accounts Extra time to pay the balance on 2020 tax returns without penalties. Filing your 2017 tax returns – and get your refund. You get the extra month this year – miss that May 17th date and lose your 2017 refund forever. The IRS says they have $1.3 BILLION in unclaimed refunds for 2017! https://www.irs.gov/newsroom/irs-has-refunds-totaling-1-point-3-billion-for-people-who-have-not-filed-a-2017-federal-income-tax-return Even with the additional time until mid-May, here are three major issues that may convince you to just go ahead and put your tax return on extension anyway. 1) Ensure that your state complies with the IRS’ Paycheck Protection Plan rules – and consider testing out some alternate computations. For IRS, getting the loan forgiven is not a taxable event – https://taxfoundation.org/small-business-loan-forgiveness-sba-ppp-loan-taxed/ For the IRS you are able to deduct expenses paid with forgiven funds – https://taxfoundation.org/state-tax-forgiven-ppp-loans/ Determine IF you want to accept the forgiveness at all? By getting the loans forgiven, you cannot use those funds towards any of the employer tax credits for things like the Employer Retention Credit, Family Leave Credit, etc. The credits may be worth a lot to you! 2) The IRS has just released new guidance on the $10,200 non-deductible part of the unemployment benefits  and what to do if you have already filed your tax return and paid tax on this, now, non-taxable income. Some people won’t have to amend – the IRS will fix it automatically and issue a refund. Others, who have more complex issues (like our #3) may want to amend. https://www.irs.gov/newsroom/irs-to-recalculate-taxes-on-unemployment-benefits-refunds-to-start-in-may And there is a lot of discussion about filing married filing separately in order to reduce one (or both) spouse’s income below $150,000 to get this benefit. It will save some couples thousands of dollars – others will lose money. Test the numbers! 3) The American Rescue Act also waived your extra taxes if you got your health insurance through the Marketplace, but have to pay back the government-paid premiums when your income suddenly exceeded 400% of the poverty level (due to unemployment or IRA or retirement plan withdrawals) We’re still waiting for specific procedures on how to eliminate that extra tax. With this reduction in cost, what part of the health insurance expense is deductible as self-employed health insurance? What are the mechanics (procedure) to get the tax/penalty waived because the adjusted gross income is too high? So, now do you understand why you just might want to go ahead and get an extension anyway – and give yourself and your tax professional time to test different computations to see which ones get you the lowest taxes, legally? There’s more you need to know, and your tax pros and I are rapidly learning everything we can to get you the most tax credits and refunds, legally possible. For those folks planning to study for the EA Exam this year,  it’s going to be a really tough exam! Good news. THIS new law won’t be on the exam. Join me our annual free webinar (a bribe is included for those who attend): Everything You Wanted to Know About the 2021-2022 Enrolled Agent Exam. Sign up for the last date. April 19 – 10:05 am Pacific http://iTaxMama.com/Everything_EA_April Meanwhile, I will be posting various updates and webinars that I am teaching, on this Events page – https://irsexams.school/events-and-webinars/ And remember, you can find answers to all kinds of questions about taxes and business issues, and EA Education, free. Where? Where else? At http://iTaxMama.com/AskQuestion To make comments please drop into the TaxQuips Forum.

    It’s TaxQuips time from TaxMama.com® – today TaxMama® wants to tell you a little bit about the new law – the American Rescue Plan Act – signed by the President yesterday.                 Dear Family, Well, people have been anticipating this new Tax Act eagerly, waiting to get the next round of stimulus checks. One of the “improvements” in this law is that the $1,400 per person checks will be provided to (or on behalf of) everyone – all dependents, regardless of age. So you don’t have to play games with tax returns and try to put your children on their own tax returns. more-> More good news for people who collected unemployment last year – the first $10,200 of that income is not taxable. We’ll come back this is in a moment. Here’s remarkable relief that no one has been talking about – the Premium Tax Credit Repayments – the thousands of dollars people are having to repay for their Marketplace Health Insurance coverage. With all the unemployment income and distributions from retirement plans, taxpayers have been shocked to learn that they have to repay hundreds, or even thousands of dollars, for the advanced premiums paid by the government.   (I have been writing about ways to get around this extra tax/penalty – but now, we won’t have to do that anymore).  Buried on page 180 of the Rescue Act are two little paragraphs that waive all these penalties/fees for people who received unemployment or took distributions from IRAs and retirement plans, which raised their income above 400% of the poverty level. (This is effective for years after 12/31/2019 – it doesn’t say when it expires – but it is temporary.) The Child Tax Credit and Credit for Dependent Care have been increased and are fully refundable. Naturally, there are new phase out limits for income levels – but even those are more generous. The Child Tax Credit is $3,600 for children under age 6, $3,000 for children under age 17. Oops! They changed the age to UNDER 18! You get this for an extra year. Starting in July, families will be able to get monthly payments of this credit, in advance of having to file their tax returns next year. The expense limits for the Dependent Care Credit have risen to $8,000 (instead of $3,000) per child, for up to two children = $16,000 total annual costs. Employer-provided child-care assistance has risen to $10,500 (instead of $5,000) The Earned Income Credits have also increased, and there is some expansion on the children who qualify the household for the credit. Unpaid Student Loan Debt will not be taxable for 2021-2025. There are lots more provisions in this bill, which is, refreshingly, only 242 pages long (as opposed to last December’s 5,593 pages.) I will be recording an on-demand webinar summarizing some of the key points that affect you – in about a week or so. Meanwhile,  be sure to file extensions: Put your business tax return on extension (by March 15th for partnerships and S Corporations  - April 15th for everything and everyone else). For those who have already filed their 2020 tax returns and want to claim some of the breaks (like non-taxable unemployment and Premium Tax Credit penalty waivers), you will need to file amended returns. BUT WAIT, until all the details  and procedures are outlined by the IRS. There’s more you need to know, and your tax pros and I are rapidly learning everything we can to get you the most tax credits and refunds, legally possible. (Right now, I am taking as many classes as time permits.) For those folks planning to study for the EA Exam this year,  it’s going to be a really tough exam! Good news. THIS new law won’t be on the exam. Join me our annual free webinar (a discount is included for those who attend): Everything You Wanted to Know About the 2021-2022 Enrolled Agent Exam. Sign up for one of these dates. March 18 – 4:00 pm Pacific http://iTaxMama.com/Everything_EA_March April 19 – 10:05 am Pacific http://iTaxMama.com/Everything_EA_April Meanwhile, I will be posting various updates and webinars that I am teaching, on this Events page – https://irsexams.school/events-and-webinars/ And remember, you can find answers to all kinds of questions about taxes and business issues, and EA Education, free. Where? Where else? At http://iTaxMama.com/AskQuestion To make comments please drop into the TaxQuips Forum.     