Many are already aware that The CARES Act waives required minimum distributions (RMD’s) for 2020 but many had already received distributions before the Act went into effect. IRS Notice 2020-51 now permits rollovers of RMDs already distributed and certain related payments, including an extension of the 60-day rollover period for certain distributions to August 31, 2020. Note that this notice doesn’t remove the rule for 1 rollover every twelve months. In general, this means that if a rollover has been completed since Sept 1, 2019 you would not be eligible for another. If you’d like to take advantage of this new provision, we always recommend you first talk to your tax or financial professional to verify eligibility and make sure it fits into your retirement plans.
If you haven’t done so already, please check with your school’s financial aid office to see if you qualify for the Higher Education Emergency Relief Fund (HEERF). This is a grant program created in the CARES Act to provide additional assistance to student affected by the coronavirus shut downs.
6/4/20: This legislation is pending presidential signing
6/5/20: The president has signed this legislation
“Covered Period” is extended. Previously ending 8 weeks after origination or June 30th , it is now up to 24 weeks not to exceed December 31st. An 8 week period can still be elected, however.
Loan Forgiveness: previous limitation was that a minimum of 75% of the loan had to be used for payroll expenses. The Flexibility Act decreases that to a minimum of 60% used for payroll expense. There is no longer a provision of pro-rating the loan forgiveness.
Additional provisions have been made to exclude employees, under specific circumstances, from the calculations of FTE employee counts for loan forgiveness. Documentation requirements exist for the below exclusions;
Inability to rehire individuals who were on payroll as of Feb 15, 2020
Inability to hire similarly qualified individuals by Dec 31, 2020
Inability to return to same level of business you were operating at before Feb 15, 2020
Unforgiven portions of loans now have a maturity of 5 years
If no forgiveness is applied for, the first payment is due 10 months from the last day of the “covered period”.
PPP Loan participants under the CARES Act were excluded from provisions allowing employers to defer payment of employer payroll taxes, this exclusion has been removed by the Flexibility Act.
As always, please consult with your professional for specifics and how they impact your business.
The first year of returns under the Tax Cuts and Jobs Act (TCJA) is
complete. We thank all our clients for
their patience while we found the best options for each of you under this new
As a Greek philosopher once wrote “change is the only constant”. Taking that to heart, the federal government is already changing some of the forms and schedules for the 2019 returns from how they appeared in 2018. 1040’s are being updated as well as it’s sub-schedules, so much for that “post card” return.
In an effort to make senior’s tax returns easier to self-prepare, the new form 1040-SR will be debuted in the 2020 filing season. It will be similar to the old 1040-EZ. The form is still a draft, but indications are that there will be no income limitations for using it, but taking the standard deduction may be required. With seniors in mind, fonts will be larger and more color contrast will be used to differentiate various sections. If you intend on self-preparing using this form for your 2019 filing, please let us know. If we don’t hear from you during tax season we worry.
An updated Form W-4 is anticipated to be released for use in determining tax
year 2020 payroll withholdings. It’s not
required to complete the new form on release, but if your withholdings haven’t
been covering your tax in 2018/2019, or you’re over withholding, we recommend
you complete the new form with your employer.
Some Additional updates:
The penalty under the individual mandate for
health insurance is being waived by the IRS starting with the 2019 tax
year. Please keep in mind, however,
there are states that will continue to charge a fee for being uninsured. It’s important to know your state level
If your itemized deductions included medical
costs in the past, please be aware that the threshold for deducting these costs
has risen from 7.5% in 2018 to 10% in 2019.
Under the TCJA, the standard deduction and all
tax brackets are indexed to inflation.
For 2019 the Standard Deductions are;
STANDARD DEDUCTION AMOUNT
Single & Married Filing Separate (MFS)
Head of Household
Married Filing Joint (MFJ)
For any divorce finalized after December 31,2018, alimony is no longer deductible by the payor and not included in income of the payee. In most cases, alimony paid/ received under a divorce finalized on or before that date will continue to receive the same tax treatment as before. If amending agreements started before 12/31/2018, ways may exist to incorporate the previous tax law, know your options.
The 2019 retirement account contribution limits include:
401(k) base contribution: $19,000 (up from $18,500 last year)
401(k) catch-up contribution (for taxpayers age 50 and older): additional $6,000 (unchanged)
IRA base contribution: $6,000 (up from $5,500)
IRA catch-up contribution (for taxpayers age 50 and older): additional $1,000 (unchanged)
The 2019 contribution limits for people who are eligible for an HSA and have the following types of high-deductible health insurance policies are:
Self-only coverage: $3,500 (up from $3,450 last year)
Family coverage: $7,000 (up from $6,900)
We are happy to meet with you throughout the year for tax planning, retirement and similar income tax related issues, and sincerely appreciate your continued business each year.
We will be holding our annual client brunch on January 18, 2020 where we
will be reviewing these and many other tax issues. Please check out the
tab on our website for details and reservations.
We started out talking about change, and in that vein, our office isn’t immune from it any more than elsewhere. Some faces have changed over the years and this year is no different. We welcome aboard this coming tax season Mark Cascino E.A. and the clients of his Tax Consulting Services.
One thing that will not change at Dunn & Pedro is our…
Experience, Integrity &
Honesty- and that sums it up.
We appreciate your continued trust in our services and look forward to
seeing you soon.
While it was made clear that entertainment expenses would no longer be deductible by the Tax Cuts and Jobs Act of 2017, the act lacked clarification related to the deductibility of business meals, until now.
Expenses for Business Meals under § 274 of the Internal Revenue Code: Notice 2018-76
Under this notice, taxpayers may deduct 50 percent of an otherwise allowable business meal expense if:
The expense is an ordinary and necessary expense under § 162(a) paid or incurred during the taxable year in carrying on any trade or business;
The expense is not lavish or extravagant under the circumstances;
The taxpayer, or an employee of the taxpayer, is present at the furnishing of the food or beverages;
The food and beverages are provided to a current or potential business customer, client, consultant, or similar business contact; and
In the case of food and beverages provided during or at an entertainment activity, the food and beverages are purchased separately from the entertainment, or the cost of the food and beverages is stated separately from the cost of the entertainment on one or more bills, invoices, or receipts. The entertainment disallowance rule may not be circumvented through inflating the amount charged for food and beverages.
If you would like further clarification on this or other deductions or how they pertain to your business, please feel free to contact our office.
If you have an LLC or Corporation the Department of State now “desires” that you pay the Biennial $9.00 fee through their website. We have the link to the left, you will need your DOS ID number and Exact entity name, which they will send to you by mail on your next registration date (save it in your corporate book you will need it every 2 years). The link below will take you to their page which includes their email and phone number along with the online form.
Please note the following:
1) Per their instructions ” Please be aware that business entities that do not file online will not automatically receive their future Biennial State forms or notices from the Department of State. Business entities that wish to paper file in the future will need to contact the Department of State, Division of Corporations, State Records and Uniform Commercial Code to obtain a form.”
2) and now….”A “Delinquent” corporation will be subject to a $250.00 fine and may be prohibited from filing other certificates with the Department of State.”