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2021 may be a good year to donate to your favorite charity. The above the line tax deduction has been extended to tax year 2021 and they made it better. For 2021 you can donate $300 above the line deduction for charity contributions or $600 for couples filing jointly. Take advantage of this deduction and help those in need.

Many taxpayers are unaware of the good that can come from a ROTH IRA Conversion. If you think you will have a low income year and you have cash to pay for the income tax that is generated due to the conversation, please speak to you financial advisor to see if a conversion is right for you. Imagine, in a market decline, you covert $60,000 and 2 years later it’s worth $75,000, tax free Roth-IRA. Not a bad tax strategy. However, there are many considerations you must make before making this move.

Tax myth If you file for an extension, you don’t have to pay your taxes until you file your return. It’s so easy to get an extension that some taxpayers believe that they don’t have to pay until they file. That’s not true. The requirements for requesting an extension can be found at Treas. Reg. 1.6081-4(b), and the language making clear an extension of time to file won’t extend the time to pay the tax due is in the Treas. Reg. 1.6081-4(c). Failure to pay on time can result in penalties.

Other than a 401-K contribution this is my favorite tax deduction because if used properly you will never pay taxes on that contribution. I personally love this plan. It’s called the HEALTH SAVINGS ACCOUNT. Health savings accounts are available to those who have high-deductible health insurance coverage and who want to set money aside to cover healthcare costs. Contribution amounts of up to $3,550 for those with self-only policies or $7,100 for family policies apply in 2020, with minimum annual deductibles of $1,400 or $2,800 respectively required to qualify for high-deductible health plan status. Catch-up contributions of $1,000 are available if you're 55 or older, but a qualifying plan must have maximum out-of-pocket expenses of $6,900 for self-only policies or $13,800 for family coverage.

Self-employed people can deduct office expenses on Schedule C (Form 1040) whether they work from home or not. This write-off covers office supplies, postage, computers, printers, and all the other ordinary and necessary stuff you need to run an office. The home office deduction may also be available to self-employed peopleif they can satisfy all the requirements. This tax break covers expenses for the business use of your home, including mortgage interest, rent, insurance, u...tilities, repairs, and depreciation. It doesn't matter what type of home you have, eithersingle family, townhouse, apartment, condo, mobile home, or even a boat. You can also claim the deduction if you work in an outbuilding on your property, such as an unattached garage, studio, barn, or greenhouse. The key to the home-office deduction is to use part of your home "regularly and exclusively" as your principal place of business. If you only worked from home for part of the year, you can only claim the deduction for the period that you can satisfy the "regularly and exclusively" requirements. See more

Form 1099-MISC and Form 1099-NEC changes Beginning in tax year 2020, Form 1099-MISC has been revamped and Form 1099-NEC is back. Because of these changes, employers will no longer report nonemployee compensation of $600 or more on Form 1099-MISC. These types of payments to non-employees should be reported on a Form 1099-NEC. These payments include commissions, fees, prizes, awards, or any form of compensation to nonemployees. These forms should be given to the payee and filed with the IRS by Jan. 31 each year.

For those that donated in 2020. The CARES Act has suspended the 60% of AGI limit for most charitable cash deductions, which allows for more deductions by taxpayers who itemize. This does not apply if the cash donations go to a donor-advised fund or private foundation. Additionally, taxpayers who don't itemize can deduct up to $300 of qualified charitable cash contributions. This applies only to cash donations. Not for clothes to goodwill, for example.

PPP Loan Webinar Are you a Small Business Owner, Independent Contractor or Self-Employed? You can qualify for the Paycheck Protection Program!... Carlos Romero, The PayrollPro will be discussing important topics on how to apply for the PPP loan, answer questions and much more... Friday, April 24th @ 11am Registration Link: https://bnionline.zoom.us//regis/WN_JM1F2Q8ZSjajEWe3V5H30Q

How to obtain a much needed business loan due to the effects the Coronavirus had on your business. For more information, please click the link below. https://www.sba.gov/disaster-assistance/coronavirus-covid-19

The Internal Revenue Service today has clarified that the deadline for making Individual Retirement Account and Health Savings Account contributions for the 2019 tax year has been extended to July 15, 2020. That’s the new deadline for filing and paying taxes for the 2019 tax year, pushed back from April 15, 2020, as COVID-19 continues to impact the United States.