Keep an eye on these links – the IRS is adding topics every month -no charge and potential CPE or CE credits. IRS webinars for Professionals – https://www.irs.gov/businesses/small-businesses-self-employed/webinars-for-tax-practitioners The next one is Sale of Partnership Interest - November 19, 2020 IRS webinars for Small Businesses – https://www.irs.gov/businesses/small-businesses-self-employed/webinars-for-small-businesses There are some for North Carolina businesses – and the link to the Partnership webinar above. IRS Webinars for Exempt Organizations and Governmental Entities – in case you are involved with a non-profit, there’s lots of guidance here. https://www.irs.gov/government-entities/webinars-for-tax-exempt-government-entities You’re never too old to learn! And since you’re generally stuck at home anyway – why not improve your skills?! And remember, you can find answers to all kinds of questions about taxes and business issues, and EA Education, free. Where? Where else? At http://iTaxMama.com/AskQuestion To make comments please drop into the TaxQuips Forum.  

  It’s TaxQuips time from TaxMama.com® – today TaxMama® wants to talk to you about the sticker shock (high tax return balances) you just faced – and how to reduce some of that financial pain.       Dear Family, There’s a lot going on right now, and new legislation about to be passed tomorrow. Drop by TaxMama.com tomorrow for a quick summary of the final changes. Meanwhile, you thought you did everything right last year, but when you prepared your tax returns, you suddenly owe a whole lot of money that you didn’t expect to owe. What caused that? A few things – here are the main issues you face, and perhaps, didn’t quite anticipate: The new IRS withholding tables are so confusing your employer didn’t withhold as much as you expected. You received a lot of unemployment income and didn’t know it was taxable! We expect a small fix for this in the American Rescue Act, making the first $10,200 of unemployment income tax-free, as long as your adjusted gross income (AGI) is under $150,000. You took distributions from your IRA or retirement plans, knowing there would be no penalties. But you didn’t realize that ALL of those funds are taxable – and dramatically increased your AGI. With the higher AGI, all sorts of things that were not normally taxable before, suddenly became taxable – like your Social Security benefits, and the advance-paid insurance premiums from the “Marketplace.” There may be other issues you will only see if you run a report to compare this year’s and last year’s tax return numbers. Is there a way to reduce any of these unexpected taxes? Now? After the end of 2020? Actually, yes! Here are several things you can do – they all revolve around reducing your AGI to avoid causing some of your other income or credits to become taxable. For folks who got the Premium Tax Credit (health insurance), you need to reduce your AGI below 400% of the poverty level. If you or your child have education expenses, consider claiming the $4,000 tuition and fees deduction instead of a tax credit. It sounds counter-intuitive. But this will reduce your AGI. Take advantage of the $300 above the line deduction for cash contributions to charity. (It won’t help much…but it’s something.) Fund your IRA for 2020 even if you cannot afford it. You must do this by April 15th. Designate the funds as a 2020 contribution so you can reduce your AGI. You can take the money out later as a 2021 distribution. If you took a large distribution from your retirement account last year, based on your COVID19 qualifications (FAQ #3), you can spread that income over three years – instead of including it all in your 2020 AGI. THIS can make a huge difference to your taxes. Since they have already taken out withholding based on the full amount, consider rolling over part of your refund to 2021 and 2022, since you will be adding 1/3 of this income to your tax return for those years. Fund a business retirement account from your business profits. Depending on your profits or the type of retirement account you use, you can fund anywhere from $13,000 to $57,000 for 2020. (Some of them will let you borrow some of your money back.) Regardless, be sure to put your business tax return on extension (by March 15th for partnerships and S Corporations  - April 15th for everything and everyone else). There’s more you need to know, and your tax pros are rapidly learning everything we can to get you the most tax credits and refunds, legally possible. For those folks planning to study for the EA Exam this year,  it’s going to be a really tough exam! Join me our annual webinar (a discount is included for those who attend): Everything You Wanted to Know About the 2021-2022 Enrolled Agent Exam. Sign up for one of these dates. March 18 – 4:00 pm Pacific http://iTaxMama.com/Everything_EA_March April 19 – 10:05 am Pacific http://iTaxMama.com/Everything_EA_April Meanwhile, I will be posting various updates and webinars that I am teaching, on this Events page – https://irsexams.school/events-and-webinars/ And remember, you can find answers to all kinds of questions about taxes and business issues, and EA Education, free. Where? Where else? At http://iTaxMama.com/AskQuestion To make comments please drop into the TaxQuips Forum.   Keep an eye on these links – the IRS is adding topics every month -no charge and potential CPE or CE credits. IRS webinars for Professionals – https://www.irs.gov/businesses/small-businesses-self-employed/webinars-for-tax-practitioners The next one is Sale of Partnership Interest -  IRS webinars for Small Businesses – https://www.irs.gov/businesses/small-businesses-self-employed/webinars-for-small-businesses There are some for North Carolina businesses – and the link to the Partnership webinar above. IRS Webinars for Exempt Organizations and Governmental Entities – in case you are involved with a non-profit, there’s lots of guidance here. https://www.irs.gov/government-entities/webinars-for-tax-exempt-government-entities You’re never too old to learn! And since you’re generally stuck at home anyway – why not improve your skills?!  

