Support you Deserve

We offer a broad range of services to help you secure a sound financial future. You've worked hard to get where you are. You deserve a firm that works hard for you.

Income Tax Season 2021

Season 2021 opened by the IRS on February 12, 2021 when their e-filing

system opened and is expected to close on Noveber 24, 2021 when e-filing

is shut down for the 2021 tax year.  We started our annual income tax

interviews to go over the tax organizer questions and informtation that you

need to upload your tax documents from January 28, 2021 and later. 

Paper returns may be filed during December and January, but should be

sent via certified mail with return receipt requested, and generally take 16 

to 18 weeks to process. 

Tax appointments may be scheduled at https://www.remotebusinesssolutionsinc.org/TaxMeetings.php and you

will be called at the scheduled time selected from Jeanine's openings. 

Please have copies of your last three tax year returns filed (federal and state), and your tax year at hand documents available during your telephone interview.

There is no charge for the interview, but there is a charge for the income tax preparation once an engagement letter is signed and dated. 

Extended 2021 Income Tax Season:  May 19 – November 24, 2021

PROGRESS REPORT FOR 2021 EXTENDED INCOME TAX SEASON

May 19 - Nov 23 2021

Late and extended clients are being processed in the order of recieving ALL

of the following items:

1) your signed-dated engagement letter(s).

2) your completed tax interview (tax organizer) including foreign assets questions

and virtual currency questions included in the interview for convenience. 

3) attached your cash basis profit and loss statement for 01-01-20XX through

12-31-20XX, cash basis balance sheet for 01-01-20XX cash basis balance sheet

for 12-31-20XX, record of dates and amounts of member draws, record of

purchases and sales of depreciable asses, copies of sales and purchases receipts

of equipment, and any other schedules, forms, and notes for your business

or entity income taxes,

4) attached Forms W-2, 1099-Misc, 1098, 1099-Int, 1099-Div, other Form 1099s,

Social Security forms, K-1s, and/or any other tax forms, spreadsheets, schedules,

and/or notes for your personal income taxes.

You should expect their returns and signature documents by on or before:

September 15 for S-Corporations and Partnerships;

October 15 for C-Corporations, Estates, Trusts, and Individuals;

November 15 for Not-for-Profits.

Of course I and my support workers are doing our best to get your income

tax returns uploaded and ready for signature authorizations as quickly as possible. 

I will personally e-mail you once your returns and signature forms are

uploaded.   Make sure that you review your returns

carefully and inform me as soon as possible if you have questions, clarifications,

or additional information needed for the returns. 

Upon approval, you must return ALL signature documents with you name as it

appears on the tax return and the date signed. 

NEVER sign or date electronically coded actual income tax returns -- ONLY sign

the designated signature forms.  The system will

confirm your signatures and dates for completion prior to e-filing your returns.  You should get acceptance confirmation within an hour of e-filing and local state within the

next day.  We will upload you copies of the receipts for your records to keep with

your copies of your tax returns.

Please schedule your telephone appointments as needed at https://www.remotebusinesssolutionsinc.org/Appointments.php

for non-income tax appointments and at https://www.remotebusinesssolutionsinc.org/TaxMeetings.php  for income

tax appointments.  All appointments remain remote through the end of the

month.  

Please make sure that Jeanine has your current driver’s license

information:  state, number, issue date, expiration date.  If Jeanine

was not able to get your returns signed, dated, and e-filed by the

March 15, 2021, April 15, 2021, or the May 17, 2021 due dates, it

was because your information was received too late, we were

missing information, or you requested an extension.  Unfortunately,

there were many clients this year that actually missed the February 28 priority

date or the 14 days prior to original due date deadlines, and the five 2020 tax

law updates were already slowing down our normal production.  We could not

rush through the late submissions because of the timely clients already being

serviced and the unprecedented five major 2020 law changes. 

We will get your review and signing items to you in the order received

as soon as possible.  Generally clients should plan on at least ten

business days from the date that ALL of their items are given to us

(engagement letter must be signed and dated, fees paid, tax organizer

and documents uploaded, and review and signatures returned) if their

items were received by February 28, 2021.  The closer to a filing date,

however, that items are given to us for preparation and processing, the longer

clients may have to wait due to “early bird” clients already in line ahead of them. 

