TallyTaxMan : Tallahassee Income Tax Service https://tallytaxman.com Wed, 12 Aug 2020 16:49:23 +0000 en-US hourly 1 58797067 Health Savings Account https://tallytaxman.com/2020/06/health-savings-account/ https://tallytaxman.com/2020/06/health-savings-account/#respond Tue, 09 Jun 2020 11:30:27 +0000 https://tallytaxman.com/?p=3635

People enrolled in Medicare can not contribute to a health savings account. But do not despair, if you have a balance remaining in an existing HSA. While on Medicare, you can continue to tax-free withdrawals from your account to pay out-of-pocket medical expenses, such as your share of prescription drug costs, co-payments and deductibles. Once you turn 65, you can use HSA money tax-free to pay premiums for Medicare Part B and Part D, and for Medicare Advantage plans.

The annual ceilings on deductible pay ins to HSAs are slated to go up in 2021 to $3,600 for account owners with self- only coverage and to $7,200 for those with family coverage. People born before 1967 can put in additional $1,000. The limits on out-of-pocket costs, such as deductibles and co-payments, will increase to $7,000 for individual coverage and to $14,000 for family. Minimum policy deductibles will remain $1,400 for individuals and $2,800 for families.

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Stimulus Legislation Details https://tallytaxman.com/2020/05/stimulus-legislation-details/ https://tallytaxman.com/2020/05/stimulus-legislation-details/#respond Tue, 26 May 2020 11:30:00 +0000 https://tallytaxman.com/?p=3628 More cash donations to charity can be deducted for 2020 under the new law. The 60%- of- AGI limit on cash donations by individuals is suspended. Gifts to donor-advised funds and private non-operating foundations are excluded. The taxable income limit on charitable gifts of cash by C corps rises to 25%. Plus, nonitemizers can write off up to $300 of charitable cash contributions. This is new above-the-line deduction for individuals who do not file Schedule A.

The package includes three key retirement-related easings for 2020. Individuals can skip taking their required minimum distributions from IRAs and workplace plans, such as a 401(k) or 403(b), for this year without penalty. The 10% penalty on preage-59 1/2 payouts. Also, funds repaid within three years are treated as tax-free rollover distributions. Otherwise, tax is spread over three years. Eligible individuals can borrow more from workplace plans such as 401(k)s, up to the lesser of $100,000 or 100% of the account balance, until Sept. 23, and repayments on retirement plan loans due in 2020 are delayed for on year.

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Foreign Accounts https://tallytaxman.com/2020/05/foreign-accounts-3/ https://tallytaxman.com/2020/05/foreign-accounts-3/#respond Thu, 21 May 2020 11:30:39 +0000 https://tallytaxman.com/?p=3624 Penalties for failing to report overseas accounts are stiff. $13,481 apiece for nonwillful violations, the larger of $134,806 or 50% of the highest balance in the account for willful failures. Be sure you comply with the reporting rules, because increasing taxpayer compliance in this area is a key IRS enforcement priority.

The standard for willfulness includes reckless conduct or willful blindness. A man living in Mich. failed to report Canadian accounts he had for several years. IRS slapped him with a penalty of nearly $1 million. According to a district court, the following factors demonstrate reckless disregard of the reporting requirements. The man did not review Schedule B of his 1040, which ask about foreign accounts. He did not bother to ask his preparer about is obligations to disclose the accounts. He had all correspondence on the accounts sent to his sister in Canada. Additionally, he had lots of money stashed overseas.

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Coronavirus Paid-Leave https://tallytaxman.com/2020/03/coronavirus-paid-leave/ https://tallytaxman.com/2020/03/coronavirus-paid-leave/#respond Wed, 25 Mar 2020 11:00:38 +0000 https://tallytaxman.com/?p=3425 The coronavirus paid- leave package includes tax credits for many employers. The law requires firms with fewer then 500 workers to provide paid sick and family leave to employees who can not work because they or a family member is affected by COVID-19, or who need to stay home to care for their kids while schools and day cares are closed. The credits offset quarterly payroll taxes. They reimburse the employers cost of providing the mandated paid sick and family leave on a dollar-for-dollar basis. Self-employed individuals are also entitled to a credit to offset SECA tax. For more information on the legislation, go to www.kiplinger.com/links/paidleave.

