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Download Volume 11, Issue 18 Document Here
BizBoost NewsVolume 11, Issue 18For distribution 2/21/22; publication 2/24/22
IRS 2022 Limits
Each year, the IRS adjusts tax rates, standard deduction amounts, and other limits to account for tax law updates and cost-of-living adjustments.
Currently for 2022, there are seven tax brackets: 10%, 12%, 24%, 32%, 35%, and 37%. Your filing status (example: single, married filing jointly, head of household) will be the determining factor of where your taxable income will fall within the tax brackets. Keep in mind that should the Build Back Better Act pass in its current form, tax brackets will be reorganized and expanded.
Standard deduction amounts will increase to $12,950 for individuals and married couples who file separately, $19,400 for head of household, and $25,900 for married couples who file jointly.
Long-Term Capital Gains tax rates (0%, 15%, and 20%) remain unchanged, but the income level has changed:
Married filing jointly: 0% rate for income up to $83,350. 15% rate for income between $83,351 and $517,200. 20% rate for income over $517,200
Single taxpayers: 0% rate for income up to $41,675. 15% rate for income between $41,676 and $459,750. 20% rate for income over $459,750
Head of household: 0% rate for income up to $55,800. 15% rate for income between $55,801 and $488,500. 20% rate for income over $488,500
Other popular limit increases and credit adjustments for 2022 include:
For a detailed list of tax rate schedules and other tax changes, review the IRS’s Revenue Procedure 2021-45.
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Our latest blog: “IRS 2022 Limits” is available now! Subscribe here: [link]
Do you know what changes have been made in the IRS 2022 tax limits? Sign up for our newsletter to learn more: [link]
Each year, the IRS adjusts tax rates, standard deduction amounts, and other limits to account for tax law updates and cost-of-living adjustments. Find out what they released for 2022 in our latest blog article: [link]
Our latest blog article reviews the IRS 2022 tax limits as well as other popular limit increases and credit adjustments. Get instant access here: [link]
Currently for 2022, there are seven tax brackets: 10%, 12%, 24%, 32%, 35%, and 37%. Your filing status will be the determining factor of where your taxable income will fall within the tax brackets. Keep in mind that should the Build Back Better Act pass in its current form, tax brackets will be reorganized and expanded. Learn more here: [link]
The tax brackets aren’t the only areas that get adjusted each year. Learn what other popular limit increases and credit adjustments for 2022 have been made in our latest blog article: [link]
DID YOU KNOW… Standard deduction amounts will increase to $12,950 for individuals and married couples who file separately, $19,400 for head of household, and $25,900 for married couples who file jointly for the 2022 tax year. Find out more here: [link]
Want to learn more about the IRS 2022 tax limits and how it may affect your situation? Find out what changes have been made in our latest blog article: [link]
Download Volume 11, Issue 17 Document Here
BizBoost NewsVolume 11, Issue 17For distribution 2/7/22; publication 2/10/22
How to Get Ready for Your Tax Accountant
It’s almost that time of year again...tax season! While it may still feel like you have plenty of time to prepare, planning ahead can help ensure that you file an accurate return and avoid potential delays in the processing of any refund you might be due. How can you make sure you have everything ready to go for your tax accountant once tax time arrives, to achieve as smooth of a process as possible? Below are some useful tips/reminders to help you prepare.
Organize Tax Records
Having organized tax documentation is crucial to ensuring that your tax return is prepared as completely and accurately as possible. The more orderly and thorough your tax records are, the less likely you are to experience tax reporting errors or processing/refund delays (and the less questions your tax professional will need to ask!). There are certain documents you can get in order now, including mileage logs or donation receipts; however, some external records will not be available until after year-end, including the following:
Furthermore, specific to the 2021 tax year, it is critical to have complete information related to any Advanced Child Tax Credit (ACTC) payments or Economic Impact Payments (EIP) that you received during the year. Your tax accountant will need to reconcile the payments to make certain you received everything you are entitled to (and to factor in any additional credits on your tax return if you did not), and to correctly account for any amounts you may need to repay. There are two letters from IRS that can be provided to your preparer to simplify this process: Letter 6419, which outlines the total ACTC payments for the year, and Letter 6475, which provides the total 2021 EIP amount received.
