Dear Clients, Family & Friends,
HAPPY NEW YEAR!!! Choose to be optimistic, it feels better ~ Dalai Lama
I hope this letter finds you well! Hopefully your received my change of address postcard, if not please note my new information above. My office is a quaint little room, with a window thankfully! It’s not the view from the porch, but there is a parking lot! (digital version, see the contact us page for address)
In order to keep the same phone number, I now have a digital phone system. It’s not what I am used to, so please bear with me. The caller ID is not always clear, and if you call and I am already on the line, you will not get a busy signal. You will get a recording that says I am busy. It’s a work in progress. Let’s get to business:
Recovery Rebate Credit/Economic Impact Payment. If you did not receive the Economic Impact Payment (EIP), you may be able to claim the Recovery Rebate Credit on your 2020 tax return. The EIP was an advance payment of the Recovery Rebate Credit. If you did not receive the full amount of the EIP, remember that was based on 2018 or 2019 income. If your 2020 income falls below the income limitations, you may be able to claim it on your tax return. Ditto for someone that was considered a dependent in 2019, but not 2020. If you did receive the EIP, you also received Notice 1444. Please add the Notice to your list of documents needed for tax prep. The Second Round of EIP’s have already started to arrive, and it is my understanding that if you did not receive the first round, you may be able to claim both payments on your 2020 tax return.
Some people experienced a delay in their refund last year, and may have received interest from the IRS or the State. Each of those agencies will be sending 1099-INT in January to those that received $10 or more.
New This Year:
· The 70 ½ maximum age limitation for making deductible traditional IRA contributions no
longer applies. A similar rule has always applied to making non-deductible ROTH IRA
· New RMD age is increased to 72 for taxpayers reaching age 70 ½ after December 31, 2019
· New Exception to Early Withdrawal Penalty from an IRA. The 10% penalty does not apply
if it is a qualified birth or adoption distribution, not to exceed $5,000.
· New Charitable deduction for taxpayers that don’t itemize deductions of up to $300
for cash contributions made in 2020 to qualifying organizations.
Also available this year, the 10% penalty on pre-age 59 ½ distributions from retirement accounts is waived on up to $100,000 of coronavirus-related payouts. Funds repaid within three years are treated as tax-free rollover distributions…otherwise; tax can be spread over three years.
Standard Mileage Rates have dropped from 58 cents to 57.5 cents for business mileage. Medical mileage is 17 cents, down from 20 cents. Charitable mileage remains at 14 cents.
This bears repeating, so I copied it from my 2014 letter. Client’s with Dependents who are eligible to file a tax return. Make sure that they file as a “Dependent Filer”. I see it happen time and again; your dependent’s get their first W-2, rush out and file a tax return to get their refund. Then the parent foots the bill to have that return corrected, pay’s back the amount of the over-stated refund (with interest), and has to mail in their own return to rightfully claim their dependent, which usually results in a higher refund than their dependent got in the first place. Don’t let this happen to you. Remember, I will prepare your dependent’s tax return at a reduced rate.
The following, common, previously expired Tax Extenders are available for 2020:
To help you find me, here’s some more information on my location. My office is located in the same building as Café Edesia, formerly Jumpin’ Juice & Java. The parking lot is besides the building, directly across from Consumer Auto Parts (CAP). There is a stairway outside that leads to the offices above. Upon entering you will be in a common area. Turn left down the hall, and I am Unit #3. There is also a back entrance if you follow the driveway up the hill. Inside that entrance, you will turn right, go through the double doors, and I am a few doors down to your left.
There is one handicap spot available, by the back entrance. The other lot in the back is solely for the salon which is also located in the building.
I look forward to hearing from you!
This Just In…….
The New Covid-19 Relief Package that just passed includes a very important provision for the Earned Income Credit. A special “lookback rule” will allow workers who experienced lower income in 2020 or received unemployment income in lieu of regular wages to use their earned income from 2019 to determine their Earned Income Credit and the refundable portion of the Child Tax Credit in 2020. This has the potential to get bigger tax credits and larger refunds.