tag:blogger.com,1999:blog-39772076008022472722024-03-04T21:56:22.068-08:00Gaylor Tax Services UpdatesUpdates from Gaylor Tax Services - Providing useful tips for minimizing your taxes or to discuss a variety of tax related matters.Matt Gaylorhttp://www.blogger.com/profile/00432521311570909859noreply@blogger.comBlogger70125tag:blogger.com,1999:blog-3977207600802247272.post-3017473351596999672021-11-22T16:01:00.006-08:002021-11-23T08:13:44.807-08:002021 Year End Tax Moves...<p> </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgoDDbnkB8hOsKoI0FBGXhBalHg4mSDWpb8fmFh-1e-n1qAbnr4SX-5IxhFoaMbKb8NyZnVprMQ5pB0Qyoct_R184NQ1DP7qDf59tLEZlAjFkj-A71nyR04h4n7a6w5Udyb9C0kjM6AOuM/s1280/drink-g4961afac8_1280.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="853" data-original-width="1280" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgoDDbnkB8hOsKoI0FBGXhBalHg4mSDWpb8fmFh-1e-n1qAbnr4SX-5IxhFoaMbKb8NyZnVprMQ5pB0Qyoct_R184NQ1DP7qDf59tLEZlAjFkj-A71nyR04h4n7a6w5Udyb9C0kjM6AOuM/s320/drink-g4961afac8_1280.jpg" width="320" /></a></div><br /><p></p><p>With the approaching Thanksgiving holiday, that means the end of the year is quickly approaching and there is still time to consider making tax moves before December 31st. This post is intended to provide some items to consider doing before year-end for individual/personal taxpayers and is not an exhaustive list of considerations.</p><p><br /></p><p><b>Individuals:</b></p><p><br /></p><p>For individual taxpayers, there are some considerations before year-end, some of these are just for 2021 and some are items to consider each year.</p><p><b>Itemized Deductions:</b></p><p style="text-align: justify;">Itemized deductions is when your various deductions like medical expenses, mortgage interest, property taxes, state and local taxes, charitable donation in total exceed the standard deduction. Medical expenses that exceed 7.5% of Adjusted Gross Income are added to the itemized deductions for Federal purposes, in AZ that percentage is not applicable.</p><p style="text-align: justify;">The standard deduction for 2021 is $12,550 for unmarried individuals, $25,100 for married filing joint, $18,800 for Head of Household filing status.</p><p style="text-align: justify;">*Special to 2021* - charitable contributions generally require being able to itemize deductions, but for 2021, taxpayers may take cash contributions in addition to the standard deduction, up to $300 for single taxpayers/$600 for married taxpayers filing joint. This was implemented as part of the CARES Act law passed in 2020.</p><p style="text-align: justify;">Bunching deductions - if you are close to being able to itemize, you may consider accelerating deductions into the current year. This works for charitable donations and medical expenses, but due to Tax Cuts and Jobs Act state and local taxes are capped at a maximum of $10,000 per year. </p><p><b>Retirement for 2021: </b></p><blockquote style="border: none; margin: 0px 0px 0px 40px; padding: 0px;"><p style="text-align: left;"><b>Contributions</b></p></blockquote><p style="text-align: justify;">For taxpayers that have earned income (wages or self-employment income), you can make contributions to an IRA. There are annual limits on the amount that can be contributed to the accounts (the lesser of earned income or $6,000, if the taxpayer is aged 50 or over then the total contribution is increased by $1,000 - still limited to earned income).</p><p style="text-align: justify;">For employees that have the ability to contribute to retirement accounts (like 401(k) or other similar accounts), review your contribution level and if you are not reaching the max contribution level before year-end, then consider making additional contributions via paycheck deduction to lower taxable income for this year, or if taxable income is low consider contributing to Roth 401(k). The decision of type of retirement contributions should be discussed with a tax/financial advisor and consider your specific situation.</p><p></p><blockquote style="border: none; margin: 0px 0px 0px 40px; padding: 0px;"><p style="text-align: left;"><b>Distributions</b></p></blockquote><p style="text-align: justify;">For taxpayers age 70.5 or over are eligible to make charitable contributions directly from their IRAs and not be taxed on the distribution. This is known as a Qualified Charitable Distribution and can be helpful for those that want to donate to an organization but counting the IRA distribution will cause higher income while the donation is not advantageous for itemized deductions.</p><p style="text-align: justify;">Taxpayers that reached age 72 during 2021 are required to take minimum distributions from their retirement accounts. The calculation is based on age and balance in the accounts at 12/31 the preceding year, calculated for IRAs, 401(k)s, 403(b)s separately. Failure to take the required amounts can result in a penalty up to 50% of that required amount.</p><p><br /></p><p></p><p><b>Health Savings Account/Flexible Savings Account:</b></p><p style="text-align: justify;">Taxpayers that have a qualifying high deductible health insurance may be eligible to contribute funds to a Health Savings Account (HSA). The contribution to an HSA is like a retirement contribution, deducted on the tax return as a reduction to income. There are annual limits for contributions that depend on the coverage being individual or family coverage. Distributions, if used to pay qualifying medical expenses, are required to be reported on the tax return but not counted as income.</p><p style="text-align: justify;">Flexible savings accounts are elections that employees make to set aside funds pre-tax from their paycheck to pay for medical expenses or dependent care expenses. The limit for Medical FSA this year was $2,750 and Dependent Care was revised under the American Rescue Plan Act to $10,500 for 2021. The flexible savings accounts are "use it or lose it" accounts, you have to spend the funds within the plan year to be able to get reimbursement, remember to submit for your reimbursement before that expires.</p><p><b>Capital Gain Income</b></p><p style="text-align: justify;">Recognition of capital gains occurs when you sell an asset at a price higher than it was purchased (general principal). With tax proposals aimed at increasing capital gains rates, there may be reason to sell this year (2021) and if you like the asset, you can purchase it back and get a higher cost basis for the asset. </p><p style="text-align: justify;">Sale of primary residence may generate capital gains income, but the sale may be partially excluded from tax. This video discusses a quick overview of that topic.</p><div class="animated_gif_container" style="text-align: center;" width="427.2"><a href="https://vidmails.com/v/iWtdXYYW1l" title="Click here to view your video from Matt Gaylor"><img alt="Click here to view your video from Matt Gaylor" height="240" src="https://vidmails.com/new_backoffice/snapshot_server.php?v=12286245&k=b063b678a3456058e49444f6f90ced7c&ts=1637683823619d126fe5d9d" style="border: 1px solid #333333;" width="427.2" /></a></div><p><br />Click the image or view your video from Matt Gaylor <a href="https://vidmails.com/v/iWtdXYYW1l">here</a><br /><br /><img alt="." src="https://www.vidmails.com/new_backoffice/open_rate_tracking.php?pback_id=~PBID~" /></p><p><br /></p><p style="text-align: justify;">If there are stocks or other investments sitting at a loss, consider selling those assets to recognize capital losses. Capital losses can be used to offset capital gains and any excess losses can offset ordinary income, up to $3,000 per year. If stocks are sold at a loss, be aware of wash loss rules - these rules deny the loss being deductible if the same asset is purchased 30 days before or after the date of sale. The wash sale loss rules do not apply to crypto assets in 2021, but proposed legislation will change that.</p><p style="text-align: justify;">IMPORTANT: *The comments in this article are not blanket recommendations as there may be other factors to consider in each individual's situation. It is recommended that you seek counsel from trained tax professionals that consider your specific situation.*</p><p>Check back for additional comments as this blog post is updated.</p>Matt Gaylorhttp://www.blogger.com/profile/00432521311570909859noreply@blogger.com1tag:blogger.com,1999:blog-3977207600802247272.post-13413181312089186902021-08-20T09:09:00.004-07:002021-09-23T08:38:31.625-07:002021 Arizona Tax Credits<h1 style="text-align: left;">2021 Arizona Charitable Income Tax Credits</h1><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhg7Ley8jMbUFPothNSJahUwtOY2lgwLOEtB6EJOQT3vZjauRqzgK1Q1UZv9pe2tdKvwkdp7cFG6vMoPadx0h2L4Dy6Xsx0rZXlD0r93i-ODv22ZMvd6IhgebwNaNirxt9imL-Nr3W4sxY/s1280/donations-1041971_1280.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1280" data-original-width="853" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhg7Ley8jMbUFPothNSJahUwtOY2lgwLOEtB6EJOQT3vZjauRqzgK1Q1UZv9pe2tdKvwkdp7cFG6vMoPadx0h2L4Dy6Xsx0rZXlD0r93i-ODv22ZMvd6IhgebwNaNirxt9imL-Nr3W4sxY/s320/donations-1041971_1280.jpg" width="213" /></a></div><br /><div style="text-align: center;"><br /><div class="separator" style="clear: both; text-align: justify;"><span style="text-align: left;">It is that time again, to update the information for a frequent question to our office: How much can I contribute for the Arizona tax credits? </span></div></div><div><br />This post is intended to provide answers about the available credits and the limit amount.<br /><br />Due to changes under the Tax Cuts and Jobs Act, in general, the ability to claim these donations as both an AZ tax credit and a charitable donation for Federal taxes was removed. Prior to 2018, these credits may have qualified as a charitable contribution for Federal tax purposes, in addition to the dollar for dollar tax credit against AZ taxes, during 2019 the IRS addressed this situation by allowing tax credits to be claimed as additional state income tax paid, up to the limit allowed for SALT (state and local taxes) deductions on Schedule A (that cap is $10,000 in total). The new rule allows for a partial application of the tax credits as an itemized deduction under the taxes paid section, if not already maxed out for tax deduction, that $10,000 amount.<br /><br />These tax credits, for AZ purposes, are treated as if these amounts were paid as state income tax and allow for a dollar for dollar offset against the amount of AZ income tax liability. These credits do not create refunds alone, but may result in a refund of AZ withholding or AZ estimated taxes paid that exceed the tax liability. <br /><br />These tax credits can still be utilized to direct dollars to organizations that you desire to support and many of these organizations survive through the donations. Please consider supporting with your dollars the organizations that impact an area you care.<br /><br /></div><div>The tax credits that are most utilized are listed below (Credit Title and maximum donation amount for single/married taxpayers):</div><div><br /></div><div></div><ul><li>Arizona Military Family Relief Fund ($200/$400) - More info/donate here: <a href="https://dvs.az.gov/military-family-relief-fund-2021" target="_blank">AZ MFRF</a></li><li>Contributions to Qualifying Charitable Organizations ($400/$800) formerly known as the Working Poor Credit - List of organizations here: <a href="https://azdor.gov/sites/default/files/CREDITS_2021_qco.pdf" rel="nofollow" target="_blank">2021 Certified Charities</a></li><li>Contributions to Qualifying Foster Care Organizations ($500/$1,000) - List of organizations here: <a href="https://azdor.gov/sites/default/files/CREDITS_2021_qfco.pdf" rel="nofollow" target="_blank">2021 Certified Foster Care Charities</a></li><li>Contributions Made or Fees Paid to Public School ($200/$400) - AZ K-12 schools are eligible</li><li>Contributions to School Tuition Organization ($1,219/$2,435) - List of organizations here: <a href="https://azdor.gov/sites/default/files/REPORTS_sto-i-list.pdf" target="_blank">School Tuition Organization List</a></li></ul><div>The Arizona Military Family Relief Fund has a cap on donations allowed to be received each year of $1,000,000. Due to this cap, timing of donation can be very important as any donations received after the cap is met will be returned to the donor and not qualify for the credit. After donating for this, the donor will receive a special receipt indicating qualification as an AZ tax credit, that must be kept to support claiming on the AZ return.</div><div><br /></div><div>Donations to Qualifying Charitable Organizations, Qualifying Foster Care Organizations, Public School Fees, and School Tuition Organization can be made during 2021 and up until April 15, 2022 to be claimed on the 2021 tax return.<br /><br />The list of eligible organizations can be quite daunting due to the voluminous number of organizations. There are many worthy organizations that are worthwhile to support, please check the current year approved charities that might be of interest. If you need a recommendation, I (Matt) have served previously on the board of directors for Helping Hands for Single Moms (<a href="https://helpinghandsforsinglemoms.org/" target="_blank">Visit Website</a>) in years past and continue to support them to this day, they qualify under the Charitable Organizations category.