If you are receiving temporary home mortgage relief under the CARES Act or in danger of having your home repossessed, know that any debt relief can have an impact on your taxes. Watch the video over on our Facebook page to find out more.
A federal tax credit for the purchase and installation costs of a residential solar system is fading away. After being 30% of the cost for several years through 2019, the credit amount drops to 26% in 2020 and then 22% in 2021, the final year of the credit.
The credit is non-refundable, meaning it can only reduce an individual’s tax liability to zero. However, the portion of credit that is not allowed because of this limitation may be carried to the next tax year and added to the credit allowable for that year. The tax code infers that any credit carryover can be added to the credit allowed in the subsequent year. However, what is unclear is whether any carryover will be allowed to 2022 once the credit expires at the end of 2021. In addition to the credit reducing the regular tax, it also reduces the alternative minimum tax should a taxpayer be subject to it.
Qualifying Property – Only the following solar power systems are eligible for the credit:
The tax filing extension deadline, October 15th, is just around the corner. Here is a quick reminder of what you need to know.
Moving to a new state can be an awesome new adventure. Whether you are moving for a new job, to be closer to family, to retire, or for some other reason.
No matter what takes you to your new residence, you can’t forget about taxes.
Here’s what you need to know about filing taxes in your new state as you settle into your new routine.
Be Sure to Establish Residency in Your New State
Even if you haven’t sold your home or severed all ties with your previous hometown, you will need to make as many connections with your new residence as possible.
This will help to prove that you have fully moved from the original state and are no longer subject to taxes there as a resident.
Cut Ties with Your Previous Jurisdiction
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. The following are typical issues related to tax treatment:
Severance Pay – Your employer may provide you with severance pay. Severance pay and payment for unused vacation time will be included in your W-2 income, and both are fully taxable.
Unemployment Compensation – If you do not find another job right away, you generally qualify for unemployment compensation. Unemployment benefits, both the regular benefits you receive from your state unemployment department and the enhanced unemployment payments during the COVID-19 emergency, are taxable for federal purposes and may or may not be taxable by your state of residence. To minimize the tax you may owe when you file your 2020 tax return, you may want to request federal income tax withholding of 10% of the unemployment benefit amount. Do that by submitting a...
All United States entities (including citizens and resident aliens as well as corporations, partnerships, and trusts) with financial interests in or authority over one or more foreign financial accounts (e.g., bank accounts and securities) need to report these relationships to the U.S. Treasury if the aggregate value of those accounts exceeds $10,000 at any time during the year. Failure to file the required forms can result in severe penalties.
The U.S. government wants this information for a couple of pretty obvious reasons. One, foreign financial institutions may not have the same reporting requirements as U.S.-based financial institutions. For example, they probably won’t issue the 1099 forms to report interest, dividends and sales of stock. By requiring those in the U.S. to divulge their foreign account holdings, the IRS can more easily cross-check to see if foreign income is being reported on the individual’s tax return. The second (and probably more significant)...
During the COVID-19 pandemic, the IRS has furloughed many of its employees or had them work from home to mitigate the spread of the virus. Many IRS offices remained shuttered for months, and a backlog of millions of pieces of unopened mail accumulated in trailers set up outside IRS facilities.
This includes unopened mail with payment checks, which creates a problem for many e-filed returns with tax due because the IRS computer shows a tax return filed but no payment made. Because the IRS utilizes a significant amount of automation, its computers began automatically spitting out tax-due notices, including to those who had mailed in payments. While most IRS facilities have reopened and IRS employees have returned to work, it will take them weeks, if not months, to get all of the backlogged mail opened and processed.
After receiving complaints from taxpayers and members of Congress, the IRS put information on its website about these outstanding payments: the payments will be posted as of...
Over 9 million Americans have yet to receive their CARES Act stimulus check from the Government, and the IRS is looking to alleviate that. These individuals didn't file taxes in 2018 or 2019, but their income qualifies them for the money. Check out the full story here.
Because of the COVID-19 pandemic emergency, the IRS postponed the original due date for filing 2019 returns to July 15, 2020. If you could not complete your 2019 tax return by July 15 and filed a request for additional time to file, that extension expires on October 15, 2020. Failing to file before the extension period runs out may cost you late-filing penalties.
There are no additional extensions available (except in designated disaster areas), so if you do not or will not have all of the information needed to complete your return by October 15, please call this office so that we can explore your options for meeting your extended filing deadline.
If you are waiting for a K-1 from a partnership, S-corporation or fiduciary return, the extended deadline for those returns is September 15 (September 30 for fiduciary returns); so you should probably make inquiries if you have not received that information yet.
Late-filed individual federal returns are subject to a penalty of 5% of the tax...
With the passage of the CARES Act stimulus package earlier this year, the federal government added $600 to the normal state weekly unemployment benefits and increased the number of benefit weeks to a total of 39.
In many cases, workers are receiving unemployment benefits for the first time in their lives, and they may not be aware that the benefits are fully taxable for federal purposes. Potentially making matters worse is that most states also tax unemployment benefits. This may come as a surprise with a potentially unpleasant outcome for many when it comes time to file their 2020 tax return next year.
Those who received unemployment benefits will be sent a Form 1099-G (Certain Government Payments) from the state that paid the benefits. This tax form shows the amount of unemployment benefits received and the amount of tax withheld, if any.
There are several states where unemployment benefits are not taxable. Seven states do not have a state income tax, so obviously, unemployment...