If you’re new to us, we’ll likely ask for prior year tax returns so we can see what was done in the past. If you have carryforward amounts, we can find that out from your prior returns and get them applied properly to this year’s return.
Checklist
Here’s a quick generic checklist:
A good idea is to make a stack of papers (or better, create a folder on your computer) for all of the related tax documents. For the ones on paper, scan them in when you have a chance, and upload them to the client portal your tax professional provides. This will keep both of you organized and your time minimized when it comes to your taxes.
Access Your IRS Online Account
Taxpayers who register to access their online account on IRS.gov can obtain extremely useful information all in one place, with just a few clicks! Along with the information related to ACTC payments and EIP data referenced above, the following details are also accessible:
If you haven’t already set up your online account with IRS, you should act as soon as possible to create an account. If you have already accessed it in the past, make sure you are still able to log in without any issues.
Additionally, by having a conversation with your tax accountant sooner rather than later, you can have clear guidance on what is needed to make the tax preparation process as straightforward as possible. Communication is key – if you make sure you are on the same page now, you will reduce headaches when tax time arrives!
Our latest blog: “How to Get Ready for Your Tax Accountant” is available now! Subscribe here: [link]
It’s almost that time of year again…tax season! While it may still feel like you have plenty of time to prepare, planning ahead can help ensure that you file an accurate return and avoid any potential delays in the processing of your refunds. Learn how to get ready for your tax accountant in our latest blog article: [link]
Our latest blog article reviews how you can make sure you have everything ready to go for your tax accountant once tax time arrives, to achieve as smooth of a process as possible. Get instant access here: [link]
Looking for tips to help you prepare for the upcoming tax season? Check out our latest blog article: [link]
Having organized tax documentation is crucial to ensuring that your tax return is prepared as completely and accurately as possible. The more orderly and thorough your tax records are, the less likely you are to experience tax reporting errors or processing/refund delays. Find out what tax documents you need here: [link]
DID YOU KNOW… For the 2021 tax year, it is critical to have complete information related to any Advanced Child Tax Credit (ACTC) payments or Economic Impact Payments (EIP) that you received during the year. Your tax accountant will need to reconcile the payments to make certain you received everything you are entitled to. Find out more here: [link]
Having a conversation with your tax accountant sooner rather than later can give you clear guidance on what you need to make the tax preparation process as straightforward as possible. Learn more in our latest blog article: [link]
DID YOU KNOW…Your tax professional may have a checklist that can help guide you on how to get ready for tax time. Sign up for our newsletter to learn more: [link]
Download Volume 11, Issue 16 Document Here
BizBoost NewsVolume 11, Issue 16For distribution 1/24/22; publication 1/27/22
Tax Provisions in the Infrastructure Investment and Jobs Act
While the Infrastructure Investment and Jobs Act of 2021 (IIJA) is primarily a bill that improves roads, bridges, and transit, as well as authorizing additional funding for energy, water, and broadband improvement, there are some tax-related provisions included.
Employee Retention Credit Changes
The Employee Retention Tax Credit (ERTC), which was a tax credit enacted under the CARES Act, is a provision designated to help small businesses retain their employees during the COVID-19 pandemic by refunding payroll costs already spent. The ERTC was extended to quarters three and four of 2021 by the American Rescue Plan Act, only to have Q4 taken away for most employers by IIJA. Under IIJA, only employers who qualify as a “recovery startup business” will have access to the tax credit in the fourth quarter of 2021. A recovery startup business meets the following criteria:
Employers that are non-recovery-startup businesses who qualify for the ERTC based on full or partial government shutdowns or a certain level of decline in gross receipts still have three years to file an amended 941 (or similar return, such as 943, etc.) to claim any credits they are eligible for.
