Mira Mesa Tax Services Inc

Tax Rules for Tuition Refunds and Section 529 Plans Did You Know? Many families and students may have received partial or complete refunds of school tuition and fees during the spring of 2020 as a result of the COVID-19 (coronavirus) pandemic. If you paid for these expenses using a Section 529 education savings plan (also called a Qualified Tuition Program, or QTP), your refund could be taxable income, and/or subject to a 10% penalty on interest earned by the account. Howev...er, it is usually possible to avoid these taxes and penalties by properly handling the refunded money and carefully documenting your transactions. One option is to redeposit the funds into the same account from which they were originally taken, or a different QTP account set up for the same child. Generally, such redeposits or rollovers do not count toward your annual contribution limit. To avoid tax implications, a redeposit or rollover of a QTP education expense refund ordinarily must be completed within 60 days of receiving the refund. However, special tax rules for the spring of 2020 may enable you to complete the reinvestment transaction within 60 days or by July 15, whichever comes later. Be sure to keep documentation of all actions taken. If redepositing your refund is impractical, you may still be able to avoid paying tax on it by using the funds for other qualifying education expenses. In addition to tuition and fees, qualifying expenses may include computers and education-related software that will be used primarily by a child who is enrolled at an eligible postsecondary school. A tax professional can help you identify your best option to manage your refund, ensure that you complete any necessary transactions by the appropriate deadline, and maintain all records required by IRS rules.

Key Facts About IRS Economic Impact Payments (EIPs) Did You Know? Although the IRS has sent out over 100 million Economic Impact Payments (also called stimulus payments), some Americans are still waiting to receive their payments. Even if you have gotten your EIP, you may have questions about how the money affects your income or taxes. The IRS recently issued answers to some of the most common questions about EIPs, including: - EIPs are NOT taxable income. You do not need t...o report your EIP on your 2020 tax return or pay tax on it, and it will not affect your eligibility for government programs with income limits. - If you are not required to file a federal tax return but receive Form SSA-1099 or RRB-1099 for Social Security or Railroad Retirement benefits, you can use the IRS Get My Payment portal (see below) to check on the status of your EIP. - If your direct deposit information has changed since you last filed a tax return and received a refund, you can NOT use the Get My Payment portal to provide the IRS with new account information. If your old account number is no longer valid or the account has been closed, the bank will return your EIP to the IRS. The Get My Payment portal will then be updated to show that you will receive a check in the mail, with an estimated delivery date. - If you are a U.S. citizen living abroad, you qualify to receive an EIP as long as you do not exceed the income limit, are eligible to file IRS Form 1040 or 1040 SR, have a valid Social Security Number (SSN) and cannot be claimed as a dependent by another taxpayer. The basic income limit is $99,000 for individuals or $198,000 for joint filers. Finally, the IRS reminds all Americans to stay alert for scams related to EIPs. You should ONLY provide your private information to the IRS through the official Get My Payment portal. Anyone who requests your bank or tax information in order to help you get your EIP, or asks you to sign your EIP check over to them, is a scammer. Hang up or delete the message immediately. IRS Get My Payment Portal: https://www.irs.gov/coronavirus/get-my-payment

Economic Impact Payments by Prepaid Debit Card Did You Know? As part of the U.S. Treasury's ongoing effort to get COVID-19 Economic Impact Payments (EIPs, also called stimulus payments) to all eligible Americans, the IRS has begun sending payments by prepaid debit card in addition to direct deposits and paper checks. Many people who are still waiting for their payments will receive these prepaid cards in the coming weeks. You can do any of the following with an EIP prepaid ...debit card with no transaction fees, until you use up the balance on the card: - Make purchases anywhere Visa is accepted, including online and in-person stores - Transfer funds from the card to your bank account - Get cash from in-network ATMs (the ATM will tell you if it is not in-network, which could result in fees being charged) - Check your card balance 24/7 by phone, online, or by using the mobile app Prepaid debit cards also offer built-in protection against loss, fraud, theft or other unauthorized use. If you already have a prepaid debit card and the IRS has not yet scheduled your payment, you may be able to request that your EIP be loaded directly onto your existing card. To find out if you are eligible for this option, visit either the Get My Payment IRS portal or the Non-Filers: Enter Payment Info Here page (see links below). NOTE: EIP prepaid debit cards will NOT come in an IRS or U.S. Treasury envelope. Instead, the card will arrive in a plain envelope from Money Network Cardholder Services, with a letter explaining that the card has been preloaded with your EIP. The front of the card has a Visa logo, while the back displays the name of the issuing bank, Metabank, N.A. The letter also explains how to activate and use the card, or you can learn more at www.eipcard.com. IRS Get My Payment portal for federal return filers: https://www.irs.gov/coronavirus/get-my-payment IRS Non-Filers Enter Payment Info Here Portal: https://www.irs.gov/coro/non-filers-enter-payment-info-here

2020 Adjustments to Standard Deductions and Tax Brackets Did You Know? The IRS has updated the 2020 inflationary adjustments for both standard deductions and the income limits for marginal tax rates. For individual taxpayers, the standard deduction for 2020 will be $12,400, up $200 from the 2019 amount. The deduction for joint filers will increase by $400 to $24,800, while the head-of-household deduction will be $18,650, an increase of $300 from 2019. As a reminder, there a...re no personal exemptions for tax year 2020, since the Tax Cuts and Jobs Act (TCJA) eliminated them through tax year 2025. The maximum income for every tax rate bracket is also increasing in 2020. For example, in 2019, the jump from the 24% to the 32% tax rate occurred for individual incomes over $160,725 ($321,450 for married filing jointly). For 2020, the 32% rate will apply to incomes above $163,300 for individuals, or $326,600 for joint filers.