<br /><br />The AZ Department of Revenue provides lists (in the links above) to the organizations that qualify for Charitable Organizations, Foster Care Organizations, and School Tuition Organizations. The Public School eligible schools are K-12th grade AZ schools and schools can be searched at the AZ Department of Education <a href="https://www.ade.az.gov/edd/">here</a>.<br /><br /></div><div>Please consult with a tax advisor (or our office) to see if these tax credits would be beneficial in your situation and be careful not to do too much in tax credits as these are not refundable (the refund generated from these credits is because of tax withholding or estimated tax payments that are offset by these credit payments) and excess donations can be carried over to subsequent years.</div>Matt Gaylorhttp://www.blogger.com/profile/00432521311570909859noreply@blogger.com0tag:blogger.com,1999:blog-3977207600802247272.post-11590977429433342822021-06-23T13:27:00.002-07:002021-06-23T13:35:11.454-07:00IRS 2021 Child Tax Portal<h1 style="text-align: center;"> IRS Reveals Child Tax Portal</h1><h1 style="text-align: center;"><div style="height: 0px; padding-bottom: 56.25%; position: relative; text-align: justify;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgTJ4T0A7CTG-WXflHppwNt5mmuVxUNxs4YlrZ6PmTq4AyQ9OZXBC6kbsXGzJvgYtEO-MoABQ3UK5TD1hjZxRme3aIqpIvqEj1oa9CtLhm7xGU5Z4MCz14RPJng6qhs5ZV9FjBciwEGsNQ/s640/baby-2717347_640.jpg" imageanchor="1" style="font-size: 32px; font-weight: 700; margin-left: 1em; margin-right: 1em; text-align: center;"><img border="0" data-original-height="426" data-original-width="640" height="327" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgTJ4T0A7CTG-WXflHppwNt5mmuVxUNxs4YlrZ6PmTq4AyQ9OZXBC6kbsXGzJvgYtEO-MoABQ3UK5TD1hjZxRme3aIqpIvqEj1oa9CtLhm7xGU5Z4MCz14RPJng6qhs5ZV9FjBciwEGsNQ/w492-h327/baby-2717347_640.jpg" width="492" /></a></div><p></p></div></h1><div style="text-align: justify;">The IRS has revealed the portal/website for unenrolling from the Advance Child Tax Payments. As previously posted, taxpayers may desire to opt out of receiving the advance payments for many reasons, this portal allows taxpayers to unenroll from the advances and provides other information.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Please note that if the 2019 or 2020 tax return is being used by the IRS to determine eligibility, if that return was a joint return, then both taxpayer and spouse need to unenroll for the advance payments.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The video in this blog shows how to access the portal and briefly addresses the account setup needed to access.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><br /></div>
<div style="height: 0px; padding-bottom: 56.25%; position: relative; text-align: center;"><iframe allowfullscreen="" frameborder="0" mozallowfullscreen="" src="https://www.loom.com/embed/a93803d9216749cab563a8a686405900" style="height: 100%; left: 0; position: absolute; top: 0; width: 100%;" webkitallowfullscreen=""></iframe></div><div style="height: 0px; padding-bottom: 56.25%; position: relative; text-align: justify;">Also note that each taxpayer's situation is unique, so the choice to opt out of the advances should be discussed in light of that specific situation. </div>Matt Gaylorhttp://www.blogger.com/profile/00432521311570909859noreply@blogger.com0tag:blogger.com,1999:blog-3977207600802247272.post-76206511043727507602021-06-04T11:23:00.002-07:002021-06-04T11:23:09.975-07:00Changes to Dependent Care - 2021 only<h1 style="text-align: center;"> 2021 Dependent Care Credit Update</h1><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi9-fH6P4TSRWNkluxoI_Q0WNaL1mniSxsEXQVjSkp2y9hgPr9nAjMQuDfmM-KY2Ap2_MromqZmZzg243lbPiZ301fzLvAQKoeb52RqNhWNzRiswo3McAfWH1UIdn1kCKwK_UiFKbpm7b0/s1280/babysitter-6141020_1280.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="853" data-original-width="1280" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi9-fH6P4TSRWNkluxoI_Q0WNaL1mniSxsEXQVjSkp2y9hgPr9nAjMQuDfmM-KY2Ap2_MromqZmZzg243lbPiZ301fzLvAQKoeb52RqNhWNzRiswo3McAfWH1UIdn1kCKwK_UiFKbpm7b0/s320/babysitter-6141020_1280.png" width="320" /></a></div><br /><div style="text-align: center;"><br /></div><div>In the last post, the 2021 changes for the child tax credit were discussed. This post is about changes to the credit for caring for dependents, which is completely different.</div><div><br /></div><div>In March 2021 Congress passed the American Rescue Plan Act (ARPA) which expands the dependent care credit for 2021 only.</div><div><br /></div><div>Historically, this credit is for qualified expenses paid that allow a taxpayer and/or their spouse to work or go to school, and was based on the earned income of the lower earner (meaning a married couple must both have earned income to be eligible for the credit, or if a student the earned income is deemed to be $250 per month while a student). The qualified expense amounts were capped at $3,000 per dependent (age 13 or younger) and up to 2 children. Employees could elect a pre-tax deferral up to $5,000 from their paycheck for reimbursement of dependent care expenses, the amount claimed on the personal return is reduced for the pre-tax deferral or employer paid amounts. The credit was non-refundable (could only be used to offset tax liability) and the percentage of expenses for the credit ranged from 35% down to 20%.</div><div><br /></div><div style="text-align: center;"><b>Changes for 2021</b></div><div><p class="MsoNormal" style="line-height: 150%; text-align: justify;"><span style="font-family: Helvetica, sans-serif; font-size: 10.5pt; line-height: 150%;">For 2021 (only) individual
tax returns qualify this credit is greatly expanded. The credit is eligible to be refundable (if the credit exceeds the tax liability, it may result in a larger refund), the credit rate ranges from up to 50% down to 20%, and the qualified expense amount is raised to $8,000 for 1 dependent and up to $16,000 expenses for more
than 1 dependent. The pre-tax dependent care election amount has been raised to $10,500.</span></p><p class="MsoNormal" style="line-height: 150%; text-align: justify;"><span style="font-family: Helvetica, sans-serif; font-size: 10.5pt;"><b>Action Items to consider:</b></span></p><p class="MsoNormal" style="line-height: 150%; text-align: justify;"></p><ul><li><span style="font-family: Helvetica, sans-serif;"><span style="font-size: 14px;">Election for pre-tax amount from paycheck: if your employer offers a dependent care Flexible Savings Account (FSA), review the option to increase the amount of the election for 2021. The FSA provides tax savings for Federal and State income taxes, plus Social Security and Medicare taxes. If you have 2 or more kids, the full election more be more beneficial than the credit.</span></span></li><li><span style="font-family: Helvetica, sans-serif;"><span style="font-size: 14px;">Document qualified expenses: To claim the credit, at tax time the form 2441 is used which requires listing the Care Provider's name, address, tax identification number/Social Security number, and amount paid during the year. Without that information, the tax return may not be able to claim the credit or may result in extended delays in processing the return for missing information.</span></span></li></ul><div><span style="font-family: Helvetica, sans-serif;"><span style="font-size: 14px;">As each person's situation is unique, a consultation to review your specific circumstances may be warranted and the above is intended to be educational to this topic, but not specific tax advice for all taxpayers.</span></span></div><div><br /></div><div><span style="font-family: Helvetica, sans-serif;"><span style="font-size: 14px;"><br /></span></span></div><div><span style="font-family: Helvetica, sans-serif;"><span style="font-size: 14px;"><br /></span></span></div><p></p></div>Matt Gaylorhttp://www.blogger.com/profile/00432521311570909859noreply@blogger.com0tag:blogger.com,1999:blog-3977207600802247272.post-31045972594613137022021-05-26T11:23:00.003-07:002021-06-16T09:44:45.053-07:002021 Child Tax Credit Changes<h1 style="text-align: center;"> Child Tax Credit Change for 2021</h1><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgvetg9BETJdJDU6HY6ZW9ancg3rEGWQKIBvJg9mdTOkz2eyehaUoJZc900DGEm6PoPhyphenhyphenTqsBgxX3z2WAkgGOpH9898ko4OwcVDuxoh1PK4cTyibheHssZQzGfeZbJtH6T_q0KsmJMlcFY/s960/Dad+Trophy.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="675" data-original-width="960" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgvetg9BETJdJDU6HY6ZW9ancg3rEGWQKIBvJg9mdTOkz2eyehaUoJZc900DGEm6PoPhyphenhyphenTqsBgxX3z2WAkgGOpH9898ko4OwcVDuxoh1PK4cTyibheHssZQzGfeZbJtH6T_q0KsmJMlcFY/s320/Dad+Trophy.jpg" width="320" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">The Gaylor kids (a few years ago)</td></tr></tbody></table><br /><div><br /></div><div><div class="subscriber-preview" style="background-color: white; box-sizing: border-box; color: #222222; font-family: Montserrat, sans-serif; font-size: 14px;"><p style="box-sizing: border-box; font-family: Lora, serif; font-size: 18px; line-height: 30px; margin: 0px 0px 30px;">As part of legislation passed on March 11, 2021 - the American Rescue Plan Act made changes to the child tax credit for the year 2021. This credit has increased from the prior $2,000 per eligible child to a maximum of $3,600 for each child under age 6 at the end of 2021, a maximum of $3,000 for each child under age 18 at the end of 2021. Interesting note, the child tax credit has been expanded to include kids aged 17 for this year, previously those children would not be eligible for this credit. </p></div><div class="subscriber-only" style="background-color: white; box-sizing: border-box; color: #222222; font-family: Montserrat, sans-serif; font-size: 14px;"><p style="box-sizing: border-box; font-family: Lora, serif; font-size: 18px; line-height: 30px; margin: 0px 0px 30px;">Previously parents would receive this credit when filing their income tax return, now under this legislation, parents will be able to get advanced payments beginning in July. The advanced payments will be calculated based on the 2020 tax return (if filed and processed, otherwise based on 2019), paid in monthly installments and will be up to 50 percent of the Child Tax Credit amount (i.e. up to $300 per month - total paid out of $1,800 for children under age 6, $250 per month - total of $1,500 for children over 5 and under 18). </p><p style="box-sizing: border-box; font-family: Lora, serif; font-size: 18px; line-height: 30px; margin: 0px 0px 30px;">The credit has income thresholds that affect qualifying for the full amount, the credit will be reduced for incomes over $150,000 for married taxpayers filing a joint return, $112,500 for heads of household, and $75,000 for all other taxpayers.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhf4VvVqlqgx-akHihVdrubVJht9Fc2BwPzetPGrO_X7qDkCYSdDS-YENOSeScUB8DkAKgs6C6FFi9pK-D4YUub2tgLEiMhe96q1g-WZfzVCx91U0da7cAWNsvGj94veCY9zEuVRmbQvCQ/s637/caution-943376_640+%25282%2529.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="198" data-original-width="637" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhf4VvVqlqgx-akHihVdrubVJht9Fc2BwPzetPGrO_X7qDkCYSdDS-YENOSeScUB8DkAKgs6C6FFi9pK-D4YUub2tgLEiMhe96q1g-WZfzVCx91U0da7cAWNsvGj94veCY9zEuVRmbQvCQ/s320/caution-943376_640+%25282%2529.png" width="320" /></a></div><br /><p style="box-sizing: border-box; font-family: Lora, serif; font-size: 18px; line-height: 30px; margin: 0px 0px 30px;">CAUTION/WARNING: For taxpayers that utilize the child tax credits to cover their tax liability, the advanced payments will reduce the child tax credit available on the 2021 tax return as it will be paid in advance. This advanced payment may also cause problems for divorced or separated parents, that alternate who claims the child - if you are paid in advance for a year that you don't claim the child, you may have to repay the advance.</p><p style="box-sizing: border-box; font-family: Lora, serif; font-size: 18px; line-height: 30px; margin: 0px 0px 30px;">SOLUTION: The IRS is supposed to be providing a website portal to opt-out of the advance payments for those taxpayers that choose to do so. This is supposed to be available by July 1st,you should be able to check that here: <a href="https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021" rel="nofollow" target="_blank">IRS Advance Child Tax Credit Payments in 2021</a></p><p style="box-sizing: border-box; font-family: Lora, serif; font-size: 18px; line-height: 30px; margin: 0px 0px 30px;">Updated June 16, 2021: The IRS has released a FAQ page about the Child Tax Credit here: <a href="https://www.irs.gov/credits-deductions/2021-child-tax-credit-and-advance-child-tax-credit-payments-frequently-asked-questions" target="_blank">2021 CTC and Advance Payments-FAQs</a></p><p style="box-sizing: border-box; font-family: Lora, serif; font-size: 18px; line-height: 30px; margin: 0px 0px 30px;">Also the IRS has released a tool to help families that don't normally file tax returns to register for the Advance Child Tax Credit payments. This system essentially files a tax return for those families - so this is to be used ONLY for taxpayers that have NO income tax filing requirement. The link can be found on the IRS website but is not linked here to prevent being used in error.