Premier Tax & Finance

Protecting Against Tax Fraud - Did You Know? The IRS will never: - Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card, or wire transfer... - Demand that you pay the taxes without the opportunity to question or appeal the amount owed - Threaten to bring in local police, immigration officers or other law enforcement officers If an IRS agent shows up, they will always provide two forms of official credentials: a pocket commission and a government identification card. The IRS may also assign certain cases to private debt collectors, but only after giving you written notice. Any payment to the private debt collectors should be made payable to the U.S Treasury.

May 17 IRS Deadline Pay and/or File Now to Avoid Penalties The IRS has extended this year's deadline to May 17, 2021 for federal tax returns that were originally due on April 15. If you have not yet filed your 2020 tax return you should make every effort to do so by May 17. If you cannot submit your 2020 return by the deadline, you can apply for an automatic filing extension to October 15, 2021. The standard way to request the extension is to file IRS Form 4868 by May 17. B...ear in mind that this extension applies only to FILING your return; the payment due date will remain as May 17. Failing to pay the full amount you owe on or before May 17 may result in late fees, interest or other penalties. If you anticipate owing tax, you should estimate the amount and include payment with your Form 4868. Alternatively, if you pay your tax with a debit or credit card or use the IRS Direct Pay or Electronic Federal Tax Payment System portal (see links below), you can get the extension to complete your return by October 15 without filing Form 4868. Simply indicate that your payment is for an automatic filing extension for tax year 2020. If you cannot pay your tax right now due to pandemic-related hardships or other extenuating circumstances, the IRS offers installment payment options that may enable you to reduce or eliminate penalties. A tax professional can help you evaluate your options or get your return filed. IRS Direct Pay portal: https://www.irs.gov/payments/direct-pay Electronic Federal Tax Payment System (EFTPS) portal: https://www.irs.gov//eftps-the-electronic-federal-tax-paym Make IRS payments with a credit or debit card: https://www.irs.gov//pay-your-taxes-by-debit-or-credit-card

Claiming the Recovery Rebate Credit Did You Know? With the May 17 deadline to file 2020 federal tax returns rapidly approaching, many eligible Americans who don't file may risk losing out on a crucial tax credit. The Recovery Rebate Credit is offered to all taxpayers who file their 2020 returns and were underpaid when the IRS distributed 2020 Economic Impact Payments (EIPs, also called stimulus payments). For a variety of reasons, some taxpayers may not have received the EI...Ps that they qualified for in 2020. Others received EIPs, but in smaller amounts than they deserved. Often, this problem occurred because the IRS had outdated information about the person's income or family size. For example, if a child was born or adopted into your family in 2020, the IRS likely did not have this information when calculating EIP amounts. The first round of stimulus payments, called EIP1, included payments of up to $1,200 per individual and $500 per qualifying child. The IRS began sending these payments in spring 2020 and continued sending them throughout the year. The second round (EIP2) included payments of up to $600 per individual and $600 per qualifying child. Most recipients got their EIP2s in January 2021. If the IRS underpaid you during either 2020 EIP round, the Recovery Rebate Credit enables you to receive the balance that you are owed as an IRS refund. However, you can only claim the credit by filing a 2020 tax return, even if you owe no tax and are not usually required to file. A tax professional can help you prepare and file your return electronically so you receive your payment as quickly as possible. You will need to know the amounts of any EIPs you received, which you can get from IRS Notice 1444 (1444-A or 1444-B), or by setting up an online IRS account (link below). Create an online IRS account: https://www.irs.gov/payments/view-your-tax-account.

How to Set Yourself Up for a Hassle-Free Tax Season (3/4) By taking a few simple steps now, you can greatly reduce uncertainty and stress during the 2020 tax filing season. These actions will help set you up to complete your return efficiently, without unpleasant surprises: Be Aware of Refund Interest And Stimulus Payments... Because the processing of some tax refunds was delayed in 2020 due to the pandemic, the IRS paid interest to many refund recipients. Unlike refunds themselves, these interest payments are classified as taxable income. If you received a tax refund interest payment, the IRS will send you Form 1099-INT in January, which you will need when preparing your return. Recipients of a 2020 Economic Income Payment (EIP, also called a stimulus payment) should have also received IRS Notice 1444, Your Economic Impact Payment. Make sure to keep this notice handy. If your EIP amount was lower than it should have been, Notice 1444 will give you the information you need to claim a tax refund for the balance owed to you.

