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Income Tax Season 2021

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

Please schedule your a

nnual 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.

Please see:  https://www.taxnotes.com/featured-news/irs-has-no-plans-extend-2021-filing-season-nationwide/2021/02/23/2zfs1.


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 financial boost.
  • 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."

IRS Newswire January 27, 2021

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Issue Number:    IR-2021-23

Inside This Issue


Important reminders before filing 2020 tax returns

WASHINGTON — Following an unpredictable year with many changes and challenges, the Internal Revenue Service today shared important reminders for taxpayers who are about to file their 2020 federal tax returns.

Choose direct deposit
The safest, most accurate and fastest way to get a refund is to electronically file and choose direct deposit. Direct deposit means any tax refund is electronically deposited for free into a taxpayer’s financial account.

Eight out of 10 taxpayers get their refunds by using direct deposit. It is simple, safe and secure. This is the same electronic transfer system used to deposit nearly 98% of all Social Security and Veterans Affairs benefits into millions of accounts.

Earned Income Tax Credit 
The Earned Income Tax Credit (EITC) can give qualifying workers with low-to-moderate income a substantial financial boost. EITC not only reduces the amount of tax someone owes but may give them a refund even if they don't owe any taxes or aren’t required to file a return.

People must meet certain requirements and file a federal tax return in order to receive this credit. The EITC assistant on IRS.gov can help people determine if they qualify.

The IRS reminds taxpayers that they may elect to use their 2019 earned income to figure the EITC if their 2019 earned income is more than their 2020 earned income. For details, see Publication 596, Earned Income Credit. Taxpayers also have the option of using their 2019 income to figure the Additional Child Tax Credit for 2020.

Taxable unemployment compensation
Millions of Americans received unemployment compensation in 2020, many of them for the first time. This compensation is taxable and must be included as gross income on their tax return.

Taxpayers can elect to have federal taxes withheld from their unemployment benefits or make estimated tax payments, but many do not take these options. In that case, taxes on those benefits will be paid when the 2020 tax return is filed. Taxes can be paid throughout the year. For safe and secure ways to pay taxes electronically go to IRS.gov/payments.
 
Taxpayers can find more details on taxable unemployment compensation in Tax Topic 418, Unemployment Compensation, or in Publication 525, Taxable and Nontaxable Income, on IRS.gov.

Interest is taxable income
Many individual taxpayers who received a refund on their 2019 tax returns also received interest from the IRS. The interest payments were largely the result of the postponed filing deadline of July 15 due to the COVID-19 pandemic.

The 2019 refund interest payments are taxable, and taxpayers must report the interest on their 2020 federal income tax return.

The IRS will send a Form 1099-INT to anyone who receives interest totaling at least $10. The average refund interest amount is $18, but the amount for each taxpayer varies based on the tax refund that the taxpayer received. Form 1099-INT will be issued no later than Feb. 1, 2021.

Home office deduction 
The home office deduction is available to qualifying self-employed taxpayers, independent contractors and those working in the gig economy.

However, the Tax Cuts and Jobs Act suspended the business-use-of-home deduction from 2018 through 2025 for employees. Employees who receive a paycheck or a W-2 exclusively from an employer are not eligible for the deduction, even if they are currently working from home. IRS Publication 587, Business Use of Your Home, provides more on the home office deduction.

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. However, gig-economy workers generally do not have taxes withheld from their pay as salaried workers normally do. The IRS encourages people earning income in the gig economy to consider making quarterly estimated tax payments to stay current with their federal tax obligations.

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. Nearly nine in 10 taxpayers now take the standard deduction and could potentially qualify.

Before making a donation, the IRS reminds people they can check the special Tax Exempt Organization Search (TEOS) tool on IRS.gov to make sure the organization is eligible for tax-deductible donations.

Under this change, individuals can claim a deduction of up to $300 for cash contributions made to qualifying charities during 2020. This deduction does not apply to donated property. The maximum deduction is $150 for married individuals filing separate returns. More information is available in Publication 526, Charitable Contributions, on IRS.gov.

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. Some 2020 tax deadlines in certain counties have been extended into 2021 due to recent wildfires, hurricanes or flooding.

February 1 deadline: Employers to issue and file wage statements; Businesses to provide Forms 1099-MISC and 1099-NEC to recipients


By law, employers are required to file copies of their Form W-2, Wage and Tax Statement, and Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration by January 31. However, since January 31 falls on a Sunday in 2021, the deadline is the next business day, Monday, February 1.