</p><p style="box-sizing: border-box; font-family: Lora, serif; font-size: 18px; line-height: 30px; margin: 0px 0px 30px;"><br /><br /></p></div></div>Matt Gaylorhttp://www.blogger.com/profile/00432521311570909859noreply@blogger.com0tag:blogger.com,1999:blog-3977207600802247272.post-45657361642860411072021-04-08T19:09:00.004-07:002021-04-08T19:13:02.766-07:002020 Tax Return Updates<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgzGhyphenhyphenvfvN999MtQJxcABgulaMsMW1w4E5Otc595qknntw08cK0sFJ0qqvrjSVMzXV1B1V-iC_YeSkYYWPhlNjJTqlLFsHBb1q6RuWvVie6oESd0KNRzUVm7XV1cYkmiGmCuNorD_BbF7s/s1280/change-671374_1280.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="815" data-original-width="1280" height="331" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgzGhyphenhyphenvfvN999MtQJxcABgulaMsMW1w4E5Otc595qknntw08cK0sFJ0qqvrjSVMzXV1B1V-iC_YeSkYYWPhlNjJTqlLFsHBb1q6RuWvVie6oESd0KNRzUVm7XV1cYkmiGmCuNorD_BbF7s/w519-h331/change-671374_1280.jpg" width="519" /></a></div><br /><h1 style="text-align: center;"> Tax filing for 2020 Tax returns - Updates</h1><div><br /></div><div>This tax season has been a wild rollercoaster as the IRS announced there were no reasons to delay filing deadline, only to be convinced that due to the American Rescue Plan Act (passed March 11, 2021) and being caught in a backlog of processing documents, the due date would be moved to May 17, 2021 for individual 2020 tax returns (forms 1040, only no other tax return due on 4/15/2021 has been extended). </div><div><br /></div><div>Items impacted by the ARP Act include: up to $10,200 in unemployment benefits are not taxable for taxpayers that have adjusted gross income below $150,000 for 2020, taxpayers that receive advanced premium assistance to pay health insurance premiums via the Health Insurance Exchange are not required to repay any excess premium assistance for 2020, and Economic Impact Payment #3 (round 3 of stimulus payments) were authorized at an amount of $1,400 per person listed on the tax return (there are income phase-outs that if the income exceeds that amount, the taxpayer will not receive the payment currently but may be eligible to claim as a credit on the 2021 tax return, similar to the first and second stimulus payments). </div><div><br /></div><div><br /></div><div>This week (April 5, 2021), Arizona Governor Doug Ducey signed an extension for AZ individual tax returns to conform to the filing due date of May 17, 2021. Also included in that bill was an extension to utilize the AZ charitable tax credits (Qualifying Charitable Organizations, Qualifying Foster Care Organizations, Fees paid to Public Schools and School Tuition Organizations), which now are allowed to be funded up to the May 17, 2021 date as well. The tax credit categories, amounts (single/married) and links to eligible charities are listed below:</div><div><br /></div><div><ul><li>Contributions to Qualifying Charitable Organizations ($400/$800) formerly known as the Working Poor Credit - List of organizations here: <a href="https://azdor.gov/sites/default/files/CREDITS_2021_qco.pdf" rel="nofollow" target="_blank">2021 Certified Charities</a></li><li>Contributions to Qualifying Foster Care Organizations ($500/$1,000) - List of organizations here: <a href="https://azdor.gov/sites/default/files/CREDITS_2021_qfco.pdf" rel="" target="_blank">2021 Certified Foster Care Charities</a></li><li>Contributions Made or Fees Paid to Public School ($200/$400) - Arizona K-12 schools are eligible</li><li>Contributions to School Tuition Organization ($1,183/$2,365) - List of organizations here: <a href="https://azdor.gov/sites/default/files/REPORTS_sto-i-list.pdf" target="_blank">School Tuition Organization List</a></li></ul><div>As of the writing of this post (April 8, 2021), Arizona has not adopted conformity with ARP Act with regards to taxation of unemployment compensation. The last time the Federal government did not tax a portion of unemployment, the state of AZ did not conform and that led to tax due notices from the state a couple of years later for many taxpayers since AZ begins the tax calculations on the Federal Adjusted Gross Income, so a word of caution.</div></div><div><br /></div><div>There are other considerations in preparing tax returns this year that add to the complexity of preparing an accurate and paying the legally allowed amount of tax, including utilizing strategies to maximize the stimulus payments (either on the 2020 return if a taxpayer did not receive the full amount allowed or to set up qualifying for the EIP 3 using 2020 tax return information). </div><div><br /></div><div>This last year has been challenging and wearying for tax professionals, as well as the general public, please be sure to stop and consider how to be kind to one another.</div><div><br /></div><div>Thank you.</div><div><br /></div><div><br /></div><div><br /></div><div><br /></div><div><br /></div><div><br /></div><div><br /></div><div><br /></div><div><br /></div><div><br /></div><div><br /></div>Matt Gaylorhttp://www.blogger.com/profile/00432521311570909859noreply@blogger.com0tag:blogger.com,1999:blog-3977207600802247272.post-58026208786945615892021-01-28T08:01:00.017-08:002021-01-28T08:08:15.898-08:002020 Tax Returns - So many changes...<h1 style="text-align: center;">2020 Tax Returns affected by COVID directed laws</h1><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEibzDBm9xCRDahjLi3ZqwiqruR3pIXXMRS73Cmp8TmCWWhSNiqpaxm_s9YqpU2-aCU3wrvxlJvDN3Y9jyipL7vSRDOrUlzZIanJW2vmIrewbEK1KK9YfNTBCN9vGtxP6QhhIr3JBXfFrOk/s1280/direction-255294_1280.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="753" data-original-width="1280" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEibzDBm9xCRDahjLi3ZqwiqruR3pIXXMRS73Cmp8TmCWWhSNiqpaxm_s9YqpU2-aCU3wrvxlJvDN3Y9jyipL7vSRDOrUlzZIanJW2vmIrewbEK1KK9YfNTBCN9vGtxP6QhhIr3JBXfFrOk/s320/direction-255294_1280.jpg" width="320" /></a></div><div><br /></div><div>For the tax year ending 12/31/2020, there was a law passed in late March 2020 (the CARES Act the Coronavirus Aid, Relief and Economic Security Act) that introduced changes, followed up by several IRS-Treasury-SBA interpretations, Treasury administrative actions (for example delay of the due date of tax returns for 2019 to July 15, 2020) and then in late December the Consolidated Appropriations Act (CCA) 2021 which included additional stimulus and tax law changes that were included in the budget bill. With all of these changes, which affect taxpayers differently attempting to summarize those changes is challenging. Here are some of the highlights of the items that were introduced and should be considered in the preparation of 2020 tax returns.</div><div><br /></div><div><b>Economic Impact Payments (EIP) - aka stimulus payments:</b> </div><div><span> A</span>fter the passage of the CARES Act, the IRS began paying the first round of EIPs to taxpayers. The stimulus was paid via check, direct deposit or a debit card. The amounts of the stimulus were $1,200 for single taxpayers, $2,400 for married joint filers as the base amounts. There is also an additional $500 per qualifying child. The EIPs amounts are reduced for income exceeding $75,000 for single/head of household taxpayers and $150,000 for married joint taxpayers.</div><div><span> As part of the CCA, there was a second round of EIPs authorized. The amounts for these payments were $600 for single, $1,200 for married joint filers, plus $600 per qualifying child. These second round payments were required to be issued by the IRS on or before 1/15/2021 because of the reconciliation of the payments occurs on the 2020 tax return as Recovery Rebate Credits.</span></div><div><span><span> The reconciliation on 2020 tax returns will mean that taxpayers that did not receive the amount entitled will be eligible to claim a tax credit for the additional amount. Examples of situations this might apply: 1) taxpayers had a new child in 2020, that would result in adding up to $1,100 in additional credits (subject to income phase out), 2) since the EIPs were based on either 2018 or 2019 filed returns, if those tax returns were above the phase out income range and 2020 income is lower, then the additional amount will be available to be claimed on the 2020 tax return. There may be other scenarios but those are 2 quick examples.</span></span></div><div><span><span><br /></span></span></div><div><span><span><b>Retirement Plan Impacts:</b></span></span></div><div><span><span><span> Waiver of </span>Required Minimum Distributions for 2020 - t</span></span>he CARES Act allowed taxpayers subject to Required Minimum Distributions (RMDs) to skip the withdrawals in 2020. Taxpayers that had taken a distribution were granted additional time to rollover (return) contributions and that would allow them not to be taxed, taxpayers were allowed until August 31st, 2020 to return the contributions and have those qualify as rollovers, resulting in not being taxable.</div><div><span> Coronavirus Related Distributions in 2020 - taxpayers that were impacted by COVID may be eligible to withdrawal up to $100,000 from a retirement account, not be subject to the 10% early withdrawal penalty and spread the taxable income from that distribution over 3 years (2020, 2021, 2022). The IRS has put together a webpage to address this here: </span><a href="https://www.irs.gov/newsroom/coronavirus-relief-for-retirement-plans-and-iras">https://www.irs.gov/newsroom/coronavirus-relief-for-retirement-plans-and-iras</a> and here: <a href="https://www.irs.gov/newsroom/coronavirus-related-relief-for-retirement-plans-and-iras-questions-and-answers">https://www.irs.gov/newsroom/coronavirus-related-relief-for-retirement-plans-and-iras-questions-and-answers</a> These pages include definitions of qualifying individuals, which those diagnosed with the virus OR adversely impacted financially due to furlough, quarantine or illness by themselves, family or members of their household.</div><div><br /></div><div><b>Charitable Deductions:</b></div><div><span> For individual taxpayers, charitable donations have some special treatment. For taxpayers that do not itemize deductions but have made cash donations to 501(c)3 charities, they will be allowed to claim an additional deduction on their taxes of the charitable donation amount, up to $300. For those taxpayers that do itemize, the donation limit for 2020 is capped at 100% of Adjusted Gross Income, raised from 60%. </span><br /></div><div><br /></div><div><b>Business Provisions:</b></div><div><span> Many businesses were impacted by the virus and legislation aimed to help keep them operating. I just summarizing a few of these provisions as the details can get complex. Some of the targeted assistance include SBA loan programs (Paycheck Protection Program loans - first and second, Economic Impact Disaster Loans), payroll tax credits for retaining employees, payroll tax credits for sick or family leave, payroll tax deferral for employers and employees, a similar deferral is available for self-employed taxpayers - they are eligible to defer up to 1/2 of their Social Security taxes from 3/27 - 12/31. I may be forgetting some, but if you have a business that was impacted, please reach out to your tax professional to discuss the potential benefits available to your business. Especially as the rules related to some of these provisions have been changed, for example employers that received PPP were previously prohibited from claiming Employer Retention Credits at all, the December legislation has changed that.</span><br /></div><div><span><br /></span></div><div><b>Other Miscellaneous Items:</b></div><div><span> The IRS has announced that e-file for individual returns will be opening February 12, 2021. Some tax software providers are accepting returns but the understanding at this point is that they will be held and submitted upon opening of the IRS in February.</span><br /></div><div><span><span> The IRS is also still behind on processing mailed documents, estimates range from a few million pieces to 11 million or more. The past several years the IRS has been impacted by government shutdowns which lasted a few days and took a few months to recover from, with this virus having resulted in IRS service centers closing for a couple of weeks, IRS employees working from home and other challenges, my estimate is that the IRS will take a couple of years to recover from the effects. The IRS phone lines have been overwhelmed and that causes frustration by the "customers" of the IRS, the taxpayer and the tax professional community. If you do speak with an IRS employee, please make extra effort to be considerate to them as they are overwhelmed with the backlog and receiving comments that convey a lack of appreciation.</span><br /></span></div><div><br /></div><div>This filing season is going to be a bumpy ride, either due to many legislative changes or due to the backlog for the IRS.</div>Matt Gaylorhttp://www.blogger.com/profile/00432521311570909859noreply@blogger.com0tag:blogger.com,1999:blog-3977207600802247272.post-52192696356236013942021-01-21T11:04:00.000-08:002021-01-21T11:04:36.206-08:00Credit Card Payment Form
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</script><p> </p>Matt Gaylorhttp://www.blogger.com/profile/00432521311570909859noreply@blogger.com0tag:blogger.com,1999:blog-3977207600802247272.post-42860694816023365962021-01-11T13:14:00.002-08:002021-01-12T12:04:27.269-08:00Forms for Our Tax Office Use<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEikSGY7zfdTcpDMvFF4GdJaRaVmmkWDQ9ruavl0WFNfrzj7jeSsYov8Avz0AlKyr8Tml_yDYb4yRqiNgx-ikR-ScFFTFhyphenhyphen0jS3HNdC3nPk7cr3Wq76c99BcGGksKES_1Te0xCEpdIiL_wA/s1600/agree-1728448_1280.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="853" data-original-width="1280" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEikSGY7zfdTcpDMvFF4GdJaRaVmmkWDQ9ruavl0WFNfrzj7jeSsYov8Avz0AlKyr8Tml_yDYb4yRqiNgx-ikR-ScFFTFhyphenhyphen0jS3HNdC3nPk7cr3Wq76c99BcGGksKES_1Te0xCEpdIiL_wA/s320/agree-1728448_1280.jpg" width="320" /></a></div>
