Archives for August 2020

It’s never too early to organize your tax records. Though it may seem so, it is sure to pay off when it comes to filing time again. Good record keeping is essential not only to stay in compliance, but also to make sure you take advantage of all your deductions and credits that you might miss otherwise.

Here are some tips to help you have a good record keeping in place:

• Records that you should keep: your W2, 1099 forms, form 1098 mortgage interest statement, property settlement statements, receipts for charitable contributions, education expenses, medical expenses, business expenses and any other documentation that supports your income and deductions.
• Develop a system to keep all your important information together. You can do so with the help of software programs available on the market. If you aren’t comfortable using them, you can still label your folders and store them in a safe place. You also have the option to scan the documentation and keep it in electronic format.
• Don’t forget to add new files to these tax records as you receive them. For year 2020 remember to include your economic impact payment documentation and unemployment compensation, if you received any. If you started a new business, make sure to keep all your receipts.
• Generally you have to keep your records for 3 years from the date you filed the return.
• If you have employees keep your employment tax records for at least 4 years after the tax is due or paid whichever is later.
• If you or a family member had a legal name change, you should notify the social security administration to avoid a delay in processing your tax return.

A little organization now, can go a long way later.

If you need help with your taxes, give us a call or send us an email.

Are you or a loved one adversely impacted by Covid-19? The CARES Act 2020 provides some tax relief related to Covid-19 withdrawals and loans from IRA accounts and certain retirement accounts that you might consider.

Generally, IRA and retirement accounts allow you to take distributions which are to be included in your gross income in the year of withdrawal (with some exceptions) and subject to additional 10% tax if withdrawn before you attain the age of 59 1/2 years.

Covid-19 Withdrawals

The special treatment for Coronavirus related distributions, lets you withdraw up to $100,000 from your IRA, 401(k) or 403(b) plan before 12/31/2020 without being subject to the additional 10% penalty, irrespective of your age at the time of the withdrawal, and without being subject to mandatory tax withholding. In addition, these Covid-19 withdrawals are allowed to be included in your taxable income over a 3 years period, one third being included each year.

Covid-19 Loans

You may also consider taking a loan of up to $100,000 before 09/22/2020 from your workplace retirement plan, if your plan allows it. The plan administrators can suspend, for up to one year, loan repayments due on or after March 27, 2020, and before January 1, 2021.

How To Qualify

This special tax treatment for Covid-19 withdrawals or loans is available if you satisfy the below conditions:

• You, your spouse or dependent are diagnosed with Covid-19 by a test approved by CDC or
• You experience adverse financial consequences because of you, your spouse or any other member of your household being quarantined, furloughed, laid off, having reduced pay/hours or being unable to work due to lack of childcare, having a job offer rescinded or start date for a job delayed or
• Closing or reducing hours of a business owned or operated by  you, your spouse or a member of the household, due to Covid-19 and
• You certify to the Retirement Plan administrator that you are a qualified eligible individual for this special tax treatment.

To find out more information about this Covid-19 tax relief click here.

If you need help with your taxes, give us a call!