Tax returns are fillable via e-file or paper-file with postmark by midnight on tax

due dates.  If you owe 2020 income taxes, there are different ways to pay 

through IRS.gov, including payment options for many people who can’t pay in full.

PROFESSIONAL TAX SERVICES

Professional tax services include the management and coordination

processes of a licensed professional specialized in tax law and tax

accounting.  Only federally licensed enrolled agents (EA), state-licensed certified

public accountants (CPA), and state-licensed attorneys (Esq) are qualified to

represent you in proceedings before the Internal Revenue Service.  Not all CPAs

and attorneys are specialized in taxation, so you should investigate their expertise in tax matters BEFORE you engage them to help you. 

EAs are the ONLY licensed tax professionals whose professionalism (licensing)

includes exclusive tax expertise.  Others such as auditors' licenses are focused

on auditing and attestation expertise, or attorney licenses that are focused on

many areas of general law. 

All other tax professionals who might assist you or your business or entity are

unlicensed and normally limited to tax preparation services.

Licensed tax professionals complete initial licensing requirements and

additional annual continued professional education hours to stay updated

on the ever-changing tax laws.  They are governed by ethics codes and

accountable to their own governing authorities.  Unlicensed professionals are

not required to learn or maintain tax knowledge, and are not accountable to any professional organization's authority.  Unlicensed tax preparers are allowed in

most states, but are also unregulated in most states.

What licensed professionals, specialized in tax law and tax accounting, can

offer you are a complete set of skills and knowledge of in-depth taxation in

the US Tax Code.  They possess analytical and research, preparation and review,

taxpayer representation, and in the case of attorneys, tax court and higher court

defense skills.  A mere unlicensed tax preparer can come from any  background,

 possess no-to-few tax skills and knowledge, and is not held accountable for

the quality of services provided in most circumstances.

You may visit https://www.irs.gov/newsroom/find-a-qualified-tax-professional-

using-irs-website-resources for information on how to find a qualified tax

professional and for a directory of registered tax professionals.

The registry includes information about each tax professional including licenses

held.

Receive your tax preparation packet and return requested completed

materials and tax forms.

This packet will include your engagement letter with your pricing, retainer

required, payment plan if applicable, and due date of your final payment. 

Please read and view all information provided.

In order for Jeanine to prepare your tax return, you must provide the following:

1) The Engagement Letter signature page signed and dated;

2)  The tax organizer(s) for each tax return package needed (such as corporate

or Partnership with individual for each owner) with the header section filled out completely and all questions requiring a yes, no, or N/A response circled or

highlighted.  Please note that each personal return should include its own tax

organizer and each corporate/partnership/not-for-profit should include its own

tax organizer.  The tax organizer is your interview! and it is our joint effort

to collect all of the information required for accurate tax compliance

filing requirements.  You may answer the questions by yourself for

convenience and time savings, OR you may get telephone or face-to-face

appointment assistance if you need help understanding any of the questions. 

4)  Locate your business or not-for-profit tax documents if a business return:

     a) Profit and Loss Statement (P & L) from 01-01-19 through 12-31-19 OR

         01-01-XX through 12-31-XX if preparing another year.

     b) Balance Sheet (B/S) for 12-31-19 or 12-31-XX if preparing another year.

     c) Balance Sheet (B/S} for 01-01-19 or 01-01-XX if preparing another year.

     d) Secretary of State Business Certificate and Articles if not already provided.

     e) Copies of last three years of federal and/state local tax returns if a new

         client.

     f)  Payroll Summary for 01-01-19 through 12-31-19 OR 01-01-XX through

         12-31-XX if preparing another year.

     g)  Copies of Quarterly and Annual Employer Tax Returns for 2019 or 20XX if

          preparing another year.

     h)  Copies of any Sales & Use Tax Returns for 2019 or 20XX if preparing

          another year.

     i)  Copies of any Property Tax Returns for 2019 or 20XX if preparing another

         year.

     j)  Any questions, notes, charts, EXCEL summaries, Form 1099s, or other t

          tax-related items that we should review for your tax preparation.