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This post contains forms that are helpful in allowing our office to serve clients. You may be directed to this page or the links contained here to complete applicable forms. The forms include engagement letters, authorization/consent to release information to 3rd party (party outside of directly with you, our client). Once you have completed the form, a completed copy will be sent to our staff and we will proceed from there.</div>
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<b>Engagement Letter - Tax Preparation:</b><br />
Our tax preparation engagement letter is available for digital completion here:<br />
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<a href="https://bit.ly/3i9elrq" rel="nofollow" target="_blank">Engagement Letter - Tax Preparation</a></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiZ0IoImmLyGuJ38jGTT_NNmGeQGKsBokX-nFBq-ZWHSYtpDSmOKE6BLSZjJsFoXdlR996oLK_QP458MtOcRYdeDIuKJAMFbpn6lddvBAZwfE4KDlwFNo7QPDuhuKJa0H39u_s4uv2LPfU/s1600/2019EngagementLetterThumbnail.JPG"><img alt="https://secure.rightsignature.com/templates/60de36a7-7644-4ffe-9d9f-26b8b969c85c/template-signer-link/02b9bddeb3eaadc966c4738cc58c8a80" border="0" data-original-height="302" data-original-width="240" height="200" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiZ0IoImmLyGuJ38jGTT_NNmGeQGKsBokX-nFBq-ZWHSYtpDSmOKE6BLSZjJsFoXdlR996oLK_QP458MtOcRYdeDIuKJAMFbpn6lddvBAZwfE4KDlwFNo7QPDuhuKJa0H39u_s4uv2LPfU/s200/2019EngagementLetterThumbnail.JPG" title="" width="158" /></a></div>
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<b>Authorization to Release of Information to 3rd Parties:</b><br />
Our letter to Consent to Release of Information to an Authorized 3rd Party is here (for example for mortgage financing purposes, to discuss tax implications of transactions with financial advisors, release information to a family member, etc.):<br />
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<a href="https://secure.rightsignature.com/templates/5c7b80a4-9887-413b-8f5e-26dbd2c472d4/template-signer-link/d0dd737e28b8f7f64d8be78c4a690939" rel="nofollow" target="_blank">3rd Party Release/Consent to Release</a></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhUqqhWwISCTQIH6o9OTr1oujFIeKXA1oJHTHg3LT-Fwpi7zA0_7Ze2eduypiEUmx08HmI7di1PsvCfBRT60vaVcak6dXJcbmqAptDU_XISafdC_VIdlz9wl5ridrd27SPq3tvk56QPirI/s1600/ConsentThumbNail.JPG"><img alt="https://secure.rightsignature.com/templates/5c7b80a4-9887-413b-8f5e-26dbd2c472d4/template-signer-link/d0dd737e28b8f7f64d8be78c4a690939" border="0" data-original-height="318" data-original-width="230" height="200" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhUqqhWwISCTQIH6o9OTr1oujFIeKXA1oJHTHg3LT-Fwpi7zA0_7Ze2eduypiEUmx08HmI7di1PsvCfBRT60vaVcak6dXJcbmqAptDU_XISafdC_VIdlz9wl5ridrd27SPq3tvk56QPirI/s200/ConsentThumbNail.JPG" title="" width="144" /></a></div>
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This post will be updated as other forms are available for use.<br />
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<br />Matt Gaylorhttp://www.blogger.com/profile/00432521311570909859noreply@blogger.com1tag:blogger.com,1999:blog-3977207600802247272.post-81225774925690252482020-11-03T11:02:00.005-08:002021-03-25T19:32:29.200-07:00 AZ Tax Credits updated for 2020 Limits<p style="text-align: center;"><b><span style="font-size: medium;"> </span><span style="font-size: large; text-align: center;">AZ Tax Credits updated for 2020 Limits</span></b></p><div style="text-align: center;"><br /><div class="separator" style="clear: both;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg4UBFcKYwF_73eNKm5a-KJfzjv5RnEVRuvQqidBY2ItzW-lrKvlSQDEXAO5zS24nSQvMDzc7Z-ugvv1Gpi5lvl5cQiAbvxyn1YssphYaKk9VB2fkarWR6YAGNlFQi_robsXmwk-6cCB0M/s1600/currency-3125703__340.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="340" data-original-width="603" height="180" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg4UBFcKYwF_73eNKm5a-KJfzjv5RnEVRuvQqidBY2ItzW-lrKvlSQDEXAO5zS24nSQvMDzc7Z-ugvv1Gpi5lvl5cQiAbvxyn1YssphYaKk9VB2fkarWR6YAGNlFQi_robsXmwk-6cCB0M/s320/currency-3125703__340.jpg" width="320" /></a></div><div class="separator" style="clear: both;"></div><br /></div><div style="text-align: center;"><br /></div><div>A frequent question to our office: How much can I contribute for the Arizona tax credits? <br /><br />This post is intended to provide answers about the available credits and the limit amount.<br /><br />There have been recent changes to applicability claiming these items as both an AZ tax credit and a charitable donation for Federal taxes, referred to as "double dipping". Prior to 2018, these credits may have qualified as a charitable contribution for Federal tax purposes, in addition to the dollar for dollar tax credit against AZ taxes, during 2019 the IRS addressed this situation by allowing tax credits to be claimed as additional state income tax paid, up to the limit allowed for SALT (state and local taxes) deductions on Schedule A. The new rule allows for a partial application of the tax credits as an itemized deduction under the taxes paid section, if not already maxed out.<br /><br />These tax credits, for AZ purposes, are treated as if these amounts were paid as state income tax and allow for a dollar for dollar offset against the amount of AZ income tax liability. These credits do not create refunds alone, but may result in a refund of AZ withholding or AZ estimated taxes paid that exceed the tax liability. <br /><br />These tax credits can still be utilized to direct dollars to organizations that you desire to support and many of these organizations survive through the donations. Please consider supporting with your dollars the organizations that impact an area you care.<br /><br /></div><div>The tax credits that are most utilized are listed below (Credit Title and maximum donation amount for single/married taxpayers):</div><div><br /></div><div></div><ul><li>Arizona Military Family Relief Fund ($200/$400) - <b>MAXED REACHED FOR 2020</b></li><li>Contributions to Qualifying Charitable Organizations ($400/$800) formerly known as the Working Poor Credit - List of organizations here: <a href="https://azdor.gov/sites/default/files/media/CREDITS_2020_qco.pdf" rel="nofollow" target="_blank">2020 Certified Charities</a></li><li>Contributions to Qualifying Foster Care Organizations ($500/$1,000) - List of organizations here: <a href="https://azdor.gov/sites/default/files/media/CREDITS_2020_qfco.pdf" rel="nofollow" target="_blank">2020 Certified Foster Care Charities</a></li><li>Contributions Made or Fees Paid to Public School ($200/$400) - AZ K-12 schools are eligible</li><li>Contributions to School Tuition Organization ($1,183/$2,365) - List of organizations here: <a href="https://azdor.gov/sites/default/files/REPORTS_sto-i-list.pdf" target="_blank">School Tuition Organization List</a></li></ul><div>The Arizona Military Family Relief Fund has a cap on donations allowed each year of $1,000,000. Due to the IRS proposed rules, this credit has already received the allowed donations for 2020. Any donations sent to them will be returned to the donor.</div><div><br /></div><div>Donations to Qualifying Charitable Organizations, Qualifying Foster Care Organizations, Public School Fees, and School Tuition Organization can be made during 2020 and up until April 15, 2021 to be claimed on the 2020 tax return.<br /><br />The list of eligible organizations can be quite daunting due to the voluminous number of organizations. There are many worthy organizations that are worthwhile to support, please check the current year approved charities that might be of interest.<br /><br />The AZ Department of Revenue provides lists (in the links above) to the organizations that qualify for Charitable Organizations, Foster Care Organizations, and School Tuition Organizations. The Public School eligible schools are K-12th grade AZ schools and schools can be searched at the AZ Department of Education <a href="https://www.ade.az.gov/edd/">here</a>.<br /><br /></div><div>Please consult with a tax advisor (or our office) to see if these tax credits would be beneficial in your situation and be careful not to do too much in tax credits as these are not refundable (the refund generated from these credits is because of tax withholding or estimated tax payments that are offset by these credit payments).</div>Matt Gaylorhttp://www.blogger.com/profile/00432521311570909859noreply@blogger.com0tag:blogger.com,1999:blog-3977207600802247272.post-77099611438692023142020-04-30T09:34:00.004-07:002020-11-03T11:32:06.994-08:00Economic Impact (Stimulus) Payment Information<div class="separator" style="clear: both; text-align: center;">
<span style="font-size: large;"><b>Stimulus Payments - Economic Impact Payment (EIP)</b></span></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgaPHrsDYwG5kuNbmvaG8akUesmFiEzzd8UVKuctn8ySwuex1QD2Geih-BNaKzm_psHx_verxxkjZAv3EhyJX3Giwrk0ZORklO1Gj4VRIdeTE8R8FaHvQx2Xpqacr9oz5vgmtxX6OC7eB8/s1600/dollar-2891817_1280.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img alt="" border="0" data-original-height="960" data-original-width="1280" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgaPHrsDYwG5kuNbmvaG8akUesmFiEzzd8UVKuctn8ySwuex1QD2Geih-BNaKzm_psHx_verxxkjZAv3EhyJX3Giwrk0ZORklO1Gj4VRIdeTE8R8FaHvQx2Xpqacr9oz5vgmtxX6OC7eB8/s320/dollar-2891817_1280.jpg" title="Making it rain! Money for Stimulus" width="320" /></a></div>
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Under the CARES Act that was signed into law on Mary 27th, 2020, Congress authorized the IRS to issue stimulus payments to US taxpayers in response to the Corona virus pandemic. These stimulus payments were named Economic Impact Payments (EIP) but are generally referred to as Stimulus payments.<br />
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The payments are structured to be $1,200 to single taxpayers with adjusted gross income up to $75,000, $2,400 to married taxpayers with adjusted gross income up to $150,000. The EIP begins to phase out 5% of the amount over the $75,000/$150,000, which means that a single taxpayer with income of $99,000 and above will not receive an EIP, married couples over $198,000.<br />
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There is an additional EIP amount for taxpayers that have children under 17 claimed as dependents. That amount is $500 and would increase the phase out amount to account for that as well.<br />
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The EIP payments being sent out during this time are based on filed tax returns for 2018 or 2019. The EIP is an advance payment of an increased refundable rebate that will be reconciled on the 2020 tax return.<br />
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This program has not been without challenges, as the IRS began sending out payments in about 2 weeks after passage of the law to taxpayers that had direct deposit information from 2018 or 2019 filed tax returns but there were issues with providing bank info if the tax return had a balance due, if the taxpayer moved or if the taxpayer passed away in 2018, 2019 or 2020. The IRS is making adjustments and updates to the system to provide payments to the public.<br />
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The IRS has put together a website to answer questions, provide payment status, provide banking information if not reported on the tax return. The website is here: <a href="https://www.irs.gov/coronavirus/get-my-payment" target="_blank">IRS Get My Payment</a>.<br />
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If you have not filed a 2018 or 2019 return and are required to file a return, prepare the 2019 tax return and submit that to the IRS as soon as possible. Once you have filed the 2019 tax return, the IRS can use that information to determine eligibility for the EIP.<br />
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If do not have a tax filing requirement, the IRS has provided a <a href="https://www.irs.gov/coronavirus/non-filers-enter-payment-info-here" target="_blank">non filer option here</a>. This files a tax return with the IRS, so ONLY use this option if you don't need to file a tax return, if you do need to file a tax return after using this system, it will require an amended tax return to be filed and will cause delays and confusion with the IRS.<br />
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The IRS is updating the Get My Payment website FAQs (Frequently Asked Questions) and payment status on a daily basis, so check back there regularly.<br />
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If you have problems accessing the system and are a client of Gaylor Tax, we may be able to help but since the IRS is mostly closed currently, our office will only have access to the same information that you do.<br />
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Stay healthy and safe.<br />
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<br />Matt Gaylorhttp://www.blogger.com/profile/00432521311570909859noreply@blogger.com0tag:blogger.com,1999:blog-3977207600802247272.post-68986921407102397202020-04-02T09:24:00.002-07:002020-11-03T11:31:51.976-08:00CARES Act/Corona Virus Relief Payments<div class="separator" style="clear: both; text-align: center;">
