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Tax Changes and Key Amounts for 2024

Proper tax planning requires an awareness of what's new and changed from last year, and there are lots of tax law changes and updates for 2024 that you need to know. 
To help, we put together a list of the most important tax law changes and adjustments for 2024, with some related items grouped. Pay attention to these changes because they can hurt or help your bottom line. Use this information now so you can hold on to more of your hard-earned money when it's time to file your 2024 federal income tax return (in early 2025).


Retirement plan changes

The SECURE 2.0 Act of 2022 bolsters retirement savings, with over 90 provisions with different effective dates. Among the changes that take effect this year are the following.

  • People under age 59½ can take more penalty-free early withdrawals from IRAs and 401(k)s. Up to $10,000 for domestic abuse victims and $1,000 for emergencies can be taken without paying the 10% additional tax. Regular income tax would still be due.
  • Leftover funds in 529 education accounts can be rolled over tax-free to a Roth IRA. There is a $ 35,000-lifetime cap. Yearly rollover amounts can’t exceed the annual pay-in limit for Roth IRAs, which is $7,000 for 2024. And the 529 account must have been open for more than 15 years.
  • Roth 401(k) owners no longer need to take required minimum distributions. This conforms to the rule that applies to owners of Roth IRAs.
  • Plan sponsors can create emergency savings accounts for participants, who could then make Roth pay-ins (on an after-tax basis) to that savings account within the plan. A participant’s account balance can’t exceed $2,500.
  • Student loan relief can be offered through workplace retirement plans. SECURE 2.0 allows employer 401(k) matches conditioned on student loan repayments made by employees. 
  • The qualified charitable distribution cap is indexed for inflation so that IRA owners 70½ and older can transfer up to $105,000 in 2024 from their IRAs directly to charity without having to pay tax on the withdrawal.

For more information on the above changes, see Kiplinger’s summary of SECURE 2.0 retirement plan changes.
Additionally, key dollar limits on workplace retirement plans and IRAs increase in 2024. The maximum 401(k) contribution is $23,000. People born before 1975 can contribute an extra $7,500. These limits also apply to 403(b)s and 457 plans.
SIMPLEs have a $16,000 cap, plus $3,500 for individuals age 50 and older.
The 2024 contribution cap for traditional IRAs and Roth IRAs is $7,000, plus $1,000 as an additional catch-up contribution for individuals age 50 and older.
The income ceilings on Roth IRA pay-ins are higher for 2024. Contributions phase out at adjusted gross incomes of $230,000 to $240,000 for joint filers and $146,000 to $161,000 for single filers.
2024 deduction phaseouts for traditional IRAs range from adjusted gross incomes of $123,000 to $143,000 for joint filers covered by 401(k)s and $77,000 to $87,000 for single filers and heads of household. If only one spouse is covered by the plan, the phaseout range for deducting pay-ins for the uncovered spouse is $230,000 to $240,000.


Tax credits and deductions 2024

EV tax credit
Eligible buyers of qualifying EVs can opt to monetize up to the $7,500 federal EV tax credit. starting in 2024, by transferring it to the dealer at the time of purchase, thus lowering the amount the buyer pays for the car. Buyers can otherwise elect to claim the break on their federal tax return that they will file in the subsequent year. For more information, see: EV Tax Credits Changed Again on Jan. 1.
IRS guidance requires auto dealers to register on the IRS’s online tool, IRS Energy Credits Online, to receive advance credit payments from eligible EV sales. Buyers who opt for the advance credit to lower the cost of the car will have to repay it when filing their Form 1040 if their modified AGI exceeds the limit for taking the credit.

Adoption tax credit
The adoption credit is taken on up to $16,810 of qualified expenses in 2024. The full credit is available for a special-needs adoption even if it costs less. The credit phases out for filers with modified AGIs over $252,150 and ends at $292,150

Standard Deduction
Standard deduction amounts for 2024 have been inflation-adjusted and are higher than they were last year. For more information, see Standard Deduction 2024 Amounts and The Extra Standard Deduction for People Age 65 and Older.

Key tax amounts 2024

Tax brackets
The income tax brackets for individuals are much wider for 2024 because of inflation during the 2023 fiscal year. Tax rates are unchanged. To view income tax brackets for the 2023 and 2024 tax years, see 2023 and 2024 Tax Brackets and Federal Income Tax Rates.

Capital gains and qualified dividends
The favorable tax rates on long-term capital gains and qualified dividends do not change. But the income thresholds to qualify for the various rates go up for 2024. The 0% tax rate applies at taxable incomes up to $94,050 for joint filers, $63,000 for heads of household and $47,025 for single filers. The 20% tax rate starts at $583,751 for joint filers, $551,351 for heads of household and $518,901 for single filers. The 15% tax rate is for filers with taxable incomes between the 0% and 20% break point.

Minimum tax
AMT exemptions rise for 2024 to $133,300 for couples and $85,700 for singles and household heads. The exemption phaseout zones start at $1,218,700 for couples and $609,350 for others. The 28% AMT rate kicks in above $232,600.

Kiddie tax
The kiddie tax has less bite in 2024. The first $1,300 of unearned income of a child under age 19 (under age 24 if a full-time student) is tax-free. The next $1,300 is taxed at the child’s rate. Any excess is taxed at the parent’s rate.

Fringe Benefits
Employees covered by health flexible savings accounts can defer up to $3,200. The cap on tax-free employer-provided parking for 2024 is $315 a month. The exclusion for mass transit passes and commuter vans match that amount. U.S. taxpayers working abroad have a $126,500 income exclusion for 2024, provided they meet all the eligibility requirements.

There are record-high HSA contribution limits for 2024:

  • Individuals can contribute up to $4,150 to their HSA accounts for 2024.
  • Families can contribute up to $8,300.

For more information about 2024 medical savings account contribution limits, see FSA and HSA Contribution Limits for 2024.


Gift and estate tax exclusion

The lifetime estate and gift tax exemption for 2024 is $13,610,000. 
More estate tax liability qualifies for an installment payment tax break. If one or more closely held businesses make up greater than 35% of a 2024 estate, as much as $740,000 of tax can be deferred, and the IRS will charge only 2% interest.
The annual gift tax exclusion for 2024 is $18,000 per donee. That means in 2024, you can gift up to $18,000 ($36,000 if your spouse agrees) to each child, grandchild or any other person without having to file a gift tax return or tap your lifetime estate and gift tax exemption. Annual gifts over the exclusion amount will trigger filing of a gift tax return for 2024, but no gift tax will be due unless your total lifetime gifts exceed $13,610,000.

Business tax changes

First-year bonus depreciation isn’t as valuable in 2024. Last year, businesses could deduct 80% of the cost of new and used qualifying business assets with lives of 20 years or less. This year, the 80% write-off decreases to 60%. 
But Section 179 expensing is higher. $1,220,000 of assets can be expensed in 2024.

  • This limit phases out dollar for dollar once more than $3,050,000 of assets are put into use in 2024. 
  • Note that the amount of business assets expensed can’t exceed the business’s taxable income. Bonus depreciation doesn’t have this rule.

Pass-through income
A key dollar threshold on the 20% deduction for pass-through income rises in 2024. Self-employeds and owners of LLCs, S corporations and other pass-throughs can deduct 20% of their qualified business income, subject to limitations for individuals with taxable incomes of more than $383,900 for joint filers and $191,950 for all others.

Accounting method
More companies can use the cash method of accounting. For taxable years beginning in 2024, C corporations with average annual gross receipts of $30 million or less over the previous three years can use the cash method. This threshold also applies to partnerships and LLCs that have C corporations as owners.

Mileage rate
The 2024 standard mileage rate for business driving is 67 cents per mile. The mileage allowance for medical travel and military moves is 21 cents per mile in 2024. The charitable driving rate is fixed by law and stays put at 14 cents a mile.

Clean-energy credits
Certain clean-energy credits in the Inflation Reduction Act can be monetized. Businesses may elect to transfer 11 of the credits to unrelated third parties for cash. State and local government and their instrumentalities and tax-exempt organizations can elect to treat 12 of the energy-savings credits as a payment of federal income tax and receive an income tax refund for the amount that exceeds any taxes they owe.

Related Content
-State Tax Changes: What’s New for 2024
-What is the Gift Tax Exclusion for 2024?
Take Advantage of the Lifetime Estate and Gift Tax Exemption While You Still Can


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Hooray! Tax Season 2023 is Here!!

Well, it’s that other time of the year again—tax seasonPlease try to maintain your enthusiasm. Some new things this year include an increased standard deduction, adjusted tax brackets, and some key changes to common tax credits and deductions. The good news is, with Network Tax Solutions, you not only don't have to do them, but will end up with more money back! Give us a call at (702) 998-0224 or visit our website to learn how you can save time and keep more of the money you make on this year's tax return!

As mentioned in the previous blog post, here are the main deadlines / dates for the 2023 tax season:

  • Tax filing deadline: April 18, 2023, is the big tax deadline for all federal tax returns and payments.
  • Extension deadline: October 16, 2023, is the deadline if you request an extension.
  • Standard deduction increase: For 2022, the standard deduction increased to $12,950 for single filers and $25,900 for married couples filing jointly.
  • Tax brackets increase: Income tax brackets went up in 2023 to account for inflation.

You can view all of 2023 tax rates and deductions here.

Tax Deductions and Credits to Consider for Tax Season 2023

The closest things to magic words when it comes to taxes are deductions and credits. Both help you keep more money in your pocket instead of Uncle Sam’s but in slightly different ways.

Here are some deductions and credits you might be able to claim on your 2022 tax return.

1. Charitable Deductions

One of the biggest changes to the 2023 tax season is how much of your charitable donations you can deduct. Unfortunately, the changes take away most of the extra benefits offered in 2021 because of the pandemic. For example, the $600 charitable deduction for non-itemizers—folks taking the standard deduction—has gone bye-bye. Bummer!

But you can still deduct qualified charitable donations you made in 2022—as long as you itemize your deductions. The limit for this is 60% of your adjusted gross income (AGI), which is your total income minus other deductions you’ve already taken.

2. Medical Deductions

If you found yourself with hefty medical bills in 2022, you might be able to find at least some tax relief.

You can deduct any medical expenses above 7.5% of your adjusted gross income (AGI). For example, if your AGI was $100,000, you can deduct out-of-pocket medical expenses above $7,500 in 2022 or 2023. But you have to itemize your deductions in order to write off those expenses on your tax return.

3. Business Deductions

If you’re self-employed, there are a bunch of deductions you can claim on your tax return—including travel expenses and the home office deduction if you use part of your home for business purposes.1

But if you’re one of the millions of people who work remotely, you won’t be able to claim the home office deduction since it’s reserved for self-employed people only. Sorry!