Please note that if you do not have financial statements (P & L and B/S) for your business, then you should use the Accounting Organizer (see https://remotebusinesssolutionsinc.org/AccountingOrganiizer.php) to create

these forms.  Alternatively, you must finish your year at hand accounting to create the financials, hire us on an hourly basis to do your accounting and create the

financials, or hire an outside accounting firm to do your accounting and create the financials.  Summarizing figures on a "napkin" will not be sufficient to prepare

reasonably accurate business tax returns.

All of the above must be returned to us electronically via the secure file exchange

(safest and fastest service), fax, e-mail, or flash drive.  We are a paperless,

remote service and our virtual office cannot process paper-submitted tax

materials.  The portal may be accessed at https://remotebusinesssolutionsinc.org/portal.php.and existing account

holders may login with their e-mail and password in the blue box.  New clients

must click on the "register here" link on the page in the sentence that says

"To start using the client portal please log in above or register here."  

Please plan on 10 business days before we upload your tax return(s) for review,

signing, and dating.  We will schedule a 15-minute phone call to cover any

questions, edits, or concerns that you may have.  Jeanine will e-mail and/or text

you if we need any clarification or additional items before this review phone call appointment.  

Once you are satisfied with your completed tax returns, then sign, date, and

return the required signature pages only.  Please note that all of your fees

for the tax returns at hand must be received BEFORE your review and

signing items are uploaded for you.   

How to pay estimated taxes

C-Corporations and self-employed (proprietors, partners, LLC members) should remember to pay their quarterly estimated income

tax payments based on their net income each quarter.  Employers are liable for

payroll tax deposits (and employer tax returns) 

including the trust fund taxes (employee withholdings) and their own employer

liabilities.  Many businesses owe sales & use taxes,

tariffs, personal property taxes, and other taxes.  Consult with your accountant

if you do not know what taxes you owe or if you are confused as to what

taxes you owe for any tax year.  Do NOT wait to see what happens as that

could result in expensive penalties and interest assessed for you or your business.  Understanding the tax responsibilities when 

starting a new business can save taxpayers money and help set them up

for success. IRS.gov has the resources and answers to help people through

 the process of starting a new business.  

Form 1040-ES, Estimated Tax for Individuals, includes instructions to help

taxpayers figure their estimated taxes. They can also visit 

IRS.gov/payments to pay electronically. The fastest and easiest ways to make

an estimated tax payment is by using IRS Direct Paythe IRS2Go app or

the Treasury Department’s Electronic Federal Tax Payment System (EFTPS).

For information on other payment options, visit IRS.gov/payments. If paying by

check, taxpayers should be sure to make the check payable to the “United States

Treasury.”

 
Publication 505, Tax Withholding and Estimated Tax, has additional details,

including worksheets and examples, that can be especially helpful to those who 

have dividend or capital gain income, owe alternative minimum tax or

self-employment tax, or have other special situations.

https://www.remotebusinesssolutionsinc.org/~bctincje/images/building-front-services.jpghttps://www.remotebusinesssolutionsinc.org/~bctincje/images/66.png

INCOME TAXES PROCESSING REQUIREMENTS AND

PROCESSING PRIORITY

Are ALL of your income tax filing requirements received:  (if not, your

priority status can be holding you up)

--Signed-dated engagement agreement,

--final 2020 fees,

--completed tax organizer, and

--tax documents.

We are moving as quickly as possible.  Our apologies for any delays as there

have been extra complications with technologies, the Covid-19 legislation, and

many interviews during the 2021 income tax season.  All of our offices (RBSI

Virtual, Finer Points, Palisades Hudson) thank you for your patience.

Extensions with RBSI Virtual Office must generally be requested by or before the

original filing due dates.  They require a $150

retainer for you to stay in our scheduler in a priority status for processing unless

you are a new client just joining our service.  If you are in a hurry and missed the

priority deadline, then Jeanine will be glad to refer you to a larger office with more accountant staff available to help you.

Taxpayers should use Where's My Refund? on https://www.irs.gov to

track their refund status and Get Transcript, both common requests.  

Each state/local department of revenue, such as  https://www.colorado.gov/pacific/tax/wheres-my-refund for

Colorado, also has a tool on its website for tracking tax refunds.  Please

google your state/local department of revenue to access the link appropriate for

your state/local refund.  

Interest on individual 2020 refunds reflected on returns filed by March 15, 2021,

April 15, 2021, or May 15, 2021, depending on type of return filed, these due

dates until the date of the refund.  Interest payments may be received separately

from the refund.  

