Mark Your Calendar for Tax Prep Deadlines

Mark Your Calendar for Tax Prep Deadlines

Please note the following deadlines for providing your materials to us in time for the tax-filing deadline:

  • March 1: Corporate/Partnership Tax Returns to file by March 15 (without extension).
  • March 25: Personal Tax Returns to file by April 18 (without extension).

You may bring in your paperwork to our office during regular business hours, or drop it off in our after-hours dropbox out front. To make sure you provide everything we need, please use our 2021 Tax Preparation Checklist (Personal and/or Business). Just click here to download and print out:

Please note that most financial advisor companies are not issuing 1099 forms until February 15 or later. It’s OK to drop off everything else and just send us any lagging paperwork as soon as you receive it.

If you have any questions, please contact us at 706-632-7850 or email our office manager, Kimberly Mortimer, at kimberly@premiercpaservices.com.

 

Don’t Forget to Report Gig Economy Earnings

Whether it’s a full-time job or just a side-hustle, those extra earnings you make need to be reported on your tax return. Here are some things to keep in mind:

  • You should receive a Form 1099-K for any gig or freelance work that exceeds $600 total. The IRS expects you to report it even if you don’t receive a Form 1099-K, though.
  • If you are an independent contractor, you may be able to deduct some of your business expenses. Be sure to keep good records.
  • As an employee, your employer typically withholds income taxes for you. As a freelancer or gig worker, however, you are responsible for your own taxes. If you also have a job that takes out taxes, you can submit a new Form W-4 to your employer to have additional taxes withheld from your paycheck to help cover the difference. Otherwise, you’ll need to make quarterly estimated income tax payments throughout the year, as well as Social Security and Medicare taxes. (We can help you with this.)

If you’re not sure about your status as a worker in the gig economy, let us help. We can help you figure out whether you should be paying additional taxes and how to best set that up. And be sure to provide us with any Form 1099-Ks you receive when you drop off your tax-preparation materials.

Money Minute: Reporting Tips

If you receive tips while working, then you must report them as part of your gross income. Here are some “tips” for reporting your tips. Tips include:

  • Cash tips received directly from customers.
  • Non-cash tips added using credit, debit or gift cards.
  • Tips from a tip-splitting arrangement with other employees.
  • Non-cash items, such as tickets, passes or other items of value.

To help keep track of your tips:

  • Keep a daily tip record.
  • Report tips of less than $20 a month on your income tax return.
  • Report tips of more than $20 a month to your employer by the 10th day of the following month. Your employer must withhold taxes on those reported tips (so you don’t have to).

IRS Video Tax Tip

If you have taxable income from any payer that doesn’t withhold tax for you, check out this IRS video to see if you need to make estimated tax payments.

The Latest Tax Info You Need to Know

The Latest Tax Info You Need to Know

Tax Return Deadline Extended to May 17

The IRS has extended the federal income tax filing due date for individuals from April 15 to May 17. To accommodate the new deadline, we will accept returns until Thursday, April 15th. If we receive your paperwork AFTER April 15, we will file an extension for you. To help you prepare your files, please download a copy of our 2020 Personal Tax Preparation Checklist.

Note that the deadline for estimated tax payments has NOT changed. First quarter payments are still due on April 15.

The American Rescue plan, which was signed by President Biden on March 11th, and other tax law changes probably affected your finances and returns for both 2020 and 2021. Here are some of the details you need to know:

Contribution Deadlines Extended to May 17

In addition to extending the tax return filing deadline to May 17, the IRS has extended other deadlines that would normally fall on April 15. You now have until May 17, 2021, to make 2020 contributions to your:

  • Individual Retirement Arrangements (IRAs and Roth IRAs),
  • Health Savings Accounts (HSAs),
  • Archer Medical Savings Accounts (Archer MSAs), and
  • Coverdell Education Savings Accounts (Coverdell ESAs).

This new deadline also applies to the reporting and payment of any 10% additional tax due on 2020 distributions from IRAs or workplace-based retirement plans.

IRS to Review Returns, Issue Refunds for Unemployment Benefits

The IRS will automatically begin refunding money in May if you filed your 2020 tax return and reported unemployment compensation before the American Rescue Plan was passed. The new law allows taxpayers who earned less than $150,000 in modified AGI to exclude 2020 unemployment compensation up to $20,400 (married filing jointly) or $10,200 (other taxpayers).

If you already filed and figured your tax based on the full amount of unemployment compensation, the IRS will determine the correct taxable amount. Any resulting overpayment of tax will be either refunded or applied to other outstanding taxes owed. So there is no need to file an amended return unless the change makes you eligible for additional federal credits and deductions.