4. Earned Income Tax Credit (EITC)

This one’s a biggie. The EITC is a refundable credit designed to help out low- and middle-income households. To qualify for the credit in the 2022 tax year, a single filer with no children must have an AGI below $16,480, while the cap for a married couple with three or more children is $59,187.11

5. Child Tax Credit

Got kids? Well, here’s a tax credit just for you! The child tax credit (CTC) lets you credit up to $2,000 per dependent child under the age of 17. The income limit is $400,000 for married filing jointly and $200,000 for all the others. The CTC is also partially refundable up to $1,500.

There are plenty of other deductions and credits that might be up for grabs depending on your situation. If you don’t want to miss out on any tax savings, you’ll want to work with a tax advisor who can make sure you’re not leaving anything on the table.

6. Child and Dependent Care Credit

This is another great credit parents and guardians should know about. The child and dependent care credit is a nonrefundable credit that allows taxpayers to offset some of the costs of paying for services like babysitters, day care and in-home caregivers for older dependents.

Here’s how it works: You can claim 20–35% of up to $3,000 ($6,000 for two or more dependents) for the cost of care. The percentage of the credit depends on your AGI. Families with an AGI of $15,000 or less can claim the full 35%. As you earn more income, the credit is reduced. But a family with an AGI of over $43,000 can still claim the minimum credit rate of 20%.

Let’s break it down. You pay $250 a week for Junior to go to daycare. That’s about $13,000 a year (ouch). If you qualify to credit 20% of $3,000 in care costs, you get $600 knocked off your tax bill. Not too shabby!

7. Education Credits

Bettering yourself or your children through education is a good thing, and it’s even better when you get a tax break.

The American opportunity tax credit (AOTC) is a partially refundable credit that pays for education expenses for students in the first four years of college. You can claim up to $2,500 per student—and if the credit brings your tax bill to zero, 40% (up to $1,000) will be refunded to you. Who can complain about free money, especially when it comes to paying for college?

Another education credit is the lifetime learning credit (LLC). This one isn’t refundable, but it covers up to $2,000 in qualified educational expenses per return. While you can only take advantage of the AOTC for undergrad expenses, you can reap the benefits of the LLC for expenses related to all kinds of educational opportunities—from degree programs to technical classes to improving job skills.

But beware: You can claim both the AOTC and the LLC on your tax return—but not for the same student or the same expenses.

1099-K Changes Delayed Until 2023 Tax Year

The IRS was set to make massive changes to the 1099-K form for this tax season, but those changes have just been delayed until the 2024 tax season. That’s good news for all you small business owners!

When you file your taxes in early 2023, a 1099-K form is only required if you’ve had more than 200 third-party business transactions a year and they’ve added up to more than $20,000 of income. These are the same thresholds for 1099-K forms as previous years. Looking ahead, however, a lot more people will have to file a 1099-K in 2024, especially those who own a small business or have a side hustle.

Here’s how it will break down: You’ll receive a 1099-K form during tax season 2024 if you accept payments for goods or services over a third-party network (think Venmo, PayPal, Stripe, Square, Zelle and Cash App) that are more than $600, even if it’s just one transaction over $600!

And be careful—with every new change, there’s bound to be hiccups. Remember, the IRS doesn’t tax personal gifts from friends or family or reimbursements for personal expenses. So, if you receive a 1099-K by mistake, you might want to cover your bases by contacting whichever third-party network sent it to you.

Smaller Tax Refunds for 2023

Here’s some more not-so-awesome news: The IRS warned people to expect smaller tax refunds in 2023. Why? Two big reasons:

  • There were no economic impact payments in 2022, so taxpayers won’t get an extra stimulus payment in their 2023 tax refund checks.
  • Expanded tax credits and deductions—like the child tax credit and charitable contributions deduction—reverted to their pre-COVID-19 amounts.

But guess what? Getting a refund check isn’t all it’s cracked up to be. Basically, this means you’ve been giving Uncle Sam interest-free loans throughout the year! A tax refund is just the government paying back money that was already yours in the first place (unless you scored some sweet refundable tax credits).

What you really want to do is adjust your tax withholdings so you owe nothing and get nothing from the IRS every year. This way, those hard-earned dollars stay in your paycheck and come home with you every payday.

Student Loan Forgiveness Tax

If you follow the headlines, you know the Biden administration announced a plan to forgive up to $20,000 in student loans per person. Thanks to the American Rescue Plan, you won’t owe federal income taxes on loan forgiveness when (or if) the loans are actually forgiven—as long as it happens before 2025.

Now, there’s a chance you might owe state income tax depending on where you live. If you live in a state that follows federal tax rules or doesn’t have an income tax, you’ve got nothing to worry about. But some states are either undecided or plan to tax student loan forgiveness as earned income. These states are Arkansas, California, Indiana, Minnesota, Mississippi, North Carolina and Wisconsin.

Retirement Plans: 401(k)s, IRAs and More

There are several key changes and inflation adjustments to retirement plans in 2023—and some of those changes could impact your tax bill in 2024. Let’s dive in.

401(k) and IRA Contribution Limits Increase

To account for inflation and an increased cost of living, the IRS bumped up 401(k) and IRA retirement plan contribution limits for 2023:

  • If you contribute to a 401(k) or 403(b), you can now put in up to $22,500 a year (up from $20,500). You can also contribute an extra $7,500 as a catch-up contribution if you’re 50 or older.
  • If you have a traditional or Roth IRA, you can now contribute up to $6,500 (up from $6,000). If you’re 50 or older, you can put in an extra $1,000.

Income Limits Increase for Roth IRA Contributions

The Roth IRA income limits for contributions are also increasing in 2023:27

  • Single and head of household: You can contribute up to the limit if you make less than $138,000, a reduced amount between $138,000 and $153,000 (up from between $129,000 and $144,000), and nothing after $153,000.
  • Married filing jointly: You can contribute up to the limit if you make less than $218,000, a reduced amount between $218,000 and $228,000 (up from between $204,000 and $214,000), and nothing after $228,000.
  • Married filing separately: Here's where it gets a little tricky. If you lived with your spouse for any amount of time during the year and your income is more than $10,000, you won't be able to contribute anything to a Roth. But if you did not live with your spouse at all, you'll have the same contribution limits as a single or head of household taxpayer (see above).

Deduction Limits Increase for Traditional IRA Contributions

Remember this for the 2024 tax season. Phase-out limits for deducting traditional IRA contributions are . . . you guessed it, increasing. What are phase-out limits, you ask? It simply means that your deduction gets lower as your income gets higher.

You can take a full deduction up to the limit ($6,500 for most folks and $7,500 if you’re 50 or older) if neither you nor your spouse participate in an employer-sponsored plan. Cha-ching! If you do contribute to an employer-sponsored plan, the deduction phases out as your income increases depending on your filing status:

  • Single: You get a full deduction if your income is less than $73,000. You can take a partial deduction if your income is between $73,000 and $83,000. The deduction phases out completely if you make more than $83,000.
  • Married filing jointly: You get a full deduction if you make less than $116,000. If your income is between $116,000 and $136,000, the deduction is only partial. Anyone making more than $136,000 gets no deduction.

Let’s say you’re not covered by an employer-sponsored plan at work but your spouse is:

  • Married filing jointly: You can take a full deduction if you make less than $218,000, a partial deduction if you make between $218,000 and $228,000, and no deduction if you make more than $228,000.
  • Married filing separately: You get a partial deduction if you make less than $10,000. There’s no deduction if you make more than $10,000.

Did you pay too much for last year’s taxes? Would you like to find out how much you could save on this year’s tax return? Give us a call at (702) 998-0224 or email us and let us help you keep more of the money you make!

IRS Sets January 23 as Official Start to 2023 Tax Season

WASHINGTON — The Internal Revenue Service today announced Monday, January 23, 2023, as the beginning of the nation's 2023 tax season when the agency will begin accepting and processing 2022 tax year returns.

More than 168 million individual tax returns are expected to be filed, with the vast majority of those coming before the April 18 tax deadline. People have three extra days to file this year due to the calendar.

With the three previous tax seasons dramatically impacted by the pandemic, the IRS has taken additional steps for 2023 to improve service for taxpayers. As part of the August passage of the Inflation Reduction Act, the IRS has hired more than 5,000 new telephone assistors and added more in-person staff to help support taxpayers.

"This filing season is the first to benefit the IRS and our nation's tax system from multi-year funding in the Inflation Reduction Act," said Acting IRS Commissioner Doug O'Donnell. "With these new additional resources, taxpayers and tax professionals will see improvements in many areas of the agency this year. We've trained thousands of new employees to answer phones and help people. While much work remains after several difficult years, we expect people to experience improvements this tax season. That's just the start as we work to add new long-term transformation efforts that will make things even smoother in future years. We are very excited to begin to deliver what taxpayers want and our employees know we could do with this funding."

These steps took place as the IRS worked for months to prepare for the 2023 tax season. The January 23 start date for individual tax return filers allows the IRS time to perform annual updates and readiness work that are critical to ensuring IRS systems run smoothly. This is the date IRS systems officially begin accepting tax returns. Many software providers and tax professionals are already accepting tax returns; they will transmit those returns to the IRS when the agency begins accepting tax returns on January 23.

The IRS urges people to have all the information they need before they file a tax return. Filing a complete and accurate tax return can avoid extensive processing and refund delays as well as avoid the possibility of needing to file an amended tax return.

In addition, the IRS encourages people to carefully review their tax situation to make sure they don't overlook important tax credits they may be eligible for, like the Earned Income Tax Credit (EITC). The IRS has set a special day on January 27 to encourage people to make sure they understand the important benefits of the EITC, a credit that can help low- and moderate-income workers and families.

The IRS has a variety of free services available to help people. The IRS's Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs also offer free basic tax return preparation to qualified individuals. People can also get help from trusted tax professionals, commercially available tax software as well as IRS Free File, which provides free electronic filing of tax returns.

April 18 tax filing deadline in 2023

The filing deadline to submit 2022 tax returns or an extension to file and pay tax owed is Tuesday, April 18, 2023, for most taxpayers. By law, Washington, D.C., holidays impact tax deadlines for everyone in the same way as federal holidays. The due date is April 18, instead of April 15, because of the weekend and the District of Columbia's Emancipation Day holiday, which falls on Monday, April 17.

Taxpayers requesting an extension will have until Monday, October 16, 2023, to file.

Tips to help people with the 2023 tax season

The IRS recommends several things for people to keep in mind for a smooth filing experience this year:

Have the right information before filing. The IRS encourages individuals to have all the information they need before filing a complete and accurate return. Organize and gather 2022 tax records including Social Security numbers, Individual Taxpayer Identification Numbers, Adoption Taxpayer Identification Numbers and this year's Identity Protection Personal Identification Numbers valid for calendar year 2023.

Filing an accurate tax return can help taxpayers avoid delays or later IRS notices. Sometimes this means waiting to make sure individuals have accounted for all their income and the related documents. This is especially important for people who may receive one of the various Forms 1099 from banks or other payers reporting unemployment compensationdividendspension, annuity or retirement plan distributions.