The ERTC is a complicated area affected by several different pieces of legislation and rules that vary from quarter to quarter and situation to situation. Please do contact us if you feel your business may be eligible for the ERTC.
Cryptocurrency Disclosures
The IRS is giving fair warning on cryptocurrency that they will be focusing more and more on this area in future years. While the disclosure question about cryptocurrency first appeared on the 2020 Form 1040 tax return, the wording has been modified slightly for 2021:
“At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency?”
Digital assets are defined as "any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology." The definition of brokers is also expanded.
Deadline Extensions for Disaster Victims
For taxpayers affected by federally declared disasters, a 60-day extension is granted for:
To read more about the Infrastructure Investment and Jobs Act, review the fact sheet released by the White House.
Our latest blog: “Infrastructure Investment and Jobs Act” is available now! Subscribe here: [link]
While the Infrastructure Investment and Jobs Act of 2021 is primarily a bill that improves roads, bridges, and transit, as well as authorizing additional funding for energy, water, and broadband improvement, there are some tax-related provisions included. Find out more in our latest blog article: [link]
Our latest blog article reviews the additional tax-related provisions included in the new Infrastructure Investment and Jobs Act of 2021. Get instant access here to learn more: [link]
In an effort to better regulate the cryptocurrency market, the tax reporting requirements for digital assets has been addressed in the new Infrastructure Investment and Jobs Act of 2021. Learn more here: [link]
The Employee Retention Tax Credit (ERTC), which was a tax credit enacted under the CARES Act, is a provision designated to help small businesses retain their employees during the COVID-19 pandemic by refunding payroll costs already spent. Under the Infrastructure Investment Jobs Act, only employers who qualify as a “recovery startup business” will have access to the tax credit in the fourth quarter of 2021. Learn more here: [link]
DID YOU KNOW… A recovery startup business is defined as a business that:
Learn how the Infrastructure Investment Jobs Act affects who qualifies as a recovery startup business here: [link]
With the new Infrastructure Investment Jobs Act, taxpayers affected by federally declared disasters are granted a 60-day extension for:
Learn more in our latest blog article: [link]
Do you know how the new tax-related provisions included in the new Infrastructure Investment and Jobs Act of 2021 could affect you? Sign up for our newsletter to learn more: [link]
Download Volume 11, Issue 15 Word Document
BizBoost NewsVolume 11, Issue 15For distribution 1/10/22; publication 1/13/22
Updated Guidance - Paycheck Protection Program (PPP) Tax Treatment
On November 18th, 2021, the IRS released three new revenue procedures – Rev Procs. 2021-48, 2021-49, and 2021-50 – to provide further guidance on the tax treatment of Paycheck Protection Program (PPP) amounts that are excluded from gross income as a result of loan forgiveness. This guidance was issued due to several uncertainties surrounding the tax implications of PPP loan forgiveness, including the timing/receipt of loan forgiveness, how partners/partnerships should allocate PPP forgiveness as exempt income as well as the associated deductions of expenses incurred with the funds, and the process for certain partnerships to file amended returns.
Rev. Proc. 2021-48
This statement of procedure indicates that the receipt of PPP forgiveness tax-exempt income may be treated as received or accrued when one of the following conditions is met:
Furthermore, the issue of partial forgiveness is addressed, as it pertains to adjustments that must be made on amended returns, information returns, or administrative adjustment requests for certain partnerships. These adjustments must be made for the tax year in which the taxpayer treated the forgiveness tax-exempt income as received or accrued. The Rev. Proc. also clarifies that while this tax-exempt income is excluded from taxpayers’ gross income, it must be included in gross receipts for purposes of certain Federal tax provisions (for example, the gross receipts test for determining whether a C corporation or partnership may use the cash method of accounting for tax reporting purposes)
Rev. Proc. 2021-49
This guidance is specific to partnerships and how they may allocate deductions and tax-exempt income in connection with PPP loan forgiveness among partners. Some of the provisions in this guidance are as follows:
Rev. Proc. 2021-50
Under this Rev. Proc., IRS specifies that certain eligible partnerships under the Bipartisan Budget Act of 2015 (BBA) may file amended Forms 1065 (and provide amended Schedules K-1 to partners) on or before December 31, 2021, to adopt the guidance presented in Rev. Procs. 2021-48 and 2021-49. This allows such partnerships to avoid filing an Administrative Adjustment Request (AAR) to make the adjustments, which is generally how such partnerships are required to handle changes after a return has been filed. This may be more favorable due to administrative ease as well as other possible advantages, including faster refunds for partners (if applicable).