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Our office is getting many questions regarding the rebate payments ("economic impact payments" also called "recovery rebates") that were authorized as part of the CARES Act, signed into law on Friday, 3/27/2020 and in response to the economic uncertainty related to the COVID-19 crisis. Here’s what you need to know about this program. <br />
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<b>Amount of payment</b>. Eligible taxpayers will receive from the IRS payments of up to $1,200 for single taxpayers or up to $2,400 to married couples filing joint returns. Parents will get an additional $500 for each dependent child under age 17. Thus, the payment for a married couple with two children under 17 will be $3,400.<br />
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<b>Who is eligible.</b> U.S. citizens and residents are eligible for a full payment if their adjusted gross income (AGI) is under $75,000 (singles or marrieds filing separately), $122,500 (heads of household), and $150,000 (joint filers). The individual must not be the dependent of another taxpayer and must have a social security number that authorizes employment in the U.S.<br />
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<b>Phaseout based on income.</b> For individuals whose AGI exceeds the above thresholds, the payment amount is phased out at the rate of $5 for each $100 of income. Thus, the payment is completely phased out for single filers with AGI over $99,000 and for joint filers with no children with AGI over $198,000. For a married couple with two children, the payment will be completely phased out if their AGI exceeds $218,000.<br />
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<b>How to get a payment.</b> The vast majority of people won’t have to do anything in order to get an economic impact payment. IRS will calculate and send the payment automatically to those who are eligible.<br />
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If you’ve already filed your 2019 tax return, IRS will use the AGI and dependents from that return to calculate the payment amount. If you haven’t filed for 2019 yet, information from your 2018 return will be used.<br />
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IRS will deposit the payment directly into the bank account reflected on the return. IRS plans to develop a web-based portal for individuals to provide banking information to IRS, so that payments can be received as a direct deposit rather than by check sent in the mail.<br />
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The IRS has indicated that people who are not otherwise required to file a tax return will need to file a simple return to receive an economic impact payment. The CARES Act did not require this, so further clarification is needed for this point. The IRS will soon provide instructions about a simple tax filing, if required, and how to do this. Edit: As of late 4/1/2020, IRS announced that they will use information from SSA-1099 or Form RRB-1099 to generate payments to those that aren't typically required to file a tax return. (see IRS Economic Impact Payments <a href="https://www.irs.gov/newsroom/economic-impact-payments-what-you-need-to-know" rel="nofollow" target="_blank">website</a>)<br />
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<b>Payments nontaxable.</b> Economic impact payments will not be included in the recipient’s income for tax purposes.<br />
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<b>Payment Offsets </b>These payments will not be affected by past due taxes, student loans or other debts. The only payment offset will be for child support, if the taxpayer is behind on those payments.<br />
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<b>2020 Tax Return Impact</b>. Taxpayers that are ineligible to receive the payment due to income on 2018 or 2019 tax returns, may still qualify for this rebate at the time of filing their 2020 tax return if their income falls below the phaseout amounts. Also, taxpayers that have a child in 2020 should be eligible for the additional child amount ($500) on their 2020 tax return. If the 2020 income is above the phase out, the rebate amount received is not required to be repaid.<br />
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<b>CAUTION: Do not respond to phone calls, texts or emails from "IRS" about these payments. The IRS will not attempt to get personal information in those formats, but scammers will.</b><br />
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Please let our office know if you have any questions about the economic impact payments or any other COVID-19 issues.Matt Gaylorhttp://www.blogger.com/profile/00432521311570909859noreply@blogger.com0tag:blogger.com,1999:blog-3977207600802247272.post-26065826122261538302020-03-26T12:18:00.002-07:002020-03-26T12:22:43.451-07:00Tax Provision Updates regarding COVID-19<div class="separator" style="clear: both; text-align: center;">
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Update
Regarding COVID-19 IRS & AZ Response<o:p></o:p></h1>
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<span style="color: #202020; font-family: "helvetica" , sans-serif; font-size: 12.0pt; line-height: 150%;">Information continues
to develop regarding COVID-19, but thankfully it is happening at a slightly
slower pace.</span><span style="color: #757575; font-family: "helvetica" , sans-serif; font-size: 12.0pt; line-height: 150%;"><br />
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<b><span style="color: #202020; font-family: "helvetica" , sans-serif; font-size: 16.5pt; line-height: 150%;">IRS Filing Deadline
Extended to 7/15</span></b><span style="color: #757575; font-family: "helvetica" , sans-serif; font-size: 12.0pt; line-height: 150%;"><br />
</span><span style="color: #202020; font-family: "helvetica" , sans-serif; font-size: 12.0pt; line-height: 150%;">The due date of income tax returns normally due on April 15
has been moved to July 15, per directive of the Secretary of the Treasury. This extension also applies to payment of
income taxes due April 15, deferred until July 15. This applies also to Federal 1st quarter estimated
tax payments. Although 2nd quarter
estimated tax payments are still due June 15.</span><b><span style="color: #202020; font-family: "helvetica" , sans-serif; font-size: 16.5pt; line-height: 150%;"><o:p></o:p></span></b></div>
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Arizona
Tax Deadlines Extended<o:p></o:p></h2>
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<span style="color: #202020; font-family: "helvetica" , sans-serif; font-size: 12.0pt; line-height: 150%;">The Arizona Department of Revenue (AZDOR) has announced the deadline
for filing AND paying state income taxes has been moved from April 15, 2020
to July 15, 2020. Taxpayers submitting returns or paying after the
original April 15 deadline will not be assessed late filing or late payment
penalties. Arizona General Tax Notice (GTN 20-1) indicates that interest
will be waived under this extension but also indicates that 1<sup>st</sup>
quarter 2020 estimated tax payments are still due April 15. See the announcement
here: </span><a href="https://azdor.gov/news-events-notices/news/ador-extends-income-tax-deadline-july-15-2020">https://azdor.gov/news-events-notices/news/ador-extends-income-tax-deadline-july-15-2020</a> <span style="color: #202020; font-family: "helvetica" , sans-serif; font-size: 12.0pt; line-height: 150%;"><o:p></o:p></span></div>
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Arizona
Tax Credit Deadlines NOT Extended<o:p></o:p></h2>
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<span style="color: #202020; font-family: "helvetica" , sans-serif; font-size: 12.0pt; line-height: 150%;">Guidance from AZDOR indicates that the deadline for Arizona
Tax Credits remains to be April 15, 2020. If you are interested in
making a Qualifying Charitable Organization, Qualifying Foster Care
Organization, Public School, or Private School Tuition Organization credit
contribution, please do so by April 15, 2020. See the notice here: </span><a href="https://azdor.gov/news-events-notices/news/taxpayers-have-until-april-15-donate-charities-stos-and-public-schools-2019">https://azdor.gov/news-events-notices/news/taxpayers-have-until-april-15-donate-charities-stos-and-public-schools-2019</a>
<span style="color: #202020; font-family: "helvetica" , sans-serif; font-size: 12.0pt; line-height: 150%;">For more information on these credits, visit GTS blog at: </span><a href="http://gaylortax.blogspot.com/2019/11/arizona-tax-credits-2019-edition.html">http://gaylortax.blogspot.com/2019/11/arizona-tax-credits-2019-edition.html</a><span style="color: #202020; font-family: "helvetica" , sans-serif; font-size: 12.0pt; line-height: 150%;"><o:p></o:p></span></div>
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Congressional Bills Proposed to Provide Financial Assistance</h2>
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<span style="color: #202020; font-family: helvetica, sans-serif;">The Federal government is working on legislation that will provide different assistance to the American people, including stimulus payments. As of this writing that has not been signed into law and our office will research more once it becomes law. </span></div>
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<span style="color: #202020; font-family: helvetica, sans-serif;">There are also other bills that have been passed to offer tax credits to employers for paying wages related to sick time taken for COVID-19 related time off.</span></div>
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More information will be released updated as we can disseminate to clients and the public. </div>
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This is believed to be accurate as of the time of publication.Matt Gaylorhttp://www.blogger.com/profile/00432521311570909859noreply@blogger.com1tag:blogger.com,1999:blog-3977207600802247272.post-52653314785479629002019-12-27T16:34:00.000-08:002019-12-27T16:38:21.264-08:00Another Year End Tax Gift<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEij-uuhEldppawLKdgPzfsMucZIQaWeY9N70zHk5-WE-Z-iUxxqK0msoH1EM0gAfF-Jtl9BmNPdrCEUl_AHY8BgNZHRs7dGqkY7lmB7pZjtizhv69rVcyiCqlOSzpBvJE7AAUXXVR8PpGs/s1600/christmas-3015776_1280.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="837" data-original-width="1280" height="209" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEij-uuhEldppawLKdgPzfsMucZIQaWeY9N70zHk5-WE-Z-iUxxqK0msoH1EM0gAfF-Jtl9BmNPdrCEUl_AHY8BgNZHRs7dGqkY7lmB7pZjtizhv69rVcyiCqlOSzpBvJE7AAUXXVR8PpGs/s320/christmas-3015776_1280.jpg" width="320" /></a></div>
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Congress has decided to give a gift to the US taxpayers through passage of recent legislation. That legislation made drastic changes to rules regarding retirement accounts and bringing back to life tax provisions that had expired in 2018 (with retroactive application).</div>
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The SECURE Act (Setting Every Community Up for Retirement Enhancement Act of 2019) was passed as part of the budget bill that was signed into law on December 20, 2019. This act impacted changes for retirement through various provisions of the act. Some of the highlights:</div>
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- Change to Required Minimum Distribution (RMD) age from 70.5 to 72 years of age, for those that have not attained age 70.5 by 12/31/2019</div>
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- If taxpayer has earned income after attaining RMD age, the taxpayer can contribute to a traditional IRA and deduct the contribution (subject to other limitations)</div>
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- New exception to the 10% penalty for early withdrawals from Qualified Plans (IRAs, 401Ks, 403Bs) for distributions made during 1 year period starting from the date of birth of a child or date the adoption of an eligible adoptee is final. The maximum amount is $5,000 per individual per birth or adoption (the $5,000 means taxpayer and spouse could withdrawal up to $5,000 each, $10,000 total) - this offers an opportunity for taxpayers in 2020 that had a birth or adoption in 2019 to take funds from qualified account without the 10% penalty</div>
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- Treatment of previously in-eligible income to now be treated as earned income and thereby qualify for retirement contributions. That income includes "Difficulty of care" payments (excluded from taxable income under §131) and also taxable fellowship and stipend payments for graduate or postdoctoral students (effective after 12/31/2019)</div>
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- Changes to distributions for inherited retirement accounts - in general, defined contribution plans (401Ks and 403Bs) and IRAs must be fully distributed to beneficiaries by the end of the 10th calendar year following the death of the covered retirement owner. That means the account balance must be withdrawn in total within 10 years, that could be some in each year or postpone until the 10th year. There are exceptions to the 10 year period for a surviving spouse, child that has not reached age of majority, disabled beneficiary (as defined in §72(m)(7), chronically ill individual (defined §7702B(e)(2)) or a beneficiary that is not more than 10 years younger than the deceased.</div>