The IRS reminds businesses and other payors that the revised Form 1099-MISC, Miscellaneous Income, and the new Form 1099-NEC, Nonemployee Compensation, must be furnished to most recipients by February 1, 2021.

Filing Season Set to Begin Feb. 12

Filing Season Set to Begin Feb. 12

The Internal Revenue Service has set Friday, Feb. 12, 2021, as the start of the nation’s tax season. That’s the day the agency will begin accepting and processing 2020 tax year returns.

The IRS says the February start date for individual returns will give it time to do additional programming and testing of its computer systems in the wake of tax law changes that came through on Dec. 27, providing a second round of Economic Impact Payments.

These programming changes are termed “critical” by the IRS. If filing season opened without these changes in place, the agency says there could be a delay in getting refunds to taxpayers. The changes, they stress, ensure that eligible people will receive any remaining stimulus money as a Recovery Rebate Credit when they file their 2020 tax return.

In order to speed up the refund process, the IRS recommends filing electronically with direct deposit as soon as taxpayers have the filing information they need. People can file immediately using the tax professional of their choice. They’re starting to accept tax returns now; the returns will be held and transmitted to the IRS starting on Feb. 12.

"Planning for the nation's filing season process is a massive undertaking, and IRS teams have been working non-stop to prepare for this as well as delivering Economic Impact Payments in record time," said IRS Commissioner Chuck Rettig. "Given the pandemic, this is one of the nation's most important filing seasons ever. This start date will ensure that people get their needed tax refunds quickly while also making sure they receive any remaining stimulus payments they are eligible for as quickly as possible."

Last year's average tax refund was more than $2,500. More than 150 million tax returns are expected to be filed this year, with the vast majority before the April 15 deadline.

Some delays are the new normal

Taxpayers should keep in mind that under the PATH Act, the IRS cannot issue a refund involving the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) before mid-February.

The law gives additional time to help the IRS stop fraudulent refunds and claims from being issued—especially to identity thieves. Therefore, the IRS expects a refund available for these credits in the first week of March if taxpayers file electronically with direct deposit and there are no issues with their tax returns.

Taxpayers should check Where’s My Refund for their individual refund date.

Overall, the IRS anticipates nine out of 10 taxpayers will receive their refund within 21 days of when they file electronically with direct deposit if there are no issues with their tax return. The IRS urges taxpayers and tax professionals to file electronically. Avoid filing paper returns wherever possible to escape delays in processing.

Tips for faster filing

To speed refunds and help with tax filing, the IRS urges taxpayers and tax pros to follow some simple steps:

  • File electronically and use direct deposit for the quickest refunds.
  • Check IRS.gov for the latest tax information, including the latest on Economic Impact Payments. There is no need to call.
  • Those who may be eligible for stimulus payments should carefully review the guidelines for the Recovery Rebate Credit. Most people received Economic Impact Payments automatically, and anyone who received the maximum amount does not need to include any information about their payments when they file. However, those who didn't receive a payment or only received a partial payment may be eligible to claim the Recovery Rebate Credit when they file their 2020 tax return.
  • Remember, advance stimulus payments received separately are not taxable, and they do not reduce the taxpayer's refund when they file in 2021.

Dates to remember

Enter these dates on the calendar; they’re important for this year’s filing season:

  • January 29. Earned Income Tax Credit Awareness Day to raise awareness of valuable tax credits available to many people—including the option to use prior-year income to qualify.
  • February 12. IRS begins 2021 tax season. Individual tax returns start being accepted and processing begins.
  • February 22. Projected date for the IRS.gov Where's My Refund tool being updated for those claiming EITC and ACTC, also referred to as PATH Act returns.
  • First week of March. Tax refunds begin reaching filers claiming EITC and ACTC (PATH Act returns) for those who file electronically with direct deposit and there are no issues with their tax returns.
  • April 15. Deadline for filing 2020 tax returns.
  • October 15. Deadline to file for those requesting an extension on their 2020 tax returns

Patience will be rewarded

As we mentioned, the opening of filing season follows the IRS’ work to update its computer programming and to test its systems, so they can factor in the second Economic Impact Payments and other changes in the tax laws.

The changes are complex. It takes time to help ensure the proper processing of tax returns and refunds. To this, add the need for coordination with the rest of the tax software industry, and the Feb. 12 start date is the result.

The IRS says there’s simply no way around the later start: the agency simply must ensure its systems are prepared to properly process and check tax returns to verify the proper amount of EIPs are credited on taxpayer accounts—and provide remaining funds to eligible taxpayers.

