12 Surprising Things That Are Taxable

Taxes are complicated, with intricate details that hardly anyone is aware of. For instance, did you know the buried treasure you found in your grandparent’s backyard is actually taxable? That’s just the start. Read on to learn about surprising taxable items.

If you’ve picked up some extra cash through luck, skill or even criminal activities, there’s a good chance you owe taxes on that money as well. To avoid being caught off guard when it’s time to file your return, take a look at our list of 12 surprising things that are actually taxable. Whether they are things you receive, cash you earn, or money you don’t have to pay back, these assets are taxable:

1. Certain Large Gifts

Get out your calculator and a diagram of your family tree, because this one can get a little complicated. Generally, a gift has to be fairly large before the Internal Revenue Service takes notice, and gifts between certain people or institutions are never taxed, regardless of size. For example, monetary transfers between spouses and direct payments to a medical or educational institution are never taxable.

Monetary gifts over $15,000 (as of 2019) to children are taxable. However, this amount can be increased if the gift-giving is done strategically. Let’s say two parents want to gift as much as they can to their child and spouse. The parents can give up to $60,000 before the gift tax kicks in. How? One parent can give a $15,000 gift to each half of the younger couple and the other parent can do the same (4 x $15,000 = $60,000).²

2. Bartered Items

It would seem bartering would not be taxable since money is never exchanged, but that is not always the case. It depends on the value of the items being bartered and whether or not the items bartered would normally earn the giver any income.

For example, if you and your neighbor take turns watching each other’s dogs while the other person is on vacation, you don’t have to claim it on your taxes because you both received something of equal value and neither of you is in the animal boarding business. However, if you do an hour’s worth of your neighbor’s yard work in exchange for your neighbor helping you set up your website, which is what that person does for a living, the IRS says you have to report the market value of the service on your tax return.³

3. Alimony

Alimony has to be reported on your tax return as income. This trips up some people who assume it is treated like child support, which is not taxed.

4. Forgiven Loans

In most cases, the money you end up not paying because a loan is forgiven has to be reported as income, whether it is forgiven by a private company, such as a bank, or the federal government.⁵ This is something many people who decide to take advantage of debt settlement are not aware of. 

There are some exceptions, though, such as a loan being forgiven by a loved one—that counts as a gift.⁶ Also, forgiven debt may not be taxed if it is part of a bankruptcy, insolvency, or primary mortgage debt.⁵

5. Illegal Activity

If you earn income from illegal activity, technically you have to report it.⁷ That includes selling drugs or extorting money. This probably has the distinction of being the least-followed tax rule in the book.

6. Scholarships and Work Study

If you receive a scholarship that pays for anything other than tuition, fees, and books, you have to pay taxes on it. Work-study income will also be taxed, although not always at the state level.⁸

7. Unemployment Income 

How much tax you have to pay on your unemployment income depends on the state in which you live. The federal government counts unemployment income as taxable income, but not all states do the same.⁹ To minimize the pain at tax time, you can have taxes deducted every time you receive an unemployment payment instead of having to pay it all at once.

As part of the American Rescue Plan, signed into law by President Biden on March 11, 2021, a Senate amendment made $10,200 of unemployment compensation paid in 2020 tax-free at the federal level for anyone earning less than $150,000. That amount is doubled for married couples filing jointly.¹⁰ If you filed your tax return early for the full amount of unemployment received, the IRS will make adjustments automatically.¹¹ State rules are different, so be sure to check this list to see if your state conforms to the exemption.

8. Airbnb 

If you earn money from renting out your room or house for more than 15 days, you have to pay taxes on that income. As the personal rental industry continues to grow and gain recognition, expect this rule to be more strictly enforced.

9. Bitcoin

While you can use bitcoin to purchase a variety of goods and services, the IRS considers bitcoin—along with other cryptocurrencies—to be an asset. If the bitcoin you used to make a purchase is worth more than you paid for it, you’re expected to pay taxes on your profits at capital gains rates—just like stocks and bonds.