Timing, Timing, Timing
All this sounds crazy technical and it is! The bottom line is that these revenue procedures are very taxpayer-friendly, providing several options across years to minimize tax liability for taxpayers who obtained PPP forgiveness. There are multiple tax planning scenarios to consider, so feel free to contact us so we can go through them with you in a session customized to your situation.
Our latest blog: “Updated Guidance - Paycheck Protection Program (PPP) Tax Treatment” is available now! Subscribe here: [link]
On November 18th, 2021, the IRS released three new revenue procedures – Rev Procs. 2021-48, 2021-49, and 2021-50 – to provide further guidance on the tax treatment of Paycheck Protection Program (PPP) amounts that are excluded from gross income as a result of loan forgiveness. Find out more in our latest blog article: [link]
Our latest blog article reviews the updated guidance for the Payment Protection Program (PPP) tax treatment. Get instant access here: [link]
The new guidance on PPP tax treatment was issued due to several uncertainties surrounding the tax implications of PPP loan forgiveness, including the timing/receipt of loan forgiveness, how partners/partnerships should allocate PPP forgiveness as exempt income, and the process for certain partnerships to file amended returns. Learn more here: [link]
The Rev. Proc. 2021-48 statement of procedure indicates that the receipt of PPP forgiveness tax-exempt income may be treated as received or accrued when one of the following conditions is met:
Learn more here: [link]
DID YOU KNOW… Rev. Proc. 2021-50 allows partnerships to avoid filing an Administrative Adjustment Request (AAR) to make adjustments, which is generally how such partnerships are required to handle changes after a return has been filed. Find out more here: [link]
The Rev. Proc. 2021-49 guidance is specific to partnerships and how they may allocate deductions and tax-exempt income in connection with PPP loan forgiveness among partners. Learn more in our latest blog article: [link]
Do you know how the three new IRS Revenue Procedures regarding the tax treatment of Paycheck Protection Program (PPP) could affect you? Sign up for our newsletter to learn more: [link]
BizBoost NewsVolume 11, Issue 14For distribution 12/27/21; publication 12/30/21
How to Reconstruct Tax Records After a Disaster
While it’s not always possible to prevent an emergency, you can reduce the likelihood that an emergency will become a disaster by being prepared. Here are some tips to do just that.
In the event that you suffer a loss to your records, the IRS has helpful tips for reconstructing them.
If you have been a victim of a disaster, you have far more important things to worry about than your taxes. Let us help you take that burden away so you can stay in compliance with the IRS and get on with more important things in life.
