Translations from Your Trusted Advisor.
In addition to November 10th being National Accountants Day and National Cupcakes Day, the IRS has also decided to add National EIP (Economic Impact Payment) Day to this list.
Mallory Vincent, MBA •
With the holiday season approaching, tis the season for spreading kindness and being charitable. During the coronavirus pandemic, even more people and animals are in need, but many not-for-profits are struggling. By making a donation and giving a gift to charity, you are helping out others and spreading holiday cheer. This act of kindness could also be a great tax write-off, and in 2020 everyone will be eligible to receive a charity tax deduction on their tax return. Read on to learn some tips on how to make your donation count as a tax benefit on your 2020 tax return.
Last week the IRS released guidance on how to report the deferral of withholding, deposits, and payments of certain payroll tax obligations.
On Monday, the IRS released Notice 2020-79 which provides cost of living adjustments for retirement plans for 2021.
401(k), 403(b), most 457 plans, and Thrift Savings Plan contribution limits have remained the same as 2020 at $19,500. The annual catch-up limitation for employees over age also remains unchanged from 2020, at $6,500.
The FAFSA application opens October 1, 2020 for the 2021 through 2022 year. The FAFSA is required for students to be eligible for federal financial aid.
We received some great information from Raymond James on additional details related to how the FAFSA calculates financial need, how to submit the form, and if it should be filed when you don't think you'll qualify. To learn more check out their post here.
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As we approach the last quarter of 2020, now is a good time to take a look at your withholdings and find out whether you are having enough taxes withheld from your paycheck. The IRS requires 100% of prior year tax (110% for adjusted gross income over $150,00) or 90% of current year tax to be withheld throughout the year. By adjusting your withholdings before the end of the year you can avoid underpayment penalties in April.
On August 8th, President Trump issued an executive order on payroll tax deferrals for employees. The IRS has followed up that memo with Notice 2020-65. In short, employees making less than $4,000 bi-weekly can defer paying the 6.2% Social Security tax on their wages. This amount is not forgiven and will be collected from the employees’ wages from January 1 through April 30 of 2021.
Did you receive an unexpected refund from the IRS? Last week the IRS began issuing interest payments to individual taxpayers who received an overpayment on their taxes after April 15th. The IRS typically only issues interest payments on timely-filed refund claims issued more than 45 days after April 15th. Additional interest is being paid on 2019 overpayments as part of Coronavirus tax relief.
Mallory Vincent, MBA •
With more time at home during the COVID 19 pandemic, now may be the time to start that degree you have always wanted to earn. Not only will you have fewer distractions due to your practically non-existent social life, but you could also get a tax credit or income adjustment on your 2020 tax return. Education credits are amounts that will reduce the amount of tax due of your tax return. They are based on qualified education expenses that you paid during the year including tuition and certain related expenses.
Recent presidential action seeks to extend key relief measures put in place as a result of the COVID-19 pandemic, but likely faces legal challenges.
On Saturday, August 8th, 2020, President Trump issued four executive orders regarding his administration’s response to the ongoing COVID-19 pandemic relating to: 1) unemployment, 2) evictions, 3) student loans, and 4) payroll taxes.
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