And late starts to the filing season aren’t unknown. While tax seasons frequently begin in late January, there have been five instances since 2007 when filing seasons didn’t start for some taxpayers until February because of tax law changes made just before tax time.

SourceIR-2021-16

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.  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.

IRS Newswire January 22, 2021

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Issue Number:    IR-2021-18

Inside This Issue


IRS urges taxpayers to gather tax documents now for smooth filing later

WASHINGTON —The Internal Revenue Service is reminding taxpayers that organizing tax records is an important first step for getting ready to prepare and file their 2020 tax return.

Taxpayers should keep all necessary records, such as W-2s, 1099s, receipts, canceled checks and other documents that support an item of income, or a deduction or credit, appearing on their tax return.

Taxpayers should develop a system that keeps all their important information together, which could include a software program for electronic records or a file cabinet for paper documents in labeled folders. Having records readily at hand makes preparing a tax return easier.

To avoid refund delays, taxpayers should be sure to gather all year-end income documents so they can file a complete and accurate 2020 tax return.

Most taxpayers will receive income documents near the end of January including:

  • Forms W-2, Wage and Tax Statement
  • Form 1099-MISC, Miscellaneous Income
  • Form 1099-INT, Interest Income
  • Form 1099-NEC, Nonemployee Compensation
  • Form 1099-G, Certain Government Payments; like unemployment compensation or state tax refund
  • Form 1095-A, Health Insurance Marketplace Statements

View IRS account online
Taxpayers can view their online account allowing them to access the latest information available about their federal tax account and most recently filed tax return through a secure and convenient tool on IRS.gov. This can help taxpayers if they need information from last year’s return.

Additionally, in the coming weeks, individuals with an account on IRS.gov/account will be able to view the amounts of the Economic Impact Payments they received as well as the latest information available about their federal tax account. Eligible individuals who did not receive the full amounts of both Economic Impact Payments may claim the Recovery Rebate Credit on their 2020 federal tax return. In order to claim the full amount of the Recovery Rebate Credit, taxpayers will need to know the amount of the Economic Impact Payments received. 

Visit Secure Access: How to Register for Certain Online Self-Help Tools for more information about how to create an account or how to reset the username or password.

Remember unemployment compensation is taxable
Millions of Americans received unemployment compensation in 2020, many of them for the first time. This compensation is taxable and must be included as gross income on their tax return.

Taxpayers can expect to receive a Form 1099-G showing their unemployment income. Taxpayers can elect to have federal taxes withheld from their unemployment benefits or make estimated tax payments, but many do not take these options. In that case, taxes on those benefits will be paid when the 2020 tax return is filed. Therefore, taxpayers who did not have tax withheld from their payments may see a smaller refund than expected or even have a tax bill.

Individuals who receive a Form 1099-G for unemployment compensation they did not receive should contact their state tax agency and request a corrected Form 1099-G. States should not issue Forms 1099-Gs to taxpayers they know to be victims of identity theft involving unemployment compensation.

Taxpayers who are victims of identity theft involving unemployment compensation should not file an identity theft affidavit with the IRS.

Individuals can find more details on taxable unemployment compensation in Tax Topic 418, Unemployment Compensation, or in Publication 525, Taxable and Nontaxable Income, on IRS.gov.

Taxpayers can use 2019 income for Earned Income Tax Credit 
For taxpayers with income less than $56,844 in 2020, they may be eligible to claim the Earned Income Tax Credit. The EITC Assistant, available in English and Spanish, can help determine who is eligible. The EITC is as much as $6,660 for a family with children or up to $538 for taxpayers who do not have a qualifying child.

And this tax season, there’s a new rule that can help people impacted by a job loss or change in income in 2020. Under the COVID-related Tax Relief Act of 2020, taxpayers may elect to use their 2019 earned income to figure the credit if their 2019 earned income is more than their 2020 earned income. The same is true for the Additional Child Tax Credit. For details, see the instructions for Form 1040 or Publication 596, Earned Income Credit.

Electronic Filing makes filing easy
The best way to file a complete and accurate return is to file electronically and there are several options for doing this – some at no cost. Visit irs.gov/filing for more details about IRS Free File, Free File Fillable FormsFree tax preparation sites or by finding a trusted tax professional. Free File is a great option for people who are only filing a tax return to claim the Recovery Rebate Credit, either because they didn’t receive an Economic Impact Payment or did not receive the full amount.

