16 Jul 2020
0

3 Issues to Consider After Filing Your 1040 on July 15th

Roger Rossmeisl, CPA
Individual Tax Briefs
3 Issues to Consider After Filing Your 1040 on July 15th

The tax filing deadline for 2019 tax returns was extended until July 15 this year, due to the COVID-19 pandemic. Now that your 2019 tax return has been successfully filed with the IRS, there may still be some issues to bear in mind. Here are 3 issues to consider after filing your 1040 on July 15th. 1. Some tax records can now be thrown away You should keep tax records related to your return for as long as the IRS can audit your return or assess additional taxes. In general, the statute of limitations is three years after you file your return. So you can generally get rid of most records related to tax returns for 2016 and earlier years. (If you filed an extension for...

06 Jul 2020
0

IRA for a Nonworking Spouse

Roger Rossmeisl, CPA
Individual Tax Briefs
IRA for a Nonworking Spouse

It’s often difficult for married couples to save as much as they need for retirement when one spouse doesn’t work outside the home — perhaps so that spouse can take care of children or elderly parents. In general, an IRA contribution is allowed only if a taxpayer has compensation. However, an exception involves a “spousal” IRA. It's essentially an IRA for a nonworking spouse and allows a contribution to be made for that nonworking spouse. Under the spousal IRA rules, the amount that a married couple can contribute to an IRA for a nonworking spouse in 2020 is $6,000, which is the same limit that applies for the working spouse. Two main benefits As you may be aware, IRAs offer two types of benefits for taxpayers who make...

06 Jul 2020
0

Deductibility of Student Loan Interest

Roger Rossmeisl, CPA
Individual Tax Briefs
Deductibility of Student Loan Interest

The economic impact of the novel coronavirus (COVID-19) is unprecedented and many taxpayers with student loans have been hard hit.  The Coronavirus Aid, Relief and Economic Security (CARES) Act contains some assistance to borrowers with federal student loans. Notably, federal loans were automatically placed in an administrative forbearance, which allows borrowers to temporarily stop making monthly payments. This payment suspension is scheduled to last until September 30, 2020. But what about the deductibility of student loan interest? Deductibility of student loan interest Despite the suspension, borrowers can still make payments if they choose. And borrowers in good standing made payments earlier in the year and will likely make them later in 2020. So can you deduct the student loan interest on your tax return? The answer is yes, depending...

27 Jun 2020
0

There’s Still Time to Make a 2019 IRA Contribution

Roger Rossmeisl, CPA
Individual Tax Briefs
Theres Still Time to Make a 2019 IRA Contribution

Do you want to save more for retirement on a tax-favored basis? If so, and if you qualify, you can make a  2019 IRA contribution for the 2019 tax year between now and the extended tax filing deadline and claim the write-off on your 2019 return. Or you can contribute to a Roth IRA and avoid paying taxes on future withdrawals. You can potentially make a contribution of up to $6,000 (or $7,000 if you were age 50 or older as of December 31, 2019). If you’re married, your spouse can potentially do the same, thereby doubling your tax benefits. The deadline for 2019 traditional and Roth contributions for most taxpayers would have been April 15, 2020. However, because of the novel coronavirus (COVID-19) pandemic, the IRS...

27 Jun 2020
0

IRS Payment Options for Those Owing Taxes

Roger Rossmeisl, CPA
Individual Tax Briefs
IRS Payment Options for Those Owing Taxes

In a News Release (IR 2020-48), the IRS has provided a list of payment options available to taxpayers who need to make a tax payment or who owe taxes they can’t pay.  Taxpayers who owe taxes Taxpayers who owe taxes can choose among the following payment options: Electronic funds withdrawal (EFW) Taxpayers who electronically file their tax returns using tax preparation software or a tax professional can pay any taxes they owe from their bank account using EFW. EFW is free and available when electronically filing a tax return with an amount due. IRS Direct Pay IRS Direct Pay allows taxpayers to pay their federal taxes, separately from filing their return, directly from their bank account, without any fees or preregistration. Taxpayers can schedule payments up to 30 days in advance...

24 Jun 2020
0

What Qualifies as a “Coronavirus-Related Distribution”?