People should also remember that most income is taxable, including unemployment income, interest received or money earned from the gig economy or digital assets. Individuals should make sure they report the correct amount on their tax return to avoid processing delays.

Visit first for questions. The IRS reminds people to visit first for common questions and also to check on the status of their refunds. has much of the same information that IRS phone assistors have.

The IRS anticipates making significant improvements to phone service this year for taxpayers and tax professionals as more training for new phone assistors is completed in the weeks ahead. However, the IRS emphasizes it's important to note that call volumes remain at historically high levels. The IRS urges people to visit for the information they need.

"Our phone volumes remain at very high levels," O'Donnell said. "For faster access to information, we urge people to start with From there, taxpayers can quickly access the variety of free resources available to help taxpayers anytime, day or night."

Speed refunds by filing electronically and choosing direct deposit. There are important steps people can take to help ensure their tax return and refund are processed without delays. The most important is to file electronically with direct deposit. This is still the fastest and easiest way to file and receive a refund. To avoid delays in processing, people should avoid filing paper returns wherever possible.

To speed refunds, the IRS urges people to file electronically with direct deposit information as soon as they have everything needed to file an accurate return. Individuals can use a bank account, prepaid debit card or mobile app to use direct deposit and will need to provide routing and account numbers with their return. Learn how to open an account at an FDIC-insured bank or through the National Credit Union Locator Tool.

IRS Free File available January 13

IRS Free File will open January 13 when participating providers will accept completed returns and hold them until they can be filed electronically with the IRS. Many commercial tax preparation software companies and tax professionals will also be accepting and preparing tax returns before January 23 to submit the returns when the IRS systems open.

The IRS's Free File program, available only at, allows taxpayers who made $73,000 or less in 2022 to file their taxes electronically for free using brand-name software provided by commercial tax filing companies. Free File Fillable forms, a part of this effort, is available to any income level and provides free electronic forms that people fill out and file themselves also at no cost.

Most refunds issued in less than 21 days; EITC refunds for many available starting February 28

The IRS anticipates most taxpayers will receive their refund within 21 days of when they file electronically, if they choose direct deposit and there are no issues with their tax return. Taxpayers should check Where's My Refund? on for their personalized refund status.

While the IRS will begin accepting returns January 23, the IRS cannot issue a refund that includes the Earned Income Tax Credit or Additional Child Tax Credit (ACTC) before mid-February. This is due to the 2015 PATH Act law passed by Congress, which provides this additional time to help the IRS stop fraudulent refunds from being issued.

Where's My Refund? should show an updated status by February 18 for most early EITC/ACTC filers. The IRS expects most EITC/ACTC related refunds to be available in taxpayer bank accounts or on debit cards by February 28 if taxpayers chose direct deposit and there are no other issues with their tax return.

Awaiting processing of previous tax returns? People can still file 2022 returns

Currently, the IRS has processed all paper and electronic individual tax year 2021 returns received prior to November 2022 that didn't require error-correction or further review. The IRS continues to work on remaining tax returns in these categories. This work will not impact tax refund timing for people filing in 2023, but the IRS continues to urge people to make sure they submit an error-free tax return this tax season to avoid delays. Check the IRS Operations page for the latest information about the status of tax returns received in 2022., IRS Online Account provide free help

Taxpayers can find online tools at that are easy-to-use and available anytime. Millions of people use them to help file and pay taxes, find information about their accounts, determine eligibility for tax credits and get answers to tax questions.

An IRS Online Account allows individuals to log in securely to access personal tax account information including balance, payments and tax records including adjusted gross income.

There are various types of tax return preparers, including enrolled agents, certified public accountants, attorneys and some who don't have a professional credential. Choosing a Tax Professional offers information to help people select one. The Directory of Federal Tax Return Preparers with Credentials and Select Qualifications can help taxpayers find local preparers who currently hold professional credentials recognized by the IRS or who hold an Annual Filing Season Program Record of Completion.

The Interactive Tax Assistant provides answers to many tax law questions. For example, it can help people determine if a type of income is taxable, or if they can deduct certain expenses. It also helps people find out if life event changes make them eligible for credits they didn't qualify for in the past and provides answers for general questions, such as determining filing status, if someone can claim dependents or if they have to file a tax return.

Where's My Refund? offers taxpayers the ability to check the status of their refund within 24 hours after the IRS accepts their e-filed tax return. The Where's My Refund? tool updates once every 24 hours, usually overnight.

MilTax is a free tax resource available for the military community, offered through the Department of Defense. It includes tax preparation and electronic filing software, personalized support from tax consultants and current information about filing taxes. It's designed to address the realities of military life – including deployments, combat and training pay, housing and rentals and multi-state filings. Eligible taxpayers can use MilTax to electronically file a federal tax return and up to three state returns for free.

Key filing season dates

There are several important dates taxpayers should keep in mind for this year's filing season:

  • January 13: IRS Free File opens
  • January 17: Due date for tax year 2022 fourth quarter estimated tax payment.
  • January 23: IRS begins 2023 tax season and starts accepting and processing individual 2022 tax returns.
  • January 27: Earned Income Tax Credit Awareness Day to raise awareness of valuable tax credits available to many people – including the option to use prior-year income to qualify.
  • April 18: National due date to file a 2022 tax return or request an extension and pay tax owed due to the Emancipation Day holiday in Washington, D.C.
  • October 16: Due date to file for those requesting an extension on their 2022 tax returns.

Is Your Stimulus Check Taxable?

You may be wondering if you have to pay taxes on your third stimulus check. The answer may surprise you.

I’ve heard the question many times: Will I have to pay tax on my stimulus check? The tax code says you have to pay taxes on “all income from whatever source derived,” unless it’s specifically exempted or excluded. That’s a pretty broad definition that seemingly would include money from the government. And, strictly speaking, there’s no specific exemption or exclusion for stimulus check money. So, third stimulus checks are taxable – right?

Wrong! There’s a loophole in the law that prevents you from having to pay taxes on the third-round stimulus check money you got from Uncle Sam last year. As it turns out, your third stimulus check isn’t “income” after all, according to the law. Instead, it’s simply an advance payment of a tax credit. And tax credits aren’t taxable income.

When you file your 2021 federal income tax return (Form 1040) this year, you’re going to see a line on the second page for the “Recovery rebate credit.” Pay close attention to that line, especially if you didn’t receive a full (or any) third-round stimulus check, you didn’t file a 2019 or 2020 tax return, your income dropped in 2021, you had a baby in 2021, you got married last year, you’re a recent college graduate, or you otherwise had a significant change of circumstances in 2021. If you’re eligible for a third stimulus check, this credit could save you a lot of money.

Your third stimulus check and the credit amount are calculated in the same way. However, your stimulus check was based on information from either your 2019 or 2020 tax return. The tax credit is based on what you put down on your 2021 tax return. So, the failure to file a 2019 or 2020 return, or a change of circumstances from 2020 to 2021, could result in a difference between the amount of your third stimulus check and the credit amount. (Use our Third Stimulus Check Calculator to see how much you should have gotten last year.)

If the recovery rebate credit is higher than your third stimulus check, your 2021 tax bill will be lower, and you might even get a refund. If your stimulus check was higher than the allowed credit, you get to keep the difference. So, you win either way!



It’s worth pointing out that the only way you can claim the recovery rebate credit is to file a 2021 tax return. This is true even if you’re not otherwise required to file a return (e.g., because your income doesn’t reach the filing requirement threshold). So, if you qualify for the credit, make sure you file a tax return this year.

For most people, tax returns for the 2021 tax year are due by April 18, 2022. If you can’t file by that date, request an extension to file, which will push your filing deadline to October 17. Depending on your income, you may even be able to file your tax return for free.

If you don’t remember how much you actually received last year as a third stimulus check, look at Notice 1444-C, which the IRS sent you last year. If you didn’t keep that notice (as you should have), don’t worry – there are other ways to get the information. The IRS should send you a Letter 6475 sometime before the end of March that contains your third stimulus check amount. You can also get the amount through an IRS online account or by requesting a 2021 account transcript (see the IRS’s Get Transcript website).

Did you pay too much on last year’s taxes? Find out how much you could save on this year’s tax return! Just give us a call at (702) 998-0224  and let us help you keep more of the money you make!



Should You Worry about Tax Increases? Maybe Not!

There’s been no shortage of apprehension about the prospect of tax increases over the course of the past year. Worried about potential tax changes, some business owners pushed ahead with sales or other liquidity events, while investors raced to book gains in 2021.

However, as 2022 progresses, the tax legislation spurring those actions faces a highly uncertain future. And for business owners and investors who were facing increases, the most recent drafts of the Build Back Better Act suggest several future planning options to mitigate the pain.


Let’s start big picture. Tax considerations are important, but they are often secondary to business and investment planning. Focusing on business operations and growth can drive valuation increases that more than pay for future tax hikes given the right investment timeline. This same logic applies to investment assets, as investors weigh expected value appreciation against the potential for tax increases. Attempting to complete sales before tax changes take effect could result in lower tax rates, but might also come at an economic cost.


It’s worth noting that the most recent legislative proposals are a significant retreat from the earlier push to raise capital gains taxes for the highest earners to a combined 43.4%. Instead, the version of the Build Back Better Act most recently under consideration in Congress would add a surtax to push up rates on all income — not just capital gains — for taxpayers only over specified income thresholds.

That surtax would be:

  • 5% on income over $10 million.
  • An additional 3% on income north of $25 million.
  • For trusts and estates, significantly lower thresholds of $200,000 (for a 5% surtax) and $500,000 (for an additional 3% surtax) would apply.

Those income thresholds would narrow the scope of tax increases as compared to an actual increase in capital gain rates. They also serve as the key to tax-planning opportunities.

Let’s also remember that the proposed tax increase on capital gains through the surtax is just that — a proposal, subject to congressional negotiations. Last fall it appeared that there was momentum for tax legislation on Capitol Hill, as the House passed a version of the BBBA and the Senate began its deliberations. However, that progress stalled, and the likelihood of significant tax increases is diminishing.


That said, tax increases do matter, and if you’re already planning to transition out of your business or investments, tax planning could minimize your liability.

One tactic business owners might consider is an installment sale. Stretching out the payment of purchase price over an agreed-upon number of years could help sellers keep their annual income recognition from the sale below the threshold that would trigger the surtax.

Installment sales aren’t for everyone. They have the notable drawback of sellers assuming economic risk for the unpaid portion of promissory notes until the final payments are received. An interest charge may also apply to the deferred tax liability, depending on the amount of deferred gain.

Installment sales aren’t for everyone. They have the notable drawback of sellers assuming economic risk for the unpaid portion of promissory notes until the final payments are received. An interest charge may also apply to the deferred tax liability, depending on the amount of deferred gain.