IRS Adjusts Tax Residency Rules for Travelers Affected by COVID-19 Did You Know? As part of its COVID-19 (coronavirus) tax relief package, the IRS is offering waivers of certain tax rules for individuals and businesses affected by coronavirus-related travel disruptions. Under standard IRS policies, anyone who spends time within the U.S. on a certain number of days during the tax year (for example, 31 days for most nonresident aliens) must pay taxes as a U.S. resident. This ...rule is known as the substantial presence test. Similarly, American taxpayers living in foreign countries must spend a specified number of days in their claimed country of residence in order to exclude foreign income from U.S. taxation. Key IRS tax residency rules adjustments for 2020 include: - For a person who visited the U.S., up to 60 consecutive days of presence in the U.S. may not be counted when determining if the person meets the substantial presence test for taxation as a resident. In most cases, this COVID-19 Emergency Period must have begun on or after February 1, 2020. - For residents of foreign countries, certain days spent away from their home countries may not jeopardize their national residency status for the purpose of excluding foreign income from U.S. taxation. - When performing calculations to determine if they are engaged in a U.S. trade or business for tax purposes, some businesses may exclude up to 60 consecutive days of conducting business activities within the U.S. You may only claim these exemptions for days on which your personal or business activities took place in an unplanned location, as a result of travel disruptions caused by the COVID-19 pandemic. A tax advisor can help you determine whether your travel or business activities qualify for an exemption, and how the exemption rules affect your U.S. tax status.

2020 IRA Required Minimum Distributions Waived Did You Know? The CARES Act that was signed into law on March 27, 2020 includes an important provision for taxpayers with various retirement accounts, including 401(k), 403(b), 457(b), traditional Individual Retirement Accounts (IRAs), and designated Roth accounts. For many taxpayers, the law waives their obligation to withdraw a certain amount from such accounts (called a required minimum distribution, or RMD) during tax year ...2020. Under standard IRS rules for the above retirement account types, you would need to accept a 2020 RMD if you turn 72 years of age in 2020, turned 70 1/2 in 2019 or before, or are any age and inherited the account as a beneficiary. RMDs are usually taxed as ordinary income. However, the CARES act allows you to skip your 2020 RMD without penalty. Note that Roth IRAs are not affected by this waiver, since they do not have RMDs under normal circumstances.

IRS Suspends Many Installment Payments Until July Did You Know? To help people undergoing hardships as a result of the COVID-19 crisis, the IRS has launched a set of new policies called the People First Initiative (PFI). The initiative provides temporary relief from certain payment obligations for many taxpayers, including those who either have an existing IRS installment payment plan, or are considering entering into such a plan. For existing installment agreements, paymen...ts due between April 1 and July 15, 2020 are suspended at the taxpayer's discretion. In other words, if you are currently unable to make the payments required under your installment agreement (including Direct Debit payments), you may discontinue your payments until July 15. However, if you can make any payments during this period you should do so, since interest will continue to accumulate on unpaid balances. The IRS strongly encourages taxpayers who cannot afford to pay their federal taxes to enter into a new installment agreement as soon as possible. The April 1-July 15 payment suspension period will apply to new agreements as well as existing ones. A tax professional can help you determine your eligibility to suspend your installment tax payments, and whether it is best to do so. The IRS will not default any installment agreements during the suspension period. In addition, many collection activities, such as liens, levies, and referrals to third-party collection agencies, have been suspended until July 15. However, field collection officers may continue to pursue compliance from some high-income taxpayers.

VA and SSI Recipients: Register Dependents by May 5th to Receive Full EIP Recipients of Veterans Affairs (VA) and/or Supplemental Security Income (SSI) benefits will automatically receive an Economic Impact Payment (EIP) from the IRS, even if they are not required to file federal income tax returns. While the standard EIP amount for non-filers is $1,200, those with children under the age of 17 may be eligible to receive an additional $500 per qualifying child. If you are a no...n-filer who receives VA and/or SSI benefits and have dependent children, you must act by May 5 in order to receive your full EIP amount quickly. You can provide the required information on your dependent children to the IRS by using a special form on the IRS website. In most cases, if you register your children by May 5, your additional payment amount will simply be added to your $1,200 basic EIP. If you have already received your $1,200 payment but still register your children by May 5, your additional payment will come soon after you register. If you do not provide the IRS with information on your children by May 5, your additional stimulus payment may be substantially delayed. In many cases, those who do not register their children by the deadline will not receive their additional EIPs until they file a return for tax year 2020. Online form to provide information on children to IRS: https://www.irs.gov/coro/non-filers-enter-payment-info-here

