Pamela Flores, CPA

If you have a high deductible medical insurance plan you might want to consider opening a Health Savings Account (HSA) . Your HSA can serve multiple purposes. It can be a tax-deductible savings account for paying medical expenses and simultaneously be a retirement account that functions similarly to a traditional IRA.

Another Covid-19 tax tidbit... The Federal government is planning to send stimulus payments to most individuals, as noted in the recent CARES ACT. They plan to base the amount of these payments on the 2019 Individual Tax returns. If your 2019 return hasn't been filed yet, they will base the automatic deposit (or check) on your 2018 figures. Either way, it is gong to be considered an advance on a 2020 tax credit. ... But I should get back on point. According to the IRS web site, Those without 2018 tax filings on record could potentially affect mailings of stimulus checks, THUS, ANYONE WHO HASN'T FILED A 2018 OR 2019 INCOME TAX RETURN, USUALLY BECAUSE THEY EARN LESS THAN THE FILING REQUIREMENT, WON'T RECEIVE THE STIMULUS PAYMENT, EVEN THOUGH THEY ARE ELIGIBLE FOR IT. THOSE PEOPLE NEED TO FILE A 2018 FORM 1040 ASAP EVEN IF NO TAXES ARE DUE. Once the government has this information, the government will be able to process their stimulus payment. The government is saying the payments should be arriving in about 3 weeks, with follow up letters being mailed out following the automatic deposit or sending of the check. Please don't hold me to this time frame. I'm just passing on information that is constantly changing and updating.

Another tax tidbit. I'm hearing a lot of talk regarding "2019 income tax returns and payments not due until July 15th". The July 15th date is ONLY for Federal income tax returns/payments and Federal 2020 first quarter estimate tax payments. California 2019 income tax return/payments and 2020 first quarter estimated payments are due on June 15th. I see a couple of upcoming problems here. 1. People are going to wait until July 15th to file and pay both of their Federal and CA t...axes. This means that their CA taxes and payments will be late and interest and penalties will be assessed. 2. CA tax returns normally can't be filed without the Federal returns attached to the CA returns. So, Federal returns will need to be prepared by June 15th if you want your CA returns to be filed by June 15th. 3. If you want to e-file your CA return, the Franchise Tax Board won't accept a CA e-filed return until the Federal e-filed return has been accepted. So, if you expect to have balances on your 2019 Federal and/or your CA income tax returns, and you want to hold off payment as long as possible, start by filing a Federal extension of time to file your Federal tax return (Form 4868) by April 15, 2020. Then, prepare both your Federal and CA 2019 income tax returns. E-file both returns by June 15, 2020. Pay your California balance by June 15, 2020. Pay your Federal balance by 7/15/20. You can also pay your 2020 first quarter Federal estimate by 7/15/20, even though your second quarter payment is currently due on 6/15/20. Your CA 2020 first quarter estimated payment is due on June 15, 2020. Please keep in mind that right now, everything is fluid and subject to modifications at any time. Stay well!

We're finding out more about what the Internal Revenue Service (IRS) and the Franchise Tax Board (FTB) are doing to help the taxpayers. The IRS says that you need to either file your income tax return, or file a timely extension request by 4/15/2020. If you do this, you have until July 15, 2020 to pay your taxes that were due by 4/15/2020. And, any interest, penalty, or addition to tax for failure to pay the Federal income taxes that accrued in the time period from April 1...6, 2020 thru July 15, 2020 will be abated. If you don't pay by July 15, 2020, the postponed penalties and interest will become due. There are a couple of exceptions (ie if the payment amount is over a million dollars). You also have until July 15, 2020 to pay your estimated 2020 tax due 4/15/2020 This information comes from the Internal Revenue Service Notice 2020-17. CALIFORNIA (the FTB) has also offered help They are allowing business and individual taxpayer an extension to file their 2019 California tax returns, and make certain payments (ie estimated tax payments), until June 15, 2020. No extension request is needed. For calendar year taxpayers, this is a three month automatic extension for partnerships and S-corporations, and a two-month extension for all other taxpayers (individuals). This relief is from the Executive Order issued by the Governor on March 12, 2020. OK, back to my computer!! See more

Organize your paperwork. January 27th is the first day to file 2019 taxes!Organize your paperwork. January 27th is the first day to file 2019 taxes!