As the end of the tax year approaches, it is worth spending a few minutes reviewing some of the changes that have been made in the tax laws surrounding donations to charities. In some cases, this guide will serve as a refresher regarding revisions made over the last few years, while in other cases there have been COVID-related changes that you may not be aware of.

Changes from The CARES Act

The most recent change – and one you might have missed – was incorporated within 2020’s CARES Act, which Congress passed to provide relief to those impacted by the global pandemic. In addition to providing paycheck protection for workers and support for small businesses as they struggled to survive the economic impact of coronavirus, the CARES Act also boosted the limit on cash donations from 60% to 100% in some situations. This increase is only valid for tax year 2020 and is limited to cash contributions given to charities that are not donor-advised funds or supporting...

Are inheritances taxable? This is a frequently misunderstood taxation issue, and the answer can be complicated. When someone passes away, all of their assets (their estate) will be subject to estate taxation, and whatever is left after paying the estate tax passes to the decedent’s beneficiaries.

Sound bleak? Don’t worry, very few decedents’ estates ever pay any estate tax, primarily because the tax code exempts a liberal amount of the estate’s value from taxation; thus, only very large estates are subject to estate tax. In fact, with the passage of the Tax Cuts & Jobs Act (tax reform), the estate tax exemption has been increased to $11,580,000* for 2020 and will be inflation-adjusted in future years. That generally means that estates valued at $11,580,000* or less will not pay any federal estate taxes, and those in excess of the exemption amount only pay estate tax on the excess amount. Of interest, there are less than 10,000 deaths each year for which...

We’ve all been there. Life is super busy. We have to take care of our families and friends, work obligations, and all our other everyday responsibilities. With all of the hustle and bustle, you realize that the October 15th tax extension deadline has passed and unfortunately, you still haven’t filed. What should you do now?

Here is a breakdown of what happens when the tax extension deadline passes and the next steps you should take.

Will I Be Penalized for Filing After the Deadline?

Yes, if you missed the October 15th filing deadline, you can be penalized. The IRS allowed you an additional six-month extension of time to file your taxes (from April 15th to October 15). That was not an extension to pay taxes, only an extension to complete your return. In addition to any interest and penalties that you may owe as a result of failing to file (and pay) your tax on time, you will now be subject to a late filing fee on any unpaid taxes. The penalty, which includes interest, is...

To say COVID-19 has made 2020 a disastrous year for just about everyone would be an understatement. In response to the economic slowdown and losses of income, Congress passed several extensive laws to benefit individuals and businesses that suffered financial hardship because of COVID-19. However, 2020 has given rise to more than the usual tax-planning opportunities. Thus, you may find it appropriate to schedule a tax-planning appointment well before the close of the year to take advantage of the tax benefits and strategies available for 2020. Although everyone’s situation is unique, the following are examples of tax opportunities and strategies that may apply to your circumstances.

Individual Planning Opportunities

Not much going on in November from a personal tax perspective; below is the one date to be aware of:

November 10 - Report Tips to Employer

If you are an employee who works for tips and received more than $20 in tips during October, you are required to report them to your employer on IRS Form 4070 no later than November 12. Your employer is required to withhold FICA taxes and income tax withholding for these tips from your regular wages. If your regular wages are insufficient to cover the FICA and tax withholding, the employer will report the amount of the uncollected withholding in box 12 of your W-2 for the year. You will be required to pay the uncollected withholding when your return for the year is filed.

In taxes, there is a saying: “Those who keep records win.” If you are an investor, you may own real property or have a variety of securities, including stocks, bonds, mutual funds, etc. When you sell the real property or those securities, undoubtedly, you’ll want to minimize your gains or maximize your losses for tax purposes. Gain or loss is measured from your tax basis in the investment (asset), which makes it important to keep track of the basis in all your investments.

What is Basis? Generally, your basis in an investment begins with the price you paid to purchase the investment. However, that will not be the case if the investment was acquired by gift or inheritance. For inherited assets, the basis generally begins with the fair market value (FMV) of the asset on the decedent’s date of death or an alternative valuation date, if available to and chosen by the executor of the estate. Assets acquired by gift actually have a basis for gain (the...

November 2 - Social Security, Medicare and Withheld Income Tax

File Form 941 for the third quarter of 2020. Deposit or pay any undeposited tax under the accuracy of deposit rules. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the quarter in full and on time, you have until November 10 to file the return.

November 2 - Certain Small Employers

Deposit any undeposited tax if your tax liability is $2,500 or more for 2020 but less than $2,500 for the third quarter.

November 2 - Federal Unemployment Tax

Deposit the tax owed through September if more than $500.

November 10 - Social Security, Medicare and Withheld Income Tax

File Form 941 for the third quarter of 2020. This due date applies only if you deposited the tax for the quarter in full and on time.

November 16 - Social Security, Medicare and Withheld Income Tax

If the monthly deposit rule applies, deposit the tax for payments in October.

November 16 - Nonpayroll...

Health insurance premiums, especially in the wake of the Affordable Care Act, have risen dramatically and are one of the greatest expenses that most individuals pay. Although the cost of health insurance is allowed as part of an individual’s medical deductions when itemizing deductions, only the amount of total medical expenses that exceeds 7.5% of the taxpayer’s adjusted gross income (AGI) is deductible. The 7.5% limitation is increased to 10% for years after 2020.

The purpose of this article is twofold: first, to remind you what insurance can be included as a medical deduction; and second, to inform you of an alternate means of deducting health insurance for certain self-employed individuals—a means that avoids the AGI limitation and allows for deduction without itemizing.

Let’s start by looking at what is treated as deductible health insurance. It includes the premiums you pay for coverage for yourself, your dependents, and your spouse, if applicable, for...

If you have lost your job, there are a number of tax issues you may encounter. How you deal with these issues can profoundly impact your taxes and finances. 

Head over to our Facebook page for a quick video summary of the issues.  

Gambling is a recreational activity for many taxpayers, and as one might expect, the government takes a cut if you win and won’t allow you to claim a loss in excess of your winnings. In fact, there are far more tax issues related to gambling than you might expect, and they may impact your taxes in more ways than you might believe. Here is a rundown on the many issues, the so-called “gotchas,” that can affect you.

Reporting Winnings – Taxpayers must report the full amount of their gambling winnings for the year as income on their 1040 returns. Gambling income includes, but is not limited to, winnings from lotteries, raffles, lotto tickets and scratchers, horse and dog races, and casinos, as well as the fair market value of prizes such as cars, houses, trips, or other non-cash prizes. The full amount of the winnings must be reported, not the net after subtracting losses. The exception to the last statement is that the cost of the winning ticket or winning...