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How to Set Yourself Up for a Hassle-Free Tax Season (2/4) By taking a few simple steps now, you can greatly reduce uncertainty and stress during the 2020 tax filing season. These actions will help set you up to complete your return efficiently, without unpleasant surprises: Organize Records of Other Potentially Taxable Transactions... The sale of major assets like stock, a house or any other big ticket item may yield a taxable capital gain. Many cryptocurrency transactions (such as buying and selling Bitcoin) also have tax implications, since the IRS classifies cryptocurrencies as property. Make sure you have complete records of all your significant financial and property transactions during 2020.

How to Set Yourself Up for a Hassle-Free Tax Season (1/4) By taking a few simple steps now, you can greatly reduce uncertainty and stress during the 2020 tax filing season. These actions will help set you up to complete your return efficiently, without unpleasant surprises: Gather Documents Showing Wage, Business And Other Income... If you work as an employee, you should receive a W-2 from your employer(s) by early February, showing your earnings for the year and the total tax withheld from your paychecks. If you are self-employed (including gig economy work) or own a business, you should receive 1099 forms from your clients showing fees paid to you. Interest and dividend income, along with royalties from past work, are also reported on 1099 forms. Recipients of unemployment benefits (including $600 federal Pandemic Unemployment Assistance payments) and/or taxable Social Security benefits should receive a year-end statement detailing these payments as well. Store all of these documents with your tax records.

Social Security Tax Deferral May Change Your Withholding Did You Know? An Executive Order issued in August allows U.S. employers the option to defer collection of the employee's share of Social Security tax between September 1, 2020 and December 31, 2020. The employee's share of this tax makes up the majority of paycheck withholding labeled as FICA on most worker pay stubs. Importantly, the Executive Order only authorizes DELAYED collection, rather than an actual reduction ...or temporary elimination of the tax. Most employers that choose not to withhold Social Security tax during the specified four-month period will need to collect the deferred tax through extra withholding after January 1, 2021. In other words, employees of these companies will have less money withheld from their paychecks this fall (resulting in increased net pay), but their net pay may decrease for several months after January 1 due to makeup withholding. For this reason, many employers have opted to continue withholding all FICA taxes as usual. The simplest way to determine whether your employer might be deferring Social Security tax collection is to save your pay stubs from August, and compare them to your pay stubs during the fall. If you see no significant change in your FICA withholding and net pay, then your employer has most likely opted out of delayed withholding. On the other hand, a decrease in the withholding amount and increase in your net pay may indicate that Social Security tax has not been withheld. You can check with your company's payroll department to make sure. Some companies may offer employees the choice to individually opt out of deferred withholding. However, under the Executive Order, deferred withholding may be mandatory for military and federal government employees with incomes below specified limits. If your Social Security tax withholding is delayed under this program, you may wish to take steps now to prepare for a potential increase in withholding and decrease in net pay during early 2021. For example, you could set aside the extra money you receive each pay period this fall as savings. A professional tax and financial advisor can help you explore other options to ensure that you are prepared for any possible upcoming changes to your net pay.

Advice on your next tax return

Some current info you may need .