You may also wanto to check out https://aidassist.intuit.com/app/home?cid=owned_QB_IPD#/home to check out the

Tax Credit Estimator and the Paycheck Protection Program

(PPP) Loan and Forgiveness Estimators. 

There is no option for rush status this income tax season, which normally requires additional service fees to pay for overtime work. 

We are in the process of completing extended returns and uploaded any of them

for review and signing that we could actually have ready by on or before

May 17, 2021.

Please continue to be patient and Jeanine will e-mail you once your review and

signature forms are uploaded to your cloud folder.   Urgent questions should be

e-mailed or texted; calls should be scheduled so that we are not interrupted

during meetings and while working on your income tax returns and our other

client projects.  We are still backed up due to the four 2020 tax law changes, the

new Form 1040 instructions, and Jeanine's recent appointments that could not

be avoided.

HELPFUL 2021 Income Tax Season Links

One way people can get the new tax year off to a good start is by checking their

federal income tax withholding. They can do this using the 

Tax Withholding Estimator on IRS.gov.  All taxpayers can use the results from the Tax Withholding Estimator to determine if they should:

•  Complete a new Form W-4Employee's Withholding Allowance Certificate and

submit it to their employer.
•  Complete a new Form W-4PWithholding Certificate for Pension or Annuity Payments and submit it to their payer.
•  Make an additional or estimated tax payment to the IRS.

https://cp7.cpasitesolutions.com/~bctincje/TaxSeason2021.php

 

Click below for tax services brochure for information about Jeanine and

her network's services:

https://cp7.cpasitesolutions.com/~bctincje/files/Tax-Services-Brochure.pdf.

Get Ready for Taxes: Stay home and stay safe with IRS online tools

Get Ready for Taxes: What’s new and what to consider when filing in

2021

Get Ready for Taxes: Steps to take now to make tax filing easier in

2021

Publication 5348 - Get Ready to File

Publication 5349 - Year Around Tax Planning for Everyone 

https://go.usa.gov/x7hPP

 https://www.irs.gov/pub5349

Tax Reform page

Tax Withholding Estimator 

Where's My Refund? tool or the IRS2Go app.

automated refund hotline at 800-829-1954

may take longer

See 

https://www.accountingtoday.com/news/irs-sees-delays-in-tax-refunds-and-quarterly-payments 

for more information.  

Taxpayers with excess advance payments of the Premium Tax Credit (excess

APTC) for 2020 are not required to file Form 8962, Premium Tax

Premium Tax Credit, or report an excess advance Premium Tax Credit repayment

on their 2020 Form 1040 or Form 1040-SR, Schedule 2, Line 2, when they file.  Source:  IR-2021-84, April 9, 2021.

https://taxfoundation.org/state-tax-forgiven-ppp-loans/

Please confirm any final edits or additions to your returns upon receipt. 

Once approved, your signature documents should be uploaded to launch your immediate e-filing income tax returns.

Please schedule your annual income tax interview to get your tax

organizer(s) and other important information at:  https://www.remotebusinesssolutionsinc.org/MeetingsClasses.php

 now.  Select the Client Annual Update

Meeting of your  choice by clicking on it.  More meeting openings will be scheduled soon so please check back if you cannot find an opening. 

E-mail Jeanine at Buben.Jeanine@comcast.net if you need assistance scheduling.

These meetings are private and will be confirmed for you only. 

Thank you.

Important Reminders Before Filing 2020 Tax Returns

Source:  NAEA E@lert, a publication of National Association of Enrolled Agents,

January 29, 2021.

"IR-2021-23, January 27, 2021. Following an unpredictable year with many

changes and challenges, IRS shared important reminders for taxpayers who are

about to file their 2020 federal tax returns. Following is a summary of reminders,

read full announcement (IR-2021-23) for additional details.