Our latest blog: “How to Reconstruct Tax Records After a Disaster” is available now! Subscribe here: [link]
While it’s not always possible to prevent an emergency, you can reduce the likelihood that an emergency will become a disaster by being prepared. Learn more about how to reconstruct your tax records in our latest blog article: [link]
In the event that you suffer a loss to your tax records, the IRS has helpful tips for reconstructing them. Find these tips and how to prepare your tax records here: [link]
You can prepare your tax records for an emergency by:
Do you know how to prepare your tax records in case of an emergency? Do you know what to do if you suffer a loss? Learn more in our latest blog article here: [link]
One tip the IRS offers for reconstructing your tax records in the case of a loss is:
Find out more here: [link]
When emergencies happen, tax records can get lost. Although we cannot prevent emergencies, we can take measures to reduce the likelihood of a loss occurring. Learn more about preventative measures you can take and how to reconstruct your tax records in our latest blog article: [link]
Our latest blog article, “How to Reconstruct Tax Records After a Disaster” explains what steps you can take in the event of a loss of tax records. Sign up for our newsletter for instant access: [link]
BizBoost NewsVolume 11, Issue 13For distribution 12/13/21; publication 12/16/21
IRS Taxpayer Advocate Service and the Taxpayer Bill of Rights
The Taxpayer Advocate Service is an independent organization within the IRS whose job it is to make sure every taxpayer is treated fairly and that they understand their rights. The Taxpayer Advocate Service offers free guidance for resolving tax problems. There are independent Taxpayer Advocates in each state who can help when a tax issue is causing personal financial difficulties, when there is an immediate threat of adverse action, and when the IRS fails to respond to your inquiries. Contact your local Taxpayer Advocatehere: https://www.taxpayeradvocate.irs.gov/contact-us/#FindlocalTAS
The Taxpayer Bill of Rights says that every taxpayer has the following rights:
Insert a link to your newsletter, website or blog before you post these:
Our latest blog: “IRS Taxpayer Advocate Service and the Taxpayer Bill of Rights” is available now! Subscribe here: [link]
The Taxpayer Advocate Service is an independent organization within the IRS whose job it is to make sure every taxpayer is treated fairly and that they understand their rights. Learn more in our latest blog article: [link]
The Taxpayer Bill of Rights includes:
Find out what other rights are listed in the Taxpayer Bill of Rights in our latest blog article. Get instant access here: [link]
DID YOU KNOW… The Taxpayer Advocate Service offers free guidance for resolving tax problems. There are independent Taxpayer Advocates in each state who can help when a tax issue is causing personal financial difficulties, immediate threat of adverse action, as well as when the IRS fails to respond to your inquiries. Learn more here: [link]
Are you having tax problems with the IRS? Did you know the Taxpayer Advocate Service offers free guidance for resolving tax problems? Learn more about these services here: [link]
The Taxpayer Bill of Rights lists many rights that every taxpayer has, including the right to be informed, to quality service, to pay no more than the correct amount of tax, to challenge the IRS’ position and be heard, and to appeal an IRS decision in an independent forum. Learn more about these rights here: [link]
DID YOU KNOW…The Taxpayer Bill of Rights includes:
Did you know there is a Taxpayer Bill of Rights? Learn about the IRS Taxpayer Advocate Services and the Taxpayer Bill of Rights in our latest blog article. Sign up for our newsletter for instant access: [link]
BizBoost NewsVolume 11, Issue 12For distribution 11/29/21; publication 12/02/21
The “Dirty Dozen” IRS Tax Scams
Each year, the IRS unveils its list of scams that target unsuspecting taxpayers. Below are five of the most common tax scams impacting taxpayers today, as well as tips to not become a victim:
Stay alert to these situations to protect your financial health. For more on the Dirty Dozen, here is the IRS web page:
https://www.irs.gov/newsroom/irs-dirty-dozen-list-warns-people-to-watch-out-for-tax-related-scams-involving-fake-charities-ghost-preparers-and-other-schemes
