SECURE Act Retirement Account Changes
Included in the 2020 Appropriations legislation passed last December was the SECURE Act. Included in the SECURE Act were changes that will affect individual retirement accounts (IRA) beginning in 2020.
COVID-19 Tax Season 2021
The 2021 information we have regarding COVID-19 and its impacts on both Federal and State tax filings.
CARES Act and Other Things to Know for Next Year Tax
This page provides details on the following areas that are changing for calendar year 2020 including the CARES Act. It also includes Tax Cuts and Jobs Act resources on the IRS website: CARES Act Tax Provisions Changing or inflation adjusted provisions Extender provisions that are still in effect Kiddie Tax change for 2020 and beyond EITC Maximum Credit Amounts Retirement distribution and contribution changes Tax Cuts and Jobs Act Resources CARES Act Tax ProvisionsHere is a summary of the tax provisions included in the CARES Act that was enacted on March 27, 2020: How the Economic Impact (Stimulus) Payments will affect the 2020 returnThe Economic Impact (stimulus) payment is really an advance payment of the Economic Impact credit which will be part of the 2020 federal return. A new refundable credit form will be added and all taxpayers that received a payment during 2020 and those who were eligible but did not, will need to complete it for 2020. The credit will be calculated based on income, filing status and children information on the 2020 federal return. For the vast majority of taxpayers the credit on their 2020 return will be zero since they already received a payment during 2020. The credit calculated (based on their 2020 income, filing status and eligible children) will be reconciled with the payment they received in 2020. For those taxpayers who did not receive an economic impact credit, they will show a refundable credit on their 2020 federal return. Also for those who might have received a lesser economic impact payment because of the AGI limitation they may receive a refundable credit if their AGI for 2020 is lower than in 2019. Retirement Distributions Related to COVID-19 For qualified COVID-19 distributions, an individual can withdrawal funds (up to $100,000) from a retirement account free of the 10 percent early withdrawal penalty and can spread the taxable portion on that distribution over a three year period. Any qualified COVID-19 withdrawal will not be taxable if it is recontributed within three years of the date of distribution. Increases the maximum loan amount for COVID-19 purposes to $100,000. Charitable ContributionsThere are two provisions for charitable contributions as follows: Above the Line Charitable Contribution DeductionTaxpayers can take up $300 as an adjustment to income beginning in 2020 Modification of limitation on charitable contributions for 2020The 50 percent of AGI limitation is suspended for 2020 Qualified Improvement Property – Technical AmendmentAllows qualified improvement property to be depreciated over 15 years and be eligible for bonus depreciation. This is a retroactive change which means that taxpayers can amend their 2018 and 2019 returns for eligible qualified improvement property. Net Operating Loss Changes Net operating losses that occur in 2018, 2019 or 2020 can be carried back 5 years These NOLs can fully offset income in the prior years Applicable to individuals and corporations Temporarily suspends the loss limitation of $250,000 ($500,000 for joint filers) for non-corporate taxpayers for losses arising in 2018, 2019 and 2020. Employee Retention CreditLegislation provides eligible employers a refundable payroll tax credit equal to 50% of qualified wages paid to employees. Eligible employers must have carrying on a trade or business in calendar year 2020 whose: Operations were fully or partially suspended due to the COVID 19 crisis or Gross receipts declined by more than 50% compared to the same quarter in the prior year For employers with greater than 100 full-time employees, qualified wages are wages paid to employees (between March 12, 2020 and December 31, 2020) when they are not providing services due to COVID-19 circumstances. For employers with 100 or fewer full time employees, all employee wages qualify for the credit. The credit is capped at the first $10,000 of compensation, including health benefits, paid to the employee. The credit is refundable to extent it exceeds the employer portion of social security taxes reduced by paid sick leave and paid extended FMLA established by the Families First Coronavirus Response Act. Eligibility for the credit begins in the first in which the employer’s gross receipts declined by greater than 50% of the corresponding calendar quarter of the prior year, and ends with the quarter following the calendar quarter in which the gross receipts excess 80% or corresponding calendar quarter in the prior year. For more information see the FAQs: Employee Retention Credit page on the IRS website. Business