Wow, an entire month has just flashed by. We’ve been buried in work at our office – how about yours?                 Dear Family, The 2020 tax return filing brings lots of questions, a certain amount of uncertainty, and for many Americans, a surprise balance due. (You didn’t realize your unemployment benefits were taxable?) Drop by the TaxMama® Forum to see the questions people are asking.  http://iTaxMama.com/AskQuestion The IRS is pumping out their daily Tax Tips (did you know they’ve been doing this for a few years?) https://www.irs.gov/newsroom/irs-tax-tips Your tax preparation software (or your tax pro’s) is still in the process of being updated, a little more each day. Yes – so is the IRS’. And many IRS forms are still in the draft stage, not quite ready for prime-time. I guess that’s what happens when Congress passes a massive 5,593 page law, signed on December 27, 2021. Everyone is scrambling to update everything! (One of the reasons I’ve been so busy – is redoing all the seminars and materials I had finished by December 15th –  and now I have to re-do everything all over again!) more-> Are we getting another massive law that will affect your 2020 tax returns? I surely hope not. Most of what I am seeing in the current Biden Rescue package doesn’t involve changes to the 2020 tax return.  The tax return changes appear to relate to the 2021 tax return – see the Tax Foundation summary in case you want reassurance. https://taxfoundation.org/biden-stimulus-american-rescue-plan/ Some great news for people who received the Paycheck Protection Loans  (PPP) and the early (up to $10,000) EIDL grants and certain other grants. You can get these loans fully forgiven (you don’t have to pay them back). And you are now permitted to deduct the expenses you paid with those funds. But wait! Your state may not have complied with one or both of these provisions. They might – but their legislators have not yet had time to meet to pass these conformity laws. So, if you’re affected, put your tax return on extension. I expect most states to comply. (Even in CA, someone has already put forward a Bill to conform to the federal laws.) Incidentally, another round of funds IS available for those businesses whose gross receipts have dropped by 25% or more last year. https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program/second-draw-ppp-loans NOTE: This forgiveness does not apply to the EIDL loans. Those are real loans that must be paid back. Read your contracts. Some good news for people whose spouse doesn’t have a Social Security Number. You may file a joint return this year with that spouse and still get your share of the stimulus benefits. Some bad news for people who got the stimulus funds. YOU need to know how much you received. The IRS log-in system only tells you the date the payment was issued to you, but not how much. I have asked the IRS for a look-up tool (since last summer). I was just told last week that they have received so many complaints about this from all over the country, that they are now working on it. Expect to see it – long after you file your tax return – perhaps before April 15th. (She said in disgust.) https://www.irs.gov/coronavirus/economic-impact-payments The IRS has opened up the Identity Protection PIN (IP PIN) for everyone (both spouses), not just people whose identity was stolen. The good thing is – no one can file a tax return using your Social Security number but you. The bad part is – you will need to get that IP PIN updated every year and won’t be able to file without it. https://www.irs.gov/newsroom/all-taxpayers-are-now-eligible-for-identity-protection-pins There’s a lot more going on. For complete updates – please drop by Lambers for this updated course – COVID19 World and The December 2020 Consolidated Appropriations Act https://www.lambers.com/shop/tax-update-in-the-covid19-world-and-in-the-december-2020-consolidated-appropriations-act/ Speaking of which, an awful lot of people are going to need the help of their tax professionals to reach the IRS this year. The IRS phone lines are basically useless. Only Enrolled Agents, CPAs and attorneys who understand how to reach the IRS through certain special channels are going to get through. If you are not already licensed, this IS the year to become an Enrolled Agent (faster than either of the other two options). Join me our annual webinar (a discount is included for those who attend): Everything You Wanted to Know About the Enrolled Agent Exam for 2021-2022. Sign up for one of these dates. Wednesday February 17 – 10:00 am Pacific http://iTaxMama.com/Everything_EA_February March 18 – 4:00 pm Pacific http://iTaxMama.com/Everything_EA_March We might have another session in April – to be determined.   Meanwhile, I will be posting various updates and webinars that I am teaching, on this Events page – https://irsexams.school/events-and-webinars/ And remember, you can find answers to all kinds of questions about taxes and business issues, and EA Education, free. Where? Where else? At http://iTaxMama.com/AskQuestion To make comments please drop into the TaxQuips Forum.    