  • Choose direct deposit — The safest, most accurate and fastest way to get a refund is to electronically file and choose direct deposit.
  • Earned Income Tax Credit — The Earned Income Tax Credit (EITC) can give qualifying workers with low-to-moderate income a substantial financialboost.
  • Taxable unemployment compensation — Millions of Americans received unemployment compensation in 2020, many of them for
  • the first time.
  • Interest is taxable income — Many individual taxpayers who received a refund on their 2019 tax returns also received interest from the IRS.
  • Home office deduction — The home office deduction is available to qualifying self-employed taxpayers, independent contractors and those working in the gig economy.
  • Workers moving into the gig economy — Many people found different employment in 2020, including jobs in the gig economy. Taxpayers must report income earned in the gig economy on their tax return.
  • Charitable donation deduction for people who don't itemize — Individuals who take the standard deduction generally cannot claim a deduction for their charitable contributions. However, the CARES Act permits these individuals to claim a limited deduction on their 2020 federal income tax returns for cash contributions made to certain qualifying charitable organizations and still claim the standard deduction.
  • Disasters such as wildfires, flooding or hurricanes — Special tax law provisions may help taxpayers and businesses recover financially from the impact of a disaster, especially when the federal government declares their location to be a major disaster area."

Click her for tax services brochure:  https://cp7.cpasitesolutions.com/~bctincje/files/Tax-Services-Brochure.pdf.

Please schedule your annual income tax interview to get your tax organizer(s) and other important information at:  https://www.remotebusinesssolutionsinc.org/MeetingsClasses.php now.  Select the Client Annual Update Meeting of your  choice by clicking

on it.  Thank you.

2021 Tax Filing Season Begins Feb. 12; IRS outlines steps to speed

refunds during pandemic:  IR-2021-16, January 15, 2021.

 

                          

                                        

Don't forget that your business or entity, and you as an owner or other individual, may be liable for other tax complaince (tax returns and tax payments) as well as the income taxes featured during income tax

season (about January 28 through December 4 annually).  Our virtual

tax center has services and information that will help our clients meet

these obligations.

                              

https://www.irs.gov/individuals/steps-to-take-now-to-get-a-jump-on-next-years-taxes

Revenue Procedure 2020-51: This revenue procedure provides a safe harbor for certain Paycheck Protection Program loan participants, whose loan forgiveness has been partially or fully denied, or who decide to forego requesting loan forgiveness, to claim a deduction for certain otherwise deductible eligible payments on (1) the taxpayer’s timely filed, including extensions, original income tax return or information return, as applicable, for the 2020 taxable year, or (2) an amended return or an administrative adjustment request (AAR) under section 6227 of the Internal Revenue Code (Code) for the 2020 taxable year, as applicable.  For taxpayers that decide to forego requesting loan forgiveness, the safe also allows these taxpayer to claim a deduction for the otherwise deductible eligible payments on an original income tax return or information return, as applicable, for the taxable year in which the taxpayer decides to forego requesting forgiveness.

Revenue Ruling 2020-27: This revenue ruling provides guidance on whether a Paycheck Protection Program (PPP) loan participant that paid or incurred certain otherwise deductible expenses can deduct those expenses in the taxable year in which the expenses were paid or incurred if, at the end of such taxable year, the taxpayer reasonably expects to receive forgiveness of the covered loan.  The revenue ruling also provides guidance if, as of the end of the 2020 taxable year, the PPP loan participant has not applied for forgiveness, but intends to apply in the next taxable year.

Business Tax Provisions: The Year in Review (Source:  Newsletter, Dec. 2020)

Here's what business owners need to know about tax changes for 2020.

Standard Mileage Rates
The standard mileage rate in 2020 is 57.5 cents per business mile driven.

Health Care Tax Credit for Small Businesses
Small business employers who pay at least half the premiums for single health insurance coverage for their employees may be eligible for the Small Business Health Care Tax Credit as long as they employ fewer than the equivalent of 25 full-time workers and average annual wages do not exceed $50,000 (adjusted annually for inflation). This amount is $55,200 for 2020 returns.

In 2020 (as in 2014-2018), the tax credit is worth up to 50 percent of your contribution toward employees' premium costs (up to 35 percent for tax-exempt employers.

Section 179 Expensing and Depreciation
Under the Tax Cuts and Jobs Act of 2017, the Section 179 expense deduction increases to a maximum deduction of $1.04 million of the first $2.59 million of qualifying equipment placed in service during the current tax year. The deduction was indexed to inflation for tax years after 2018 and enhanced to include improvements to nonresidential qualified real property such as roofs, fire protection, and alarm systems and security systems, and heating, ventilation, and air-conditioning systems.

