Monthly Archives: July 2020
With the 2019 Tax Filing Season just behind us, it is difficult to think of the next filing season, however, there are many issues that need to be addressed now, rather than wait.
At this most difficult time for our taxpayers, we want to assure you that our firm is here to assist you with your questions and concerns.
Economic Impact Payment – Stimulus
Many of you received an Economic Impact Payment, known as the Stimulus. Whether you received a direct deposit, a check or a debit card, you also received a letter from the Internal Revenue Service. If you received this letter, Notice 1444 in the mail we will need it to prepare your 2020 U. S. Federal Income Tax Return to determine if you qualify for additional payment.
If you did not get your payment, you can check the Get My Payment tool on the IRS website to double-check that it has been issued.
You can initiate a trace on your payment by calling the IRS at 800-919-9835,expect long wait times, or submitting Form 3911. The United States Department of Treasury has requested for any deceased taxpayer who received a stimulus, their estate should return the payment to the Internal Revenue Service.
According to the IRS, unemployment benefits are taxable income. This means that any unemployment compensation that you receive from a state or the federal government must be included in your income and will be taxed at your ordinary income tax rate
To access 1099-G tax statements, claimants can go to https://dwd.wisconsin.gov/uiben/1099.htm and then follow a few easy steps to obtain an electronic copy of their 2020 benefit payment records.
In response to customer service trends toward the convenience of online self-service, claimants who have logged onto UI’s online benefits services system are being notified their 1099-G statements for 2020 will be accessible online and that they should not expect to be mailed paper copies. DWD securely stores 1099-G forms online for all claimants to access and print for their records. Claimants’ statements are available online for the past six years, which is helpful if claimants have to file amended tax returns. The UI Division is required to send 1099-G information to the Internal Revenue Service and the Wisconsin Department of Revenue
This tax form shows the amount of unemployment benefits you received and the amount of taxes withheld. Unemployment benefits will also be taxable to your state if you live in a state with state income tax. We will need the Form 1099-G to prepare your 2020 tax return.
You may wish to have withholding taken from your payment or may make Estimated Tax Payments to the IRS and the State. If you received Unemployment benefits, you may want to plan ahead for the potential tax impact so that there are not any surprises when you file your 2020 tax return.
Payroll Protection Plan Loans
Payroll Protection Plan (PPP) loans obtained to assist you keep your business open and your staff employed will undoubtedly have some impact on your 2020 tax filing. The United States Congress is considering additional legislation to determine if debt forgiveness will not allow deductions used to eliminate the debt to be deductible or if there will be a blanket allowance of up to $150,000 of the PPP to be considered a grant and non-taxable. Currently, the part of the loan that is forgiven will not be allowed as deductible expenses, i.e. payroll, rent, utilities. This may increase your profits subject to tax. Tax Planning will be very important if this legislation does not change.
RMDs – Required Minimum Distributions
The CARES Act enabled any taxpayer with an RMD due in 2020 from a defined-contribution retirement plan, including a 401(k) or 403(b) plan, or an IRA, to skip those RMDs this year. This includes anyone who turned age 70 1/2 in 2019 and would have had to take the first RMD by April 1, 2020. This waiver does not apply to defined-benefit plans.
In addition to the rollover opportunity, an IRA owner or beneficiary who has already received a distribution from an IRA of an amount that would have been an RMD in 2020 can repay the distribution to the IRA by August 31, 2020. The notice provides that this repayment is not subject to the one rollover per 12-month period limitation and the restriction on rollovers for inherited IRAs.
These issues and many others have impacted our clients so far this year including changes in the tax code that may require amendment of prior tax returns.
Additionally the Supreme Court is scheduled to hear oral arguments concerning the constitutionality of the Patient Protection and Affordable Care Act, ACA, case California vs. Texas. Should the Supreme Court over-turn the ACA it will overturn such tax issues as the Additional Medicare Tax and the Net Investment Income Tax. It remains to be seen the full tax scope of such a decision.
Again, we understand the need to stay safe and well, it is our priority for our firm as well.
We are taking the precautions to keep you, our staff and us safe during these times.
We are ready to serve you. Please call our office for an appointment, either face-to-face or by telephone.
Our best of wishes for your health and well-being.