The potential for tax changes could also prompt business owners to revisit their plans around gifting or succession, both potential avenues to divest from the business in a tax-efficient manner. Tax changes involving gifting and estate planning were removed from the Build Back Better Act during the legislative process, but business owners should continue to watch that area closely.


There’s little we can be certain about with upcoming tax changes. But it’s a safe bet that taxes won’t go down anytime soon, and business owners are right to pay attention. Yet, setting out to eschew growth to escape a future of higher taxes may be counterproductive. It’s often better to focus on making your business as successful as possible, and then when it comes time to sell, figure out the most tax-advantageous way to do it.


Why This Tax Filing Season Could Be Ugly

During last year’s tax-filing season, fewer than 10% of taxpayers who called the IRS were able to get a representative on the phone. Millions of taxpayers still haven’t received their 2020 refundsHere’s some advice on what taxpayers could expect from this year’s filing season.

What were the primary reasons for IRS backlogs in 2021, and will the situation improve this year? The last filing season was extremely difficult for many taxpayers, practitioners and the IRS. At the end of 2020, more than 11 million tax returns had not been processed, and that carried over to 2021 season. We’re going to have a similar situation this year. We’ve also had COVID-19 restrictions for employees, and the IRS has had continued reductions in budgets.

Since the beginning of the pandemic, Congress has approved three economic stimulus payments and monthly advance child tax credit payments. How has that affected the IRS’s ability to provide customer service? The IRS only has a finite amount of resources. Getting those checks out the door takes staff away from what they need to do every day. I’m concerned that during this filing season, we had the third stimulus check and the advance child tax credit, and there’s some confusion over those payments. Some people had a life event where maybe they had a new child or their income changed, which could increase or decrease their payments. The IRS is going to have to reconcile some of those tax returns, and that will require manual processing.

What can taxpayers do to reduce the likelihood that their refunds will be delayed this year? File electronically. That’s the easiest thing you can do that will be a time saver. If you’re getting a refund, direct deposit really speeds the time to process the payment. If you received a stimulus payment and/or an advance child tax credit payment, you should try to make sure your information matches what the IRS has. The IRS has been sending out letters to taxpayers who received the advance child tax credit that show how much they received last year and the number of dependents it used to determine that amount. It’s doing the same for the third economic stimulus payment. (With the child tax credit, you can also go to to look up the amount of your payments.) Taxpayers can use these letters to make sure the number they put on their return is consistent with IRS records.

What’s your advice for someone who decides they need professional help with their taxes this year? If you qualify, the IRS’s Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly are good resources. They get a lot of training from the IRS and are free for lower-income taxpayers. Go to to find a location near you. If you’re able to pay to hire someone, you want to check their credentials. Use a licensed preparer, whether it’s a certified public accountant or enrolled agent, who has had the proper training to prepare tax returns. Some of the unlicensed preparers may have good intentions, but they may not be as familiar with the laws and changes in the laws.

While the problems in 2021 were extreme, taxpayers have complained about the IRS for years. What needs to be done to make long-term improvements in how the agency deals with taxpayers? The simple answer is funding. The IRS budget has been depleted for the past decade, which has reduced its ability to hire. The IRS brings in about 95% of the country’s budget. You hear a lot of jokes about the IRS but it performs a very critical function, and Congress has called on them to assist in administering social programs. It’s a vital organization for the country that needs to be fed, and the problem is, it’s been starved.


IRS Announces 2022 Tax Rates, Standard Deduction Amounts And More

The Internal Revenue Service has announced annual inflation adjustments for tax year 2022, meaning new tax-rate schedules and tax tables and cost-of-living adjustments for various tax breaks. Most numbers are up more than in recent years because of higher inflation. Note: These numbers, for the tax year beginning January 1, 2022, are what you’ll use to prepare your 2022 tax returns in 2023. (You can find the numbers and tables to prepare your 2021 tax returns here.)

One BIG deduction to note is the Meal Per Diem Deductible at 100% for 2021 and 2022! Thanks to The Consolidated Appropriations Act, 2021, permits a 100% deduction for food and beverages provided by a restaurant during calendar years 2021 and 2022. Taxpayers can claim meal expenses using either the Actual method or the Per Diem method.  Clearly the Actual method qualified for the 100% deduction as long as the meal was provided by a restaurant. 

Generally speaking, if you don’t expect your income or life to change significantly—by getting married or starting a gig job, for example—you can use the new numbers to estimate your 2022 federal tax liability. If you’re expecting major changes, make sure you check your tax withholding and/or make quarterly estimated tax payments. All the details are broken down on our tax rates page.We also cover the new higher retirement, education, and meal deduction limits for 2022.

There’s one big caveat to these 2022 numbers: Democrats are still trying to pass the now $1.85 trillion Build Back Better Act, and the latest legislative text includes income tax surcharges on the rich as well as an $80,000 cap—up from $10,000—for state and local tax deductions, funding support for families seeking child care and an expanded child tax credit, among other measures. Earlier versions included cutting the estate-tax exemption in half and increasing capital gains taxes.


How Long Should You Keep Tax Records?

Now that tax season is over, you can forget about taxes for a while! (Unless, of course, you got a filing extension.) But what should you do with all the forms, receipts, canceled checks and other records scattered across your desk? Do you need to keep them, or can you throw them away (or, should I say, shred them)? The IRS generally has three years after the due date of your return (or the date you file it, if later) to kick off an audit of your return, so you should hold on to all your tax records at least until that time has passed. But you should keep some records even longer, and it’s also a good idea to hold onto copies of the return itself indefinitely.

Also think about keeping certain documents for non-tax purposes. For instance, it might be wise to save W-2 forms until you start receiving Social Security benefits so you can verify your income if there’s a problem.

Here’s a general rundown on how long you should keep certain common tax records and documents. Of course, you can always hang on to them longer if you want…but don’t become a pack rat!


Keep pay stubs at least until you check them against your W-2s. If all the totals match, you can then shred the pay stubs. Take a similar approach with monthly brokerage statements—you can generally dispose of them if they match up with your year-end statements and 1099s.


Generally speaking, you should hold onto documents that support any income, deductions and credits claimed on your tax return for at least three years after the tax-filing deadline. Among other things, this applies to:

• W-2 forms reporting income;
• 1099 forms showing income, capital gains, dividends and interest on investments;
• 1098 forms if you deducted mortgage interest;
• Canceled checks and receipts for charitable contributions;
• Records showing eligible expenses for withdrawals from health savings accounts and 529 college-savings plans; and
• Records showing contributions to a tax-deductible retirement-savings plan, such as a traditional IRA.
If, like most people, you don’t itemize deductions on Schedule A, you might not need to hold onto as many documents. For example, if you’re not deducting charitable contributions, then you don’t need to keep donation receipts or cancelled checks for tax purposes. (Note, however, that people who don’t itemize can deduct up to $300 for cash donations to charity made in 2021.)


The IRS has up to six years to initiate an audit if you’ve neglected to report at least 25% of your income. For self-employed people, who may receive multiple 1099s reporting business income from a variety of sources, it can be easy to miss one or overlook reporting some income. To be on the safe side, they should generally keep their 1099s, their receipts and other records of business expenses for at least six years.

If you don’t report $5,000 or more of income attributable to foreign financial assets, the IRS also has six years from the date you filed the return time to assess tax on that income. So, save any records related to such income until the six-year window is closed.


Sometimes your stock picks don’t turn out so well, or you loan money to your deadbeat brother-in-law who can’t pay you back. If that’s the case, you might be able to write off any your worthless securities or bad debts. But make sure you keep related records and documents for at least seven years. That’s how much time you have to claim a bad debt deduction or a loss from worthless securities.


If you paid taxes to a foreign government, you may be entitled to a credit or deduction on your U.S. tax return—and you get to decide if you want a credit or deduction. If you claimed a deduction for a given year, you can change your mind within 10 years and claim a credit by filing an amended return. You also have 10 years to correct a previously claimed foreign tax credit. For these reasons, save any records or documents related to foreign taxes paid for at least 10 years.


When it comes to investments and your property, you’ll need to save some records for at least three years after you sell. For instance, you should keep records of contributions to a Roth IRA for three years after the account is emptied. You’ll need these records to show that you already paid taxes on the contributions and shouldn’t be taxed on them again when the money is withdrawn.

If you inherit property or receive it as a gift, make sure you keep documents and records that help you establish the property’s basis for at least three years after you dispose of the property. The basis of inherited property is generally the property’s fair market value on the date of the decedent’s death. For gifted property, your basis is generally the same as the donor’s basis.

Keep home-purchase documents and receipts for home improvements for three years after you’ve sold the home. Most people don’t have to pay taxes on home-sale profits—singles can exclude up to $250,000 in gains and joint filers can exclude up to $500,000 if they’ve lived in the house for two of the five years prior to the sale. But if you sell the house before then or if your gains are larger, then you’ll need to have your home-purchase records to establish your basis. You can add the cost of significant home improvements to the basis, which will help reduce your tax liability. (See IRS Publication 523 for more details.) Similar rules apply for any rental properties you own; save records relating to your basis for at least three years after selling the property.


Don’t forget to check your state’s tax record retention recommendations, too. The tax agency in your state might have more time to audit your state tax return than the IRS has to audit your federal return. For instance, the California Franchise Tax Board has up to four years to audit state income tax returns, so California residents should save related documents for at least that long.


Common IRS Where’s My Refund Questions and Errors


Are you getting the message “Tax Topic 151: Appeal Your Rights” when you log into Where’s My Refund?

Tax Topic 151 means that you’re getting a tax offset, which is where the Department of Treasury will be taking your refund to pay for something you owe.

The most common reasons for getting a tax offset are unpaid taxes, unpaid child support payments, and offsets for Federal student loans in default.

If you received Tax Topic 151 error code, the IRS can’t really help you. They will send you a letter that explains why you won’t be getting your return, or how much was taken. However, the best place to call is the Bureau of the Fiscal Service. Their customer service can explain the issue better. You can learn more here:

If your student loan is in default, you need to rehabilitate your student loan to stop having your tax return taken.



Tax Topic 152 means you’re getting a tax refund. That’s it!

The IRS has given guidelines this year that 90% of tax filers should receive their refund within 21 days of filing. The IRS works weekends during tax season, so it’s 21 days, not “business days”.

If you want a good estimate, check out our tax refund calendar for 2020.



When you get a direct deposit date, the system will tell you “Expect your refund on this date, but call if not received by XXX date”. Why?

Basically, some banks take several days to process ETF transfers into accounts. The IRS will be sending the money on the date listed. However, your bank may not post it to your account for several days.

Note: one of the biggest problems we see here with direct deposits is that the name listed on the bank account doesn’t match the tax return. This can be due to a spouse’s or partner’s name on the account, but it can also be due to identity theft – which is what the IRS is concerned about. 

The bottom line is to make sure the name on your bank account matches your tax return information!



