Regina Bianucci Rus CPA

Upcoming Advance Child Tax Credit Payments & Due Dates June 15 - Second quarter estimates are due - Please pay on-line if you can and send me your e-mail confirmation of the payment. The number one reason for a tax notice once your tax return is filed is that the estimated tax payments you thought you made don't line up with the ones you did really make. Let me help you with this! If you send me the confirmation, I can place it in your current year folder which saves you havi...ng to find them later. July 15 - Advance Payments of the 2021 Child Tax Credit for eligible taxpayers begins - https://www.irs.gov//advance-child-tax-credit-payments-in- The increased credit is $3,000 per qualifying child between ages 6 and 17 at end of 2021 or $3,600 per qualifying child under age 6 in 2021 (up from $2,000). Advance payments will be up to 50% of the expected tax credit and are estimated from information included in eligible taxpayers' 2020 tax returns (or 2019 if 2020 is not filed and processed yet). Portal to decline Advanced Payments open by July 1 - You might want to DECLINE the advanced payment!! Maybe you are divorced and claimed your one child in 2020, but you won't in 2021 (your ex-spouse will if taken in alternate years). Maybe your 2020 income would make you eligible for the larger tax credit but not in 2021. Will your income be over $150,000 (married taxpayers filing joint return) or $112,500 (heads of household) or $75,000 (filing single)? The IRS will provide more information about advance payments soon. This advanced credit will be paid back if you are not eligible in 2021. August 15 - Time to reassess your 2021 estimated taxes. If your income or deductions have changed from 2020, and the estimated tax payments I provided you were based on 2020 taxable income, it is time to re-evaluate before the 3rd quarter estimate (due Sept 15). Please contact me by August 15 if you need to review your 2021 estimated taxes. At any time of year we can check your 2021 tax withholdings to ensure they are adequate to cover your taxable income. Checking too late in the year leaves you with little time to make small and more comfortable adjustments.

Read about: Common tax issues that lead to an audit on my website here: https://www.rbrcpa.com/news-updates

May 17, 2021 - the real Tax Day Here is what is due May 17 - ** Your 2020 Personal tax return (Form 1040 and CA Form 540) ** Taxes due for 2020 ... ** IRA contribution ** Health Savings Account contribution ** Superseding returns that correct a previously filed 2020 tax return (omitted Schedule K-1, deduction not reported) Why May 17 and not May 15? Because if a deadline falls on a weekend, it is automatically bumped to the next Monday. Should we get used to these delayed Tax Days? No, I don't think so. The IRS didn't give up on the April 15 due date for 2021 first quarter estimated taxes. Do you have a deadline for tax information to file a return by May 17? No, because I have enough work in the office to keep me busy until then. If you are providing your tax information to me now, expect an extension. For individuals who receive a Schedule K-1 from their pass-through entity (LLC, S corporation) that is extended only because of the state non-conformity to PPP expense deductibility, there is good news and possibly bad news. The state is set to finally conform but only for businesses that can demonstrate a 25% reduction in gross receipts (comparing 2020 to 2019). That means if your business took a PPP loan for under $150,000, and did not have this reduction in gross receipts, the expenses paid with the PPP loan (salary, primarily) will be added to your state taxable income. The federal return allows for the deduction. Neither the state or the IRS will tax the loan forgiveness income. I hope to be able to file all individual returns for LLC members and S corporation shareholders once this law is final, hopefully by May 17.

Observations from early tax return filing season... I love the early birds! But I'm here for all filing seasons whether it is February, March or later. Here are a few things the early birds and I are experiencing:... # Confusion about that second stimulus check - Even though the second check came in 2021, it gets reconciled to your income on the 2020 tax return. Here's the deal, if your income was higher in 2020 and the stimulus check came to you based on lower 2019 income, you won't have to pay it back. But if the situation is reversed (and you didn't get the full or any stimulus check at all), there can be an additional payment on your 2020 tax return that will increase your refund (or reduce the amount due). # Charitable donations - I need them please! For years 2020 and 2021, you can deduct up to $300 of cash donations made even if you don't itemize. Noncash donations (to Goodwill) don't count. Please list them or give me a number; if you don't then I'll be checking with you to be sure you don't miss this opportunity for an "above the line" deduction of your charitable donation, not matter how small. (Again - maximum $300) # Virtual currency transactions, even if you just purchased, must be disclosed with a "Yes" checkbox on page one of your tax return. Failure to inform me will be a problem, please don't ignore this question on my tax organizer. While you don't have to do any further disclosure if you just purchased and held virtual currency, sales must be reported like any other stock sale transaction. Please don't put either of us in jeopardy by failure to disclose this, the IRS is serious and will penalize us both (me as the preparer of your return). # I know you worked from home, we all did, but if you are an employee (W-2) you can't deduct a home office. That is because such a deduction is a "miscellaneous itemized deduction" which was slashed in the 2017 tax act (that mostly expires in 2025). Maybe you can for state purposes, but that deduction still needs to exceed 2% of adjusted gross income. You still are deducting 100% of your home mortgage interest and property taxes, although this is no solace for renters. # However, for self-employeds who pay for office space but also had to work from home, there could be an additional home office deduction for you. I'm going to take it! It is an allocation of the business use square footage to total home square footage, and insurance and utilities can be deducted. # For those of you who still did IRA to charity distributions, please be sure to include the letter from the IRA that substantiates that transfer so that we have the evidence in the file to prove the distribution isn't taxable. I've answered many IRS notices about this "qualified charitable distribution" QCD that the IRS computer still wants to pick up as taxable. # Please pay your taxes on-line.

