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Alyssa Hodges, CPA •

The new year has been rung in and I’m sure your first thought in 2020 was, “2019 is over, I need to get my accountant my tax forms STAT!” However, you may have to take a breather and wait for everything you need to be ready. What should you wait for? It depends on the type of taxes you’re filing and what types of income you have.

Individual Taxes

In most cases, individuals should wait until they think they have all of their information together before giving it to their accountant.

​The IRS has released a new Form W-4 for 2020. This form is provided to employers by their employees to authorize the proper amount federal income tax to be withheld from the employee’s paycheck. The previous version of this form was believed to be confusing because an employee had to come up with a number of allowances and the employer would use those allowances to calculate withholdings.
 

Lena Rozzi, CPA •

If you own or manage a rental property, chances are that you’ve heard of depreciation before. Once you’ve determined your depreciation rates, expensing it year-after-year can be pretty straightforward. However, if you decide to sell your property, any depreciation that you’ve taken will come back to you as a depreciation recapture. While the concept of depreciation recapture is more complicated than depreciation expense, real estate investors will benefit from understanding how depreciation recapture will affect your tax liability to avoid surprises when it comes time to file your tax returns.
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By the time a lot of taxpayers get around to thinking about taxes, it could be too late to be proactive, and all you can do is close your eyes and write that check! By taking a look at your financial situation now, you may be able to take advantage of some tax saving strategies before the end of year to improve your tax outcome. 

Wednesday, the IRS released Notice 2019-59 which provides cost of living adjustments for retirement plans for 2020. 
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401(k), 403(b), most 457 plans, and Thrift Savings Plan contribution limits have increased $500 to $19,500. The annual catch-up limitation for employees over age also increases $500, to $6,500.
 

Yesterday the IRS released inflation adjustments for the 2020 tax year. 

The standard deduction for married filing jointly taxpayers is increasing $400 to $24,800. It will be $12,400 ($200 increase) and $18,650 ($300 increase) for single and head of household taxpayers, respectively.

Do you have a spouse, child, or a parent working for you? If so, did you know you could be paying more Federal payroll taxes than required? No one wants to pay more taxes than they are required to pay! There are a few different taxes on payroll; Social Security tax (SS), Medicare tax (Medi), and Federal Unemployment Tax (FUTA). Some of these taxes might not apply to you, depending on your relationship type with the employee.

The Social Security Administration (SSA) has recently released their updated fact sheet for 2020:

The updates include:

Lena Rozzi, CPA •

Most sole proprietors are aware that their business activities are reported to the Internal Revenue Service (IRS) on Schedule C, Profit and Loss from Business, of Form 1040, U.S. Individual Income Tax Return, on an annual basis. And while Schedule C businesses get most of the same tax deductions as incorporated businesses, Schedule C business owners (sole proprietors) do not get the benefit of getting a tax deduction on “salaries” paid to themselves. Read on for some common questions sole proprietors have when it comes time to “pay” themselves from their business.

Lena Rozzi, CPA •

If driving a vehicle is part of your trade or business, whether it’s a car, truck, or van, you can deduct the vehicle expenses to lower the taxable income you report on your business tax return. While the costs of operating your vehicle can seem pretty straightforward, there are several considerations you should understand to optimize your deduction depending on your particular situation.