The IRS has been cracking down on identity theft for the last several years. This is a great thing, because a lot of people were becoming victims of tax refund identity theft.

However, a lot of people think they are “verifying their identity” when they call the IRS. And while this is true, it’s not identity theft related.

Whenever you call the IRS, they will ask you to verify your ID. This is just for your security, and is designed to prevent identity theft. It doesn’t mean there is an identity theft issue with your return. Many callers have reported IRS representatives saying this is “to protect your identity”, and that’s correct – but it’s not because there is a problem with your return.

If you do have an identity theft issue with your return, you’re going to get a form 5071C letter in the mail from the IRS. You’ll also be asked to verify your identity in person at an IRS office, or through a new website setup for identity verification, Identity Verification Service.

So, unless you had to do that, identity theft did NOT impact your return.



I keep getting tons and tons of questions about ID verification, so I tracked down the IRS Operational Guidelines, and here is what the IRS is going to do whenever you call and inquire about your tax refund. This is straight from the IRS operational manual:

For purposes of identification and to prevent unauthorized disclosures of tax information, you must know with whom you are speaking, complete name and title and the purpose of the call/contact. It may be necessary to ask the caller or visitor if he or she is an individual taxpayer (primary or secondary), a business taxpayer (sole proprietor, partner, or corporate officer), or an authorized third party.

Inadequate authentication of the identity of a caller could result in an “unauthorized disclosure” of return or return information. If an IRS employee makes a knowing or negligent unauthorized disclosure, the United States may be liable for damages. See IRC section 7213, IRC section 7213A , and IRC section 7431. If an IRS employee makes a voluntary, intentional disclosure, the employee may be subject to criminal penalties including a fine, imprisonment, and loss of employment.

Required authentication probes:

  • Taxpayer Identification Number (TIN),Social Security Number (SSN), Individual Taxpayer Identification Number (ITIN) – If the taxpayer is inquiring about a jointly filed return, only one TIN is necessary, preferably the primary number. The secondary TIN may be required if the primary is unavailable, or for use as an additional authentication check. See IRM ,Disclosure Guidelines for ITIN Data , for specific ITIN research. Note: In the event the name and TIN provided by the caller at the beginning of the call do not match our records, ask the caller to verify their information. Terminate the call if, after probing, the information provided still does not match our records. Ask the caller to check their records and call back.
  • Name – as it appears on the tax return (for the tax year(s) in question), including spouses name for joint return.
  • Current address – If taxpayer fails to provide the correct address of record, but correctly responds to all of the other items, (IMF – name, TIN and date of birth) you may request additional taxpayer authentication pursuant to IRM, Additional Taxpayer Authentication. Note: If you are unable to verify the address on the Integrated Data Retrieval System (IDRS), request the address as it appears on the last tax return or as modified by IRS records.
  • Date of birth (DOB) of primary or secondary taxpayer – If the taxpayer fails the DOB probe, but correctly responds to all other items above (name, TIN, address), you may request additional taxpayer authentication pursuant to IRM, Additional Taxpayer Authentication. Note: If there is a discrepancy with the DOB on IRS records (CC INOLE) but you are confident (taxpayer has passed authentication requirements) that you are speaking with the taxpayer, advise the taxpayer to contact the Social Security Administration (SSA) at 1-800-772-1213 to correct the error.


Paycheck Protection Program Tax Questions

Here are answers to some of the most common questions we’re hearing as small businesses and their advisors navigate the new Paycheck Protection Program and this year’s tax return.

My business received a PPP loan, do we have to report the loan proceeds as income for federal income tax purposes?

No. In general, loan proceeds are not considered taxable income to the borrower


We expect our PPP loan to be fully forgiven, does our small business have to pay income tax on the forgiven amount?

No. Under the COVID-related Tax Relief Act of 2020, no deduction is denied, no tax attribute is reduced, and no basis increase is denied by reason of the exclusion from gross income of the forgiveness of an eligible recipient’s covered loan. This applies for tax years ending after March 27, 2020. Note that the COVID-related Tax Relief Act of 2020 applies only to federal income taxes. While many states will also follow the federal framework, PPP loan forgiveness may be subject to income tax in some states. (Source: Revenue Ruling 2021-02).


My small business used the PPP loan proceeds to pay eligible employee wages and rent for our store location. Can we still deduct these expenses on our income taxes?

If the expenses are otherwise deductible, yes. Deductions for payments of eligible expenses are allowed even though such payments would result (or be expected to result) in the forgiveness of a covered PPP loan. This provision applies to tax years ending after March 27, 2020 (Source: Revenue Ruling 2021-02).


If my business receives a PPP loan, can we claim other COVID-19 tax relief like paid leave credits, the Employee Retention Credit, or deferral of payroll taxes?

If your business received a PPP loan, you may also claim the Employee Retention Credit for any qualified wages paid to employees as long as your business is an eligible employer that meets the requirements for the credit. However, qualified wages for which your business claims the Employee Retention Credit are excluded from payroll costs paid during the covered period that qualify for forgiveness under the PPP (Source: IRS Notice 2021-20).

As for paid leave credits, receiving credits for qualified leave wages does not disqualify your business from receiving the PPP loan to which it is otherwise entitled under section 1102 of the CARES Act.  However, the amount of the PPP loan is reduced by the amount of the qualified leave wages for which your business is allowed tax credits, and those wages are not eligible as “payroll costs” for purposes of receiving loan forgiveness under section 1106 of the CARES Act (Source: IRS Special Issues for Employers: Taxation and Deductibility of Tax Credits)

The CARES Act also allows employers to defer deposits and payments of the 6.2% employer share of social security tax for 1-2 years. Under the PPP Flexibility Act, a business is still eligible for this payroll tax deferral even after it is granted PPP loan forgiveness (Paycheck Protection Program Flexibility Act, P.L. 116-142, June 5, 2020).


10 Best & Worst Tax-Friendly States for Retirees

If you’re thinking of moving to a different state in retirement, you’ll want to consider climate, proximity to family and friends, access to quality health care, and a host of other important factors before picking a new location. But make sure you add taxes in the new state to the list of considerations. The total state and local tax burden in one place can be thousands of dollars more per year than in another. That can make a huge difference when you’re trying to stretch out your retirement savings.

The results are based on the estimated state and local tax burden in each state for two hypothetical retired couples with a mixture of income from wages, Social Security, traditional and Roth IRAs, private pensions, 401(k) plans, interest, dividends, and capital gains. One couple had $50,000 in total income and a $250,000 home, while the other had $100,000 of income and a $350,000 home.

Take a look to see if your state—or the state you’ve been dreaming about for retirement—made the "best tax-friendly” list for retirees (and not the worst!)

Best States to Retiree

10. Tennessee
9. Arkansas
8. Arizona
7. South Carolina
6. Colorado
5. Nevada
4. Wyoming
3. District of Columbia
2. Hawaii
1. Delaware

Worst States to Retire

10. Texas
9. New York
8. Iowa
7. Wisconsin
6. Vermont
5. Nebraska
4. Kansas
3. Connecticut
2. Illinois
1. New Jersey

How to Stress Less This Busy Tax Season

Many adults reported not knowing what to do to change their lifestyle so they could reduce their stress. Here are the most common stress-reducing tasks that some people do, according to the survey:

  1. Listen to music
  2. Exercise or walk
  3. Read
  4. Watch TV
  5. Spend time with friends or family
  6. Surf the internet or play video games
  7. Nap
  8. Pray
  9. Eat
  10. Spend time on a hobby
  11. Go to church
  12. Shop
  13. Smoke
  14. Drink
  15. Play sports

Most of these activities do reduce your stress slightly, and a few are excellent for stress reduction (exercise and spending time with friends and family). Some of them actually increase your stress (watching TV, playing video games, eating, smoking and drinking even normal amounts).

It’s important to take a big-picture perspective to understand stress better. Chronic stress is a negative emotion rooted in fear. It’s your fear system – your fight or flight system designed in caveman days – gone haywire for the 21st century.

When we can get our fear under control, we can get our stress under control too. Here are some tips you might not normally associate with stress. Try to incorporate as many of these as you can as you go through your busy day.

  1. Breathe deeply. Do this several times a day or make a habit of it. When you learn how to really breathe, you’ll be taking a micro-vacation each time you do.

  2. Set an intention for the day. Do you have a question for the universe? A problem you’re working on at work? A goal you want to achieve? Or even just a theme for the day that you could share as a game with the kids? Set a statement, question or keyword for the day. As you move through the day, look for things that support your intention. Listen to what your intuition is showing you. Have fun with your theme.

  3. Be extra polite to wait staff, service people, receptionists and customer service agents. This act of kindness will help you feel better yourself.

  4. Learn how to change any catastrophic thinking you might have. This is when your mind thinks, “I’ll never be ___,”  “I’m always ___,” etc.

  5. Find something in your day that makes you feel awe-inspired.

  6. Avoid talk radio and loud rock music, especially first thing in the morning and late at night when your brain is extra sensitive. Instead play soft instrumentals, classical or Reiki music that is calming and nurturing.

  7. During the 3:00 afternoon blahs at your office, pipe rock music (which is okay at this time) over the sound system or turn up your iPod and dance or conga your way around the office.

  8. Get rid of any clutter in your environment that when you walk by it, your inner nag voice goes off saying you need to do it.

  9. Connect with a coach, mentor, mastermind or someone who is a support for you.

  10. Water your plant and prune its leaves, or stare out the window at a nature scene.  Or sit on a park bench and watch the butterflies, birds, babies or passersby.

  11. Sing or whistle. But shut your office door if you do this at work.

  12. Go to bed earlier. Nothing beats a good night sleep.

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.


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 w/ higher collection potential, yet the IRS is not doing them.


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.

  • IRS should prioritize high-income delinquents rather than high balances due. (IRS disagrees.)
  • 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.)
  • IRS should gather indications that high-income delinquents have the ability to pay. (IRS disagrees.)
  • IRS should improve the measurement of field collection managers’ compliance with case selection guidelines. (IRS disagrees.)
  • IRS should revise procedures for shelving certain cases so they can be assigned to private collection agencies. (IRS disagrees.)
  • IRS should revise criteria for assigning cases to private collection agencies, replacing random selection with criteria considering high income. (IRS disagrees.)
  • 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.)

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.”

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.

5 Tips for Finding a Tax Preparer


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.



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.



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.



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.



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.


4 Signs You’re in for an Unwelcome Tax Bill

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


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.


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.


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,


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.


Tax Tips For Filing Your 2020 Tax Return

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). 


Good News! Business Owners Who Took PPP Will Get to Deduct Expenses After All

The 2020 tax season now looks a lot less bleak for those business owners who used Payroll Protection Program (PPP) money to cover their expenses to keep going during the coronavirus pandemic. On Dec. 21,2020, Congress clarified rules on the program’s tax ramifications, leaving thousands of small-business owners the winners.