Lifetime Learning Credit Did You Know? The IRS Lifetime Learning Credit (LLC) can offer substantial tax savings for students or their parents, especially for students who have previously completed four years of higher education. If you paid tuition and school fees in 2020 for yourself, your spouse or a dependent, you may be able to claim an LLC of up to $2,000 on your 2020 tax return. Generally, you may only claim the credit for one member of your household per year. Studen...ts currently taking post-secondary education classes at eligible higher learning institutions may qualify for this credit by meeting BOTH of the following criteria: - They are or were enrolled in higher (post-secondary) education classes for at least one 2020 academic period. An academic period can be a semester, quarter, trimester, summer session, or any other coursework session defined by the school. - The student is taking these higher education classes in pursuit of a degree or other recognized certification, or to acquire or improve job skills. In addition, the taxpayer claiming the credit (usually the student or the student's parent or guardian) must meet the program's income restrictions. Taxpayers with a modified adjusted gross income (MAGI) of $58,000 or less ($116,000 or less for joint filers) generally qualify to claim the full credit. Taxpayers with a MAGI between $58,000 and $68,000 ($116,000 and $136,000 for joint filers) may receive a reduced credit; those with higher incomes cannot claim the LLC. Although the LLC may only be claimed once per tax return, there is no limit to how many times students can qualify for the credit during their lifetimes. Before claiming the LLC for a student in your household, however, check whether the student qualifies for the American Opportunity Tax Credit (AOTC). The AOTC has higher income limits and a higher maximum credit amount ($2,500). In addition, unlike the LLC, the AOTC may be partially refundable if your tax is reduced to less than zero. For students who do not qualify for either the AOTC or LLC, it may still be possible to claim an above-the-line income deduction for tuition and fees. A professional tax advisor can help you determine your eligibility for these valuable education tax credits and deductions.

IRS Extends Deadline to Register for Stimulus Payments Did You Know? The IRS has extended the deadline for some Americans to register to receive their 2020 coronavirus Economic Impact Payments (EIPs, also called stimulus payments). The new deadline of midnight on November 21, 2020 primarily applies to those who are not required to file federal income tax returns, and also have not yet registered for or received their EIPs. Those who meet these criteria are urged to use the ...IRS online non-filers registration tool (link below) to submit their information and receive their EIPs as soon as possible. Choosing the direct deposit option will speed up the payment process. Generally, those who do not provide banking information for direct deposit will receive their stimulus payments by check. Note that for most people who are required to file a 2019 tax return but requested an extension, the deadline to file remains October 15. Federal return filers who qualify for EIPs generally receive their payments automatically; no separate registration is required. Beginning two weeks after they register to receive a payment, those who qualify for EIPs can track the status of their payments by using the online Get My Payment tool (link below). IRS EIP Registration Tool for Non-Filers: https://www.irs.gov/coro/non-filers-enter-payment-info-here IRS Get My Payment EIP Tracking Tool: https://www.irs.gov/coronavirus/get-my-payment

Extensions and FBAR Deadline - Did You Know? For taxpayers who requested extensions to file various 2019 returns, the filing due date for those returns is October 15, 2020. This deadline applies to multiple filings that were originally due on April 15, 2020. (For most of these forms, the filing due date without an extension was subsequently changed to July 15, 2020 by the IRS due to the COVID-19 pandemic.) The October 15 deadline to file under an extension applies to several ...common returns, including: 2019 INDIVIDUAL INCOME TAXES: Most individual taxpayers who requested an automatic extension to file their 2019 federal tax returns must file by October 15. However, additional extensions may be available to some taxpayers affected by recent disasters, including hurricanes and western wildfires. 2019 CORPORATE INCOME TAXES: The October 15 deadline also applies to C corporations that requested an extension to file their 2019 corporate income tax returns (Form 1120). FOREIGN BANK ACCOUNT REPORT (FBAR): Many U.S. taxpayers, including individuals and businesses, must file an annual report of their foreign bank and other financial accounts, called an FBAR. Typically, filing an FBAR is necessary if the total value of a taxpayer's foreign accounts exceeds $10,000 at any time during the calendar year. However, certain accounts, such as those held within a qualified IRA or other retirement plan, may not need to be reported. Most taxpayers who are required to file a 2019 FBAR and have not yet done so must file by October 15. Remember that in general, an extension to file tax returns is NOT an extension to pay any tax due. Therefore, those who have not yet filed but expect to owe 2019 tax should estimate the amount they owe and pay that amount as soon as possible, even if they will not file their returns until October 15. Immediate payment will minimize any interest charges and late payment penalties. A tax professional can help you determine how much to pay and/or if an FBAR is required.