10. Gambiling

What happens in Vegas doesn’t necessarily stay in Vegas. Gambling income includes (but isn’t limited to) winnings from lotteries, horse races, casinos and sports betting (including fantasy sports). The payer is required to issue you a Form W2-G (which will also be reported to the IRS) if you win $1,200 or more from bingo or slot machines, $1,500 or more from keno, more than $5,000 from a poker tournament, or $600 or more from other wagers if your take is more than 300 times the amount of your bet. But even if you don’t receive a W2-G, the IRS expects you to report your gambling proceeds on your tax return.

11. Presents from Your Boss

If your employer gives you a $500 bonus, it’s automatically taxed. But what about other gifts? An engraved name tag doesn’t count, but a season pass to your local basketball team is another story.¹³

12. DONATING YOUR EGGS

Every year, thousands of young, healthy women donate their eggs to infertile couples. If you offer your eggs to an infertile person, you have to pay taxes on the amount you received for them. Payments for this service generally range from $6,500 to $30,000, according to Egg Donation, Inc., a company that matches donors with couples. Sperm donors also have to report any income they receive from donating their sperm.

The Bottom Line

Chances are, you haven’t experienced most of these situations. But you’ve probably run into at least one, and you never know which tax gaffe is going to lead to a full-blown audit. “I didn’t know” is hardly ever a justifiable excuse, and it’s especially true during tax season. Don’t gamble with your financial future just to save a few bucks. Follow the rules and avoid getting on the bad side of the IRS.

---

If you need assistance filing this year’s tax return or have tax questions, give us a call at (702) 998-0224 or visit networktaxsolutions.com.

Source: Kiplinger.com, Investopedia.com

Photo: Adobe stock

Time to Hire a Tax Professional?

Tax season can be an overwhelming time. The process of preparation and filing is not always an easy one. You have the option of choosing tax preparation services, software, or hiring a professional tax preparer depending on what your overall needs are. However, because of the added complexities of new tax laws and the pandemic, you may want to consider hiring a professional tax preparer.

If you are overwhelmed, hesitant, or uncomfortable filing your taxes, then a tax preparation service or preparer may be ideal for you. Expertise in this area, not to mention the time saved, could provide a sigh of relief this tax season. If you have decided to explore this option of using a tax preparation service, then it is time to look at some of the best tax preparation services and tax preparers. 

Maybe big retail chains aren’t your thing, or perhaps your tax situation is complex. If so, an independent tax preparer may be an option for you. Filing your taxes with the help of an independent tax accountant or CPA firm is one way to ensure that your taxes are filed professionally. Complex tax returns require people with the right expertise who know the rules and the laws. Often, these are professionals that deal with taxes year-round, not only during tax season.

Network Tax Solutions provides a full range of tax services for both businesses and individuals. Our goal for our clients is to make the tax process enjoyable–maybe even fun! We work to develop close relationships with each of our clients, earning their trust with personal attention to their needs. Clear and effective communication is the key to our success. We have been helping people keep more of the money they make for over 40 years. If you are stuck and need help with your taxes, don’t wait. Please call (702) 998-0224 or visit networktaxsolutions.com for more information.

How to Cheat the IRS: The Way the Wealthiest Do It

The Internal Revenue Service isn’t supposed to consider a taxpayer’s income or wealth when prioritizing Taxpayer Delinquent Accounts. Rather, the Service is supposed to focus on balances due, pursuing collection of higher amounts.

Obviously, many of those higher balances are owed by taxpayers (or tax dodgers) in the higher adjusted gross income brackets, and the IRS believes that pursuing high balance dues effectively addresses high AGIs.

But the Treasury Inspector General for Tax Administration ( TIGTA ) says that focusing on the balance due is increasing the risk of high earners skipping out on what they owe.

Shocking Numbers

In an audit report titled “High-Income Taxpayers Who Owe Delinquent Taxes Could Be More Effectively Prioritized,” America’s TIGTA writes, “Intentional nonpayment of income tax by those with significant financial resources and sophistication is a blatant form of noncompliance. The underpayment of income tax is also a substantial component of the Tax Gap.”

The Gross Tax Gap is the difference between what taxpayers should pay and what they actually pay. The numbers are substantial, if not shocking.

• The 2011-2013 annual average GTG was a staggering $441 billion.
• $50 billion (11 percent) of that GTG is due to underpayment.
• $38 billion (76 percent) of that underpayment is by individuals.
• $39 billion (nine percent) of the GTG is due to people who simply fail to file a tax return.