Whew! This has been an astonishing year. We still have new challenges to face in 2021. But look at what an inspiring group of women did to rise out of the ashes of a burned out town. The indomitable ladies in Paradise, California have pooled their spirits, resources and funds to help a woman who lost everything – by becoming Disaster Diva Calendar Girls!     [ You can’t keep a good woman down![/caption]   We will give away calendars to the first 10 people who post a story about how they helped someone in 2020 – on this Facebook page – We Found a Solution Wishing you all a healthy, happy and optimistic  2021! Hugs Eva

We have legislation pending today – which might actually go through!                 Dear Family, Until some of the data released this morning, I didn’t think the new budget legislation was going to have any impact on our 2020 tax returns…but there are strong hints that aside from additional stimulus funds and unemployment funds – there may also be a provision to allow us to deduct the expenses we paid with the PPP loans. (Don’t hold your breath – but a definite MAYBE!) When we get news, we will add it to the materials in our December COVID19 Update class – so it will be there for all our students, family members and upgraded students. In the meantime, I want to alert you that next year will be a frustratingly confusing tax year for everyone – taxpayers and tax professionals, alike. Two things will be critical for tax professionals: 1)  To keep updated on tax law and procedure changes on a very regular basis – because I guarantee there will be more changes coming during the first 6 months of 2021. 2) To have the credentials necessary to represent your clients before the IRS and the state taxing agencies -  Enrolled Agents (EAs), Certified Public Accountants (CPAs) or Attorneys. more-> The problems I anticipate lie in these  four main areas: 1) The stimulus checks – people who didn’t get them, those who did, and those who need to get additional funds. Note: Only people with Social Security numbers (SSNs) are eligible. And a joint return with a spouse who has an ITIN is not eligible. So, folks who are eligible to get green cards or US citizenship – it’s time to start the process IMMEDIATELY. And put your 2020 tax returns on extension until that valid SSN is issued. 2) People who received (and will receive) unemployment benefits – and didn’t take withholding for IRS (and certain state taxes). There will be some substantial balances due. They will need help to establish payment plans,…or… 3) People who drew money from retirement accounts. Sure, you probably are not subject to the 10% early withdrawal penalty from the IRS (and possibly your state). But you will have to pay tax on that income – either now – or over three years. Tax pros will need to understand how to handle that deferred reporting. HOWEVER, all that extra income is going to cause enormous OTHER tax problems because of the increase to Adjusted Gross Income (AGI). A variety of adjustments to income and tax credits won’t be available. WORSE! People who received insurance coverage through the Marketplace may find themselves having to repay thousands of dollars of the advanced premiums because their AGI has risen to exceed 400% of the poverty level. 4) And the PPP Loans and EIDL loans that people received – and did or didn’t use correctly or took the money out for personal use. There will be lots of struggles, paperwork – and balances to deal with. There will be more issues. Many more. So if you’re not already an EA, CPA or attorney and you want to help your clients, it’s time to become an EA as soon as you can – because, at this time, this is the fastest way to get the authority to represent clients before the IRS. As a result, I have a very unusual, special offer, something I have never done before. You are invited to join the TaxMama® Premium EA Exam Course right now – so you can start studying and pass at least one or two of the exams by the end of February – and finish up in the summer with the live sessions. Or you can join the Self-Study class for the entire study process. This is the lowest price I will ever offer. The details are here. (To see what all is included, follow the links on this page) http://iTaxMama.com/TM_SpecialOrderPage This opportunity will end on December 28th and will not be renewed. And remember, you can find answers to all kinds of questions about taxes and business issues, and EA Education, free. Where? Where else? At http://iTaxMama.com/AskQuestion To make comments please drop into the TaxQuips Forum.

Today is a special day, especially precious to those facing serious challenges this year – it’s Giving Tuesday.         Dear Family, Giving Tuesday is apparently in its ninth year, as a reaction to the commercialization of the holiday season. There are so many people struggling to stay in their homes; making decisions about eating – or feeding their children instead; many more are facing the same choice when it comes to their beloved pets, as well. And of course, so many people are dealing with COVID19 tests, illnesses and even deaths – sometimes it’s the breadwinner of the family who is gone. With all the recent storms, cold weather and other problems, we have new terms floating around, like “food challenged.” If you can afford to help people in your community, please, be generous. When it comes to the tax side of the donations, here are some tips and considerations. Money you give to people on the street or directly to someone in need is not deductible. And if you’re donating to GoFundMe-type appeals, look to see if they are directly for an individual, or handled through a non-profit organization (some are). Try to donate to charities that use your money to actually help people – rather than paying themselves ginormous wages and benefits. You can actually see their spending by looking up the Form 990 that the charity files with the IRS each year, The reports are easy to find on the Charity Navigator website. https://www.charitynavigator.org/ If you’re like many Americans, your standard deduction is so high that you cannot even itemize. So you’re not going to get a deduction for your contributions. What can you do instead? Give the money to a relative or friend who IS itemizing and let them make the donations. If you want recognition for the donation – they can donate in your honor. If you like making large donations, consider making two years’ or more worth of donations now, so you have enough to itemize your deductions. You can actually do that a couple of ways: Naturally, you can simply donate to your favorite organizations directly. Consider opening a Donor-Advised Fund (DAF) with your favorite financial institution. That let’s you make extremely substantial donations to your DAF right now – but gives you time to distribute the money to your various, favorite charities. For seniors, age 70.5 or older, there is a special way to make donations directly from your retirement accounts. It’s called a Qualified Charitable Distribution (QCD) – and allows you to transfer up to $100,000 directly from your retirement account to charity without paying any tax on the distribution at all. The benefit is that this distribution won’t increase your adjusted gross income, potentially causing your Social Security benefits to become taxable. This is ideal for folks who like to donate $10,000 or so to their churches, mosques, synagogues, temples, etc. Incidentally, this distribution would also qualify for the Required Minimum Distribution (RMD) in years when they are required. (All requirements are waived for 2020 – but that doesn’t mean you may not take RMDs.) Receipts – please be sure to get written receipts for all donations of $250 or more to any organization – before you file your tax return This is very important if you want the deduction. Folks who cannot get any tax breaks for your donations – it still might make you feel good if you can help someone who’s worse off than you this year. While your donation might not be in the form of money or something tangible, even babysitting, or grocery shopping or running errands for someone can still be so valuable. Sometimes, even just a phone call or a hug is enough (if it’s safe to touch someone). (That means I need to start making calls to my family today, too, right?) And remember, you can find answers to all kinds of questions about taxes and business issues, and EA Education, free. Where? Where else? At http://iTaxMama.com/AskQuestion To make comments please drop into the TaxQuips Forum.