https://www.calsavers.com/ California has begun mandating employer participation on CalSavers, a retirement program to help people save for retirement. By June 30, 2021, employers with more than 50 employees will need to register if the employer doesn't already offer a retirement plan. By June 30, 2022, all employers with more than 5 employees must register! ... Under CalSavers, the employer must enroll their employees in a CalSavers account. The account is essentially a Roth IRA which is a nondeductible retirement plan contribution (does not reduce income taxes). The employee can opt out. For employees who do not opt out, the employer must collect, remit and report contributions for each payroll period. The initial default contribution rate is 5% and increases 1% each year (up to 8%). Short-term and part-time employees are included as long as the employee is age 18 or older. Funding must start with the first paycheck. Penalties for not complying are $250 per employee. Offering a retirement plan for employees can be easy to do and not terribly expensive if the company chooses the right type of plan. Having a good payroll service like ADP or Paychex is important as well. Part of their service is to manage the employee sign ups and account management. Plus, some retirement accounts like a SIMPLE IRA don't have annual reporting to the Department of Labor, or top heavy testing rules. A SIMPLE IRA can be used by a business with under 100 employees and require the employer to contribute just 3% of the employee wages if the employee defers their own income (like a 401K). The employee can tax advantage of tax-deferred contributions plus get the 3% wage bump which can make them a happier employee that stays with the business longer. https://www.adpretirementmarketing.com//99-3038-ACI_WEB_SI

A highly regarded tax letter publication I read twice monthly says not (NOT) to expect tax increases in 2021 on either corporations or rich individuals. The publishers hear that there is no appetite for tax increases while the country is still doing battle with coronavirus recovery. There might be some retirement savings and tax incentives for IRA owners and 401K participants and proposals to encourage more employers to offer workplace retirement plans. Here are the links t...o pay taxes on-line: https://www.irs.gov/payments https://www.ftb.ca.gov/pay/index.html

Best tax filing recommendations from the trenches... Here are a few tips from your income tax expert. I'm sharing this with you today, February 1, because tax season is here!! # Expect a bumpy filing season - IRS offices and phone lines are still not fully staffed because of coronavirus restrictions. Getting live assistance is hard. Millions of 2019 tax returns are still being processed. Year 2020 income tax forms are being approved late, and the 2020 e-filing season won't st...art until next week. # Congress enacted another stimulus payment just a month ago. These payments are reconciled on the 2020 tax return. (Please inform me of the payments you received, even if the answer is "none".) # File early to help protect yourself from tax-related identity theft. Thieves who use stolen taxpayer identification numbers on fraudulent returns to obtain improper refunds. A phony return using your social security number won't be accepted if your legitimate return was already filed. # You can apply for an identity protection PIN as extra protection from tax identity theft. The IP PIN is a six-digit number assigned by IRS. https://www.irs.gov/identity/get-an-identity-protection-pin # The filing date is still April 15. Some tax professionals want that extended again, while others are advocating for an automatic federal tax extension (like most states, including California have). So far, no changes. # Don't forget that your taxes for year 2020 are due April 15, 2021 even if you extend your return. There is no extension to pay, only to file. # Please pay your taxes on-line. Every newsletter I've done for months has provided the link (below). It was gut wrenching to deal with all of your calls and e-mails about payments made but not recorded to your account. Be sure to use the social security number of the "taxpayer" and not the "spouse" on a jointly filed return.

Making your income tax payments - Recently I heard about two situations when a client made a payment on-line but still got an IRS notice that did not reflect the payment. Here is what I have learned: > Somehow the IRS computer no longer matches a payer's social security number with the payment to a jointly filed tax return, if the payer is listed as the "spouse" (rather than the first listed taxpayer who is the "taxpayer").... > Therefore, when making any payment to the IRS, be sure to list both social security numbers on your paper check. > When you make your payment on-line, please make the payment using the "taxpayer" social security number, even if you are the spouse. (Be sure to enter it correctly! Have the tax return in front of you to avoid a mistake) The state requires both social security numbers to be entered with an on-line payment. If you haven't started making your income tax payments on-line, it is time to consider it. It can be safer than mailing a check and has a much higher rate of being applied correctly and timely to your account.