If we filed your tax return for you before March 11, we will automatically check it for additional credits and deductions, then let you know if an amended return should be filed. If we have not yet filed your taxes, we will take the new law into account for you. Please contact us if you have any questions about this.

3rd EIP Is Different from Earlier Payments

You may notice that the third Economic Impact Payment you receive(d) is different from the first and second payments. Here’s how:

• The 3rd EIP is an advance payment of the 2021 recovery rebate credit. The two earlier payments are advance payments of the 2020 recovery rebate credit. If you didn’t get a first or second EIP or got less than the full amounts, you may be eligible to claim the 2020 recovery rebate credit on your 2020 tax return.

• The 3rd EIP may be larger. You will receive up to $1,400 as a single taxpayer or $2,800 as a joint filer. If you have qualifying dependents, you will receive up to $1,400 per qualifying dependent.

• More dependents qualify. You will get a payment for all qualifying dependents claimed on your return, not just for children under age 17. This may include older family members like college students, adults with disabilities, parents and grandparents.

• Income phase-out amounts are different. You will not receive a 3rd EIP if your AGI exceeds:

  • $160,000 if married filing jointly or as a qualifying widow/er.
  • $120,000 if filing as head of household.
  • $80,000 if filing single or married filing separately.

• You may be eligible for additional funds. The amount of the 3rd EIP is based on your latest processed tax return (either 2020 or 2019). If it’s based on your 2019 return and is less than the full amount, you may qualify for a supplemental payment after your 2020 return is processed.

Small Businesses: Take Advantage of the Employee Retention Credit

The Employee Retention Credit was modified by the Taxpayer Certainty and Disaster Tax Relief Act of 2020, and applies to the first two calendar quarters of 2021. The changes include:

  • Increasing the maximum credit amount,
  • Expanding the category of employers eligible to claim the credit,
  • Modifying the gross receipts test,
  • Revising the definition of qualified wages, and
  • Revising the ability of employers to request an advance payment of the credit.

Eligible employers can claim a refundable tax credit against the employer share of Social Security tax equal to 70% of the qualified wages they pay to employees after from January 1-June 30, 2021. Qualified wages are limited to $10,000 per employee per calendar quarter in 2021. Thus, the maximum employee retention credit available is $7,000 per employee per calendar quarter, for a total of $14,000 per employee for 2021.

Employers can access the Credit for the 1st and 2nd calendar quarters of 2021 prior to filing their employment tax returns by reducing employment tax deposits. Small employers may request advance payment of the credit (subject to certain limits) on Form 7200, Advance of Employer Credits Due to Covid-19.

Note that the Employee Retention Credit is also available to eligible employers during the third and fourth quarters of 2021, thanks to the American Rescue Plan. The IRS will provide further guidance on this soon.

If you need assistance on how to calculate and claim the Employee Retention Credit, please contact us today.

New Tax Changes May Affect Your Retirement Savings

New Tax Changes May Affect Your Retirement Savings

President Trump signed into law in December a bill to keep the federal government funded. As part of that bill, several new tax changes were enacted, include some major changes to retirement plan rules.

The new “SECURE” Act is designed to encourage retirement savings and to simplify administrative requirements for small businesses. For the most part, these are positive changes and good news if you’re saving for retirement. Some of the key changes include:

  • Increasing the age after which required minimum distributions from certain retirement accounts must begin from age 70½ to age 72.
  • Repealing the maximum age for IRA contributions, which was formerly 70½.
  • Allowing penalty-free distributions from qualified retirement plans and IRAs to help pay for births and adoptions.
  • Allowing qualified home healthcare workers to contribute to a defined contribution plan or IRA.
  • Making it easier for long-term, part-time employees to participate in elective deferrals.
  • Making it easier for small businesses to offer multi-employer plans by allowing otherwise completely unrelated employers to join in the same plan.

One change that could create some substantial tax consequence is the requirement that non-spouse beneficiaries of IRAs and qualified retirement plans withdraw all money from inherited accounts within 10 years. This rule takes effect for accounts inherited after January 1, 2020.

Other Tax Changes Made

In addition to the retirement plan adjustments noted above, the new law also:

  • Allows certain expenses associated with registered apprenticeship programs to count as qualified higher education expenses for 529 accounts.
  • Repeals the excise tax on certain high-cost employer health plans (the Cadillac tax), the medical device excise tax and the annual fee on health insurance providers — all of which were part of the Patient Protection and Affordable Care Act, but had been postponed or suspended.
  • Extends several expired tax provisions, including those relating to the discharge of qualified principal residence indebtedness income; the treatment of mortgage insurance premiums as qualified residence interest; the continuance of the 7.5% (instead of 10%) adjusted-gross-income floor for medical expense deductions; and an above-the-line deduction for qualified tuition and related expenses.
  • Extends through 2020 several tax credits that were scheduled to expire, including a new markets tax credit, an employer credit for paid family and medical leave, the work opportunity credit, and the credit for health insurance costs of eligible individuals.
  • Provides tax relief for victims of various disasters occurring in 2018, 2019, and through January 19, 2020.