The TIGTA audit identified 685,555 delinquent taxpayers with AGIs over $200,000 for years 2013 through 2017. They owed a total of $38.5 billion. That amount, owed by just six percent of all delinquent taxpayers, accounted for 22 percent of the total owed by all delinquent taxpayers.

Shocking

The breakdown stats for high-income delinquents:

• 20 percent owe less than $1,000, less than one percent of the total balance due.
• 29 percent owe $1,000 to $9,999, just two percent of total due.
• 20 percent owe $10,000 to $24,999, just six percent of total due.
• 14 percent owe $25,000 to $49,999, nine percent of total due.
• Five percent owe $50,000 to $74,999, five percent of total due.
• Three percent owe $75,000 to $99,000, five percent of total due.

Just nine percent (64,005 taxpayers) owe more than $100,000 each—a total balance due of over $28 billion, which is 73 percent of the total balance due by all high-income delinquents.

The TIGTA audit also found out that:

• High-income taxpayers are generally not a collection priority, nor is there a strategy in place to address nonpayment by high-income taxpayers.
• High income is not a primary factor for determining collectibility.
• Opportunities exist to work more cases with higher collection potential, but the IRS is not executing them.

Recommendations

Part of the problem, the audit report says, is that revenue officer staffing is insufficiently assigned to areas where high-income tax dodgers live. The stripped-down IRS budget can be blamed for a lack of staffing, but the TIGTA says that reallocating resources to tonier towns could lead to increased revenue without increasing expenditures.

The TIGTA came up with seven recommendations for collecting more from those who can most afford to pay. The IRS agreed with only two of them.

1. IRS should prioritize high-income delinquents rather than high balances due. (IRS disagrees.)
2. IRS should improve its collection prediction model to better correlate predicted and actual recovery rates for high-income delinquents. (IRS agrees to evaluate the model.)
3. IRS should gather indications that high-income delinquents have the ability to pay. (IRS disagrees.)
4. IRS should improve the measurement of field collection managers’ compliance with case selection guidelines. (IRS disagrees.)
5. IRS should revise procedures for shelving certain cases so they can be assigned to private collection agencies. (IRS disagrees.)
6. IRS should revise criteria for assigning cases to private collection agencies, replacing random selection with criteria considering high income. (IRS disagrees.)
7. IRS should consider assigning more collection officers to areas where high-income delinquency outweighs current numbers of staff. (IRS agrees to do so in FY 2021.)

---

article source: Cpatrendlines.com
photo: Adobe stock

Working Remotely in the Pandemic May Generate a Tax Surprise

If the pandemic caused you to relocate across state lines, even temporarily, the next surprise could be having to file an extra tax return and potentially pay more taxes.

Most states tax people who earn money within their borders if the amount is over $600, regardless if they live and file tax returns elsewhere.

Multistate taxation has long been a headache for entertainers, athletes, professional speakers and others who earn money in more than one state. Snowbirds, retirees who move south for the winter, can face it as well. Now it could be a problem for many people who relocated, however temporarily, because of the pandemic.

Nearly one in 10 young adults, those ages 18 to 29, said they had relocated because of the pandemic, according to a Pew Research Survey poll taken in early June. Overall, 3% of adults said they’d moved and 6% said someone else had moved into their households. Those who moved cited reducing their risk of infection (28%), college campuses closing (23%), wanting to be with family (20%) and job loss or other financial issues (18%).

Changing attitudes about remote work mean that multistate taxation could be an issue for more people and companies in the future. Nearly half of the company leaders surveyed said they planned to let employees work remotely full time even after people can return to the workplace. Remote working allows people to move to more affordable areas, which could be in a different state. But having even a single employee in another state can raise business and sales taxes for their companies.

For individuals, double taxation, having to pay taxes in two or more states on the same income, is possible because state rules differ so widely. In most cases, though, the taxpayer’s home state will offer a credit for taxes paid in other states.

But there are scenarios where someone could end up paying more without technically being taxed twice. If the tax rate in the new location is higher, for example, the home state’s credit may not offset the whole bill. Also, if the person’s home state doesn’t impose an income tax but the other state does, then there’s no credit to offset the additional taxes.