Our latest blog: “The “Dirty Dozen” IRS Tax Scams” is available now! Subscribe here: [link]
Each year, the IRS unveils its list of scams that target unsuspecting taxpayers. Learn about the five most common scams in our latest blog article: [link]
Our latest blog article reviews the five most common tax scams impacting taxpayers today, as well as tips to not become a victim. Get instant access here: [link]
DID YOU KNOW… Fake Charities are created to exploit natural disasters and other situations such as the current Covid-19 pandemic. When requested, legitimate charities will provide their Employer Identification Number (EIN), which can be used to verify their legitimacy by using the IRS search tool. Learn more about the most common tax scams here: [link]
A common tax scam is Immigrant/Senior Fraud. Scammers target groups with limited English knowledge as well as senior citizens. To avoid this type of scam, keep in mind that the first contact the IRS makes with a taxpayer will typically be through the mail – they will not initiate communication by phone. Legitimate IRS employees will never use scare tactics. Learn more here: [link]
Each year, the IRS unveils its list of scams that target unsuspecting taxpayers. You can learn about the five most common tax scams in our latest blog article, and find the whole IRS Dirty Dozen List on the IRS website: [link]
DID YOU KNOW… One of the most common tax scams is “Ghost” Tax Return Preparers. These people will prepare a taxpayer’s return but refuse to sign the return as the paid preparer. Learn more in our latest blog article: [link]
The five most common tax scams are Fake Charities, Immigrant/Senior Fraud, Offer in Compromise Solicitations, “Ghost” Tax Return Preparers, and Unemployment Insurance Fraud. Learn more about each of these scam types in our latest blog article. Sign up for our newsletter for instant access: [link]
BizBoost NewsVolume 11, Issue 11For distribution 11/15/21; publication 11/18/21
What Happens if the IRS Prepares Your Tax Return?
Have you ever wondered what happens if someone never files a tax return? The IRS has the ability to create a return on your behalf called a Substitute for Return orSFR.
Generally, unless you are self-employed, it’s easy for the IRS to create a return for you. Employers file Form W-2, which reports your wages and withholding. Banks and brokerage firms report your interest and dividends on 1099 forms. All of this and more are filed with the IRS. Therefore, information is readily available for a return to be created without your input.
And don’t count on the government giving you any credits or deductions you may be eligible for! IRS will not take into consideration whether you should be filing a joint return, have dependents you can claim, or have any other deductions or credits that could reduce your tax bill.
If you are self-employed, you’re not off the hook either. The IRS knows your occupation through licensing databases and prior year disclosures, and statistics are available to estimate what someone in your profession earns. Let’s say you are a hairdresser: the IRS knows based on audits of salon businesses what the average hairdresser makes in a day, including tips. The result could be a staggering tax bill!
Besides the fact that you won’t receive deductions and credits in the event an SFR is created, there is no statute of limitations since a return was never actually filed. That means there is no time limit for an audit or collection. The IRS also shares information with states, which means if your state has an income tax, you will be hearing from them as well.
If you haven’t filed returns and this happens, you will receive an IRS notice proposing to assess taxes based on the substitute return created. It is recommended that you file a return as soon as possible in order to trigger a reconsideration of the SFR. This will also start the statute of limitations on collections and audit.
Remember, it is almost always better to file your own tax return rather than allowing IRS to prepare an SFR for you. Even though you are still able to file your own return within a certain timeframe after an SFR is created, it may be subject to more scrutiny since the IRS must accept and process the return in place of the SFR. Avoid this from the start by filing your tax returns in a timely fashion!