Businesses are allowed to immediately deduct 100% of the cost of eligible property placed in service after September 27, 2017, and before January 1, 2023, after which it will be phased downward over a four-year period: 80% in 2023, 60% in 2024, 40% in 2025, and 20% in 2026. The standard business depreciation amount is 27 cents per mile (up from 26 cents per mile in 2019).

Please call if you have any questions about Section 179 expensing and the bonus depreciation.

Work Opportunity Tax Credit (WOTC)
Extended through 2020 under the Further Consolidated Appropriations Act, 2020, the Work Opportunity Tax Credit can be used by employers who hire long-term unemployed individuals (unemployed for 27 weeks or more). It is generally equal to 40 percent of the first $6,000 of wages paid to a new hire. Please call if you have any questions about the Work Opportunity Tax Credit.

SIMPLE IRA Plan Contributions
Contribution limits for SIMPLE IRA plans increased to $13,500 for persons under age 50 and $16,500 for persons age 50 or older in 2020. The maximum compensation used to determine contributions is $285,000.

Please contact the office if you would like more information about these and other tax deductions and credits to which you are entitled.

Small Business: Deductions for Charitable Giving

Tax breaks for charitable giving aren't limited to individuals, your small business can benefit as well. If you own a small to medium-size business and are committed to giving back to the community through charitable giving, here's what you should know.

1. Verify that the Organization is a Qualified Charity

Once you've identified a charity, you'll need to make sure it is a qualified charitable organization under the IRS. Qualified organizations must meet specific requirements as well as IRS criteria and are often referred to as 501(c)(3) organizations. Note that not all tax-exempt organizations are 501(c)(3) status, however.

There are two ways to verify whether a charity is qualified:

  • Use the IRS online search tool; or
  • Ask the charity to send you a copy of their IRS determination letter confirming their exempt status.

2. Make Sure the Deduction is Eligible

Not all deductions are created equal. In order to take the deduction on a tax return, you need to make sure it qualifies. Charitable giving includes the following: cash donations, sponsorship of local charity events, in-kind contributions such as property such as inventory or equipment.

Lobbying. A 501(c)(3) organization may engage in some lobbying, but too much lobbying activity risks the loss of its tax-exempt status. As such, you cannot claim a charitable deduction (or business expense) for amounts paid to an organization if both of the following apply:

  • The organization conducts lobbying activities on matters of direct financial interest to your business.
  • A principal purpose of your contribution is to avoid the rules discussed earlier that prohibit a business deduction for lobbying expenses.

Further, if a tax-exempt organization, other than a section 501(c)(3) organization, provides you with a notice on the part of dues that is allocable to nondeductible lobbying and political expenses, you cannot deduct that part of the dues.

3. Understand the Limitations

Sole proprietors, partners in a partnership, or shareholders in an S-corporation may be able to deduct charitable contributions made by their business on Schedule A (Form 1040). Corporations (other than S-corporations) can deduct charitable contributions on their income tax returns, subject to limitations.

Cash payments to an organization, charitable or otherwise, may be deductible as business expenses if the payments are not charitable contributions or gifts and are directly related to your business. Likewise, if the payments are charitable contributions or gifts, you cannot deduct them as business expenses.

Sole Proprietorships. As a sole proprietor (or single-member LLC), you file your business taxes using Schedule C of individual tax form 1040. Your business does not make charitable contributions separately. Charitable contributions are deducted using Schedule A, and you must itemize in order to take the deductions.

Partnerships. Partnerships do not pay income taxes. Rather, the income and expenses (including deductions for charitable contributions) are passed on to the partners on each partner's individual Schedule K-1. If the partnership makes a charitable contribution, then each partner takes a percentage share of the deduction on his or her personal tax return. For example, if the partnership has four equal partners and donates a total of $2,000 to a qualified charitable organization in 2020, each partner can claim a $500 charitable deduction on their 2020 tax return.

A donation of cash or property reduces the value of the partnership. For example, if a partnership donates office equipment to a qualified charity, the office equipment is no longer owned by the partnership, and the total value of the partnership is reduced. Therefore, each partner's share of the total value of the partnership is reduced accordingly.

S-Corporations. S-Corporations are similar to Partnerships, with each shareholder receiving a Schedule K-1 showing the amount of charitable contribution.