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10- Year Clean-out Rule https://tallytaxman.com/2020/03/10-year-clean-out-rule/ https://tallytaxman.com/2020/03/10-year-clean-out-rule/#respond Thu, 19 Mar 2020 19:23:43 +0000 https://tallytaxman.com/?p=3389 NOW there is a 10- year clean-out rule for many beneficiaries of inherited IRAs. The IRA funds must be distributed to them within 10 years of the owners death. This new clean-out rule doesn’t mean that the payouts must be distributed evenly over a 10-year period. The beneficiary can wait until year 10 to take all the money. Some exceptions do apply for beneficiaries who are surviving spouses or minor children of the account owner or beneficiaries who are chronically ill, disabled or not more than 10 years younger than the deceased IRA owner. For minor children, the exception applies only until the child reaches the age of 18. The rule for spouses does not change. Unlike other beneficiaries, a surviving spouse still has the option to take an inherited IRA as his or her own. One other important note: These new rules were not made retroactive. They apply to beneficiaries of IRA owners who die in 2020 or later. For individuals who inherited an IRA before 2020, the old rules continue to apply, so that these lucky beneficiaries can still take advantage of the stretch IRA strategy.

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Small Firm Payroll Taxes https://tallytaxman.com/2020/03/small-firm-payroll-taxes/ https://tallytaxman.com/2020/03/small-firm-payroll-taxes/#respond Tue, 17 Mar 2020 11:00:00 +0000 https://tallytaxman.com/?p=3405 Small firms have the flexibility in choosing how often to file payroll tax returns. If you have a new business and expect your yearly federal employment taxes to be $1,000 or less, then you can select the option to file and annual Form 944 when you apply for an employer identification number. Those who don’t check the box for annual filing will be required to submit the 941 quarterly payroll tax returns. Existing businesses that now file the 941 but meet the 944 eligibility rules can contact the Revenue Service by April 1 in a given year to request to file the 944. Firms that receive written permission from the Service can shift to annual reporting.

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Inherited IRAs for Non- spouse https://tallytaxman.com/2020/03/inherited-iras-for-non-spouse/ https://tallytaxman.com/2020/03/inherited-iras-for-non-spouse/#respond Thu, 05 Mar 2020 12:00:00 +0000 https://tallytaxman.com/?p=3413 A strategy for inherited IRAs has been curbed by the enactment of the SECURE Act late last year: The stretch IRA for nonspouse beneficiaries. Before the SECURE Act, IRA owners who died could leave their accounts to their children, grandchildren or other nonspouse beneficiaries, and heirs could stretch the required minimum distributions over their own lifetimes, thus allowing the funds in the account to grow tax-free for decades.

Congress saw this as a loophole for the rich and has been itching to curtail it for years!

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Virtual Currency https://tallytaxman.com/2020/03/virtual-currency-3/ https://tallytaxman.com/2020/03/virtual-currency-3/#respond Tue, 03 Mar 2020 12:00:00 +0000 https://tallytaxman.com/?p=3409 IRS in intensely interested in filers who transact in virtual currency. And it is requiring more disclosure. Starting with returns filed this year, people must answer on Schedule 1 of the 1040 whether they have received, disposed of, sold, exchanged or acquired any financial interest in virtual currency, such as bitcoin. If the answer in no, Schedule 1 is not required to be attached to the 1040 filing unless the taxpayer has income or deduction items to include on the schedule.

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Medical Expense Deduction Threshold Changes Again https://tallytaxman.com/2020/02/medical-expense-deduction-threshold-changes-again/ https://tallytaxman.com/2020/02/medical-expense-deduction-threshold-changes-again/#respond Tue, 18 Feb 2020 12:00:00 +0000 https://tallytaxman.com/?p=3394 The threshold for deducting medical expenses on Schedule A is 7.5% of AGI. The adjusted-gross-income threshold was slated to jump from 7.5% to 10% after 2018, but the year-end government funding law revived the 7.5% figure for 2019 and 2020.

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Late-filing Penalty Going Up https://tallytaxman.com/2020/02/late-filing-penalty-going-up/ https://tallytaxman.com/2020/02/late-filing-penalty-going-up/#respond Thu, 13 Feb 2020 12:00:00 +0000 https://tallytaxman.com/?p=3390 The fine for filing late returns is higher for returns with post-2019 due dates. The minimum penalty for returns filed 60 or more days after the due date is the lesser of $435 (up from $215) of 100% of the required tax shown on the return.

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