Use IRS.gov
IRS tax help is available 24 hours a day on IRS.gov, the official IRS website, where people can find answers to tax questions and resolve tax issues online from the safety of their home. The Let Us Help You page helps answer most tax questions, and the IRS Services Guide links to other important IRS services.

2021 Tax Filing Season Begins Feb. 12; IRS outlines steps to speed refunds during pandemic:  IR-2021-16, January 15, 2021

IRS Newswire January 15, 2021

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Issue Number:    IR-2021-16

Inside This Issue


2021 tax filing season begins Feb. 12; IRS outlines steps to speed refunds during pandemic

WASHINGTON ? The Internal Revenue Service announced that the nation's tax season will start on Friday, Feb. 12, 2021, when the tax agency will begin accepting and processing 2020 tax year returns.

The Feb. 12 start date for individual tax return filers allows the IRS time to do additional programming and testing of IRS systems following the Dec. 27 tax law changes that provided a second round of Economic Impact Payments and other benefits.

This programming work is critical to ensuring IRS systems run smoothly. If filing season were opened without the correct programming in place, then there could be a delay in issuing refunds to taxpayers. These changes ensure that eligible people will receive any remaining stimulus money as a Recovery Rebate Credit when they file their 2020 tax return.

To speed refunds during the pandemic, the IRS urges taxpayers to file electronically with direct deposit as soon as they have the information they need. People can begin filing their tax returns immediately with tax software companies, including IRS Free File partners. These groups are starting to accept tax returns now, and the returns will be transmitted to the IRS starting Feb. 12.

“Planning for the nation’s filing season process is a massive undertaking, and IRS teams have been working non-stop to prepare for this as well as delivering Economic Impact Payments in record time,” said IRS Commissioner Chuck Rettig. “Given the pandemic, this is one of the nation’s most important filing seasons ever. This start date will ensure that people get their needed tax refunds quickly while also making sure they receive any remaining stimulus payments they are eligible for as quickly as possible.”

Last year’s average tax refund was more than $2,500. More than 150 million tax returns are expected to be filed this year, with the vast majority before the Thursday, April 15 deadline.

Under the PATH Act, the IRS cannot issue a refund involving the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) before mid-February. The law provides this additional time to help the IRS stop fraudulent refunds and claims from being issued, including to identity thieves.

The IRS anticipates a first week of March refund for many EITC and ACTC taxpayers if they file electronically with direct deposit and there are no issues with their tax returns. This would be the same experience for taxpayers if the filing season opened in late January. Taxpayers will need to check Where’s My Refund for their personalized refund date.

Overall, the IRS anticipates nine out of 10 taxpayers will receive their refund within 21 days of when they file electronically with direct deposit if there are no issues with their tax return. The IRS urges taxpayers and tax professionals to file electronically. To avoid delays in processing, people should avoid filing paper returns wherever possible.

Tips for taxpayers to make filing easier

To speed refunds and help with their tax filing, the IRS urges people to follow these simple steps:

  • File electronically and use direct deposit for the quickest refunds.
  • Check IRS.gov for the latest tax information, including the latest on Economic Impact Payments. There is no need to call.
  • For those who may be eligible for stimulus payments, they should carefully review the guidelines for the Recovery Rebate Credit. Most people received Economic Impact Payments automatically, and anyone who received the maximum amount does not need to include any information about their payments when they file. However, those who didn’t receive a payment or only received a partial payment may be eligible to claim the Recovery Rebate Credit when they file their 2020 tax return.  Tax preparation software, including IRS Free File, will help taxpayers figure the amount.
  • Remember, advance stimulus payments received separately are not taxable, and they do not reduce the taxpayer’s refund when they file in 2021.

Key filing season dates

There are several important dates taxpayers should keep in mind for this year’s filing season:

  • Jan. 15. IRS Free File opens. Taxpayers can begin filing returns through Free File partners; tax returns will be transmitted to the IRS starting Feb. 12. Tax software companies also are accepting tax filings in advance.
  • Jan. 29. Earned Income Tax Credit Awareness Day to raise awareness of valuable tax credits available to many people – including the option to use prior-year income to qualify.
  • Feb. 12. IRS begins 2021 tax season. Individual tax returns begin being accepted and processing begins.
  • Feb. 22. Projected date for the IRS.gov Where’s My Refund tool being updated for those claiming EITC and ACTC, also referred to as PATH Act returns.
  • First week of March. Tax refunds begin reaching those claiming EITC and ACTC (PATH Act returns) for those who file electronically with direct deposit and there are no issues with their tax returns.
  • April 15. Deadline for filing 2020 tax returns.
  • Oct. 15. Deadline to file for those requesting an extension on their 2020 tax returns

Filing season opening

The filing season open follows IRS work to update its programming and test its systems to factor in the second Economic Impact Payments and other tax law changes. These changes are complex and take time to help ensure proper processing of tax returns and refunds as well as coordination with tax software industry, resulting in the February 12 start date.