Interest Limitation ChangesFor 2019 and 2020 the interest expense that businesses are allowed to deduct is increased to 50% of taxable income. Changing or inflation adjusted provisions for 2020 Standard Deduction:Basic: Single/MFS: $12,400 MFJ/Qualifying Widow(er): $24,800 Head of Household: $18,650 Standard Mileage Rates 57.5 cents per mile – Business purposes (up to four vehicles 17 cents per mile – Medical/Moving purposes 14 cents per mile – Charitable purposes Extender Provisions still in effect for 2020Here are some of the most relevant individual extender provisions that will expire at the end of 2020 and therefore are still in effect for 2020: Tuition and Fees Deduction (Form 8917/Form 1040, Schedule 1, line 21) Medical expense deduction floor remains at 7.5% of AGI Exclusion of gain from income of foreclosed home mortgage debt (Form 982, line 1e) Ability to treated mortgage insurance premiums as qualified mortgage interest (Schedule A, line 8d) Nonbusiness Energy Property Credit – Form 5695, Part II See the 2019 IRS Publication 17 (Tax Guide for Individuals) – Impact of New Legislation section for a full list of the extended provisions that are applicable through tax year 2020. Kiddie Tax ChangeThe Tax for Certain Children Who Have Unearned Income that is reported on Form 8615 was changed in the Secure Act which was included in the 2020 Appropriations legislation enacted on December 20, 2019. Effective for tax years beginning in 2020 the kiddie tax reverts back to the rules that were in effect before 2018. Therefore the tax will be determined using the tax rate of the parent. EITC Maximum Credit AmountsFor tax year 2020 the maximum EITC amounts are: $6,660 with three or more qualifying children $5,920 with
Preparer Security and Tax Identity Theft
This page is designed to give tax preparers the information they need to meet their security obligations and to improve their defenses against tax related identity theft, which includes safeguarding their computer systems from cybercriminals.
Tax Tips 2022 – Things to Know
This page gives an overview of federal tax provisions that will go into effect in 2021 and items that are changing for calendar year 2021.
Paid Preparer Due Diligence Requirements
This page is designed to give preparers a overview of their due diligence requirements which include the earned income tax credit, child tax credit, the American Opportunity education credit and now the head of household filing status and the new credit for other dependents.
Taxpayer First Act and New IRS Modernization Plan
This legislation was signed into law on July 1, 2019. Its main focus is on administrative and structural changes which will affect how the IRS operates in the future.
IRS Voluntary Continuing Education Program and PTIN Requirement for Federal Tax Return Preparers
This page is designed to help you understand PTINs and the IRS requirement to have one and renew it each year, as well as the IRS Voluntary Education Program.
Helpful IRS Websites
Security and Disclosure Section 7216 Disclosure RulesIdentity Theft CentralIdentity Theft Prevention (Red Flag rules)Protect Your Clients; Protect YourselfDon’t Take the BaitIdentity Theft Information for Tax ProfessionalsNational Tax Security Awareness WeekPublication 4557 (Safeguarding Taxpayer Data)FTC – Start with Security: A Guide For Business Webinars/Workshops/Phone Forums Tax Professional WebinarsIRS Training and Communication Tools for Tax ProfessionalsIRS Video Portal for Professional Tax PreparersSmall Business Tax Workshop Electronic Filing Publication 1345 (Handbook for Authorized IRS E-File Providers)Modernized E-File Status Page Earned Income Tax Credit EITC CentralEITC Home PageCommon EITC ErrorsEITC Due Diligence RequirementsIRS EITC Due Diligence VideosSupporting Documentation Requirements for Qualifying Child and Head of Household Filing StatusIRS EITC Compliance InitiativesDue Diligence Training ModuleEITC Frequently Asked Questions IRS Forms and Publications Draft FormsFinal Forms, Instructions and PublicationsIRS Publication 17 IRS Tools Where’s My RefundIRS Individual Online AccountTax Pro AccountWhere’s My Amended ReturnGet Transcripts – View your transcript online and print immediatelyDirect Pay General IRS Operations – How long it will take to process returns and other operational infoIRS Tax Help in SpanishIRS E-Services – Online Tools for Tax ProfessionalsITIN Resource PageEFTPS (Electronic Federal Tax Payment System)Tax Information for Members of US Armed ServicesIRS Hotlines and Toll Free NumbersDisaster Relief Resource Center Tax Professional Pages IRS Tax Professionals HomeIRS Fact SheetsIRS NewsroomBasic Tools for Tax Professionals Small Business Information Self Employed Tax CenterSmall Business/Self Employed Tax Center
State Requirement for Preparers which offer Tax Refund Products
There are 20 states that have regulations for preparers who offer tax refund loan products with the following types of requirements…