The State of California Postpones Tax Deadline for California Taxpayers Affected by the COVID-19 Pandemic Sacramento The Franchise Tax Board announced special tax relief for California taxpayers affected by the COVID-19 pandemic. Affected taxpayers are granted an extension to file 2019 California tax returns and make certain payments to June 15, 2020, for all tax filings and payments due between March 15, 2020, through June 15, 2020. https://www.ftb.ca.gov/

Individuals and businesses will have an extra 90 days to pay the IRS if they owe additional income tax for 2019, Treasury Secretary Steven Mnuchin said Tuesday. Normally, taxpayers owe the amount due by April 15. But as part of the government's response to the coronavirus, individual and small business filers will be able to defer payments of up to $1 million and corporations can defer up to $10 million -- without incurring interest or penalties. But taxpayers should still file their federal returns by April 15, Mnuchin said. "We encourage those Americans who can file their taxes, to continue to file their taxes on April 15 because for many Americans you will get tax refunds. We don't want you to lose out on those tax refunds," Mnuchin said.

The Tax Cuts and Jobs Act, which was passed in late 2017, created massive changes, starting for filers of 2018 tax returns. And while the bulk of the tax reform has already been rolled out, keep an eye out for these tweaks and delayed changes impacting 2019 taxes, which are filed by the 15th of April 2020. To ensure that your taxes are done correctly, please contact us at 626.332.5900 for a FREE consultation.

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If you need money and plan to take money out of a retirement account, please take the following into consideration: 1. You will be taxed on the distribution. Therefore, please request that they take out the required federal and state taxes. 2. 10% additional tax/penalty on the distribution if you have not reached the age of 59 1/2. ... Please speak to your tax advisor before you take money out of a retirement account to avoid paying taxes, penalties and interest on the distribution.

The child tax credit was modified for 2018 and this is the description of the credit in a nutshell. The child tax credit is $2,000 for each qualifying child under the age of 17. The credit is subject to income limitations and may be reduced or eliminated depending on a person’s filing status and income. The Tax Cuts and Jobs Act also temporarily provides a $500 nonrefundable credit for qualifying dependents other than qualifying children. $1,400 of the child tax credit is... refundable. A qualifying child is an individual for whom the taxpayer can claim a dependency exemption and who is a son, daughter, stepson or stepdaughter (or descendant of either), or a brother, sister, stepbrother or stepsister (or descendant of either) for whom the taxpayer cares as the taxpayer’s own child, or an eligible foster child of the taxpayer. The full credit is available to single parents with modified adjusted gross incomes (MAGIs) of $200,000 or less or to couples filing jointly with MAGIs of $400,000 I have reviewed a handful of returns that have mistakes when calculating or determining if the credit applies to them. If you have children under the age of 17, please make sure you ask your tax professional to indicate the credit amount reported on your tax return.

I get a lot of questions regarding the Child Care Credit. Let me explain it. You may be able to claim the child and dependent care credit if you paid work-related expenses for the care of a qualifying individual. The credit is generally a percentage of the amount of work-related expenses you paid to a care provider for the care of a qualifying individual. The percentage depends on your adjusted gross income.... Work-related expenses qualifying for the credit are those paid for the care of a qualifying individual to enable you to work or actively look for work. The expenses qualifying for the credit must be reduced by the amount of any dependent care benefits provided by your employer that you exclude from gross income. The total expenses qualifying for the credit are capped at $3,000 (for one qualifying individual) or at $6,000 (for two or more qualifying individuals). Also, make sure to keep receipts of all payments made for qualified child care services because you will need them at time of your tax preparation.

What is the student loan interest deduction? When you repay student loans, you’re not just paying down the original balance; you’re paying interest, too. The student loan interest deduction will let you subtract your interest payments from your taxable income if you earned less than $65,000 last year. Grads who earned between $65,000 and $80,000 can deduct a reduced amount of interest. If you qualify, you can take the student loan interest deduction even if you don’t itemize.... That is, you can take the student loan interest deduction and the standard deduction, too. If your parent took out a loan for you, he or she will take the deduction. But neither of you can take it if the loan is in your name and you’re listed as a dependent on your parent’s tax return. If you’re an overachiever who is making student loan payments while still in school, you can take this deduction too. It’s not just for graduates doing taxes.