Our latest blog: “What Happens if the IRS Prepares Your Tax Return?” is available now! Subscribe here: [link]
Have you ever wondered what happens if someone never files a tax return? The IRS has the ability to create a return on your behalf called a Substitute for Return or SFR. Learn more in our latest blog article: [link]
It is almost always better to file your own tax return than to have the IRS create a Substitute for Return for you. For example, you won’t receive deductions and credits in the event an SFR is created, and there is no statute of limitations, meaning there is no time limit for an audit or collection. Learn more here: [link]
DID YOU KNOW…Unless you are self-employed, it’s easy for the IRS to create a tax return for you. Employers file Form W-2 reporting your wages and withholding, and banks and brokerage firms report your interest and dividends on 1099 forms - and this information is filed with the IRS. Learn more here: [link]
If you haven’t filed tax returns and the IRS creates a Substitute for Return, you will receive an IRS notice proposing to assess taxes based on the substitute return created. It is recommended that you file a return as soon as possible in order to trigger a reconsideration of the SFR. Learn more here: [link]
Remember, it is better to file your own tax return rather than allowing the IRS to prepare a Substitute for Return for you. Find out more here: [link]
Even though you are still able to file your own tax return within a certain timeframe after a Substitute for Return is created, it may be subject to more scrutiny since the IRS must accept and process the return in place of the SFR. Avoid this from the start by filing your tax returns in a timely fashion! Learn more in our latest blog article: [link]
Did you know the IRS can create a tax return for you if you do not file? Learn why it is always better to submit your own tax return in our latest blog article. Sign up for our newsletter for instant access: [link]
BizBoost NewsVolume 11, Issue 10For distribution 11/01/21; publication 11/04/21
What You Should Know About Required Minimum Distributions
With all the legislative changes related to retirement distributions over the last couple of years, it’s important to have a clear understanding of what to expect for the current year. In particular, it’s critical to know what to expect with Required Minimum Distributions (RMDs) for tax year 2021. RMDs are required distributions investors over a certain age must take out every year from their retirement savings accounts.
As part of the SECURE Act of 2019, the age when RMDs are required was increased from 70 ½ to 72 years. Furthermore, as part of the CARES Act passed in 2020, the RMD requirement was temporarily waived. So, what should you expect for 2021?
Unfortunately, there is no longer an RMD waiver for tax year 2021. Therefore, anyone age 72 or older as of December 31, 2021 must take their RMD by year-end to avoid a penalty. The only exception to this is if 2021 is the first year an individual is subject to the RMD requirement, in which case the due date is April 1, 2022. The RMD rules apply to traditional IRAs, inherited IRAs, and employer-sponsored plans.
For inherited IRAs, the RMD rules for beneficiaries depend on when the original owner passed away as well as the type of beneficiary. While non-spouse beneficiaries are generally required to withdraw the entire account balance of the inherited IRA within 10 years, spousal and other certain eligible beneficiaries may be allowed to take RMDs over their life expectancy. The taxation of the distributions depends on the type of account – no taxes will be owed on inherited Roth IRA distributions (assuming the original account owner held the account for at least five years), while distributions from an inherited traditional IRA account would be subject to taxation.
It is important to understand the various rules surrounding RMDs to avoid the steep 50 percent penalty that kicks in if you don’t comply with the rules and/or handle your distributions accurately. But what if you don’t need the funds? While you are still required to take the distributions when you meet the requirements, there are some options available if you don’t depend on the money to meet your spending needs, including reinvesting the proceeds in another allowable account (to take advantage of continued growth) or taking qualified charitable distributions (QCDs) that allow for gifting of up to $100,000 annually to a qualified charity (the latter of which are excluded from your taxable income and not subject to tax).
Be sure to work with a tax or financial professional so you know what to expect and can plan withdrawal strategies that put you in the best situation possible!
Our latest blog: “What You Should Know About Required Minimum Distributions” is available now! Subscribe here: [link]
With all the legislative changes related to retirement distributions over the last couple of years, it’s important to have a clear understanding of what to expect for the current year. Learn more in our latest blog article: [link]
There have been many changes to Required Minimum Distributions in the last couple years. If you’re confused about what to expect for 2021, you can find out in our latest blog article. Get instant access here: [link]
It’s critical to know what to expect with Required Minimum Distributions (RMDs) for tax year 2021. RMDs are required distributions investors over a certain age must take out every year from their retirement savings accounts. Learn more here: [link]
DID YOU KNOW… There is no longer an RMD waiver for tax year 2021. Therefore, anyone age 72 or older as of December 31, 2021 must take their RMD by year-end to avoid a penalty. The only exception to this is if 2021 is the first year an individual is subject to the RMD requirement, in which case the due date is April 1, 2022. The RMD rules apply to traditional IRAs, inherited IRAs, and employer-sponsored plans. Learn more here: [link]
As part of the SECURE Act of 2019, the age when RMDs are required was increased from 70 ½ to 72 years. Furthermore, as part of the CARES Act passed in 2020, the RMD requirement was temporarily waived. So, what should you expect for 2021? Find out here: [link]
It is important to understand the various rules surrounding RMDs to avoid the steep 50% penalty that kicks in if you don’t comply with the rules/handle your distributions accurately. But what if you don’t need the funds? While you are still required to take the distributions when you meet the requirements, there are some options available if you don’t depend on the money. Learn more in our latest blog article: [link]
Do you know what to expect for 2021 when it comes to Required Minimum Distributions (RMDs)? Sign up for our newsletter to learn about the recent changes and what to expect: [link]
BizBoost NewsVolume 11, Issue 9For distribution 10/18/21; publication 10/21/21
Refundable Payroll Tax Credits Still Available
When President Biden signed the American Rescue Plan Act of 2021 in the spring, two refundable payroll tax credits were extended and expanded: the Families First Coronavirus Response Act (FFCRA) and the COBRA Premium Assistance Credit.