Another issue: failing to file a required state tax return, either because people didn’t know the other state required it or because they’re hoping to get away with it. That can lead to audits, taxes, penalties and amended returns. Auditors often can figure out where you were when by using cell phone records and credit card receipts.

You can, of course, decide to make your move permanent. But if you change your mind, move back and get audited, the auditors will conclude that you never truly left.

Some states have long-standing reciprocity agreements, usually with neighboring states, that will prevent commuters from having to file multiple state tax returns. In addition, 13 of the 41 states that tax income have said they will give remote workers a break if they moved because of the coronavirus.

People who may be affected by another state’s tax laws talk to a tax pro to assess what their liability might be and discuss the situation with their employer, in case their withholding needs to change. People should also keep good records so they can track how many days they earned money in each state and how much.

It’s possible that Congress could provide some help. A proposal in the Senate’s pandemic relief bill would require that states maintain the pre-pandemic status quo — in other words, pay for newly remote workers would be taxed the way it was before the pandemic. The bill also would create uniform rules for assessing state and local income taxes.

Those ideas may face opposition from states desperate to replace lost revenue. The lockdowns quashed economic activity, and the resulting recession has made consumers and businesses cautious about spending money, further reducing tax revenues.

Just realize “The states need money, according to Mark Klein, chairman of Hodgson Russ law firm in New York, Because of COVID, they need more money than ever before.”

---

Article first published in NerdWallet

Photo: shutterstock

California Conforms to IRS May 17 Tax Extension

The Franchise Tax Board has confirmed that California will follow the IRS filing and payment extension date of May 17, 2021, for individual taxpayers only. Like the IRS extension, the California extension will not apply to the estimated tax Q1 payment date of April 15, 2021. Taxpayers whose income isn’t subject to income tax withholding must pay their estimated tax by April 15, 2021, to avoid penalties.

Even with the new deadline, we urge taxpayers to consider filing as soon as possible, especially those who are owed refunds. Electronic filing with direct deposit is the fastest way to obtain refunds, and could help those taxpayers receive any remaining federal stimulus payments they’re owed more quickly.

The filing extension will give taxpayers breathing room to meet tax obligations in what is becoming one of the most complicated tax seasons in decades. Among the changes this tax season are last-minute amendments to the $1.9 trillion stimulus bill signed into law earlier this month that give filers a new tax exemption on up to $10,200 of jobless benefits. The individual tax return, Form 1040, is also the mechanism for people to claim any missing $1,200 or $600 stimulus payments from last year.

---

If you need help filing your taxes, or would like to find out how much money we can help you save on this year’s tax return, please call (702) 998-0224. Network Tax Solutions – Helping you keep more of the money you make.

Tax Services for Long Haul Truckers

 Network Tax Solutions specializes in providing financial services to Owners / Operators, contract haulers, and other long-distance truck drivers in the transportation industry.

Our specialized money management and tax planning programs can help improve your bottom line. We present essential information in an easy-to-access, easy-to-understand manner, designed to meet the needs of the Owners / Operator independent truck driver.

Questions about deductions, tax planning, and other issues central to Owners / Operators are easily handled by NTS, with many years of experience in dealing with the transportation industry. Contact Us today!

5 Tips for Finding a Tax Preparer

1. Verify the Preparer’s Credentials

There are a lot of people out there claiming to be a “tax professional.” However, just because someone hangs out a shingle and advertises tax prep services, it doesn’t mean they actually have the skill, education, and expertise to handle your return.

To increase the odds of finding a qualified tax preparer, look for someone who is credentialed. You’re much more likely to get a competent preparer if they’ve been vetted by the IRS or a state regulatory board. The most common types of credentialed preparers are certified public accountants (CPAs), enrolled agents, attorneys, and annual filing season program participants.

CPAs are licensed by state boards of accountancy, studied accounting at a college or university, and have passed a rigorous exam. They must also satisfy ethical requirements and take continuing education classes to keep their license.

Enrolled agents are licensed by the IRS. They must pass a comprehensive exam, which requires them to demonstrate proficiency in federal tax return preparation, and complete 72 hours of continuing education classes every three years.