The IRS must ensure systems are prepared to properly process and check tax returns to verify the proper amount of EIP’s are credited on taxpayer accounts – and provide remaining funds to eligible taxpayers.

Although tax seasons frequently begin in late January, there have been five instances since 2007 when filing seasons did not start for some taxpayers until February due to tax law changes made just before the start of tax time.

All Taxpayers Now Eligible for Identity Protection PINs

All Taxpayers Now Eligible for Identity Protection PINs

The Internal Revenue Service is expanding just who is eligible for an Identity Protection PIN. In fact, the IRS has thrown open the gates and now says any taxpayer who can verify their identity can now get an IP PIN.

The IP PIN is a six-digit code that is known only to the taxpayer and the IRS. It helps to stop identity thieves from filing fraudulent tax returns using a taxpayer’s personally identifiable information.

"This is a way to, in essence, lock your tax account, and the IP PIN serves as the key to opening that account," said IRS Commissioner Chuck Rettig. "Electronic returns that do not contain the correct IP PIN will be rejected, and paper returns will go through additional scrutiny for fraud."

The IP PIN program was launched nearly a decade ago by the IRS, aimed at protecting confirmed identity theft victims from ongoing tax-related fraud.

In recent years, the IRS expanded the program to specific states where taxpayers could voluntarily opt-in to the IP PIN program. Now, that voluntary program is going nationwide.

Rules of the Game

The IRS says there are few ground rules to keep in mind about the IP PIN Opt-In program:

  • This is a voluntary program.
  • You must pass a rigorous identity verification process.
  • Spouses and dependents are eligible for an IP PIN if they can verify their identities.
  • An IP PIN is valid for a calendar year.
  • You must obtain a new IP PIN each filing season.
  • The online IP PIN tool is offline between November and mid-January each year.
  • Correct IP PINs must be entered on electronic and paper tax returns to avoid rejections and delays.
  • Never share your IP PIN with anyone but your trusted tax provider. The IRS will never call, text or email requesting your IP PIN. Beware of scams to steal your IP PIN.
  • There currently is no opt-out option but the IRS is working on one for 2022.

Getting an IP PIN

Taxpayers who want an IP PIN for 2021 should go online and visit IRS.gov/IPPIN. Use the Get an IP PIN tool.

The online process requires taxpayers to confirm their identities using the Secure Access authentication process. Taxpayers have to verify their identities if they do not already have an IRS account.

See IRS.gov/SecureAccess for what information taxpayers need to be successful in signing up. There is no need to file Form 14039, Identity Theft Affidavit, to opt into the program.

 Once taxpayers have authenticated their identities, their 2021 IP PIN will be revealed to them immediately. Once in the program, this PIN must be used when prompted by electronic tax returns or entered by hand near the signature line on paper tax returns.

All taxpayers are encouraged to first use the online IP PIN tool to obtain their IP PIN. Taxpayers who cannot verify their identities online, though, do have options.

Taxpayers whose adjusted gross income is $72,000 or less can complete Form 15227, Application for an Identity Protection Personal Identification Number, and mail or fax the form to the IRS. An IRS customer service representative will then contact the taxpayer and verify their identity by phone. Taxpayers should have their prior year tax return handy for the verification process.

Taxpayers who use this process will have an IP PIN mailed to them the following tax year. This is for security reasons. Once in the program, the IP PIN will be mailed to these taxpayers each year.

Those who can’t verify their identities online or by phone and are ineligible to file Form 15227  can contact the IRS and make an appointment at a Taxpayer Assistance Center to verify their identities in person. Taxpayers should bring two forms of identification, including one government-issued picture ID.

Taxpayers who can verify their identity through the in-person process will have an IP PIN mailed to them within three weeks. Once in the program, the IP PIN will be mailed to these taxpayers each year.

Identity Theft Victims are Safe

Those taxpayers who are confirmed victims of identity theft - or who have filed an identity theft affidavit because of suspected stolen-identity-refund fraud - will automatically receive an IP PIN by mail once their cases are resolved.

