Article Highlights: 

• Employment (Earned) Income
• Earned Income Tax Credit (EITC)
• Child Tax Credit (CTC)
• 2019 or 2020 Earned Income
• Credit Qualifications

Because of the pandemic, many individuals have seen their employment (earned) income plummet. In that situation, two very important tax credits, the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC), which are based in part on earned income, will be adversely affected, hitting lower-income taxpayers with a double whammy.

Not wanting those who normally rely on those credits to make ends meet to suffer further economically, Congress came up with a special way to calculate the two credits for 2020. So, when figuring these 2020 credits, taxpayers are allowed to use the amount of their 2019 or 2020 earned income, whichever produces the better result. This will only affect the computation of the EITC and CTC and does not impact the gross income used for determining an individual’s income tax for 2020. The option...

Article Highlights:

• Crowdfunding Sites
• Gifts
• Charitable Gifts
• Business Ventures
• SEC Registration
• Crowdfunding Scams

Raising money through Internet crowdfunding sites prompts questions about the taxability of the money raised. A number of sites host money-raising projects for fees generally ranging from 5 to 9%, including GoFundMe, Kickstarter, and Indiegogo. Each site specifies its own charges, limitations, and withdrawal processes. The money raised may or may not be taxable depending what the purpose of the fundraising campaign was.

Gifts – When an entity raises funds for its own benefit and the contributions are made out of detached generosity (and not because of any moral or legal duty or the incentive of anticipated economic benefit), the contributions are considered tax-free gifts to the recipient.

On the other hand, the contributor is subject to the gift tax rules if they contribute more than $15,000 to a particular fundraising effort that benefits one individual; the...

As if this past year with all of its pandemic perils has not been stressful enough, the Office of the Inspector General for the Department of Labor has just added to our anxieties by announcing that at least $36 billion and possibly as much as $63 billion has been lost to improper unemployment payments having been made. In many cases the improper payments are a result of fraudsters who spent the earliest months of the pandemic filing unemployment claims using stolen personal data. What this means is that millions of unsuspecting Americans are about to receive federal forms reporting unemployment benefits that they never received. Not only does this leave them potentially vulnerable to identify theft issues, but in the short term it also means that the federal government is expecting them to pay income taxes for money somebody else received.

We’ve all been told to watch out for identity theft, but this newest method feels particularly cruel in the face of all of the other...

Article Highlights:

• Charitable Contributions
• Educator Expenses
• Performing Artist Expenses
• State and Local Government Officials’ Expenses
• Health Savings Account Contributions
• Moving Expenses for Members of the Armed Forces
• Student Loan Interest Deduction
• Tuition and Fees Deduction
• Deduction for Early Withdrawal of Savings
• Deductible Part of Self-employment Tax
• Self-employed Health Insurance Deduction
• Alimony Deduction (pre-2019 divorce agreements)
• Business Pass-through Deduction
• Retirement Plan Deductions

Most taxpayers think they have to itemize their deductions to claim them on their tax return. However, that is not entirely true. There are certain deductions that can be claimed while still using the standard deduction. Here is a list of those deductions:

Charitable Contributions

• For 2020, non-itemizers can deduct up to $300 of cash contributions above-the-line. The $300 limits apply both to single and married taxpayers. Donations to donor-advised funds and private...

Article Highlights:

• Credit Amounts
• Deceptive Advertising
• Refundability
• Worth the Cost?
• Qualifying Property
• When Is the Credit Available?
• Who Gets the Credit
• Multiple Installations
• Battery
• Installation Costs
• Basis Adjustment
• Association or Cooperative Costs
• Mixed-Use Property
• Newly Constructed Homes
• Utility Subsidy

A federal tax credit for the purchase and installation costs of a residential solar system has been extended through 2023. The credit for 2021 and 2022 is 26% of the cost of the solar installation but drops to 22% for 2023, the final year of the credit (unless extended again by Congress).

The credit is nonrefundable, meaning it can only reduce your 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...

Article Highlights:

• The Extension
• About the Credit
• Advance Payment
• Employer Qualifications
• Qualified Wages
• Impact on Other Tax Provisions
• Claiming the Credit

In order to help trades and businesses to retain employees and keep them employed during the COVID-19 crisis, the Coronavirus Aid, Relief, and Economic Security (CARES) Act created the Employee Retention Credit for 2020. As part of the Consolidated Appropriations Act, 2021 (CCA), the credit has been extended through June 2021.

The credit is actually a government-sponsored program to keep workers employed and is funded by providing qualifying employers with a refundable credit against certain employment taxes equal to 70% (up from 50% prior to 2021) of the qualified wages that an eligible employer pays to employees after March 12, 2020, and before July 1, 2021. (Before the extension, the credit ended on December 31, 2020.)

If the employer's employment tax deposits are insufficient to cover the credit, the employer may...

Article Highlights: 

• Legislation for Major Disasters
• Definitions
• Qualified Disaster Distributions
• Re-Contributing Withdrawals for Home Purchases
• Retirement Plan Loans
• Loss Limitations, Revised
• Relief for Non-Itemizers
• Employee Retention Credit
• Other Disaster Area Tax Issues

Most of us will always remember the year 2020, as much as we may like to forget it. On top of the COVID-19 emergency, street protests (both peaceful and not), and hotly contested election races, the U.S. has had numerous natural disasters – hurricanes, an unprecedented number of wildfires, severe windstorms, flooding, and what seems like everything except a plague of locusts (so far, the gigantic swarms of the insects that have invaded Africa and the Middle East haven’t made it across the Atlantic).

Congress typically passes legislation to provide some temporary tax relief to the victims of major disasters. Recently, Congress did just that when it passed the Taxpayer Certainty and Disaster Tax...

Proper, optimized tax planning can yield surprising increases in cash flow -- often in the range of 5-6 figures total!  If you suspect that your tax planning is not optimized, and you think you may be leaving money on the table, contact us immediately and we'll let you know if and how we can help.

A true wealth plan -- one that's oriented towards accelerated growth over the long term, in support of lasting, generational wealth -- needs to take into account tax optimization (in every case) and real estate (in nearly all cases).

If you're missing these two items, drop us a line ASAP and let's talk!

Article Highlights:

• State Income Tax Refund
• Social Security Taxes Deduction
• NOL Carryback
• Charitable Contribution Deduction for Non-Itemizers
• PPP Loan Expenses
• Military Reservist Travel Expenses
• Child’s Private School Expenses
• Student-Loan Interest
• Extended Tax Benefits
• Gambling Losses
• Live in a State without a State Income Tax?
• Spousal IRA
• Economic Impact Payment
• Economic Impact Payment Document
• Reinvested Dividends
• Worthless Stock
• Lifetime Learning Credit
• Charity Volunteer Tax Breaks
• Self-Employed Travel Expenses
• Self-Employed Health Insurance Deduction
• Summer Camp
• Medical Dependent
• Income in Respect of a Decedent (IRD)

As tax time is upon us, here are some tax issues that taxpayers frequently overlook, ranging from obscure deductions to overlooked tax credits and benefits. Of course, not everything can be included since the tax law has grown significantly in complexity, and it would take a thick book to list everything. But besides what you are probably accustomed to,...