2. Check the Preparer’s Professional Record

You have to be able to trust your tax preparer. Afterall, he or she will know all about your finances and even have your Social Security number. And even if a preparer is credentialed, that doesn’t guarantee that he or she has a good professional reputation. That’s why it’s smart to check a preparer’s history before handing over your tax and financial documents.

For credentialed preparers, you might also want to check on their licensing status and look for disciplinary actions against them. For CPAs and attorneys, check with the state regulatory board in charge of licensing. For enrolled agents, go to the IRS’s enrolled agent status webpage.

Also make sure the preparer will be around and accessible after your taxes are filed. If there’s a problem with your return, you want to know that the preparer is there to help resolve any issues with the IRS.

3. Ask About Fees

As with any other service or product you buy, make sure you have a good idea of the costs ahead of time. Prices for tax return preparation can vary widely depending on a variety of factors, including the complexity of your return, where you live, and the preparer’s experience. That’s why it’s important to get a quote before settling on a preparer.

You might not get an exact price up front, but at least make sure you understand how the price is determined. For example, a preparer might have a set fee for each form required, charge you by the hour, or start with a minimum fee and tack on additional costs depending on the complexity of your return. However, walk away if a preparer bases his or her fee on a percentage of your tax refund—you don’t want a preparer claiming questionable tax breaks on your return in order to inflate the fee.

Also make sure you understand what’s covered for the quoted price. Does it include preparation of your state return? Will you be charged extra for e-filing or office visits? Does the price include any type of audit protection if the IRS flags your return? Ask these questions up front.

Don’t give tax documents, Social Security numbers or other information to a preparer if you’re simply inquiring about their services and fees. According to the IRS, some dishonest preparers have used this information to improperly file returns without the taxpayer’s permission.

4. Watch for Problems After Selecting a Preparer

Your due diligence doesn’t end after you pick a preparer. Watch out for warnings signs that something isn’t quite right. If one of these red flags pop up, you should seriously consider switching to another preparer right away.

First, don’t ever sign a blank tax return. Run for the hills if a preparer asks you to do this! It’s just as bad as signing a blank check.

Once the return is completed, make sure you get a chance to review it before signing it. If you have any questions or if something is not clear, the preparer should take the time to answer your questions. You have to feel comfortable with the accuracy of the return before you sign it, because you’re accepting responsibility for the information on the return when you sign it. You should get a copy of the completed return, too.

Also make sure the preparer signs the return and includes his or her Preparer Tax Identification Number (PTIN) at the end of your 1040 (bottom of page 2). This is required by law. Not signing a return is a big red flag that the preparer is up to no good. All paid tax preparers are required to have a PITN.

If you’re due a refund, double check the bank routing number and account number on Line 35 of Form 1040 or 1040-SR before signing the return.

In addition, make sure the preparer offers to file your return electronically. Paid preparers who do taxes for more than 10 clients generally must file electronically.

5. Report Problems to the IRS

If you do run into a dishonest tax preparer, you can report them to the IRS using Form 14157. If you suspect that a preparer filed or changed your return without your consent, file Form 14157-A.

You can also file a complaint against a CPA or attorney with the appropriate state regulatory board.

If you suspect your identity was stolen, file Form 14039 with the IRS right away. To report alleged tax law violations, use Form 3949-A.

With a little bit of time and a few targeted questions, you can find a competent and dependable tax preparer and file your tax return. To find out more about our company and tax preparation services, please visit Network Tax Solutions.

---

Article source: Kiplinger.com
Photo: Adobe Stock

4 Signs You’re in for an Unwelcome Tax Bill

If any of these happened to you in 2020, you could be in for an unpleasant surprise from the IRS

1. Find a 1099-NEC in Your Mailbox

A 1099-NEC reports income earned from freelancing, from a side gig or as an independent contractor. Money your clients paid you is on that form if it was at least $600 — and there was likely no tax withheld. The IRS and maybe even your state will probably be looking for that tax money from you by the April 15 tax-filing deadline.

You’re generally not taxed on the gross income for this type of work, you’re taxed on the net income or profit. Gathering your receipts and other information about your business expenses can reduce that net income and thus cut your tax bill. Contributing to an IRA could also reduce your taxable income for 2020 if you do it by the April 15 tax-filing deadline.