Current tax-related identity theft victims who have been receiving IP PINs by mail will see no change.

For more information on IP PINs, visit IRS.gov.IPPIN. The IRS is also encouraging tax professionals and employers to share information with taxpayers about the availability of an IP PIN. Tax pros and employers can print or email Publication 5367 or share IRS social media and e-poster products.

Bob Williams

Forget genes; I’ve got words in my DNA. Communication has been part of who I am nearly all my life. From a long career in radio news to another one in newspapers – and a University of Georgia journalism degree sandwiched between the two – language has been my life. I’ve also been fortunate to have learned the tax business from the ground up here at Drake, starting with 1040.com online forms some years ago before moving on to work on the Web. In all things tax-ish, we aim to give you tools you can use.

IMPORTANT DATES

January 2, 2021:
  • Drake begins receiving PRE-ACK bank products and sending to banks for processing
  • Drake begins receiving 1040, 990 and 1120 for tax year 2020
  • Drake begins receiving 1040, 1041, 1120, 1120S, 1065, and 990 for prior years 2017 through 2019
  • Drake begins transmitting to the CA Franchise Tax Board
***The IRS has not yet released the date they will begin accepting business and individual tax returns.***

Jeanine and the licensed professionals (enrolled agents, certified public accountants, attorneys  --  see https://www.remotebusinesssolutionsinc.org/LicensesCertifications.php) in our network provide professional tax services (https://www.remotebusinesssolutionsinc.org/ProfessionalTaxServices.php ) for our clients.  These include tax research, tax preparation, tax review, tax paralegal under the supervision of a licensed attorney, and taxpayer representation. 

Please go to the RBSI Tax Center at https://cp7.cpasitesolutions.com/~bctincje/RBSIVirtualTaxCenter.php for specific tax services and details about our virtual tax center.  You may also want to print or refer to the Tax Due Dates      page for federal and your state/local department of revenue for state/local tax due dates, and mark relevant dates on your calendar as well.  The continuously updated Tax Season 2021 information is a subpage located at https://cp7.cpasitesolutions.com/~bctincje/TaxSeason2021.php  under our Announcements page

Some helpful links re final 2020 tax planning:

http://file:///C:/Users/Owner/Desktop/Year-end%20tax%20planning%20for%202020%20by%20Thomson%20Reuters.pdf 

http://file:///C:/Users/Owner/Desktop/year%20end%20payroll%20reminders%202020.pdf

For more information about Economic Impact Payments and the 2020 Recovery Rebate, key information will be posted on IRS.gov/eip. Later this week, you may check the status of your payment at IRS.gov/GetMyPayment. For other COVID-19-related tax relief, visit IRS.gov/Coronavirus.

Para obtener más información sobre los pagos de impacto económico y el reembolso de recuperación del 2020, la información clave se publicará en IRS.gov/es/eip.  Durante la semana, podrán revisar el estado de su pago en IRS.gov/GetMyPayment. Para otros alivios tributarios relacionados con COVID-19, visite IRS.gov/es/Coronavirus.

December 17, 2020 Westminster, CO based virtual business services provider Business Consulting & Taxation, Inc. | Tax Season 2021 Page | Remote Business Solutions, Inc. 

'ncy transactions are becoming more common. There are many different types of virtual currencies, such as Bitcoin, Ethereum and Ripple. The sale or exchange of virtual currencies, the use of such currencies to pay for goods or services or holding such currencies as an investment generally has tax consequences. We can help you understand those consequences. 

Other tax matters to note

  • Purchases of property and equipment – With tax-favorable options available to businesses, many purchases can be completely written off in the year they are placed in service. Plus, there were tax-favorable rules passed in the CARES Act that permit qualified improvement property to qualify for 15-year depreciation and, therefore, also be eligible f'
  • otice or letter from the Internal Revenue Service (IRS) regarding a tax return, tax bill or income that doesn’t apply to you
  • Get an unsolicited email or another form of communication asking for your bank account number or other financial details or personal information
  • Receive a robocall insisting you must call back and settle your tax bill

Make sure you’re taking steps to keep your personal financial information safe. Let us know if you have questions or concerns about how to go about this.  

The Affordable Care Act (ACA) and your taxes

The U.S. Supreme Court is expected to rule on the constitutionality of the ACA in 2021. Thoug

do not have hea'place. Contact us if you have questions about how this affects you.

retirement pla

e advantage of health savings accounts that can help you reduce your taxes and save for your future. We can help you determine whether you’re on target to reach your retirement goals.