You thought we were all done with deadlines on the 15th? Yet, here are some more for you to consider. And some great classes coming up.             Dear Family, Let’s get the upcoming deadlines out of the way, then we can get to more interesting information about how to learn more about dealing with tax issues. October 31 – FBAR – The foreign bank account filing deadline  for folks in general. December 31st for folks in Presidentially-declared disaster areas. You can file the FinCEN 114 form online at no charge. (There are no taxes related to this.) The penalty for not filing each year starts at $10,000. Oh, you think this doesn’t apply to you? Oh Yeah? Do you have family outside the U.S.? Do you sign jointly on your parents’ bank accounts in case anything happens to them? Did they open an account for your child and have been funding it in the child’s name? Lots of traps and pitfalls that could generate a penalty, even if you’re innocently ignorant. October 31 – All the 3rd quarter payroll and sales tax returns are due for the IRS and your states, if you’re an employer. It’s in your best interest to try to file these reports and make your payments electronically. The IRS still hasn’t quite cleared up all their mountain of unopened mail. November 10th –  National EIP Registration Day, with a big publicity push to get non-filers registered before the final deadline on November 21st. Folks who don’t normally file tax returns, but want those Economic Impact Payments, it’s time to get into the system. Just so you know, the IRS has been actively trying to locate people who are chronically homeless or in shelters to try to get the funds to them. If you know someone who qualifies and isn’t in the system, please help them register. And if they don’t have bank accounts, help them get a prepaid debit/credit card to receive their payments. (No, don’t rip them off.) Note: This is for people who don’t normally have a filing obligation due to very low income – AND they are not someone’s dependent. No games, please. Online Education Opportunities with TaxMama®

Here it is again, the end – the final filing deadline for 2020 – for most people. TaxMama® wants to give you some last-minute tips.         Dear Family, It’s October again. The filing deadline for individuals (1040) and C corporations (1120) that got extensions in April must file by Friday, October 15th. (You do realize that your partnerships, S corps and 1041s were due last month, right?) Well, first of all, the good news – in the face of bad news. Those people in the various disaster zones still have more time to file – and pay a variety of taxes. (This includes personal, business and payroll forms and taxes that are due.) This year, the President did declare the California wildfires as disaster zones. So if you’re affected, your new deadline is extended to Dec. 15. (Note: none of the wildfires in 2019 were declared by the President at all – and so none of the 2019 damage is deductible on the IRS return – but is deductible on the California return.) https://www.irs.gov/newsroom/around-the-nation-california Victims of Hurricane Sally have until January 15, 2021 to file tax returns and make payments.  https://www.irs.gov/newsroom/irs-announces-tax-relief-for-hurricane-sally-victims Here is the main IRS disaster page, with links to each state. See if your area is affected – and any special deadlines that might apply –  https://www.irs.gov/newsroom/around-the-nation Moving on from natural disasters to financial and personal disasters What about if you’re still trying to prepare your tax return and you don’t have any of the natural disaster excuses, perhaps you have COVID19 excuses because you’re not getting data you need. And/or you are frustrated and annoyed due to missing information and new tax law confusion? If your problem is based on COVID19 missing information, it’s quite possible that if you wait until you get all the information, and then file your tax return, that the IRS (and state) will waive your penalties. But why go through the process of begging for penalty relief? Here’s a better idea. (Always a great solution!) FILE! Even if you’re missing information, don’t understand Sec 199A, or other parts of the Tax Cuts and Jobs Act. Do the best you can to estimate, project, or compute the missing or confusing information as best you can. If you’re really not sure about the numbers – tell the IRS. And tell them why. Include a Form 8275 disclosure statement and identify each line in the tax return that you estimated. Include a worksheet, spreadsheet or explanation for each item – and explain why you had to estimate the amounts. Do the best you can with this. Remember, you always have three years to amend the tax return once you get better information. The benefit of doing this? The main benefit is to avoid the 25% late filing penalty that will kick in almost immediately after October 15th. You won’t have to try to correspond with the IRS, or sit on hold for hours, to try to get the penalties waived. The other benefit is, you get it done and reduce your stress. You now have time to get help to fix any shortcomings in your return. Some business owners (especially those with no employees) still have time to reduce their balance due by opening and funding a SEP-IRA until October 15th, if you don’t already have one open (or fund your solo-401(k) if it’s already open by December 31, 2019.) Be SURE your financial institution sets it up properly and on time. Be absolutely certain to get the funds in and designated as 2019 contributions if you want to claim the deduction on your 2019 tax return. (Of course, if you have employees, make sure they are covered and funded as well – so this strategy may not be as easy for employers.) If you have a balance due, try to pay it in full. Though your interest on that balance is only about 3% – 4% per year, the late payment penalty is ½ % per month. That runs from April 15th. Remember to make your estimated tax payments for 2020 – they were due by September 15th – but if you pay a little late, the penalties are minor. And remember, you can find answers to all kinds of questions about taxes and business issues, and EA Education, free. Where? Where else? At http://iTaxMama.com/AskQuestion To make comments please drop into the TaxQuips Forum.