2. You Filled Out a New W-4 Last Year to Reduce Paycheck Withholdings

A W-4 is the form you use to tell your employer how much tax to withhold from your paycheck. Many people may have filled out a new W-4 in 2020 to reduce those withholdings and get more take-home pay in order to make ends meet. But that could mean a nasty surprise at tax time for a lot of filers.

“Their withholding has been adjusted, and they didn’t really realize that until the end of the year, when they’re used to a couple-thousand-dollar refund and now they’re having to pay a couple thousand dollars.”

Check with a tax pro or use a tax calculator now so that you have more time to plan for any tax-refund shortfalls or unexpected tax bills. If you need to, readjust your W-4 so you don’t encounter the same issue next year.

3. Your investments did well in 2020

If the market lifted your portfolio or you sold some investments last year, your tax situation may not be what you expect. There might be some large capital gains coming.

There may not be a lot you can do to offset those capital gains now, because Dec. 31 has come and gone. But you can make some strategic moves now for a better 2021, including reviewing your situation more frequently. I would suggest quarterly, at least, looking at your investments to make sure there’s not a bunch of income that you’re not expecting,

4. You received Unemployment

Unemployment income isn’t tax-free. It will be subject to income tax, and that also is going to include any additional unemployment compensation that’s provided from the federal government. You’ll likely receive a form 1099-G in the mail showing how much you received, and the IRS and your state may want a cut by April 15.

If you don’t have the money to pay your tax bill by April 15, know that the IRS offers installment plans that allow you to pay over time. And if you’re receiving unemployment in 2021, you can have 10% withheld for taxes from each disbursement, which could help prevent another tax surprise next year.

---

If you need help filing your taxes, or would like to find out how much money we can help you save on this year’s tax return, please call (702) 998-0224. Network Tax Solutions – Helping you keep more of the money you make.

article source: Nerdwallet
photo: Adobe

Tax Tips For Filing Your 2020 Tax Return to Help Avoid Delays

File electronically and use direct deposit. The IRS says that paper-filed tax returns and paper checks will take even longer this year. One out of five taxpayers don’t get their tax refunds by direct deposit. You can provide routing information for up to three accounts—even retirement accounts—on your tax return to which the IRS can send your refund. “I can’t stress enough the importance of filing electronically and choosing direct deposit. This is the safest and easiest way to file an accurate tax return and get a refund,” says IRS Chief Taxpayer Experience Officer Ken Corbin. Taxpayers have until Thursday, April 15, to file their returns and pay any tax owed.

Check Stimulus payments. Most taxpayers got two economic-impact “stimulus” payments in Round 1 and Round 2. If you’re eligible—and either didn’t receive a payment or think you qualify for more than you got—you can claim a Recovery Rebate Credit on your 2020 tax return. 

Covid 401(k) distributions. If you took a CARES Act 401(k) or IRA distribution in 2020 under the loosened rules for tapping your 401(k) penalty free, you can report all of the income on your 2020 tax return or in equal installments over three years. See the new IRS Form 8915-E and instructions. The enhanced retirement plan distribution rules were not extended for 2021 in the year-end 2020 tax package.

Unemployment benefits are taxable.This includes basic state benefits as well as the extra $600 weekly CARES Act federal pandemic benefits. You should have received a Form 1099-G showing the amount you were paid and any federal income taxes withheld. If you didn’t get a 1099-G, check your state’s unemployment compensation website to access it. Some states are providing tax relief for the state tax hit on unemployment benefits.  

Gig work is taxable. If you picked up a side job during the pandemic, you have to include it on your tax return as self-employment income. The basic rule is this: Individuals must file a tax return if they have net earnings from self-employment of $400 or more from gig work, even if it’s a side job, part-time or temporary. If you have self-employment income, make sure you keep track of deductible expenses relating to your gig, and if you’ve set up a home office, you might qualify for the home office deduction.

Charitable deduction changes for 2020. If you made cash gifts to charities in 2020, there’s a new $300 above-the-line charitable donation deduction per tax return. That means that even if you, like most taxpayers, take the standard deduction and don’t itemize deductions, you can take the $300 charitable deduction. You need proof of your gift. For gifts under $250, credit card statements or cancelled checks will work as a receipt. For gifts of $250 or more, you need a written acknowledgment from the charity. There’s a new $600 charitable tax deduction for 2021.