Virtual currenc

y/cryptocurren

cy

Virtual currency transactions are becoming more common. There are many different types of virtual currencies, such as Bitcoin, Ethereum and Ripple. The sale or exchange of virtual currencies, the use of such currencies to pay for goods or services or holding such currencies as an investment generally has tax consequences. We can help you understand those consequences.  

Year-end planning equals fewer surprises

There are many other opportunities to discuss as year-end approaches. And, many times, there may be strategies such as deferral of income, prepayment of expenses, etc., that can help you save taxes. We are here to help.

Whether it’s working toward retirement or getting answers to your tax and financial questions, we’re here for you. Please contact our office today at 303-900-7265, buben.jeanine@comcast.net, or on the Appointments page of our website at https://www.remotebusinesssolutionsinc.org/appointments.php to set up your year-end review and your income tax seaon interview (tax organizer). As always, planning ahead can help you minimize your tax bill and position you for greater success.

If you are a low income client or visitor looking for free or low-income tax services, please visit the Internal Revenue Service (IRS) website for their VITA Program locations, or the AARP website for their senior citizen tax service program sites.  You may be asked to submit proof of low income in order to use these services.  Per the Internal Revenue Service free tax services https://www.irs.gov/pub/irs-pdf/p3676bsp.pdf:

The VITA program offers free tax help to people who make $57,000 or less, persons with disabilities and limited English-speaking taxpayers.

The TCE program offers free tax help to those who are 60 years of age and older. TCE volunteers specialize in questions about pensions and retirement-related issues unique to seniors.

Per AARP: 

   AARP does offer free in-person tax help. Our Tax-Aide sites are open annually from late January/early February to April 15. To find a location near you or for the latest updates, go to aarpfoundation.org/taxhelp.

If you are preparing your own income tax returns or other types of tax returns, you may want to visit the Self-Prepared returns links in our RBSI Virtual Tax Center or the https://www.irs.gov and your state/local departments of revenue for forms and instructions.  Jeanine will not be assisting clients or non-clients with the use of free tax software or free tax preparation services.  Tax consulting must be pre-paid on an hourly basis.

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:

 

COVID Tax Tip 2020-159: Here’s what taxpayers can do now to Get Ready to file taxes in 2021

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Issue Number: COVID Tax Tip 2020-159


Here’s what taxpayers can do now to Get Ready to file taxes in 2021


There are steps people can take now to make sure their tax filing experience goes smoothly in 2021. First, they can visit the Get Ready page on IRS.gov.

Here are a few other things people can do now:

Check their withholding and make any adjustments soon
Since most taxpayers typically only have a few pay dates left this year, checking their withholding soon is especially important. It's even more important for those who:
  • Received a smaller refund than expected after filing their 2019 taxes this year.
  • Owed an unexpected tax bill last year.
  • Experienced personal or financial changes that might change their tax liability.

Some people may owe an unexpected tax bill when they file their 2020 tax return next year, if they didn’t have enough withheld throughout the year. To avoid this kind of surprise, taxpayers should use the Tax Withholding Estimator to perform a quick paycheck or pension income checkup. Doing so helps them decide if they need to adjust their withholding or make estimated or additional tax payments now.

Gather tax documents and keep them for at least three years
Everyone should come up with a recordkeeping system. Whether it's electronic or paper, they should use a system to keep all important information in one place. Having all needed documents on hand before they prepare their return helps them file a complete and accurate tax return. This includes:
  • Their 2019 tax return.
  • Form W-2 from employers.
  • Form 1099 from banks and other payers.
  • Forms 1095-A from the marketplace for those claiming the premium tax credit.
  • Form 1099-NEC, Nonemployee Compensation
  • Notice 1444, Your Economic Impact Payment.

Most income is taxable, including unemployment compensation, refund interest and income from the gig economy and virtual currencies. Therefore, taxpayers should also gather any documents from these types of earnings. People should keep copies of tax returns and all supporting documents for at least three years.

Confirm mailing and email addresses
To make sure forms make it to the taxpayer on time, people should confirm now that each employer, bank and other payer has the taxpayer's current mailing address or email address. Typically, forms start arriving by mail or are available online in January.

Remember these new things when preparing for the 2021 tax filing season
  • Taxpayers may be able to claim the recovery rebate credit if they met the eligibility requirements in 2020 and one of the following applies to them:

     - They didn't receive an Economic Impact Payment in 2020.
     - They are single and their payment was less than $1,200.
     - They are married, filed jointly for 2018 or 2019 and their payment was less than $2,400.
     - They didn’t receive $500 for each qualifying child.