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- Changes to 529 Educational Savings Accounts to allow some funds be used to pay student loan principal, up to $10,000 for lifetime for the individual. Also changes to allow definition of qualified higher education expenses to include apprenticeship expenses for programs registered and certified with the Secretary of Labor under the National Apprenticeship Act.</div>
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These are highlights of areas that were impacted by the SECURE Act. Also signed into law was the TCDRA (Taxpayer Certainty and Disaster Relief Act) which made extended previously expired tax provisions and made changes related to Disaster provisions. The extended provisions were made retroactive to 2018 tax year and good through tax year 2020.</div>
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Some of the items of the TCDRA were:</div>
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- Exclusion from income of cancellation of debt related to a principal residence</div>
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- Mortgage insurance premiums deduction qualify as mortgage interest as an itemized deduction</div>
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- Medical expenses allowed as an itemized deduction for the amount that exceeds 7.5% of adjusted gross income (that had increased to 10% of AGI)</div>
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- Tuition and Fees deduction as an adjustment to gross income</div>
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- Nonbusiness energy property credit (windows, doors, etc.) - this has a lifetime cap</div>
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Various other miscellaneous provisions that impact a smaller segment of the taxpayer population that will not be mentioned here.</div>
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If you have questions, please contact our team at the office to discuss.</div>
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Matt Gaylorhttp://www.blogger.com/profile/00432521311570909859noreply@blogger.com0tag:blogger.com,1999:blog-3977207600802247272.post-1755086202615072852019-11-25T18:00:00.000-08:002019-11-25T18:00:11.829-08:00Arizona Tax Credits - 2019 Edition<div style="text-align: center;">
AZ Tax Credits updated for 2019 Limits<br />
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A frequent question to our office: How much can I contribute for the Arizona tax credits? <br />
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This post is intended to provide answers about the available credits and the limit amount.<br />
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There have been recent changes to applicability claiming these items as both an AZ tax credit and a charitable donation for Federal taxes, referred to as "double dipping". Prior to 2018, these credits may have qualified as a charitable contribution for Federal tax purposes, in addition to the dollar for dollar tax credit against AZ taxes, during 2019 the IRS addressed this situation by allowing tax credits to be claimed as additional state income tax paid, up to the limit allowed for SALT (state and local taxes) deductions on Schedule A. This was a change from the limit applied in rules released in August 2018 by the IRS, the IRS proposed rules that if a taxpayer receives a benefit (in this case a state tax credit) for a contribution, the contribution must be reduced for the benefit received (unless a de minimis exception applies). The new rule allows for a partial application of the tax credits as an itemized deduction under the taxes paid section.<br />
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These tax credits for AZ purposes are treated as if these amounts were paid as state income tax and allow for a dollar for dollar offset against the amount of AZ income tax liability. These credits do not create refunds alone, but may result in a refund of AZ withholding or AZ estimated taxes paid that exceed the tax liability. <br />
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These tax credits can still be utilized to direct dollars to organizations that you desire to support and many of these organizations survive through the donations. Please consider supporting with your dollars the organizations that impact an area you care.<br />
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The tax credits that are most utilized are listed below (Credit Title and maximum donation amount for single/married taxpayers):</div>
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<li>Arizona Military Family Relief Fund ($200/$400) - <b>MAXED OUT IN 2019</b></li>
<li>Contributions to Qualifying Charitable Organizations ($400/$800) formerly known as the Working Poor Credit - List of organizations here: <a href="https://azdor.gov/sites/default/files/CREDITS_2019_qco.pdf" rel="nofollow" target="_blank">2019 Certified Charities</a></li>
<li>Contributions to Qualifying Foster Care Organizations ($500/$1,000) - List of organizations here: <a href="https://azdor.gov/sites/default/files/CREDITS_2019_qfco.pdf" rel="nofollow" target="_blank">2019 Certified Foster Care Charities</a></li>
<li>Contributions Made or Fees Paid to Public School ($200/$400) - AZ K-12 schools are eligible</li>
<li>Contributions to School Tuition Organization ($1,135/$2,269) - List of organizations here: <a href="https://azdor.gov/sites/default/files/REPORTS_2019_sto-i-list.pdf" target="_blank">School Tuition Organization List</a></li>
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The Arizona Military Family Relief Fund has a cap on donations allowed each year of $1,000,000. Due to the IRS proposed rules, this credit has already received the allowed donations for 2019. Any donations sent to them will be returned to the donor.</div>
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Donations to Qualifying Charitable Organizations, Qualifying Foster Care Organizations, Public School Fees, and School Tuition Organization can be made during 2019 and up until April 15, 2020 to be claimed on the 2019 tax return.<br />
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The list of eligible organizations can be quite daunting due to the quantity of organizations. Our office has 2 organizations that are recommended for the Qualifying Charitable Organizations: Shoebox Ministry (Becky Gaylor is and has been on the board of this organization for many years) and Helping Hands for Single Moms (Matt Gaylor served on the board of this organization). There are many other organizations that are worthwhile to support so the named ones are recommendations.<br />
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The AZ Department of Revenue provides lists (in the links above) to the organizations that qualify for Charitable Organizations, Foster Care Organizations, and School Tuition Organizations. The Public School eligible schools are K-12th grade AZ schools and schools can be searched at the AZ Department of Education <a href="https://www.ade.az.gov/edd/">here</a>.<br />
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Please consult with a tax advisor (or our office) to see if these tax credits would be beneficial in your situation and be careful not to do too much in tax credits as these are not refundable (the refund generated from these credits is because of tax withholding or estimated tax payments that are offset by these credit payments).</div>
Matt Gaylorhttp://www.blogger.com/profile/00432521311570909859noreply@blogger.com0tag:blogger.com,1999:blog-3977207600802247272.post-51879776108847292612019-11-25T10:18:00.001-08:002019-11-25T10:18:15.154-08:00Year End Tax Steps to Consider<br />
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This week brings Thanksgiving and heralds the end of the year is quickly approaching. Knowing that attention is turned to the myriad of activities that occur this time of year for the holidays, it is important to be reminded to not neglect reviewing your tax situation and taking action, as needed to improve the situation.<br />
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For individual taxpayers the following are a few actionable areas to consider before year end.<br />
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1. Capital Gains/Losses<br />
- Review investment portfolios and determine the character of income derived in these accounts. Did you know that Qualified Dividends and Long Term Capital Gains receive preferential tax treatment, being taxed as lower than ordinary income tax rates? Review to see if this income will be able to remain in the lower 0 or 15% tax rate for Capital Gains.<br />
- Consider Capital Loss Harvesting. This is selling stocks at a loss that can be used to offset losses and excess losses over gains can offset up to $3,000 in ordinary income. Careful to avoid wash sale rules, can't buy purchase similar securities that were sold for a loss or the loss is unallowed.<br />
- For retirees, careful to watch the amount of realized gains as that could impact items such as taxable amount of Social Security income and/or Medicare premiums in future years.<br />
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2. Charitable Contributions<br />
- Consider bunching (moving into one year or another by accelerating or waiting) charitable contributions into a year that will give greater tax benefit. If your taxable income is projected to be higher in 2020, and you will have enough deductions to itemize, defer some contributions to January 2020 to accumulate a larger amount.<br />
- If you have a stock owned for more than 1 year that has a significant capital gain, look at donating all or a portion of that stock to a charitable organization. The donation deduction is allowed for the fair market value of the stock and you will not be taxed on the capital gain. The donation is limited to 30% of adjusted gross income for donating capital gain stocks.<br />
- For retirees aged 70 1/2 or older, consider donating your required minimum distribution to a charity (up to $100,000). This has 2 advantages: 1) satisfy your required minimum distribution for IRAs and 2) avoid counting that distribution in your income for the year.<br />
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3. Retirement Plans<br />
- If you are still working, be sure to utilize retirement savings plans such as 401K plans, IRAs and SIMPLE plans. Contributions as an employee need to be completed via payroll deduction and done during the year, so take steps to increase contributions if you are not on track to take advantage of employer matching amounts or if you will not meet the annual limits. The annual contribution limits increased for 2019 and have increased for 2020 as well, plus those aged 50+ are allowed to make additional contribution amounts. Check with your employer or our office for limits for those plans.<br />
- Those taxpayers that have earned income (wages or self-employed income) without access to employer plans, can consider IRA contributions that can be funded until April 15th, 2020.<br />
- For retirees age 70 1/2, you have spent a lifetime setting aside money for retirement and when you reach age 70 1/2, Congress has dictated that you have to take a minimum distribution from retirement accounts. Failure to take that withdrawal will result in a 50% penalty of the amount required to be withdrawn.<br />
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These are just a few suggestions and may not be appropriate in all situations. Each person's situation is different and unique, so seek competent advice for your particular situation.<br />
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<br />Matt Gaylorhttp://www.blogger.com/profile/00432521311570909859noreply@blogger.com2tag:blogger.com,1999:blog-3977207600802247272.post-49315850165605287842019-09-03T17:00:00.000-07:002019-09-04T08:54:36.150-07:00Avoid taxes on Required Minimum Distributions from IRAs<br />
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<b><span style="font-size: large;">Avoid taxes on Required Minimum Distributions from IRAs</span></b></div>
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Have you accumulated large IRA retirement account balances
that now you are age 70 ½ or older you are being forced to withdrawal funds
from the account?<span style="mso-spacerun: yes;"> Do you want to learn how to satisfy the requirement to take funds out while not being taxed on some of that withdrawal?</span></div>
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A little background,
taxpayers are encouraged to save for retirement through their working years and
under current rules, once you obtain age 70 ½, there is a Required Minimum
Distribution (RMD) from those retirement accounts which gets added to your
income for the amounts withdrawn from those accounts.<o:p></o:p></div>
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Under the Tax Cuts and Jobs Act passed in late 2017, tax
reform reduced the benefit of charitable donations (and other itemized
deductions) due to increasing the standard deduction for taxpayers.<span style="mso-spacerun: yes;"> </span>As an alternative to increasing your income
for the RMD, tax rules allow funds to be sent directly from an IRA to a
qualifying charitable organization (such as a church, qualifying 501(c)3
organizations) and not be added to the income of the taxpayer.