C-Corporations. Unlike sole proprietors, partnerships, and S-corporations, C-Corporations are separate entities from their owners. As such, a corporation can make charitable contributions and take deductions for those contributions.

4. Categorize Donations

Each category of donation has its own criteria with regard to whether it's deductible and to what extent. For example, mileage and travel expenses related to services performed for the charitable organization are deductible but the time spent on volunteering your services is not.

Here's another example: As a board member, your duties may include hosting fundraising events. While the time you spend as a board member is not deductible, expenses related to hosting the fundraiser such as stationery for invitations and telephone costs related to the event are deductible.

Generally, you can deduct up to 50 percent of adjusted gross income. Non-cash donations of more than $500 require completion of Form 8283, which is attached to your tax return. In addition, contributions are only deductible in the tax year in which they're made.

5. Keep Good Records

The types of records you must keep vary according to the type of donation (cash, non-cash, out of pocket expenses when donating your services) and the importance of keeping good records cannot be overstated.

Ask for - and make sure you receive - a letter from any organizations stating that said organization received a contribution from your business. You should also keep canceled checks, bank and credit card statements, and payroll deduction records as proof or your donation. Furthermore, the IRS requires proof of payment and an acknowledgment letter for donations of $250 or more.

Questions about charitable donations? Help is just a phone call away.

Individual Taxpayers: Recap for 2020

(Source:  Newsletter, Dec. 2020)

As we close out the year and get ready for tax season, here's what individuals and families need to know about tax provisions for 2020.

Personal Exemptions
Personal exemptions are eliminated for tax years 2018 through 2025.

Standard Deductions
The standard deduction for married couples filing a joint return in 2020 is $24,800. For singles and married individuals filing separately, it is $12,400, and for heads of household, the deduction is $18,650.

The additional standard deduction for blind people and senior citizens in 2020 is $1,300 for married individuals and $1,650 for singles and heads of household.

Income Tax Rates
In 2020 the top tax rate of 37 percent affects individuals whose income exceeds $523,600 ($628,300 for married taxpayers filing a joint return). Marginal tax rates for 2020 are as follows: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. As a reminder, while the tax rate structure remained similar to prior years under tax reform (i.e., with seven tax brackets), the tax-bracket thresholds increased significantly for each filing status.

Estate and Gift Taxes
In 2020 there is an exemption of $11.58 million per individual for estate, gift, and generation-skipping taxes, with a top tax rate of 40 percent. The annual exclusion for gifts is $15,000.

Alternative Minimum Tax (AMT)
For 2020, exemption amounts increased to $72,900 for single and head of household filers, $113,400 for married people filing jointly and for qualifying widows or widowers, and $56,700 for married taxpayers filing separately.

Pease and PEP (Personal Exemption Phaseout)
Both Pease (limitations on itemized deductions) and PEP (personal exemption phase-out) have been eliminated under TCJA.

Flexible Spending Account (FSA)
A Flexible Spending Account (FSA) is limited to $2,750 per year in 2020 (up from $2,700 in 2019) and applies only to salary reduction contributions under a health FSA. The term "taxable year" as it applies to FSAs refers to the plan year of the cafeteria plan, which is typically the period during which salary reduction elections are made.

Long-Term Capital Gains
In 2020 tax rates on capital gains and dividends remain the same as 2019 rates (0%, 15%, and a top rate of 20%); however, taxpayers should be reminded that threshold amounts don't correspond to the tax bracket rate structure as they have in the past. For example, taxpayers whose income is below $40,000 for single filers and $80,000 for married filing jointly pay 0% capital gains tax. For individuals whose income is at or above $441,450 ($496,600 married filing jointly), the rate for both capital gains and dividends is capped at 20 percent.

Miscellaneous Deductions
Miscellaneous deductions that exceed 2 percent of AGI (adjusted gross income) are eliminated for tax years 2018 through 2025. As such, you can no longer deduct on Schedule A expenses related to tax preparation, moving (except for members of the Armed Forces on active duty who move because of a military order), job hunting, or unreimbursed employee expenses such as tools, supplies, required uniforms, travel, and mileage.

Business owners are not affected and can still deduct business-related expenses on Schedule C.