Save for retirement by maxing out your 2020 IRA. You can make tax year 2020 contributions to an Individual Retirement Account through April 15, 2021, and take a tax deduction if you’re eligible. For 2020, the limit on annual contributions to an IRA (pretax or Roth or a combination) is $6,000, plus a $1,000 catch-up contribution allowed if you’re 50 or older. For 2020 and later, there is no age limit on making IRA contributions. If you’re self-employed and have more room for retirement savings, you can still open and fund a SEP-IRA for 2020 through April 15.

Save for healthcare expenses, or retirement, by maxing out your HSA. If you have a hig-deductible health plan, you can contribute to a health savings account and get a triple tax benefit. The money goes in pretax, grows tax free, and comes out tax free if you use it for eligible healthcare expenses. Typically you contribute via salary deferrals but you can top up your annual contribution for the prior tax year through the tax filing deadline. That means you can make 2020 contributions through April 15, 2021. For 2020, the maximum contribution amount is $3,550 for individual coverage, or $7,100 for family coverage, plus a $1,000 catch-up if you’re 55 or older. If you take out money for non-healthcare needs, you’ll owe taxes—plus a 20% penalty if you’re under 65.

Check the IRS Where’s My Refund? tool. Most refunds are sent within 21 days of e-filing. If you’re expecting a refund and want to know when you might get it, the Where’s My Refund? tool on the IRS website lets you plug in your name, filing status and refund amount to check on the status. A personalized refund date should show up 24 hours after you e-file. For taxpayers filing early who are claiming the earned income tax credit or the additional child tax credit, the tool should update by February 22 (they should see refunds by the first week of March). 

IF YOU EXPECT A BIG REFUND, FILE EARLY.

---

If you need help filing your taxes, or would like to find out how much money we can help you save on this year’s tax return, please call Esta at (702) 998-0224. Network Tax Solutions – Helping you keep more of the money you make.

article source: Frobes.com

photo: Adobe

Tax Time

Dear Friends,

Ready or not, tax season is now upon us. With a new President coming into office , we can expect a number of tax changes to occur.  If you haven’t done so already, this is a good time to get your income tax “house” in order.   

We can prepare your 2020 federal and state personal income tax return from information you furnish us.  We will not audit or otherwise verify the data you submit, although it may be necessary to request clarification and/ or documentation of some of the information.  Generally, we will rely on your representation that you have maintained the documentation required by law to support the information you provide, including expenses for meals, travel, gifts, vehicle use. charitable contributions, etc.  If you are not clear regarding what documentation is needed for any given item of income or deduction, we’d be happy to discuss it with you.  You have the final responsibility for your tax returns and therefore, you should carefully review them before you sign and file them.

We will use professional judgement in resolving issues when the tax law is unclear or when there is conflict among the authorities. 

The filing deadline for the tax returns is April 15, 2021.  In order to meet this filing deadline, we MUST receive your information in complete form by April 1^st.

If an extension of time to file is required, we will use the information available to us at the time to prepare the extension.  We also need your express approval to file the extension on your behalf.  An extension only provides you with an extension to file, not an extension to pay.  Taxes paid after April 15 will result in late-payment penalties and interest.

Under both federal and California law, we are required to electronically file your returns.  If you would rather not e-file, please let us know and we will provide you with the government opt-out forms you must sign and return to us.    

If a joint return is prepared, tax returns and copies of all supporting documentation will be made available to either spouse without the consent or notification of the other spouse. 

Your tax returns may be selected for review by the taxing authorities.  If the government selects your return for examination,  we will be available to assist you.  There will be additional fees for this service. 

We generally retain for four years, the final work product generated for our clients.  We do not keep original documents – they are returned to you after completion of the returns.  It is your responsibility to retain your records for possible future use.  -Our fees for tax preparation services are based on the amount of time required at our standard billing rates plus out-of-pocket expenses.  All invoices are due and payable upon presentation.  Tax returns will not be filed electronically until fees are paid. 

If you are interested in our services and would like to make an appointment or have questions, please call (702) 998-0224. May you and yours enjoy good health, happiness, success and peace throughout 2021.

Financially yours,

Esta Klatzkin, EA
Founder
Network Tax Solutions
“Helping You Keep More of the Money You Make.”