<span style="mso-spacerun: yes;"> </span>This direct distribution to charity
strategy is called a Qualified Charitable Distribution (QCD).<span style="mso-spacerun: yes;"> </span>There is an annual limit of up to $100,000
from IRAs to charities under the QCD rules per taxpayer, while that may not
apply in your circumstance, it is helpful to know this limit.<o:p></o:p></div>
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The QCD strategy has a few benefits such as:<o:p></o:p></div>
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1) Satisfying the annual RMD – the penalty for not taking
your RMD is 50% of the amount required to be distributed, so it is crucial to
meet the RMD each year.<o:p></o:p></div>
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2) Supporting your designated Qualifying Charitable Organization,
like Shoebox, from resources you required to withdrawal.<o:p></o:p></div>
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3) Avoiding tax on the QCD amount, tax savings! – (points 2
& 3 remind me of the old saying – “It is better to give than to receive”)<o:p></o:p></div>
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4) By avoiding adding to income the distribution, your Adjusted
Gross Income is lower for other tax calculations such as Medicare Premium calculations
(IRMA), taxable calculation of Social Security income, are 2 examples.<o:p></o:p></div>
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The QCD is helpful to those taxpayers that are no longer
eligible to itemize deductions on their tax returns and were going to use the
funds to support a charity.<span style="mso-spacerun: yes;"> </span>Utilization
of this strategy allows taxpayers to support their favorite charity in a tax
efficient manner.<o:p></o:p></div>
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<br />Matt Gaylorhttp://www.blogger.com/profile/00432521311570909859noreply@blogger.com0tag:blogger.com,1999:blog-3977207600802247272.post-31961970461857082442019-01-28T13:08:00.002-08:002019-01-28T13:08:21.941-08:00Arizona Income Tax Conformity?<br />
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Does the state of Arizona conform with Federal tax law for 2018?</h2>
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The year 2018 will be marked as a year of major changes in the tax world. The Federal tax law named Tax Cuts and Jobs Act (TCJA) was passed in late 2017 with major changes that affect itemized deductions, adjustments to income and several other items. The state of Arizona has to adopt conformity to Federal tax law changes each year, this is usually done early after the end of the year, in this case in 2019 for 2018. But with all of the changes, the state of Arizona is left to decide if total conformity will be adopted or if there are modifications that will be made.</div>
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Currently the AZ tax laws are conforming to laws in place before 2018. The state of AZ, for individual tax returns, starts with Federal Adjusted Gross Income (AGI). The challenge is which Federal AGI will be complied with by AZ, either the pre-TCJA or post-TCJA, and also what other changes will be adopted or not adopted. Those answers are needed from AZ legislators and bills are being discussed at the state capitol on these issues. There are bills currently discussing full conformity to the TCJA mixed with a small reduction in tax rates.</div>
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In the meantime, earlier this month on January 9, 2019, the Arizona Department of Revenue released a letter via their website (<a href="https://azdor.gov/news-events-notices/news/arizona-department-revenue-releases-important-2019-taxpayer-guidance" target="_blank">AZ D.O.R. releases important 2019 taxpayer guidance</a>) explaining the steps being taken and assumptions that are being made to comply with laws. If there is a need to amend an AZ tax return, that can be done but most practitioners (including this office) don't want to unnecessarily create additional billable work for clients, so there may be a reasonable basis to wait a little while to see what movement AZ legislators are taking. I encourage you to contact your state representatives to ask that they quickly take action on any tax conformity bills that are brought before them to remove confusion and possible need to file amended tax returns.</div>
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Matt Gaylorhttp://www.blogger.com/profile/00432521311570909859noreply@blogger.com0tag:blogger.com,1999:blog-3977207600802247272.post-40658572996651203522018-12-14T09:30:00.000-08:002018-12-14T09:30:06.091-08:00IRS Standard Mileage Rates<br />
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<span style="font-family: Tahoma, sans-serif; font-size: large;"><b>2019 IRS Mileage Rates</b></span></div>
<span style="font-family: Tahoma, sans-serif;"><span style="font-size: 13.3333px;"><br /></span></span>
<span style="font-family: Tahoma, sans-serif; font-size: 10pt;">Beginning Jan. 1, 2019, the standard mileage rates for the use of a car (also vans,
pickups or panel trucks) will be:</span><br />
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<li class="MsoNormal" style="mso-list: l0 level1 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list .5in;"><span style="font-family: "Tahoma",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">58
cents per mile driven for business use, up 3.5 cents from the rate for
2018 of 54.5 cents,<o:p></o:p></span></li>
<li class="MsoNormal" style="mso-list: l0 level1 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list .5in;"><span style="font-family: "Tahoma",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">20
cents per mile driven for medical or moving purposes, up 2 cents from the
rate for 2018 of 18 cents, and<o:p></o:p></span></li>
<li class="MsoNormal" style="mso-list: l0 level1 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list .5in;"><span style="font-family: "Tahoma",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">14
cents per mile driven in service of charitable organizations.<o:p></o:p></span></li>
</ul>
<span style="font-family: "Tahoma",sans-serif; font-size: 10.0pt;">The business
mileage rate increased 3.5 cents for business travel driven and 2 cents for
medical and certain moving expense from the rates for 2018. A reminder that under Tax Cuts and Jobs Act, the moving expense deduction is only available for members of the military that have a duty station change (relocation).</span><br />
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<span style="font-family: "Tahoma",sans-serif; font-size: 10.0pt;">The charitable rate
is set by statute and remains unchanged.<o:p></o:p></span><br />
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<span style="font-family: Tahoma, sans-serif;"><span style="font-size: 13.3333px;">The IRS announced the mileage rates for 2019 in </span></span><a href="https://www.irs.gov/pub/irs-drop/n-19-02.pdf" style="font-family: Tahoma, sans-serif; font-size: 10pt;">Notice-2019-02</a>. The business use rates can be used by employers to reimburse employees or claimed by self-employed individuals that use a vehicle and take the standard mileage rate vs. actual expenses.Matt Gaylorhttp://www.blogger.com/profile/00432521311570909859noreply@blogger.com0tag:blogger.com,1999:blog-3977207600802247272.post-18933800620911339242018-10-22T14:35:00.003-07:002018-10-22T14:42:40.630-07:002018 AZ State Tax Credits<div style="text-align: center;">
AZ Tax Credits updated for 2018 Limits<br />
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Our office often answers the questions: what tax credits are available for Arizona taxpayers? How much can I contribute for the Arizona tax credits? This post is intended to provide answers about the available credits.<br />
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This year there are changes to the available credits and the applicability of "double dipping". Prior to 2018, these credits qualified as a charitable contribution for Federal tax purposes, in addition to the dollar for dollar tax credit against AZ taxes. A tax credit is a great tax savings because of that dollar for dollar application, but only if you have income subject to tax in the state of AZ. The IRS released proposed rules that changed the charitable donation eligibility of these types of contributions due to the Tax Cuts and Job Act limits on SALT (State and Local Taxes) deductions. The IRS has proposed rules that state if a taxpayer receives a benefit (in this case a state tax credit) for a contribution, the contribution must be reduced for the benefit received (unless a de minimis exception applies). This rule went into effect for donations after August 27, 2018.<br />
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These tax credits can still be utilized to direct dollars to organizations that you desire to support, but the extra credit of a charitable donation is no longer applicable going forward.<br />
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The tax credits that are most utilized are listed below (Credit Title and maximum donation amount for single/married taxpayers):</div>
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<li>Arizona Military Family Relief Fund ($200/$400) - <b>MAXED OUT IN 2018</b></li>
<li>Contributions to Qualifying Charitable Organizations ($400/$800) formerly known as the Working Poor Credit - List of organizations here: <a href="https://azdor.gov/sites/default/files/media/QCOs_2018-10.pdf" target="_blank">2018 Certified Charities</a></li>
<li>Contributions to Qualifying Foster Care Organizations ($500/$1,000) - List of organizations here: <a href="https://azdor.gov/sites/default/files/media/QFCOS_2018-10.pdf" target="_blank">2018 Certified Foster Care Charities</a></li>
<li>Contributions Made or Fees Paid to Public School ($200/$400)</li>
<li>Contributions to School Tuition Organization ($1,107/$2,213) - List of organizations here: <a href="https://azdor.gov/sites/default/files/media/REPORTS_2018_sto-c-list.pdf" target="_blank">School Tuition Organization List</a></li>
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The Arizona Military Family Relief Fund has a cap on donations allowed each year of $1,000,000. Due to the IRS proposed rules, this credit has already received the allowed donations for 2018. Any donations sent to them will be returned to the donor.</div>
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Donations to Qualifying Charitable Organizations, Qualifying Foster Care Organizations, Public School Fees, and School Tuition Organization can be made during 2018 and up until April 15, 2019 to be claimed on the 2018 tax return.<br />
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The AZ Department of Revenue provides lists (in the links above) to the organizations that qualify for Charitable Organizations, Foster Care Organizations, and School Tuition Organizations. The Public School eligible schools are K-12th grade AZ schools and schools can be searched at the AZ Department of Education <a href="https://www.ade.az.gov/edd/">here</a>.<br />
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Please consult with a tax advisor (or our office) to see if these tax credits would be beneficial to you and be careful not to do too much in tax credits as these are not refundable (the refund generated from these credits is because of tax withholding or estimated tax payments that are offset by these credit payments).</div>
Matt Gaylorhttp://www.blogger.com/profile/00432521311570909859noreply@blogger.com0tag:blogger.com,1999:blog-3977207600802247272.post-88175872412429131702018-10-06T15:05:00.003-07:002018-10-06T15:23:56.666-07:00Itemized Deduction vs. Standard Deduction (TCJA Changes for 2018)For 2018 taxes (to be filed starting in early 2019), the biggest change affecting individual taxpayers will be the increased standard deduction and the resultant decreased likelihood of itemizing deductions. Under the changes in the Tax Cuts and Jobs Act, the standard deduction is being increased from $6,350 for a single taxpayer to $12,000, for a married couple the change is from $12,700 to $24,000. Taxpayers that are either blind or age 65 or older get an additional $1,300 added to the standard deduction (if married and both the taxpayer and the spouse qualify, then the amount is $2,600).<br />
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What does a standard deduction do for me? Under the U.S. Federal tax system, individual taxpayers are allowed to deduct the larger of standard deduction or itemized deductions to arrive at their taxable income. The taxable income is the figure that income taxes are based on. So for 2018, a single taxpayer will not pay income tax on the first $12,000 of income in that year (assuming they are under age 65 and not blind), a married couple will not be taxed on the first $24,000 in income. Seems pretty straightforward so far, right? </div>
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Now you may be asking what are itemized deductions? Itemized deductions are items that Congress has decided are allowed to be tax deductions, if cumulatively those items added together exceed the standard deduction. These deductions are reported on IRS form Schedule A, shockingly named "Itemized Deductions". Included is a draft version of the form for 2018.</div>
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The form provides an outline of the items that are allowed to be claimed as itemized deductions: Medical and Dental Expenses, Taxes you paid, Interest you paid, Gifts to Charity, Casualty and Theft Losses (only for Federally declared disaster area now), and Other Itemized Deductions. </div>
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The first category is <b>Medical and Dental Expenses. </b>The definition of qualified medical care expenses are out of pocket expenses for "the diagnosis, cure, mitigation, treatment, or prevention of disease, or payments for treatments affecting any structure or function of the body" (from <a href="https://www.irs.gov/taxtopics/tc502" rel="nofollow" target="_blank">IRS Topic #502</a>). In 2018, if the sum of these expenses exceeds 7.5% of your Adjusted Gross Income (AGI), for 2019 the percentage increases to 10% of AGI. </div>
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The next category is <b>Taxes You Paid</b>. These expenses would include state and local taxes (either the larger of state and local <u>income</u> taxes or general <u>sales</u> taxes), state and local real estate taxes, and personal property taxes (ad valorem taxes, for example). These amounts will be capped to the total sum of these amounts or $10,000, whichever is lower.</div>
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The third category is <b>Interest You Paid</b>. Home mortgage deductible interest will be limited to loans used to buy, build or improve the home and no longer will taxpayers be able to deduct interest on that amounts representing refinancing that was used to consolidate other debts, used for personal purposes (travel expenses, car purchase, etc.). Other interest that is deducted is investment interest, interest paid on money borrowed to purchase investments or securities. Investment interest is allowed to the extent that there was investment income on the tax return, so for example if you have $1,000 in dividend or interest income and $1,500 in qualifying investment interest expense, the deduction would be limited to $1,000 (there may be other factors to consider but this is a simplified illustration).</div>
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The fourth category is <b>Gifts to Charity</b>. This would be donations made to qualifying charitable organizations such as churches, 501(c)3 organizations such as <a href="https://www.salvationarmyusa.org/usn/" target="_blank">Salvation Army</a>,<a href="https://www.habitat.org/" target="_blank"> Habitat for Humanity</a>, <a href="https://helpinghandsforsinglemoms.org/" target="_blank">Helping Hands for Single Moms</a>, <a href="https://shoeboxministry.org/" target="_blank">Shoebox Ministry</a> just to name a few among the various, wonderful organizations out there. Charitable donations can be made via cash, check, credit card or may even be donation of tangible goods (i.e. dropping off household items at Goodwill or Salvation Army thrift stores). If you are claiming a deduction for charity, be sure you have proper documentation to substantiate those donations.</div>
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The last categories are Casualty Losses and Other Itemized Deductions. Casualty losses are only going to be applicable if 1) the loss occurs in a federally declared disaster area and 2) allowed for loss amounts that exceed reimbursement from insurance. I pray that this will not be a deduction that many will be eligible to claim on their tax return.</div>
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As for the Other Itemized Deductions, this category is, in my experience, utilized in rare instances. There may be other qualifying deductions but the example that comes to mind is a deduction for repayment of previously taxed income (referred to as a claim of right deduction). As stated, there may be other qualifying deductions but none that come readily to mind.</div>
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If the total of these various categories exceeds the $12,000/$24,000 standard deduction, then that is the amount that will be used to lower your taxable income for federal tax purposes. In states that have an income tax, you may be eligible to itemize deductions even if the total does not exceed the federal standard deduction amounts - please consult with a tax professional to discuss your specific situation.</div>
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<b>***NOTE:</b> For those folks familiar with the Schedule A, please note that there is no longer a Miscellaneous Itemized Deductions Subject to 2% of Adjusted Gross Income - this section was eliminated under the Tax Cuts and Jobs Act. This was the section that taxpayers could deduct unreimbursed employer expenses, investment expenses (such as financial advisor fees, financial publication expenses, etc.) and tax advisory and preparation fees as the main examples of items that fell in this category.<br />