  • Taxpayers who received a federal tax refund in 2020 may have been paid interest. The IRS sent interest payments to individual taxpayers who timely filed their 2019 federal income tax returns and received refunds. Most interest payments were received separately from tax refunds. Interest payments are taxable and must be reported on 2020 federal income tax returns. In January 2021, the IRS will send a Form 1099-INT, Interest Income to anyone who received interest totaling at least $10.


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IRS Newswire February 11, 2021

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Issue Number:    IR-2021-36

Inside This Issue


Get ready for tax season using IRS Online Account

WASHINGTON — The Internal Revenue Service today reminded taxpayers they can securely access their IRS account information through their individual online account.

The IRS regularly adds features to online account. For example, people can now check the amounts of their Economic Impact Payments (EIPs) to help them accurately calculate any Recovery Rebate Credit they may be eligible for on their 2020 tax return. The EIP amounts can be found on the Tax Records tab. Amounts will show as “Economic Impact Payment” for the first payment and “Additional Economic Impact Payment” for the second payment. For married filing joint individuals, each spouse will need to sign into their own account to retrieve their portion of the payments. For more information regarding the credit, see Recovery Rebate Credit. Additionally, taxpayers can view:

  • The amount they owe, updated for the current calendar day
  • Their balance details by year
  • Their payment history and any scheduled or pending payments
  • Key information from their most recent tax return
  • Details about their payment plan, if they have one
  • Digital copies of select notices or letters from the IRS (under the Message Center tab)

They can also:

  • Make a payment online
  • See payment plan options and request a plan via Online Payment Agreement
  • Access their tax records via Get Transcript

Later in 2021, taxpayers will be able to digitally sign certain authorization forms, such as a power of attorney, initiated by their tax professional.

Here’s how to get started for new users:

  1. Select View Your Account at IRS.gov homepage
  2. Select the “Create or View Your Account” button
  3. Click “Create Account”
  4. Pass “Secure Access” authentication. This is a rigorous process to verify that the taxpayers are who they say they are. They must be able to authenticate their identity to continue. See www.irs.gov/secureaccess for details.
  5. Create a profile.

Once the initial authentication process is complete, returning users can use the same username and password to access other IRS online services such as Get Transcript and Get An Identity Protection PIN (IP PIN) (if applicable).

All password-protected online IRS tools for taxpayers are protected by multi-factor authentication, offering extra security precautions.

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.



IRS Newswire February 11, 2021

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Issue Number:    IR-2021-36

Inside This Issue


Get ready for tax season using IRS Online Account

WASHINGTON — The Internal Revenue Service today reminded taxpayers they can securely access their IRS account information through their individual online account.

The IRS regularly adds features to online account. For example, people can now check the amounts of their Economic Impact Payments (EIPs) to help them accurately calculate any Recovery Rebate Credit they may be eligible for on their 2020 tax return. The EIP amounts can be found on the Tax Records tab. Amounts will show as “Economic Impact Payment” for the first payment and “Additional Economic Impact Payment” for the second payment. For married filing joint individuals, each spouse will need to sign into their own account to retrieve their portion of the payments. For more information regarding the credit, see Recovery Rebate Credit. Additionally, taxpayers can view:

  • The amount they owe, updated for the current calendar day
  • Their balance details by year
  • Their payment history and any scheduled or pending payments
  • Key information from their most recent tax return
  • Details about their payment plan, if they have one
  • Digital copies of select notices or letters from the IRS (under the Message Center tab)

They can also:

  • Make a payment online
  • See payment plan options and request a plan via Online Payment Agreement
  • Access their tax records via Get Transcript

Later in 2021, taxpayers will be able to digitally sign certain authorization forms, such as a power of attorney, initiated by their tax professional.

Here’s how to get started for new users:

  1. Select View Your Account at IRS.gov homepage
  2. Select the “Create or View Your Account” button
  3. Click “Create Account”
  4. Pass “Secure Access” authentication. This is a rigorous process to verify that the taxpayers are who they say they are. They must be able to authenticate their identity to continue. See www.irs.gov/secureaccess for details.
  5. Create a profile.

Once the initial authentication process is complete, returning users can use the same username and password to access other IRS online services such as Get Transcript and Get An Identity Protection PIN (IP PIN) (if applicable).

All password-protected online IRS tools for taxpayers are protected by multi-factor authentication, offering extra security precautions.

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