Give Us a Call: 706-632-7850

To take full advantage of the changes under this recent legislation, schedule an appointment to come in and talk with Jackie or Donna. We can review your personal situation and provide guidance for some smart financial moves.

We’re also booking appointments for tax filing beginning in January, so call us if you’re ready to get started!

(Source: Journal of Accountancy)

Important & Interesting Dates to Note for 2020

JAN 15: 4th Quarter Estimated Tax Payments due for 2019

JAN 31: Final date for employers to send W-2 and 1099 forms

FEB 2: Super Bowl LIV (Miami)

FEB 29: Leap Day

MAR 8: Daylight Savings Time begins

MAR 24: Georgia Presidential Primary

APR 1: Census Day (By this date, every home will receive an invitation to participate in the 2020 Census)

APR 15: Tax Day

APR 22: Earth Day 50th Anniversary

JUL 24-AUG 9: Summer Olympics (Tokyo)

OCT 15: Tax Filing Extension Deadline

NOV 1: Daylight Savings Time ends

NOV 3: Election Day

The information provided here by Premier CPA Services PC is for general information only. It does not constitute legal, accounting, tax or other professional advice or services, and is presented without any representation or warranty as to the accuracy or completeness of the information. Please contact us for information as it relates to your circumstances.

2020 Tax Season Updates Announced

2020 Tax Season Updates Announced

Over the last couple weeks, the IRS has announced a few updates that will apply to the 2020 tax-filing season (for returns processed in 2021). Keep these changes in mind while planning your finances.

Retirement Plan Contribution Limits Increased

» The limit on elective deferral contributions to Sec. 401(k) plans, Sec. 403(b) plans, most Sec. 457 plans, and the federal government’s Thrift Savings Plan increases to $19,500 in 2020, up from $19,000 in 2019. If you’re 50+, the catch-up contribution limit increases to $6,500 in 2020, up from $6,000 in 2019.

» The maximum deductible IRA contribution for 2020 remains at $6,000. If you also have a workplace retirement plan, your ability to deduct your IRA contribution is phased out depending on your adjusted gross income (AGI):

  • $65,000-$75,000 for singles and heads of household
  • $104,000 to $124,000 for married couples filing jointly, where the spouse who makes the IRA contribution is covered by a workplace retirement plan
  • $196,000 and $206,000 for married couples filing jointly, where the spouse who makes the IRA contribution is NOT covered by a workplace retirement plan but is married to someone who is.

» If you contribute to a Roth IRA, the phaseout range for determining the maximum contribution increases to $196,000 to $206,000 for married couples filing jointly, and $124,000 to $139,000 for singles and heads of household.

» The AGI limit for the Retirement Savings Contribution Credit (Saver’s Credit) also increases slightly for 2020: $65,000 for married couples filing jointly, $48,750 for heads of household, and $32,500 for single taxpayers and for married individuals filing separately.

Inflation Adjustments and Tax Table Changes

» The Standard Deduction increases to $24,800 for married individuals filing joint returns or surviving spouses, $18,650 for heads of household, and $12,400 for unmarried individuals (other than surviving spouses) and married individuals filing separate returns.

» The Earned Income Tax Credit (for taxpayers with three or more children) increases to $6,660, up from $6,557 in 2019. The Adoption Tax Credit also increases to $14,300, up from $14,080 in 2019.

» The 2020 exemption amounts for the Alternative Minimum Tax rises to $113,400 for married individuals filing joint returns and surviving spouses, $72,900 for unmarried individuals (other than surviving spouses), $56,700 for married individuals filing separate returns, and $25,400 for estates and trusts.

» The Sec. 179 depreciation deduction for small businesses increases to $1,040,000, with a phaseout threshold of $2,590,000.

» The Sec. 199A income deduction threshold for a qualified trade or business increases to $326,600 for married individuals filing joint returns, and $163,300 for married individuals filing separate returns, single individuals, and heads of household.

For more details on these updates, or help planning your finances in relation to these changes, please give us a call today.

The information provided here by Premier CPA Services PC is for general information only. It does not constitute legal, accounting, tax or other professional advice or services, and is presented without any representation or warranty as to the accuracy or completeness of the information. Please contact us for information as it relates to your circumstances.