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If you have any questions, please leave a comment or contact the office to discuss the impact to your situation.</div>
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Matt Gaylorhttp://www.blogger.com/profile/00432521311570909859noreply@blogger.com0tag:blogger.com,1999:blog-3977207600802247272.post-17075718190992932062018-07-05T13:00:00.000-07:002018-07-05T13:00:03.118-07:00Tax Simplification? The 2018 Form 1040 "Postcard" draft released<div style="text-align: center;">
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At the end of June, the IRS released a draft version of the revised form 1040. As "promised" by politicians, the form is the size of a postcard but in order to facilitate that size for the form, the IRS had to introduce supplemental schedules that support lines on the postcard. (Insert obligatory comment about government efficiency of taking a 2 page document and making it into 2 half pages and 6 supplemental pages to "simplify" the form).</div>
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The draft of form 1040 page 1 is above. A few things to note on this page, the first page of the 1040 is mostly demographic information and contains no calculation related to the taxes. The filing status indication goes from 5 check boxes to 3 with the IRS assuming that if just 1 name is listed that indicates that the taxpayer is single unless one of the boxes in the top right corner are checked (Married Filing Separate return, Qualifying Widow(er) or Head of household). Check boxes indicating whether taxpayer is over age 65 or blind are now listed on the front of the form, just beneath the name of either the taxpayer or the spouse.<br />
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Interestingly, the check box to indicate health care coverage for the full year is on the front section, under the Tax Cuts and Job Act passed in December 2017, the penalty for not having health coverage goes to zero starting in 2019 so the IRS has proposed to move this to a more prominent location on the front of the page (previously located on line 61, second page of the 1040).<br />
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The signature section of the tax return is moved to the front for both the taxpayer(s) and their paid preparer, if utilizing one. I like this change for the mere fact that taxpayers can confirm that their preparer is listing their information, as a legitimate tax professional is required to notate. Some unscrupulous people have left this box blank which indicates to the IRS that it is a self prepared tax return.<br />
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The draft 1040 page 2 copy above shows lines that many are familiar seeing but note that the income section now has 6 lines versus the 16 lines for income previously. Missing income line items include capital gains income, business income, rental and passthrough income, also missing from the new 1040 are adjustments to income, such as IRA deductions, student loan interest, educator expenses, HSA contributions and along with the other allowed deduction items. The missing income and deductions are now lumped into the Line 6 Additional Income and Adjustments, which is detailed on Schedule 1 and required to be attached.</div>
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There is reference to attaching Schedule A if eligible to itemize deductions, otherwise claim the higher standard deduction ($12,000 for single, $24,000 for married filing joint, additional amounts if taxpayers are blind and/or age 65 or over).</div>
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Schedules 2, 3, 4 & 5 are used to calculate taxes, credits (refundable vs. non-refundable appear to require different schedules due to different documentation and additional schedules or forms to be completed as well) and other taxes (for example, self-employment tax or penalty taxes such as early retirement distributions).</div>
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The draft form reduces the size of the form 1040 but the complexity of the tax system does not accommodate this form being useful in the smaller size. Fortunately, most taxpayers prepare and file their tax return electronically, whether they use a tax professional or not. Many of these form changes will not be seen by the general population as many are mainly concerned by the results (refund due to them or balance owed).</div>
<br />Matt Gaylorhttp://www.blogger.com/profile/00432521311570909859noreply@blogger.com0tag:blogger.com,1999:blog-3977207600802247272.post-86314263001386658912018-05-18T16:30:00.001-07:002018-05-18T16:30:11.131-07:00Life Check Up<div class="separator" style="clear: both; text-align: center;">
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Generally this blog is intended to provide information that is tax specific, but because of the relational nature of this business this blog post will be more about the non-tax aspect of tax work.</div>
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There is a commercial that says "<a href="https://youtu.be/ifd3u5E82rw" target="_blank">life comes at you fast" (see video)</a> and in our office that seems to be the case in particular this week.</div>
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The week began with a greatly emotional phone call from a client, calling to inform our office that her adult son had passed away the day before and she would need a referral to an attorney to handle matters for his widow and children (from other relationships). </div>
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Later that same day, a client spouse called requesting copies of the last 5 years tax returns and providing an address in a different state than last in our records. This raised suspicions for our office as this may indicate 1) an attempt at ID theft for the married couple's records or 2) a need for financial records for an impending divorce situation. It turned out to be the latter, as our office confirmed additional information and was informed of the couple being separated and divorce beginning.</div>
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Hearing from clients that are celebrating children (or grandchildren) graduating from high school and college. Clients share their excitement at having their children get married, or at the news of becoming grandparents, or becoming empty-nesters.</div>
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All of these things illustrate again that "life comes at you fast"! We all need to stop and take inventory of the truly important things in our life and take steps to leave a legacy. I want to encourage you to take a moment and review items that could be impacted by a death, divorce, marriage, or even some other life event. The following are not an extensive list and not intended to replace legal or professional advice but intended to be a catalyst to take action:</div>
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- Do you have a trust or will drawn up? Is it still current or is it outdated?</div>
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- Do you have life insurance? Do you know who the beneficiaries are of the policy? Is that beneficiary still around (ex-spouse? deceased person?)?</div>
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- Do you have retirement plans (401K, IRA, etc.)? Do you have a beneficiary named on those accounts? Is that who you want to get the money and incur the tax consequences?</div>
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These questions are by no means an exhaustive list but please take some time to review these questions and maybe others will come to mind as you answer these questions. </div>
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Matt Gaylorhttp://www.blogger.com/profile/00432521311570909859noreply@blogger.com0tag:blogger.com,1999:blog-3977207600802247272.post-79657445649433658212017-11-06T16:48:00.003-08:002017-11-06T16:48:57.223-08:00Tax Cuts and Jobs Act H.R. 1 - 2017 Tax Proposal<div style="text-align: center;">
<b>2017 Tax Reform</b></div>
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Last week the House of Representatives released a proposal that was touted as simplifying the U.S. tax code. This "simplification" was summarized in a document that was 80+ pages, the bill was approximately 420+ pages.<br />
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After reading through the summary, I was attempting to summarize the key points of the bill to disseminate to interested parties. Then I realized that this is just the beginning and in all likelihood this bill is going to have to proceed through the pork barrel process or logrolling before being voted on by the House of Representatives, agreed to and voted on by the Senate and submitted to the President for signing. So in proceeding in writing about this first attempt by Congress may be an act in futility (much like the bill in it's current state), but I thought it worth pointing out some highlights of the bill as it currently stands.<br />
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<b>Reduction of Individual Income Tax Rate</b>s - the bill consolidates from the current 7 tax brackets to 4 tax brackets. Those brackets are 12%, 25%, 35% and 39.6%.<br />
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Increased Standard Deduction - under current law, taxpayers are eligible to claim the larger of the Standard Deduction or Itemized Deductions. The proposal looks to increase the Standard Deduction from $12,700 for Married couples in 2017 to $24,400 in 2018 (under the proposal). The Single amounts are exactly 1/2 of the Married amounts, while eligible Head of Household taxpayers would receive the midpoint between Married and Single amounts. The thought behind this action is to avoid the complexity of itemizing deductions for the American taxpayer.<br />
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<b>Repeal of Personal Exemptions</b> - under current tax law, each taxpayer is generally able to claim a personal exemption (reduction to income) for the taxpayer, spouse, and eligible dependents. This deduction is being removed and could be an issue for large families or tax households that contain many dependents. The tax bill attempts to address this by providing enhanced child tax credits and a dependent credit, these credits are written to be applicable for years before 2023 (so from 2018 - 2023).<br />
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<b>Education Related Changes</b> - for College, the tax proposal will eliminate the Lifetime Learning Credit but retain the American Opportunity Credit. Currently, the AOC is available for the first 4 years of post-secondary education, the proposal will expand to allow for a 5th year of the credit on a slight reduction from the 4 year credit.<br />
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Removal of the following items related to education: Student loan interest deduction, Tuition and Fees deduction, Employer-provided Education assistance (currently an employer can provide $5,250 per year for graduate and post-graduate studies to employees and this assistance is excluded from income, if meeting certain requirements), Qualified Tuition Reductions (educational institutions providing reduced tuition to the institution's employees and family as a benefit of employment). These items would all be removed and require adjustments to college planning and employer benefit plans.<br />
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<b>Itemized Deduction Simplification</b> - the proposal would repeal deductions for state income taxes and sales taxes, medical expenses, unreimbursed employee expenses (out of pocket work expenses) and adjust deductions for real property taxes, mortgage interest and charitable deductions.<br />
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Mortgage interest would be deductible for 1 property (currently eligible for up 1st and 2nd home) and would be capped to for debt up to $500,000, down from $1,000,000. For most taxpayers in Arizona, this will not be a big deal except for those that have a vacation home in the mountains and a primary residence in the Phoenix metro area, for example. Taxpayers in high cost locations like California, Washington, Oregon or the east coast, may find that decreased debt limit to be an detriment.<br />
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Real property tax, or real estate tax, deductions will be capped to $10,000 or less allowed for deduction purposes. Again in Arizona, this should not be a problem but taxpayers in high property tax states may suffer under this provision.<br />
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Charitable deductions would remain as a deduction with some minor adjustments. Examples include charitable mileage rate would be adjusted for inflation, limitations for charity donations would be increased to 60% of Adjusted Gross Income for public charities.<br />
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<b>Other Adjustment/Deductions</b> - Alimony payments would not be deductible by the payor or taxable to the recipient, effective for divorce decrees executed after 2017.<br />
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Moving expense deduction would be repealed. Under current law, if a taxpayer has a change in employment that moves them 50 miles or more (more specifics may need to be met), the expenses for the move could be a tax deduction. This tax benefit would be removed. Employer exclusion of moving reimbursement would also be repealed as a tax-free benefit to new employees.<br />
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<b>Principal Residence Exclusion Rule Change</b> - under current Federal law, a taxpayer needs to own and live in a home for 2 years and can exclude up to $250,000, if single or $500,000, if married, of gain on the sale of the home. Under the proposed rules, the ownership and use test would change to 5 years out of the previous 8 years and the exclusion of gain would be phased out if a taxpayer's adjusted gross income exceeds $500,000 (married)/$250,000 (for single filers). The phase out is $1 for every dollar over the AGI amount. The consideration is to prevent house flippers from making money tax-free, but appears likely to punish homeowners that have lived in an area for decades and may exceed the exclusion amounts due to inflation.<br />
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The above items are highlights of just the first 20 pages of the Tax Cuts and Jobs Act proposal summary. There are items in this tax bill that are difficult to accept and I expect the bill to be amended before becoming law. <br />
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If you have any question or comments about the bill, send them my way and I will be glad to dig a little more into the bill to find an answer.<br />
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Also please let me know if this was helpful information.<br />
<br />Matt Gaylorhttp://www.blogger.com/profile/00432521311570909859noreply@blogger.com0tag:blogger.com,1999:blog-3977207600802247272.post-70417050398833250412017-10-27T12:15:00.002-07:002017-10-27T12:16:05.168-07:00Arizona Military Family Relief Fund Tax Credit<div style="text-align: center;">
Military Family Relief Fund 2017 Tax Credit</div>
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In the continuing explanations of Arizona tax credits leads us to the Military Family Relief Fund Tax Credit. This credit is administered through the Arizona Department of Veterans' Services and the fund was established to provide financial assistance to families of currently deployed Service Members and post-9/11 Military and Veteran Families. This fund is authorized to accept $1,000,000 in donations and up to that amount qualify for the credit. This limit means that unlike the other common AZ credits that allow for donations to be made any time during the year or even up to April 15th, once the DVS receives donations totaling $1,000,000 all excess funds are returned and no credit is available. Donations are determined on a first come, first served basis.</div>
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The credit amount is up to $200 for single taxpayers and $400 for married taxpayers. This donation has to be made via check and the DVS provides a form that contains the required information and can be used when submitting the donation. The required information is full name, address, and last 4 digits of Social Security Number. To claim this credit, you must have received a receipt from DVS that shows this information plus the amount donated and confirm that the donation qualifies for the credit.</div>
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Here is a copy of a recent receipt:</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiWlqDUVclrFBIUz860zYjcB0rbTJleNDNaE9-OHd9BGEw3432wx5UMMSJSLmUFTGQ_MtV59BAGSLxlD-CV1It2fC4vzHGXVhyG2AIz9Td2sMt625IkEC8ENDVsXlCjIjqOxYy8g3-h82s/s1600/MFRF_Redacted.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1600" data-original-width="1261" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiWlqDUVclrFBIUz860zYjcB0rbTJleNDNaE9-OHd9BGEw3432wx5UMMSJSLmUFTGQ_MtV59BAGSLxlD-CV1It2fC4vzHGXVhyG2AIz9Td2sMt625IkEC8ENDVsXlCjIjqOxYy8g3-h82s/s320/MFRF_Redacted.jpg" width="252" /></a></div>
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As of this writing, the donations to the fund were $904,586 which leaves $95K additional donations available to be received. If you want to donate, please visit the Relief Fund page at the AZ DVS here: <a href="https://dvs.az.gov/MFRF" target="_blank">MFRF</a>. You can also find the donation form, available in PDF format there.</div>
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This credit is set to expire after the 2018 tax year, unless the AZ legislature extends or renews this program. So be sure to start planning accordingly and maybe speak with your representative about extending this program/credit.</div>
Matt Gaylorhttp://www.blogger.com/profile/00432521311570909859noreply@blogger.com1