AOTC Tuition Credit Offers Tax Savings for Students or Parents Did You Know? If you, your spouse or any of your dependents are currently enrolled in a higher education program, or were enrolled for a previous academic period in 2020, you may qualify for the American Opportunity Tax Credit (AOTC). The AOTC program allows eligible taxpayers to claim a credit for tuition costs and certain school fees. To qualify for the credit, a student must be taking post-secondary classes ...at an eligible higher learning institution, in pursuit of a degree or other recognized certification or credential. In addition, students must meet ALL of the following eligibility requirements: - They are or were enrolled at least half time for at least one academic period (as defined by the school) in 2020. - They had not completed their first four years of higher education as of January 1, 2020. - Neither the AOTC nor its predecessor, the Hope credit, has been claimed more than four times total for the student, including the current year. - The student and the person claiming the credit (if different from the student) must have a valid taxpayer identification number (TIN) before the due date for the tax return. Additional eligibility criteria may apply to both the student and the educational institution. To claim the full credit, taxpayers must have a modified adjusted gross income (MAGI) of $80,000 or less for individuals, or $160,000 or less for couples filing jointly. A reduced credit may be available for individual taxpayers with a MAGI between $80,000 and $90,000 (between $160,000 and $180,000 for joint filers). Those with higher incomes may not claim the credit. The maximum allowed credit per eligible student is $2,500, up to $1,000 of which may be refundable. You may claim the credit for multiple students in your household if they all meet the eligibility standards. For students who do not qualify, you may still be able to claim either the Lifetime Learning Credit or an above-the-line income deduction for tuition and fees. A tax professional can help you determine which credits and/or deductions provide the greatest tax benefit for you.

Educator Expense Deduction Did You Know? If you are a teacher, principal, counselor, or classroom aide who works at least 900 hours a year in a state-accredited school (grades K-12), you may qualify for the Educator Expense Deduction. This IRS rule allows you to deduct up to $250 on your tax forms ($500 for joint filers who are both educators, but not more than $250 each) for classroom supplies that you purchase at your own expense. Allowed expenses include traditional sch...ool supplies like rulers and markers, computer equipment and software, along with specialty items like athletic gear for physical education classes. A qualified tax advisor can help you determine which of your expenses qualify for the deduction. You may not have to itemize deductions in order to claim the Educator Expense Deduction, but the IRS does require that you have written evidence for every expense. During this hectic back-to-school period when classroom expenses are most likely to occur, it is important to remember to save your receipts.

Unemployment Benefits Are Taxable Income Did You Know? Due to the economic impact of the COVID-19 (coronavirus) pandemic, individuals may have had to file for Unemployment Insurance (UI) benefits for the first time. These benefits include the federal Pandemic Unemployment Assistance (PUA) program created under the CARES Act, which provides an additional $600 per week to many UI benefits recipients. For individuals receiving UI payments in 2020, it is important to understand... the tax treatment of those benefits. Both state and federal unemployment benefits payments are generally taxed as ordinary income by the IRS. As is the case with most regular income sources, recipients of these benefits are required to make tax payments throughout the year. One way that taxpayers can meet this requirement is to request that tax be withheld from their UI payments, which can be done in most states by filing Form W-4V with the state's unemployment benefits office. If no tax is withheld from their UI payments, taxpayers may need to make quarterly estimated tax payments in order to avoid a large tax bill next spring, which could include penalties and interest charges. A tax professional can help UI payment recipients determine whether estimated payments are needed, and how much to pay. The estimated tax payment deadline for the first two quarters of 2020 was July 15, but if an individual missed that deadline, penalties can still be minimized by making a payment as soon as possible. Even if tax is withheld from UI payments, the amount withheld may be incorrect if a person's benefit amount differs from their salary while working. To avoid an unpleasant tax surprise next spring, taxpayers can use the IRS Withholding Estimator tool (link below) to calculate the appropriate withholding amount, and file an updated Form W-4V to request additional withholding if necessary. UI benefits recipients should also do a second checkup with the Withholding Estimator after returning to work, to ensure that their paycheck withholding is accurate going forward. IRS Withholding Estimator tool: https://www.irs.gov/individuals/tax-withholding-estimator

