Blogging Beyond the Numbers

What are the tax implications of these common COVID-19 related situations? COVID-19 has certainly changed our lives in many ways:  many people are either working remotely or have been furloughed or newly unemployed. Here is the tax treatment information about these two common situations: 1. Working from home Many offices are closed and, as a result, many office workers are currently working from ...

To provide tax relief to businesses suffering during the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security (CARES) Act temporarily relaxes the limitation on deductions for business interest expense. Here’s the story. TCJA created new limitation Before the Tax Cuts and Jobs Act (TCJA), some corporations were subject to the so-called “earnings stripping” rules. Those rules att...

Are you close to retirement? In planning for retirement, an important question to consider: Are my social security benefits going to be taxable?  The short answer is, it depends. To determine what percentage of your benefits are taxable we need to take a closer look at your other income, including income of your spouse and also tax exempt interest income.  The general rule in is to add half of your so...

Despite being in the middle of the COVID-19 pandemic, students are going back to school this fall, either remotely or in-person. This means parents may still be eligible for certain tax breaks to help defray the cost of education. Before we take a look at the 3 opportunities below, it is important to note: you can receive benefits from all three listed below on the same return BUT not for the same stude...

Does your employer provide you with group term life insurance? Is the coverage higher than $50,000? If you answered yes to both of these questions then this employee benefit may create undesirable income tax consequences for you. “Phantom income” The first $50,000 of group term life coverage provided by your employer is tax free to you and will not have an effect on your tax bill. With that said,...

Most taxpayers file and pay taxes on time. However, there are circumstances where taxpayers aren’t able to make timely federal tax payments. In those cases, there are some options for taxpayers who can’t pay by the filing deadline. There are also penalties and interest that accumulate when making late payments. If you cannot make your tax payments, it is still important to file your return or file a...

With the tax law changes that have happened recently because of the Covid-19 pandemic, there have also been changes to the Required Minimum Distributions (RMD) for 2020. RMD is the amount of money that must be withdrawn each year from a SEP, SIMPLE, IRA or other defined contribution plan including 401(k) and 403(b) plans, when the owner/participant reaches age 72 (70½ if you were 70½ before January 1, 20...

Carryover basis on a life-time transfer (i.e., gift) When property is transferred before death (e.g. gifting) the recipient receives carryover basis of the donor’s original cost basis in the property.  In effect, the recipient steps into the shoes of the donor (i.e., the donor’s basis is now your basis; and the property’s holding period is the donor’s holding period). When this gifted ...

Millions of Americans have already received their Economic Impact Payments (EIPs) authorized by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) in response to the economic threats caused by COVID-19.  Under the CAREs Act, eligible individuals can receive $1,200 (or $2,400 for a married couple filing a joint return) and may receive up to an additional $500 for each qualifying child.&...

Whether you are a new or a well-established business, maintaining good business records is essential to supporting your business income and tax deductions. Good recordkeeping means you also claim the full amount of tax deductions to which you’re entitled. And you want to make sure you can defend the amounts reported on your tax returns if you’re ever audited by the IRS or state tax agencies. It...