Coronavirus-related Tax Scams Did You know? The IRS warns everyone to watch out for scam phone calls, emails and text messages related to COVID-19 (coronavirus) tax relief programs during the spring of 2020. This new wave of phishing attempts and other criminal activity centers on the Economic Impact Payments (EIPs) that the IRS is currently distributing to many U.S. taxpayers. The scammers might incorrectly refer to these payments as Stimulus Checks or Stimulus Payments.... As a reminder, most taxpayers do not need to take any action in order to receive their EIPs. The IRS will NOT call, email or text you to request private information such as your address or bank account number. If anyone claiming to represent the IRS requests such information from you, asks you to sign over your EIP check, or suggests that they can get your EIP to you faster, you should immediately hang up or delete the message. You can also help the IRS to identify, track down and prosecute perpetrators by forwarding any suspicious emails you receive to [email protected]. If you are unsure whether a call or message you receive is legitimate, treat it as a scam and then contact the IRS for more information. You will not be punished for hanging up on an IRS agent because you believed that the call was fraudulent. Note that although most IRS taxpayer assistance phone services are temporarily suspended due to COVID-19, call centers will reopen as soon as possible. In the meantime, you can still email the IRS and/or find regular updates on coronavirus tax relief programs at https://www.irs.gov/coronavirus-tax-relief-and-economic-imp. If you wish to provide the IRS with information such as an updated mailing address to ensure that you receive your EIP as quickly as possible, you should ONLY do so through the official IRS Economic Impact Payments portal, https://www.irs.gov/coronavirus/economic-impact-payments.

New IRS Tools for Faster Delivery of Economic Impact Payments Did You Know? The IRS has launched two new web portals to help some taxpayers receive their COVID-19 Economic Impact Payments (EIPs) more quickly. Remember that the vast majority of Americans who filed a 2018 or 2019 federal income tax return, or receive Social Security or Railroad Retirement benefits, do not need to take any action in order to receive their EIPs. If you provided the IRS with bank account informa...tion on your most recent tax return or receive benefits by direct deposit, your EIP will be automatically deposited to your account. Otherwise, the IRS will mail an EIP check to the most recent mailing address you provided. You can use the new Get My Payment portal to: - Learn the amount of your EIP - Check the status of your payment - Provide direct deposit banking information to the IRS if you have not previously done so - Update your mailing address if you have moved and prefer to receive your EIP by check In order to check the status of your payment, you will need your social security number (SSN), date of birth, and the mailing address shown on your most recent federal tax return. To provide bank account information for direct deposit, you will also need your adjusted gross income (AGI) from your most recent federal tax return (2018 or 2019), the refund amount or amount you owed on that return, and your bank routing number, account type, and account number. NOTE: If the IRS has already scheduled the delivery of your EIP, you will not be able to use Get My Payment to update your bank account information. If you are not required to file federal income tax returns (for example, because of an individual gross income below $12,200) and do not receive Social Security or Railroad Retirement benefits, you may need to complete a simple online form in order to receive your EIP. The necessary form is called Non-Filers: Enter Payment Info Here. IRS portals for EIPs: Economic Impact Payments: https://www.irs.gov/coronavirus/economic-impact-payments Get My Payment & Status (for those who file federal returns and other automatic EIP recipients): https://www.irs.gov/coronavirus/get-my-payment Non-Filers: Enter Payment Information Here (for those who do not file federal returns and may not automatically receive their EIPs) https://www.irs.gov/coro/non-filers-enter-payment-info-here

Additional 2020 IRS Tax Deadlines Extended Did You Know? Last month, the IRS announced that the April 15, 2020 federal income tax filing and payment deadline had been extended to July 15, 2020 for most taxpayers. The IRS has now broadened this extension to cover nearly all federal income tax filing and payment due dates that fall between April 1 and July 15, 2020. In particular, individuals, couples, estates, corporations, other businesses, and Americans living abroad now a...ll have until July 15, 2020 to file their 2019 federal income tax returns, without fear of penalties or interest charges. Two other specific deadline changes will benefit payers of estimated tax and those who have fallen behind on filing returns or claiming refunds for past years: - The deadline for second quarter 2020 federal estimated tax payments has changed from June 15 to July 15. Since the first quarter payment due date was previously moved from April 15 to July 15, taxpayers can now make their first two 2020 quarterly estimated tax payments at any time on or before the July deadline. For example, you can make both payments on July 15 without penalty. - The deadline to file a 2016 federal income tax return (either new or amended) and claim a 2016 tax refund has also moved from April 15 to July 15, 2020. If you are unsure how to obtain a refund from a past year, a tax professional can help you file the necessary return. If you have a complicated tax situation, such as filing on a fiscal-year schedule, a tax professional can help you determine how this broad deadline extension applies to you.

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