  Today TaxMama®  wants to talk to you about your missing payments to the IRS.             Dear Family, Feeling frustrated about getting your tax questions, answered, issues resolved and trying to understand where your stimulus checks have gone? Yeah. The bad news is – this is going to go on for a very long time. The worse news is – you’re going to get IRS notices about balances due on your IRS tax liability if you send in your payments by mail, instead of paying them online. Why? The IRS is still working their way through the mounds and towers and truck-loads of mail – and may not have gotten to your check yet. Tip – for future reference, try to ALWAYS make all IRS and state tax payments electronically. They will get recorded on time.   In the meantime – we have asked the IRS to see if they can turn off that automated notice in their computer system. After all, we all know that those penalties and assessments will be forgiven. But in the meantime, either you or your tax professional will have to write to the IRS to request that the penalties be forgiven. (Which letters the IRS won’t find for more months.) OR your tax pro has to invest time in trying to reach someone at the IRS – and your fees for this service might be more than your penalties. Then the IRS will have to invest time and staff resources to respond – and a needless cycle will just play out – wasting everyone’s time, resources and funds. So our Stakeholder Liaison team has asked that the IRS just set the computer system not to send out ANY of those letters until at least October – by which time, hopefully, they will have processed all those letters and payments. Of course, you can always switch and make those payments electronically – and stop payment on the paper checks! (Sure, that will generate more correspondence in the end for the bounced check fees – but you can easily clear that up by showing your proof of payment – later, when they are receiving paper again.) You can use these resources to pay online – https://www.irs.gov/payments The Direct Pay system comes straight from your bank account – with no fees. https://www.irs.gov/payments/direct-pay The debit or credit card version comes with fees - https://www.irs.gov/payments/pay-your-taxes-by-debit-or-credit-card (So instead of the debit card – use the Direct Pay option.) Oh, by the way, businesses that have been sending in payments by mail? Some of your letters have been returned, without even being opened. The IRS has closed certain lockboxes (contracts with some banks have expired). https://www.irs.gov/filing/closing-of-business-po-box-addresses-could-affect-your-clients SAVE THOSE RETURNED envelopes! You will need those as proof that you tried to pay on time to avoid late payment penalties.  Instead, pay electronically – using the public payments link or QUICKLY set up the business payment system you should have had in the first place – at https://www.eftps.gov/eftps/ (IRS’ Electronic Federal Tax Payment System). And remember, you can find answers to all kinds of questions about taxes and business issues, and Enrolled Agent tax education, free. Where? Where else? At www.TaxMama.com . To make comments please drop into the TaxQuips Forum. Incidentally, I don’t know if you know - TaxMama.com® is a free resource for people to get answers to tax questions BEFORE they make major, costly moves. more-> Reminder – Some Helpful IRS Links Which IRS services are open and available – keep an eye on this link https://www.irs.gov/newsroom/irs-operations-during-covid-19-mission-critical-functions-continue IRS Electronic Options https://www.irs.gov/newsroom/irsgov-helps-taxpayers-get-tax-information-they-need-find-tools-for-filing-paying-checking-accounts-and-answering-questions IRS Online Assistance Available https://www.irs.gov/newsroom/irs-urges-taxpayers-to-use-electronic-options-outlines-online-assistance Dealing with audit or collections issues – IRS is keeping this page up to date https://www.irs.gov/newsroom/irs-unveils-new-people-first-initiative-covid-19-effort-temporarily-adjusts-suspends-key-compliance-program Of course, all the filing and paying deadlines – including taxpayers overseas whose June 15th filing deadline has been pushed back to July 15th. https://www.irs.gov/newsroom/filing-and-payment-deadlines-questions-and-answers? And a great chart: How to Use the Tools on IRS.gov to Get Your Economic Impact Payment  https://www.irs.gov/newsroom/how-to-use-the-tools-on-irsgov-to-get-your-economic-impact-payment There are lots more things going on – watch the information in the IRS Newsroom –  https://www.irs.gov/newsroom  and TaxMama.com          

Today TaxMama®  wants to give you some tax updates and tips now that the long-delayed first filing deadline for 2020 has arrived.   more->       Dear Family, Today may be a bit of a frantic day for those of us working through the last-minute filing requirements for July 15th. We were given a gift of 3 extra months to get our files in order. Hopefully, people who were not working, or were working for fewer hours, you took advantage of that time to get your financial and tax lives in order. Either you have already filed – or today’s the day. Remember, if you are still not ready – you do have options – EXTENSIONS. (get details here) If you owe money and cannot pay, consider putting your tax return on extension for three reasons: You delay the IRS’ collections actions You avoid the 5% non-filing penalty by getting an extension, instead of just avoiding filing because you owe the money. You get three extra months to try to find a way to either raise the money or reduce your taxes (legally). Incidentally, I just finished the materials for a class on Estimated Tax Payments and Paying Payroll Taxes for CCH CPE Link that will be live on July 28th. And ways for business owners to still reduce their 2019 taxes legally – in the July 21st class on Owners’ Fringe Benefits – in case either of these will help you after you file your extensions.   Alert for you from the IRS: Due to COVID19, the IRS had put collections actions on hold until July 15th.  