Quarterly Estimated Tax Payments - Reminder If you are making quarterly estimated tax payments to the IRS, the due date for the June 1 - August 31 quarter of the year is September 15. For payments made using IRS Direct Pay, you can make payments until 8PM EST, and for payments using a credit or debit card, payments can be made up to midnight on the due date.... If the due date for making an estimated tax payment falls on a Saturday, Sunday, or legal holiday, the payment will be considered on time if you make it on the next day that's not a Saturday, Sunday, or legal holiday.

2019 Refund Interest Payments - Did You Know? Over 13 million taxpayers who have received or will receive federal income tax refunds for 2019 will also receive an interest payment from the IRS. The 2019 filing and payment deadline change from April 15 to July 15, 2020 due to COVID-19 (coronavirus) was classified as a disaster-related postponement. Therefore, the federal tax code requires the IRS to pay interest starting from April 15 on refunds issued to taxpayers who filed t...heir 2019 returns by July 15. These interest payments will average about $18, and will usually be issued separately from tax refunds. If you provided the IRS with banking information and received your refund by direct deposit, any interest payment you are owed will most likely be automatically deposited to the same account. However, some taxpayers will receive a check in the mail, which can be identified as a refund interest payment by the notation "INT Amount" on the official U.S. Treasury check. Unlike IRS tax refunds themselves, these interest payments are generally taxable and must be reported on the recipient's 2020 federal tax return. Anyone who receives an interest payment of $10 or more will receive Form 1099-INT from the IRS in January. Only individual taxpayers and joint filers are eligible to receive these interest payments, not businesses. Note also that the IRS is not required to pay interest on refunds that were issued before the original April 15 filing deadline.

RMD Repayment or Rollover Deadline - Did You Know? The deadline to return or rollover a Required Minimum Distribution (RMD) for IRA owners, beneficiaries or workplace retirement plan participants is coming up on Monday, August 31. The CARES Act allows most taxpayers with an eligible retirement account, such as a 401(k), 403(b) or traditional IRA, to skip their required minimum distributions (RMDs) for 2020 without penalty. Individuals who received the RMD, including those who... turned 70 in 2019, have the option to return the distribution to their account or other qualified plan. They may also have the option of rolling over to another IRA or qualified retirement plan by August 31, 2020 to avoid taxes on the RMD. Please note that the suspension of the RMD does not apply to qualified defined benefit plans. A tax and financial professional can help you determine the best strategy for handling your 2020 retirement account RMDs.

Charitable Cash Contribution Limits for 2020 Did You Know? As part of the U.S. Treasury's ongoing COVID-19 (coronavirus) relief programs for taxpayers, the IRS has made temporary changes to the rules for deducting charitable contributions on federal tax returns. Normally, taxpayers who itemize deductions on Schedule A can deduct cash charitable contributions up to a specified limit, usually 60% of their adjusted gross income (AGI). For 2020, however, qualified contributions... may be deducted up to 100% of the taxpayer's AGI. (For corporations, the 2020 deduction limit is 25% of taxable income.) Furthermore, qualified contributions above this raised limit may be carried over as a deduction for the next tax year. To qualify for this limit suspension, a contribution must satisfy ALL of these requirements: - It is a cash contribution (that is, a direct contribution of money, not other property) - It is made to a qualifying charitable organization - It is made during calendar year 2020. Note that non-cash property contributions made in 2020 do not qualify for this limit suspension. However, these contributions may still be deducted up to the normal limits (typically 50% of AGI minus the amount of any deducted cash contributions). A tax professional can help you determine if any of your 2020 charitable contributions qualify for the deduction limit suspension, and how to claim your full deduction if so. The IRS also has a tool available for checking exempt organizations: https://www.irs.gov/charities-non-prof/search-for-charities.