Individuals - Tax Credits (Source:  Newsletter, Dec. 2020)

Adoption Credit
In 2020 a nonrefundable (i.e., only those with tax liability will benefit) credit of up to $14,300 is available for qualified adoption expenses for each eligible child.

Child and Dependent Care Credit
The Child and Dependent Care Tax Credit was permanently extended for taxable years starting in 2013 and remained under tax reform. As such, if you pay someone to take care of your dependent (defined as being under the age of 13 at the end of the tax year or incapable of self-care) in order to work or look for work, you may qualify for a credit of up to $1,050 or 35 percent of $3,000 of eligible expenses.

For two or more qualifying dependents, you can claim up to 35 percent of $6,000 (or $2,100) of eligible expenses. For higher-income earners, the credit percentage is reduced, but not below 20 percent, regardless of the amount of adjusted gross income.

Child Tax Credit and Credit for Other Dependents
For tax years 2018 through 2025, the Child Tax Credit increases to $2,000 per child. The refundable portion of the credit increases from $1,000 to $1,400 - 15 percent of earned income above $2,500, up to a maximum of $1,400 - so that even if taxpayers do not owe any tax, they can still claim the credit. Please note, however, that the refundable portion of the credit (also known as the additional child tax credit) applies higher-income when the taxpayer isn't able to fully use the $2,000 nonrefundable credit to offset their tax liability.

Under TCJA, a new tax credit - Credit for Other Dependents - is also available for dependents who do not qualify for the Child Tax Credit. The $500 credit is nonrefundable and covers children older than age 17 as well as parents or other qualifying relatives supported by a taxpayer.

Earned Income Tax Credit (EITC)
For tax year 2020, the maximum earned income tax credit (EITC) for low and moderate-income workers and working families increased to $6,660 (up from $6,557 in 2019). The maximum income limit for the EITC increased to $56,844 (up from $55,952 in 2019) for married filing jointly. The credit varies by family size, filing status, and other factors, with the maximum credit going to joint filers with three or more qualifying children.

Individuals - Education Expenses (Source:  Newsletter, Dec. 2020)

Coverdell Education Savings Account
You can contribute up to $2,000 a year to Coverdell savings accounts in 2020. These accounts can be used to offset the cost of elementary and secondary education, as well as post-secondary education.

American Opportunity Tax Credit
For 2020, the maximum American Opportunity Tax Credit that can be used to offset certain higher education expenses is $2,500 per student, although it is phased out beginning at $160,000 adjusted gross income for joint filers and $80,000 for other filers.

Lifetime Learning Credit
A credit of up to $2,000 is available for an unlimited number of years for certain costs of post-secondary or graduate courses or courses to acquire or improve your job skills. For 2020, the modified adjusted gross income (MAGI) threshold at which the Lifetime Learning Credit begins to phase out is $114,000 for joint filers and $57,000 for singles and heads of household. The credit cannot be claimed if your MAGI is $67,000 or more ($134,000 for joint returns)

Employer-Provided Educational Assistance
As an employee in 2020, you can exclude up to $5,250 of qualifying postsecondary and graduate education expenses that are reimbursed by your employer.

Student Loan Interest
In 2020, you can deduct up to $2,500 in student-loan interest as long as your modified adjusted gross income is less than $65,000 (single) or $135,000 (married filing jointly). The deduction is phased out at higher income levels.

Individuals - Retirement (Source:  Newsletter, Dec. 2020)

Contribution Limits
For 2020, the elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan is $19,500 ($19,000 in 2019). For persons age 50 or older in 2020, the limit is $26,000 ($6,500 catch-up contribution).

Retirement Savings Contributions Credit (Saver's Credit)
In 2020, the adjusted gross income limit for the saver's credit for low and moderate-income workers is $65,000 for married couples filing jointly, $48,750 for heads of household, and $32,500 for married individuals filing separately and for singles. The maximum credit amount is $2,000 ($4,000 if married filing jointly). As a reminder, starting in 2018, the Saver's Credit can be taken for your contributions to an ABLE (Achieving a Better Life Experience) account if you're the designated beneficiary. However, keep in mind that your eligible contributions may be reduced by any recent distributions you received from your ABLE account.

If you have any questions about these and other tax provisions that could affect your tax situation, don't hesitate to call.

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