But they are re-starting ALL collections activity. If you have a direct pay installment agreement it will automatically make payments on due after July 15th – otherwise, send in your payment If you still cannot afford to pay, due to unemployment, hardship, etc. you can revise it online – https://www.irs.gov/payments/online-payment-agreement-application or call the number on your notice Pending Offer in Compromise (OIC) – if it was in process and your periodic payments were suspended until July 15th – start making them again, to keep your OIC in effect while the IRS continues to review your application Accepted OICs – if payments were not made recently – you MUST catch them up by July 15th – or call the number on your notice if you are unable to pay. Private Debt Collection – The IRS did not send any new cases to them – but will start again on July 16th . Taxpayers who owe but cannot pay – set up an online installment agreement or try to call the IRS to get yourself put in Currently Not Collectible Status – better yet, file an extension to get more time before they start collections activity.   Advice for you from the Taxpayer Advocate, Erin M. Collins The value of superseding a return – important – must be done by July 15th to be of any use https://taxpayeradvocate.irs.gov/news/NTA_Blog_The_Value_of_a_Superseding_Tax_Return A warning about relying on IRS information – and protecting the rights of taxpayers who rely on that information  -  please, please read this. https://taxpayeradvocate.irs.gov/news/nta-blog-protecting-taxpayer-rights-FAQ   And remember, you can find answers to all kinds of questions about taxes and business issues, and Enrolled Agent tax education, free. Where? Where else? At www.TaxMama.com .   Reminder – Some Helpful IRS Links Which IRS services are open and available – keep an eye on this link https://www.irs.gov/newsroom/irs-operations-during-covid-19-mission-critical-functions-continue IRS Electronic Options https://www.irs.gov/newsroom/irsgov-helps-taxpayers-get-tax-information-they-need-find-tools-for-filing-paying-checking-accounts-and-answering-questions IRS Online Assistance Available https://www.irs.gov/newsroom/irs-urges-taxpayers-to-use-electronic-options-outlines-online-assistance Dealing with audit or collections issues – IRS is keeping this page up to date https://www.irs.gov/newsroom/irs-unveils-new-people-first-initiative-covid-19-effort-temporarily-adjusts-suspends-key-compliance-program Of course, all the filing and paying deadlines – including taxpayers overseas whose June 15th filing deadline has been pushed back to July 15th. https://www.irs.gov/newsroom/filing-and-payment-deadlines-questions-and-answers? And a great chart: How to Use the Tools on IRS.gov to Get Your Economic Impact Payment  https://www.irs.gov/newsroom/how-to-use-the-tools-on-irsgov-to-get-your-economic-impact-payment There are lots more things going on – watch the information in the IRS Newsroom –  https://www.irs.gov/newsroom  and TaxMama.com     And remember, you can find answers to all kinds of questions about taxes and business issues, and Enrolled Agent tax education, free. Where? Where else? At www.TaxMama.com .   Incidentally, I don’t know if you know - TaxMama.com® is a free resource for people to get answers to tax questions BEFORE they make major, costly moves. To make comments please drop into the TaxQuips Forum.

Today TaxMama®  wants to provide some tips before the upcoming July 15th filing deadline.                 Dear Family, I hope you’re able to enjoy (what we used to call) a “safe and sane” 4th of July holiday. When arriving in Los Angeles many decades ago, we used to have colorful booths all over town, selling fireworks, using that slogan. With high levels of fire danger around here, those booths are gone, and fireworks are not welcome in Los Angeles anymore. (Though I am sure we are seeing them around our neighborhood lately.) Moving on to other topics – another round of COVID19 loans will probably be approved. Please understand the distinction between the PPP loans that you get through your bank, and the EIDL loans that you get directly from the SBA. The EIDLs are real loans that must be paid back. These loans do not include a forgiveness provision. And if you accept a loan over $25,000, the SBA will file a lien against your business, including all intangible assets. The terms include a variety of significant restrictions and conditions – so READ your loan agreement carefully before signing. The PPP Loans are the ones with the forgiveness provision. And the SBA does not file a lien against the business. The upcoming July 15th filing deadline Getting an extension of time to file your tax returns does not give you an extension of time to pay the taxes that are due. You still have to pay a variety of taxes that were deferred and are rapidly coming due: 2019 IRS balance due and the state 2019 IRA, Roth IRA and HSA or MSA contributions 2020 1st quarter estimated tax payments 2020 2nd quarter estimated tax payments That can add up to a LOT of money, if you have been taking advantage of the extra time and not paying any of those balances – or if you have been unemployed and don’t have the funds. If you still cannot come up with enough money to cover it all – what should you prioritize? The 2019 IRA, Roth IRA and HSA or MSA contributions – there is no extension for those – so the only way you can get those deductions is to fund these accounts by July 15th. What about all those 2019 balances that are due? Here is a form hardly anyone knows about! Form 1127 – for additional time to PAY taxes without incurring penalties.  You can use it in hardship situations – and this year certainly qualifies!   https://www.irs.gov/forms-pubs/about-form-1127 In the meantime, you can get additional time to file your 2019 personal, corporate and certain trust returns. For both the 1040 series (Individual Income Tax Return) and the Form 709 (Gift and Generation Skipping Tax Return) – file Form 4868 by July 15th . For pretty much all other eligible entities, file Form 7004 by July 15th . Note: Extensions for calendar year partnerships and S Corporations should have been filed by March 15th . I am sure you have a lot of questions This is a tough year – and we are going to help you. We = Andy at Pronto Tax and the team at Lambers.   My friends and I have set aside two hours on Wednesday, July 8th – a whole week before the filing deadline – to answer your questions. So please, join us. It’s free.  http://iTaxMama.com/SpecialRoundTableWebinar Watch out of another deadline – 2016! If you still haven’t gotten around to filing that year’s tax return – you were given 3 extra months to get that year filed – before you lose your entire refund. Instead of April 15th – you were given until July 15, 2020 to file your 2016 tax return and claim your refund. The IRS says that $1.5 BILLION is sitting there unclaimed. What are you waiting for? If you still can’t get the specific numbers you need in order to file – use reasonable estimates and explain how you arrived at those numbers. Don’t wait. File IMMEDIATELY! That will protect your refund. You will then have up to 3 years to amend and provide documentation. And if you do need that documentation – get to work right now to get it, to preserve your share of that $1.5 BILLION worth of unclaimed tax withholdings and estimated taxes. You can prepare the returns electronically using  this service http://iTaxMama.com/FreeTaxUSA .  