In 2020, the FFCRA was mandated for all employers with less than 500 employees to provide paid family and sick leave for employees. In January 2021, paid leave became optional, but the credit is still available for employers providing leave.
The FFCRA was extended to last through the end of 2021 and expanded to promote vaccination and testing by creating two additional reasons for covered leave:
1 – Leave for employees receiving the COVID-19 vaccine or recovering from any side effects or illness related to the vaccine
2 – Leave for employees who are awaiting the results of a diagnostic test or medical diagnosis related to COVID
Another credit available for employers is for COBRA premium assistance for periods beginning after April 1, 2021 and before September 30, 2021. This credit is available for individuals who have been involuntarily terminated or had reduced work hours who choose continuation of health care under COBRA. The employer receives a refundable tax credit in the amount of premiums paid on behalf of the employee against its share of Medicare tax. Premiums exceeding the Medicare tax are refunded.
These credits can be used in advance by adjusting the federal withholding tax deposits and reporting the credit claimed on Form 941, Employer’s Quarterly Federal Tax Return. If the expected tax credit exceeds deposits available, an employer may file Form 7200 to request an advance of the tax credit – however, Form 941 must still be filed. An employer can also file an amended 941-X to claim the credit if the original Form 941 did not account for them.
Take advantage of these credits while you can!
Our latest blog: “Refundable Payroll Tax Credits Still Available” is available now! Subscribe here: [link]
When President Biden signed the American Rescue Plan Act of 2021 in the spring, two refundable payroll tax credits were extended and expanded: the Families First Coronavirus Response Act (FFCRA) and the COBRA Premium Assistance Credit. Learn more about the expansions in our latest blog article: [link]
The Families First Coronavirus Response Act and the COBRA Premium Assistance Credit were expanded in the spring of 2021. Learn more about how you can take advantage of these credits here: [link]
In 2020, the FFCRA was mandated for all employers with less than 500 employees to provide paid family and sick leave for employees. In January 2021 paid leave became optional, but the credit is still available for employers providing leave. Learn more here: [link]
Learn more about this expansion here: [link]
The COBRA premium assistance credit is available for individuals who have been involuntarily terminated or had reduced work hours who choose continuation of health care under COBRA. The employer receives a refundable tax credit in the amount of premiums paid on behalf of the employee against its share of Medicare tax. Premiums exceeding the Medicare tax are refunded. Find out more here: [link]
DID YOU KNOW…The FFCRA and COBRA credits can be used in advance by adjusting the federal withholding tax deposits and reporting the credit claimed on Form 941, Employer’s Quarterly Federal Tax Return. Learn more in our latest blog article: [link] Find out more here!
DID YOU KNOW… If the expected tax credit from the FFCRA and COBRA exceeds deposits available, an employer may file Form 7200 to request an advance of the tax credit – however, Form 941 must still be filed. Sign up for our newsletter to learn more: [link]