The months-long battle between the legislators who wrote the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the IRS appears to be over. (To read about the fight and how it affected business owners, check out IRS Leaves Business Owners Who Took PPP in a Tax Quandary.) Both the House and Senate have voted to approve the “Consolidated Appropriations Act, 2021.” President Trump signed it into law about a week later, after wrangling over the amount of the stimulus payments.

Among the Act’s many provisions, is a subsection called the “Covid-related Tax Relief Act of 2020” (which starts on page 1,965 for those reading the full text). Under Section 276, Congress clarifies the tax treatment of forgiven PPP loans and the deductions paid by such loans.

Recall that the original Section 1106(i) of the CARES Act included language excluding forgiven PPP loan proceeds from taxable income but was silent on deductibility of expenses paid with those same proceeds. The Tax Relief Act amends the CARES Act to address this gap (which the IRS attempted to use as a backdoor to tax business owners on the relief funds’ benefits) with the bolded portion below:

TAX TREATMENT—For purposes of the Internal Revenue Code of 1986—

(1) no amount shall be included in the gross income of the eligible recipient by reason of forgiveness of indebtedness described in subsection (b),

(2) no deduction shall be denied, no tax attribute shall be reduced, and no basis increase shall be denied, by reason of the exclusion from gross income provided by paragraph (1) ….

Although many (including myself) believe Congress made its original intent clear regarding taxability of PPP funds (and deductions) in the CARES Act text, subsequent positions taken by the IRS raised eyebrows – and questions – and, in the process, gave already-stressed small-business owners more to worry about.

Apparently wishing to leave no room for further misinterpretation, Congress went into greater detail with the Tax Relief Act, including additional language directed to pass-through income and tax basis of ownership interests. Additional provisions state:

(3) in the case of an eligible recipient that is a partnership or S corporation—

(A) any amount excluded from income by reason of paragraph (1) shall be treated as tax exempt income for purposes of sections 705 and 1366 of the Internal Revenue Code of 1986, and

(B) except as provided by the Secretary of the Treasury (or the Secretary’s delegate), any increase in the adjusted basis of a partner’s interest in a partnership under section 705 of the Internal Revenue Code of 1986 with respect to any amount described in subparagraph (A) shall equal the partner’s distributive share of deductions resulting from costs giving rise to forgiveness described in subsection (b).

This last part – “except as provided by the Secretary of Treasury” (the department that oversees the IRS) worried me, and I consulted with a tax expert, Rain Hughes, expert tax education provider and CEO of Fast Forward Academy, for insight. Hughes explains:

This language means that a partner’s tax basis shall increase by the distributable share of deductions attributed to forgiveness. This is meaningful because a taxpayer's adjusted basis affects the taxation of distributions, the ability to recognize losses, and the amount of gain/loss recognized on disposition.

In other words, this language helps ensure business owners who receive the benefit now will not end up losing it in the form of capital gains later. This language prevents an end-run in another form of tax.

This is great news for business owners all over the country (including many of my clients) who took advantage of the CARES Act’s Payroll Protection Program to actually protect their payroll employees by keeping them employed earlier this year.

Imagine the struggling business owner (dentist, pediatrician, autism school, restaurant owner, or insert your own business) relying on PPP relief, who borrowed $250,000 and did not lay off any employees, even though business revenue dropped off substantially because everyone stayed home from April through July. If the PPP worked as intended, those proceeds helped carry the business through until things picked up by September. Everything may be looking good for a break-even year and a fresh eye toward a better 2021 – until the owner realizes she has an additional $250,000 in taxable income for 2020 and not enough in the bank to pay the tax bill. The ultimate irony would have had the IRS attempt to do what the coronavirus could not by putting those owners deeper in debt or out of business.

Thankfully, business owners no longer need to worry about such an absurd scenario, and we can now focus on a stronger recovery in 2021. Now that the president signed the Act into law, we can all breathe a sigh of relief.

RMDs Already Taken in 2020 Can be Rolled Over

The required beginning date for taking money from an IRA or defined contribution plan used to be the year the taxpayer reached age 70.5.  The distribution for the first year could be delayed to as late as April 1st, of the following year.

The SECURE Act changed the age from 70.5 to age 72 for anyone who had not yet reached age 70.5 as of December 31, 2019.  In other words, if the taxpayer reached age 70.5 on or before December 31, 2019, the taxpayer had to start taking distributions and continue taking distributions.  If the taxpayer had not yet reached age 70.5 on or before December 31, 2019, the taxpayer’s required beginning date is the year the taxpayer reaches age 72.  Again, the first year’s distribution could be delayed as late as April 1st of the following year.

The CARES Act permits taxpayers to ignore the requirement to take an RMD for the year 2020.  This includes:

1) Taxpayers who turned 70.5 during 2019 and chose to delay the first distribution to 2020 but not later than April 1, 2020,

2) Taxpayers who were 70.5 or older as of December 31, 2019, or

3) Taxpayers who were beneficiaries of an IRA or defined contribution plan as of December 31, 2019.

Unfortunately, the CARES Act didn’t become law until March 27, 2020, by which time many taxpayers had already taken some or all of their 2020 RMD.  Of course, since the CARES Act eliminated RMDs for 2020, these earlier distributions could be rolled, but the time limit for rollovers is 60 days and some distributions were already past the 60-day time limit.  Also, taxpayers can only do one rollover every 12 months.  For the past few months, the tax professional community has questioned whether or not these early RMDs could be rolled over beyond the 60th day AND whether more than one rollover could take place, such as when a taxpayer was spreading the RMD into monthly payments and had already received multiple monthly payments

Now IRS issued Notice 2020-51, on Tuesday, June 23, 2020, and answered these questions.  Briefly this 10-page Notice (plus a 2-page Appendix) states:

1) A taxpayer who took an RMD in 2020 can roll over the RMD to avoid paying taxes on the distribution as long as the rollover takes place no later than the LATER of:  a) the normal 60-day rollover period, or b) August 31, 2020.

2) If a taxpayer took multiple payments in 2020 as part of the RMD, the taxpayer can roll over the total RMD amount as long as the rollover takes place no later than the LATER of:  a) the normal 60-day rollover period, or b) August 31, 2020.

3) Such a rollover will not be treated as a rollover for purposes of the “one rollover per 12-month period” limitation found in §408(d)(3)(B).

4) This rollover option does NOT apply to distributions from a defined benefit plan.

5) This rollover option does NOT apply to any distributions above and beyond the RMD amount for the year.  (We interpret this Notice to say all distributions taken in 2020 are considered to be the RMD first.  For example, a taxpayer who has an RMD for 2020 of $6,000 chooses to take a total of $18,000 in distributions at the rate of $1,500 per month.  The first $6,000 of distributions will be considered RMD distributions and eligible for rollover and the remaining $12,000 are NOT eligible for this rollover treatment although some or all of this remaining $12,000 can be rolled but is subject to the “one rollover per 12-month period” limitation.)

6) This rollover option (and waiver of taking RMDs) does NOT apply to distributions that are part of a series of substantially equal periodic payments designed to avoid the 10% early distribution penalty.  These distributions must still be taken or the taxpayer will face the 10% early distribution penalty for breaking the stream of payments.  (This makes sense since these substantially equal period payments are not RMDs and the CARES Act change did not address a stopping of these payments.)


The Notice also has 12 Q&As to address other issues related to retirement plans and the CARES Act.

You can find this Notice by going to, clicking on irs-drop, and then on n-2020-51.


6 Tips When Starting A Small Business

If you’ve thought about opening your own business, this could be a great time especially if you are looking to start a home-based one. With so much information out there, choosing what ideas to follow can be confusing and overwhelming. Here are a few tips I found to be helpful. And while there's no way to guarantee success, of course, following these tips is a great way for you to get started and help your business grow.


1. Put a plan in place. Having a business plan that takes into account as many factors as possible helps ensure that you won't start a business that's doomed from the beginning. Business plans should account for many factors, including products, people, the marketplace, the competition and finances. When you put that all in one place, you'll see what your business needs to be successful and how you're able to meet those needs. You can also see weak areas that you might not have thought about. Be honest with yourself when creating the business plan. Check out Bplans for lots of examples and a wizard that will help you get started.

2. Know your banker. You want to establish a relationship with a banker, before you ever have to ask for a loan for your small business. When you start an account, don't just set it up with the clerk at the front counter. Ask to meet the loan officer and chat about your business, along with any services the bank might offer that could help you.

3. If you work from home, do it right. The ability to work from home is often a great way for small business owners getting started, because it allows them to spend precious capital on only what's absolutely necessary for the business. If you decide to work from home either to get started or indefinitely, try to set aside a room for a home office, and decorate it appropriately. Get into a routine of waking up, getting ready for work, just like if you worked in an office building. If you need a conference room or a business mailing address, you are usually able to rent those as needed.

4. Watch your cash flow. Cash flow is the lifeblood of any company. While the goal of a business is to make a profit, it can survive for some time without profit, but a lack of cash flow is deadly. Using financial software or just a spreadsheet, create a 12 month cash flow projection so you're able to take pre-emptive measures and avoid problems when necessary.

5. Tap your resources. Being a small business owner is daunting, but you don't have to go it alone. Anybody starting a small business should join the local chamber of commerce, rotary club or networking group. It is a great way to give back to the community while also meeting other business owners and taking advantage of services offered by them. Also consider joining a local or national industry organization in your field to network and get advice on regulartory, legal and other issues.

6. Know when to grow. While you want to grow your business, keep in mind that growth comes with bigger inventory and expense. Don't put your business in jeopardy. Watch carefully how you spend your capital.


How to Secure a PPP Loan for Your Business

Last week, Congress replenished the Paycheck Protection Program (PPP) fund with another $310 billion. The PPP, a lifeline to small businesses struggling because of the coronavirus pandemic, is attractive to many small business owners because of its low-interest, forgivable loans. One of the most attractive features of this loan is that all or at least a portion of the loan will be forgiven if borrowers follow certain rules after receiving the loan. If you or your business still could use a loan, here is what to do to qualify.

Steps to Securing a PPP Loan 

1. Get grounded in your numbers

Calculate and document these dates and numbers today, to identify the parameters you will have to work within for loan forgiveness.

  • Your eight-week period (covered period) — The eight-week period in which businesses must use loan proceeds for allowable uses starts as soon as the business receives the loan. Know your start date and calculate your end date. This is the covered period for which you’ll need to provide documentation of your allowable uses.

  • Your full-time equivalent headcount — The SBA will reduce the loan forgiveness by the proportion in which the FTE headcount during the covered period is less than a comparable pre-COVID-19 period. Your FTE headcount in the covered period is the average monthly FTEs employed during the eight-week period, subject to adjustment for the re-hire provisions noted below.