But, filing these returns won’t be easy.   You will  have to file them on paper. And you know the IRS isn’t processing paper returns right now. So, you will have to PROVE that you filed before the deadline. How? Send your tax return in, properly addressed, using CERTIFIED MAIL with proof of mailing. If possible, get proof of delivery. And guard that receipt carefully. Put it in a safe place. Because it’s going to take the IRS many months before they even get to open your envelope. To preserve your right to your refund, you will probably be called upon to prove that you mailed that tax return in by July 15th. So don’t slack off on this, please.   Reminder – Some Helpful IRS Links Which IRS services are open and available – keep an eye on this link https://www.irs.gov/newsroom/irs-operations-during-covid-19-mission-critical-functions-continue IRS Electronic Options https://www.irs.gov/newsroom/irsgov-helps-taxpayers-get-tax-information-they-need-find-tools-for-filing-paying-checking-accounts-and-answering-questions IRS Online Assistance Available https://www.irs.gov/newsroom/irs-urges-taxpayers-to-use-electronic-options-outlines-online-assistance Dealing with audit or collections issues – IRS is keeping this page up to date https://www.irs.gov/newsroom/irs-unveils-new-people-first-initiative-covid-19-effort-temporarily-adjusts-suspends-key-compliance-program Of course, all the filing and paying deadlines – including taxpayers overseas whose June 15th filing deadline has been pushed back to July 15th. https://www.irs.gov/newsroom/filing-and-payment-deadlines-questions-and-answers? And a great chart: How to Use the Tools on IRS.gov to Get Your Economic Impact Payment  https://www.irs.gov/newsroom/how-to-use-the-tools-on-irsgov-to-get-your-economic-impact-payment There are lots more things going on – watch the information in the IRS Newsroom –  https://www.irs.gov/newsroom  and TaxMama.com And remember, you can find answers to all kinds of questions about taxes and business issues, and Enrolled Agent tax education, free. Where? Where else? At www.TaxMama.com . Incidentally, I don’t know if you know - TaxMama.com® is a free resource for people to get answers to tax questions BEFORE they make major, costly moves. To make comments please drop into the TaxQuips Forum. [Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]

Today TaxMama® wants to let you know that the House and Senate have passed the Paycheck Protection Program Flexibility Act of 2020 (PPPFA).         Dear Family, The latest Bill is heading for the President’s desk today. Believe it or not, it’s only 9 pages long. The PPPFA increases the time to pay back the loan to 5 years, from 2. You can still get the loan forgiven if only 60% of the funds are used for payroll instead of 75% . Best of all, you have 24 weeks to use up the loan money, instead of 8 weeks – or up to the end of 2020. (This is specially to accommodate restaurants and other industries that were barred from opening so far.) The bill revises the deferral period for paycheck protection loans, allowing recipients to defer payments until they receive compensation for forgiven amounts. Recipients who do not apply for forgiveness shall have 10 months from the program’s expiration to begin making payments. (Not clear on what that date is.) Businesses with loans that are forgiven are permitted to delay paying their payroll taxes, just like everyone else. (Removed that provision from the CARES Act.) The bill extends the period in which an employer may rehire or eliminate a reduction in employment, salary, or wages that would otherwise reduce the forgivable amount of a paycheck protection loan. You can read more of the details here – https://www.congress.gov/bill/116th-congress/house-bill/7010 While I may not understand all the nuances, we will be getting more details and clarification in the next few days – from the experts. In other news 1040X  - the IRS opened up electronic filing for amended individual tax returns (1040X) – but only for 2019 returns. That should reduce some of the paper flood of corrections people want to file this ear. Plain-Wrapped Stimulus Debit Cards – The IRS is sending out stimulus money to millions of people in plain white envelopes containing a debit card. You will have to go online to activate it. Yes, some people have already started shredding them, thinking they are junk mail. Read the guidance here on how to recognize them and what to do if you inadvertently tossed or shredded your card. Reminder – Some Helpful IRS Links Which IRS services are open and available – keep an eye on this link https://www.irs.gov/newsroom/irs-operations-during-covid-19-mission-critical-functions-continue IRS Electronic Options https://www.irs.gov/newsroom/irsgov-helps-taxpayers-get-tax-information-they-need-find-tools-for-filing-paying-checking-accounts-and-answering-questions IRS Online Assistance Available https://www.irs.gov/newsroom/irs-urges-taxpayers-to-use-electronic-options-outlines-online-assistance Dealing with audit or collections issues – IRS is keeping this page up to date https://www.irs.gov/newsroom/irs-unveils-new-people-first-initiative-covid-19-effort-temporarily-adjusts-suspends-key-compliance-program Of course, all the filing and paying deadlines – including taxpayers overseas whose June 15th filing deadline has been pushed back to July 15th. https://www.irs.gov/newsroom/filing-and-payment-deadlines-questions-and-answers? And a great chart: How to Use the Tools on IRS.gov to Get Your Economic Impact Payment  https://www.irs.gov/newsroom/how-to-use-the-tools-on-irsgov-to-get-your-economic-impact-payment There are lots more things going on – watch the information in the IRS Newsroom – https://www.irs.gov/newsroom  and TaxMama.com And remember, you can find answers to all kinds of questions about taxes and business issues, and Enrolled Agent tax education, free. Where? Where else? At www.TaxMama.com . Incidentally, I don’t know if you know - TaxMama.com® is a free resource for people to get answers to tax questions BEFORE they make major, costly moves. To make comments please drop into the TaxQuips Forum.