Roger Rossmeisl, CPA
Individual Tax Briefs
What Qualifies as a "Coronavirus-Related Distribution"?

As you may have heard, the Coronavirus Aid, Relief and Economic Security (CARES) Act allows “qualified” people to take certain “coronavirus-related distributions” from their retirement plans without paying tax. So how do you qualify? In other words, what’s a coronavirus-related distribution? Early distribution basics In general, if you withdraw money from an IRA or eligible retirement plan before you reach age 59½, you must pay a 10% early withdrawal tax. This is in addition to any tax you may owe on the income from the withdrawal. There are several exceptions to the general rule. For example, you don’t owe the additional 10% tax if you become totally and permanently disabled or if you use the money to pay qualified higher education costs or medical expenses New exception Under the CARES...

22 Jun 2020
0

COVID-19 Individual Tax Questions Answered

Roger Rossmeisl, CPA
Individual Tax Briefs
COVID-19 Individual Tax Questions Answered

The Coronavirus (COVID-19) pandemic has affected many Americans’ finances. Here are some COVID-19 individual tax questions answered. My employer closed the office and I’m working from home. Can I deduct any of the related expenses? Unfortunately, no. If you’re an employee who telecommutes, there are strict rules that govern whether you can deduct home office expenses. For 2018–2025 employee home office expenses aren’t deductible. (Starting in 2026, an employee may deduct home office expenses, within limits, if the office is for the convenience of his or her employer and certain requirements are met.) Be aware that these are the rules for employees. Business owners who work from home may qualify for home office deductions. My son was laid off from his job and is receiving unemployment benefits. Are they...

16 Jun 2020
0

Residency Audits on Departing Californians

Roger Rossmeisl, CPA
Individual Tax Briefs
Residency Audits on Departing Californians

                In the attached audio clip (click on photo above to listen), Spidell Publishing's "California Minute" discusses a subject that is gaining traction with the California Franchise Tax Board.  With California’s increasing taxes and regulations, many people are leaving the Golden state for greener pastures. When a new nonresident taxpayer, especially one with high income, comes into the FTB’s sights, even before the taxpayer knows an audit is happening, the auditor will have pulled documents from other government databases and built the residency case. (This is Blog Post #829) Spidell Publishing, Inc. has been a critical source of California tax information for tax professionals since 1975, promoting ideas, references, solutions, and guidance, plus news and commentary covering all aspects of tax and its administration....

03 Jun 2020
0

Keep Life Insurance Out of Your Estate

Roger Rossmeisl, CPA
Individual Tax Briefs
Keep Life Insurance Out of Your Estate

If you have a life insurance policy, you probably want to make sure that the life insurance benefits your family will receive after your death won’t be included in your estate. That way, the benefits won’t be subject to the federal estate tax. Under the estate tax rules, life insurance will be included in your taxable estate if either: Your estate is the beneficiary of the insurance proceeds, or You possessed certain economic ownership rights (called “incidents of ownership”) in the policy at your death (or within three years of your death). The first situation is easy to avoid. You can just make sure your estate isn’t designated as beneficiary of the policy. The second situation is more complicated. It’s clear that if you’re the owner of the...

03 Jun 2020
0

2019 Gift Tax Return Deadline is Coming Up

Roger Rossmeisl, CPA
Individual Tax Briefs
2019 Gift Tax Return Deadline is Coming Up

If you made large gifts to your children, grandchildren or other heirs last year, it’s important to determine whether you’re required to file a 2019 gift tax return. And in some cases, even if it’s not required to file one, it may be beneficial to do so anyway. Who must file? Generally, you must file a gift tax return for 2019 if, during the tax year, you made gifts: That exceeded the $15,000-per-recipient gift tax annual exclusion (other than to your U.S. citizen spouse), That you wish to split with your spouse to take advantage of your combined $30,000 annual exclusion, That exceeded the $155,000 annual exclusion for gifts to a non-citizen spouse, To a Section 529 college savings plan and wish to accelerate up to five...

ROGER ROSSMEISL, CPA

Kho & Patel CPAs
160 E. Arrow Highway
San Dimas, CA 91773

(714) 325-0442
roger@khopatel.com

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