    Your pre-COVID-19 FTE headcount is either the average monthly FTEs from February 15, 2019, through June 30, 2019, or the average monthly FTEs from January 1, 2020, through February 29, 2020. You can choose which pre-COVID-19 period to use, so calculate the headcount for each period and select the lower of the two to help minimize any reduction in the forgiveness amount.
  • Individual employee salary or wages — The loan forgiveness amount could also be reduced if salary or wages in the covered period are less than 75% of a pre-COVID-19 quarter. The covered period is the eight-week period following the loan origination, while the pre-COVID-19 period is the most recent full quarter before the covered period (most likely, Q1 2020 or Q4 2019). We are still awaiting guidance on how to equalize the eight-week period to a quarter’s 12-week period.

  • Re-hire dates — The loan forgiveness calculations disregard FTE or salary reductions that occurred between February 15, 2020, and April 26, 2020, as long as the employer has eliminated the reduction in FTEs and/or salary by June 30, 2020.

2. Get organized and document your expenses

Knowing the numbers above is only half the battle. Applying for forgiveness with your lender will require strict documentation to prove your numbers and how you used the proceeds.

Maintain the following documentation throughout your covered eight-week period to assist in your application process:

  • Payroll tax filings reported to the IRS;
  • Payroll summary reports reflecting FTE headcount numbers and individual salary and wages over the eight-week period (use this to compare to numbers you calculated for the prior period);
  • State income, payroll, and unemployment insurance filings; and
  • Payment receipts, canceled checks, bank statements, or other documents verifying payment on covered mortgage interest, lease, or utility payments

Maintain this documentation from day one of your covered period. This is the time to insist on receipts, transparent reporting, and an organized system for document storage.


3. Develop strategies to impact the long-term outcomes for your business

While the spirit of the PPP is to give employers the means to keep as many employees employed as possible during the COVID-19 crisis, there may be circumstances where employers simply cannot maintain their pre-COVID-19 workforce. Employers faced with such circumstances may have difficulty spending the entire loan on allowable uses in the applicable eight-week period.

By way of example, a construction business that applied for the maximum PPP loan may be unable to keep its hourly employees working full time because many jobs have been canceled or delayed due to the outbreak. Or, in the case of restaurants, many employers have already furloughed their employees, and, while they can bring them back on their payroll to qualify for forgiveness, it may not make sense to do so for restaurants that are not running at full capacity within eight weeks. In addition, it may be difficult to get furloughed employees to come back, because some furloughed employees may actually be earning more from recently expanded unemployment benefits than they would earn if they came back to work.

In all of these situations, employers may have difficulty spending the full loan proceeds during the eight-week period and 75% of their loan amount on payroll during that time with a reduced workforce. Note that loan forgiveness is not all or nothing. If you have not met all of the requirements for loan forgiveness, a portion of the loan will be forgiven based on what you were able to spend on allowable uses in the period.

This is where different strategies can come into play. In some situations, it may be more beneficial to operate with a reduced workforce and convert a portion of the loan to a two-year, low-interest loan or immediately repay any unforgiven portion of the loan without penalty. In other situations, it may be a better strategy to push more payroll-related expenses, such as employer 401(k) contributions or bonuses, into the eight-week period to meet the 75% payroll cost threshold. Employers should think through the various available strategies to help enhance loan forgiveness, while also balancing the near-term needs of employees and long-term needs of the business.


Bringing it all together

During a time when so much is outside our control, understanding what you can control as it relates to the PPP loan will help prepare your business for enhancing loan forgiveness. Here’s what you can control now: calculate the dates and numbers impacting your forgiveness calculation, maintain your documentation, and model out various strategies that demonstrate 100% forgiveness versus a sliding scale of forgiveness. This model should incorporate the numbers you calculated above, along with an updated cash flow forecast. This will enable you to see what levers you can pull to impact longer-term outcomes for your business during and beyond your eight-week covered period.

Please visit the website for more information and to get started on the loan application.


Retirement reforms in the CARES Act

The Coronavirus Aid, Relief, and Economic Security Act, (CARES Act, HR 748), signed into law March 27, 2020 is a $2.2 trillion stimulus package geared towards providing relief for businesses impacted by the COVID-19 pandemic. However, it does contain provisions that change rules about retirement plans for 2020. If you are retired or near retirement, here’s what you should know about.

Temporary Waiver of RMDs

Under §401(a)(9), a retirement plan or IRA owner must take a required minimum distribution (RMD) annually once the owner reaches age 72. However, for the calendar year 2020, CARES waives the required minimum distribution rules for certain defined contribution plans. The wavier applies to all required minimum distributions that would have been required in 2020. This includes the first RMD, which individuals may have delayed from 2019 until April 1, 2020.

Example. John, who is 74 years of age, has an IRA that had a balance of $1,000,000 on Dec. 31, 2019. Using prior law, John’s RMD for 2020 is $42,017.  Currently, his IRA is worth $500,000 and he doesn’t want to sell stock inside of the IRA account to take out an “inflated” RMD amount. CARES allows John to waive his 2020 RMD.

Application. According to CARES, RMD rules do not apply in 2020 to:

  1. defined-contribution plans (§403(a) or §403(b)),
  2. defined-contribution plans that are eligible deferred compensation plans under 457(b) and maintained by an employer, or
  3. individual retirement plans (§401(a)(9)(I)(i)).

Also, the RMD rules do not apply to any distribution required to be made in 2020 because of:

  1. a required beginning date occurring in 2020, and
  2. such distribution not having been made before 2020.

Example. Jill turned 70 ½ in January 2019.  She chose to take her first RMD on April 1, 2020.  Because of CARES, Jill is not required to take an RMD, even this one, in 2020.

Tax practitioner planning. 80% of account owners drew more than their RMD before the pandemic. Clients may need to take more money from their pension accounts, not less.

Remind your clients.  They may take a distribution from their IRA or pension plan in 2020. The new law simply does not require them to take a distribution in 2020.

Waiver of 10% Penalty for Coronavirus-related Distribution

Consistent with previous disaster-related relief provisions, CARES waives the §72(t) 10% early withdrawal penalty for distributions up to $100,000 from qualified retirement accounts for coronavirus-related purposes made on or after Jan. 1, 2020 and before Dec. 31, 2020. Income attributable to such distributions is subject to tax over three years.

Repayments of Coronavirus-related Distributions. A coronavirus-related distribution may, at any time during the 3 years beginning on the day after the date such coronavirus-related distribution was received, be repaid in one or more contributions to an eligible retirement plan in which the qualified individual is a beneficiary. Such repayments will be treated as eligible trustee to trustee rollovers made within 60 days of distribution.

Coronavirus-related distribution. A coronavirus-related distribution is one made to an individual:

  1. who is diagnosed with COVID-19,
  2. whose spouse or dependent is diagnosed with COVID-19, or
  3. who experiences adverse financial consequences as a result of being quarantined, furloughed, laid off, having work hours reduced, being unable to work due to lack of child care due to COVID-19, closing or reducing hours of a business owned or operated by the individual due to COVID-19, or other factors as determined by the Treasury

Qualified Individual. A qualified individual is any individual:

  1. diagnosed with the virus SARS-CoV-2 or with coronavirus COVID-19 by a test approved by the CDC,
  2. whose spouse or §151 defined dependent is similarly diagnosed, or
  3. experiencing adverse financial consequences as a result of being:
    • quarantined,
    • furloughed or laid off or having work hours reduced due to such virus or disease, or
    • unable to work due to lack of child care due to such virus or disease, the closing or reduction of hours in a business owned or operated by the individual due to such virus or disease.

Note. The retirement plan administrator can rely on an employee’s certification that the employee satisfies the conditions of the item (3) above.

Pension Plan Loans

The §4975(d) limit on retirement plan loans from a qualified employer plan made to qualified individuals during the 180 days beginning on March 27, 2020, is increased from $50,000 to $100,000 000 (or, if less, the individual’s nonforfeitable benefit).  If the due date of a loan occurs between March 27, 2020, and Dec. 31, 2020, it will be delayed for one year.


A Breakdown of the CARES ACT Economic Relief Plan

On Friday the President signed the approved Coronavirus Aid, Relief and Economic Security (CARES) Act, a $2.2 trillion dollar aid package that helps provide economic relief to the American economy due to the devastating impact of the COVID-19 pandemic. The CARES Act builds on the two former pieces of legislation by providing more robust support to both individuals and businesses, including changes to tax policy. This massive economic aid bill will include:

  • Expanded unemployment insurance (UI) for workers, including a $600 per week increase in benefits for up to four months and federal funding of UI benefits provided to those not usually eligible for UI, such as the self-employed, independent contractors, and those with limited work history. The federal government will provide temporary full funding of the first week of regular unemployment for states with no waiting period and extend UI benefits for an additional 13 weeks through December 31, 2020, after state UI benefits end.
  • $350 billion allocated for the Paycheck Protection Program, which is meant to help small businesses (fewer than 500 employees) impacted by the pandemic and economic downturn to make payroll and cover other expenses from February 15 to June 30. Notably, small businesses may take out loans up to $10 million—limited to a formula tied to payroll costs—and can cover employees making up to $100,000 per year.
  • Recovery Rebate for individual taxpayers. The bill would provide a $1,200 refundable tax credit for individuals ($2,400 for joint taxpayers). Additionally, taxpayers with children will receive a flat $500 for each child. That means a family of four earning less than $150,000 can expect $3,400. Individuals making more than$99,000 and couples filing jointly making more than $198,000 would not qualify. Rebate payments are based on either your 2018 or 2019 tax filings, and would not be counted as taxable income for recipients, as the rebate is a credit against tax liability and is refundable for taxpayers with no tax liability to offset.
  • Other Individual Tax Benefits include:
    •  a $300 partial above-the-line charitable contribution for filers taking the standard deduction and expands the limit on charitable contributions for itemizers.
    • Waives the 10 percent early withdrawal penalty on retirement account distributions for taxpayers facing virus-related challenges. Withdrawn amounts are taxable over three years, but taxpayers can recontribute the withdrawn funds into their retirement accounts for three years without affecting retirement account caps. Eligible retirement accounts include individual retirement accounts (IRAs), 401Ks and other qualified trusts, certain deferred compensation plans, and qualified annuities. The bill also waives required minimum distribution rules for certain retirement plans in the calendar year 2020.
    • Certain employer payments of student loans on behalf of employees are excluded from taxable income. Employers may contribute up to $5,250 annually toward student loans, and the payments would be excluded from an employee’s income.
  • Business Tax Provisions include:
    • Employers are eligible for a 50 percent refundable payroll tax credit on wages paid up to $10,000 during the crisis. It would be available to employers whose businesses were disrupted due to virus-related shutdowns and firms experiencing a decrease in gross receipts of 50 percent or more when compared to the same quarter last year. The credit is available for employees retained but not currently working due to the crisis for firms with more than 100 employees, and for all employee wages for firms with 100 or fewer employees.
    • Forgivable loans: There is $350 billion allocated for the Small Business Administration to provide loans of up to $10 million per business. Any portion of that loan used to maintain payroll, keep workers on the books or pay for rent, mortgage, and existing debt could be forgiven, provided workers stay employed through the end of June.
    • Relief for existing loans: There is $17 billion to cover six months of payments for small businesses already using SBA loans
    • Employer-side Social Security payroll tax payments may be delayed until January 1, 2021, with 50 percent owed on December 31, 2021, and the other half owed on December 31, 2022. The Social Security Trust Fund will be backfilled by general revenue in the interim period.
    • Firms may take net operating losses (NOLs) earned in 2018, 2019, or 2020 and carry back those losses five years. The NOL limit of 80 percent of taxable income is also suspended, so firms may use NOLs they have to fully offset their taxable income.
    • Firms with tax credit carryforwards and previous alternative minimum tax (AMT) liability can claim larger refundable tax credits than they otherwise could.
    • The net interest deduction limitation, which currently limits businesses’ ability to deduct interest paid on their tax returns to 30 percent of earnings before interest, tax, depreciation, and amortization (EBITDA), has been expanded to 50 percent of EBITDA for 2019 and 2020. This will help businesses increase liquidity if they have debt or must take on more debt during the crisis.
    • Aviation excise taxes are suspended until January 1, 2021. We estimate this will reduce federal revenue by about $8 billion in 2020.
  • $454 billion in emergency lending to businesses, states, and cities through the U.S. Treasury’s Exchange Stabilization Fund. Additionally, this includes $25 billion in lending for airlines, $4 billion in lending for air cargo firms, and $17 billion in lending for firms deemed critical to U.S. national security. Firms taking loans must not engage in stock buybacks for the duration of the loan plus one year and must retain at least 90 percent of its employment level as of March 24, 2020. Loans also come with terms limiting employee compensation and severance pay for firms taking loans. Emergency lending will be overseen by a Congressional Oversight Commission and a Special Inspector General.
  • Health provisions to address the coronavirus crisis, including provisions addressing supply shortages, coverage of diagnostic testing for the virus, support for health-care providers, improving telehealth service access and flexibility, encouragement for the creation of drugs to treat the virus, strengthening related Medicare and Medicaid provisions, and providing support for educational institutions.
  • $150 billion in a Coronavirus Relief Fund for state and city government expenditures incurred due to dealing with the coronavirus public health emergency. The fund would be allocated by population proportions, with a minimum of $1.25 billion for each state.


IRS Extends Filing and Payment Deadline to July 15, 2020

The Treasury Department and the Internal Revenue Service are providing special tax filing and payment relief to individuals and businesses in response to the COVID-19 Outbreak. The filing deadline for tax returns has been extended from April 15 to July 15, 2020. The IRS urges taxpayers who are owed a refund to file as quickly as possible. For those who can't file by the July 15, 2020 deadline, the IRS reminds individual taxpayers that everyone is eligible to request an extension to file their return.


This filing and payment relief includes:

The 2019 income tax filing and payment deadlines for all taxpayers who file and pay their Federal income taxes on April 15, 2020, are automatically extended until July 15, 2020. This relief applies to all individual returns, trusts, and corporations. This relief is automatic, taxpayers do not need to file any additional forms or call the IRS to qualify.

This relief also includes estimated tax payments for tax year 2020 that are due on April 15, 2020.

Penalties and interest will begin to accrue on any remaining unpaid balances as of July 16, 2020. You will automatically avoid interest and penalties on the taxes paid by July 15.

Individual taxpayers who need additional time to file beyond the July 15 deadline can request a filing extension by filing Form 4868 through their tax professional, tax software or using the Free File link on Businesses who need additional time must file Form 7004.


State tax returns

This relief only applies to federal income returns and tax (including tax on self-employment income) payments otherwise due April 15, 2020, not state tax payments or deposits or payments of any other type of federal tax. Taxpayers also will need to file income tax returns in 42 states plus the District of Columbia. State filing and payment deadlines vary and are not always the same as the federal filing deadline. The IRS urges taxpayers to check with their state tax agencies for those details. More information is available at


12 Important Things To Know About Social Security

Social Security trust funds are near an all-time high. The Trust Fund Reserves are worth about $2.89 trillion today. As more boomers retire, the ratio of workers to Social Security recipients is changing. The program will need to dip into its reserves to pay full benefits from now on. It is now forecast that the trust fund reserves could be exhausted in 2034. Social Security still won’t be bankrupt. The program will then pay benefits at a rate of 79 percent of what recipients expected to receive. The goal is to keep benefits at their current level.

Control of Congress after the 2018 elections will play a key role in how Social Security’s funding is addressed. Since Social Security is so important, we need to be really thoughtful and deliberate about how to make change. Bipartisan support will be required for Congress to make any effort to reform Social Security.

One proposal is to either raise or eliminate the wage cap on how much income is subject to the Social Security payroll tax. The cap for 2019 is $132,900. Other options are either raising the percentage rate of the payroll tax or raising the age for full retirement benefits.

Money remaining after benefits are paid is invested directly into U.S. Treasury securities. The government can use the money from those securities, but it has to pay the money back with interest.

With the rapid increase in the number of retirees, the agency is struggling to keep up. Over 10,000 people are turning 65 every day. Average wait times at field offices has increased 32% since 2010. Something needs to be done.


Single filers whose combined annual income exceeds $34,000 might pay income tax on up to 85% of their Social Security benefits; couples filing jointly may pay tax on up to 85% if their combined income tops $44,000.


The SSA says the program’s retirement benefits will replace about 40 percent of your preretirement wages. Fifty percent say their families depend on Social Security for at least half of their income. Twenty-six percent have families trying to live on almost all of their retirement income.


Every year, the SSA issues a cost of living adjustment (COLA) to keep up with inflation. Medical costs for older Americans has increased faster than the COLA has adjusted. This is another area that needs to be addressed.


The agency will withhold some of your benefit if you are under the full retirement age and your earned wages exceed a certain limit. In 2019, the threshold on your earnings will be $17,640. The government will temporarily withhold $1 from your benefit for every $2 earned over the cap. Once you reach full retirement age, you can work as much as you like and your benefits won’t be reduced.

The U.S. Treasury Department no longer sends paper checks in favor of electronic payments. The SSA has an online portal called My Social Security where you can track your benefits.


There are 4 main types of Social Security benefits: retirement, disability, dependent and survivor. When filing for benefits, you should make sure to ask about your eligibility for other benefits. If someone in your family dies, you should inform SSA of th death and ask if you or other family members are now eligible for additional survivor or dependent benefits.


Generally, married couples are more likely to get back more than they contributed than single people. Both low-income and high-income people may receive more dollars from the program over a lifetime than the amount of money they contributed it.


TAX Questions? We've got answers

Here are a few answers some common questions many clients tend to ask. Please contact us for any additional tax questions or concerns.

Q: Can I deduct investment fees I pay this year?
A: No. The schedule A write-off for these costs, IRA custodial fees paid directly by the account owner, and the rest of the popular miscellaneous deductions subject to the 2%-of-AGI threshold are now gone.

Q: My employer paid for my cross-country move. Is the amount taxable to me?
A: Generally, yes. It used to be that when you relocate for a new job, you could deduct moving costs, or if your employer reimbursed you, the payment was tax-free. Well, not anymore, except for active-duty military personnel who move pursuant to military orders.

Q: Is the new opportunity zone program up and running yet?
A: In part. This program, which is included in the new tax law, lets taxpayer defer capital gains from the sale or exchange of business or personal property, including stocks, by investing the proceeds in opportunity funds to help low-income communities. Those who opt to take advantage of this break have 180 days from the date of the sale to invest all or part of the gain proceeds in a so-called qualified opportunity fund.

Q: I inherited real estate from my father in September. If I sell it, will I owe any income tax?
A: Under the current tax rules, you benefit from a step up in basis. The basis for computing a taxable gain or loss from the sale is the value of property on date of death, not original purchase price. Your taxable gain will be limited to the difference between the sale price and the stepped up basis of the property.

Q: Our bookkeeper stole almost $1,000 from our petty cash. Can we deduct the loss?
A: Yes. The 2017 federal Tax Cut and Jobs act did suspend deductions for personal losses but doesn’t touch the losses suffered by a business. Keep police records in case the IRS ever challenges the theft deduction


Fiscal Fitness For the year 2021

Financial planning experts counsel that the new year is an excellent time to do certain key things in evaluating ones investment portfolio.


10 Key Things To Do Now:

1.   Check that you have the right stock-bond mix.

2.   Cut back your investments  to a manageable  number.

3.   Make sure you are saving enough.

4.   Increase the size of your emergency  reserve.

5.   Look into boosting the returns on your cash holdings.

6.   Make the most of tax-favored savings plans.

7.   See whether it's worth paying down your mortgage.

8.   Monitor that your stock portfolio is well diversified.

9.   Get a handle on your annual investment costs.

10.  Determine if your tax bracket justifies owning municipal bonds.


2019 Tax Reform : a few important tax changes you need to know

We hope that 2018 has been a happy and prosperous year for you. As you probably know the President has signed the biggest tax reform law in over 30 years. Your tax return will look very different when you file your 2019 taxes. There will be Tax Rate changes, Standard Deduction increases, disappearing Deductions, and some new benefits for individuals. Here are some of the changes you need to know about :

• Tax return due dates change for Partnership and C Corporations.
• Due date for 2018 returns is April 15th.
• Tax refund fraud and identity theft are an increasing problem. Ignore phone calls that say they
are from the IRS. The IRS never calls. A letter stating you owe money and says to write a
check to the IRS is another scam. Checks always go to U.S. Treasury.
• If you sold any property, be sure to provide copies of escrow statements, loan estimate form
and closing disclosure form.
• 1099's or K-1's from investments in 2018 may require us to extend your returns. There are
increasing numbers of corrected information returns creating amendments and penalty problems.
• Annual Gift Tax Exclusion increases to $15,000 in 2018.
• IRC Sec.179 max is $1,000,000 in 2018.

You can find a complete list of 2019 Tax Rates here. Please feel free to contact me at (702) 998-0224 if you have any questions or need additional information. Network Tax Solutions "Helping You Keep More of the Money You Make!

Financially yours,
Esta Klatzkin, EA


5 Things To Do To Have A Solid Financial Groundwork By Age 30

1. Make a budget to track your income and expenses.

2. Begin a Retirement Account.

3. Have Savings for an emergency (rainy day account).

4. Have Zero Credit Card Debt.

5. Designate Beneficiaries for all your accounts including Life Insurance.


Eight Signs That It's Time to Get a New Tax Professional

Now is a good time to think about your relationship with your tax professional and make sure that it is a good fit. To help you decide, here are 8 signs that it might be time to get a new tax professional.

1. She's never prepared. It is unrealistic to expect that your tax professional has your file at the ready every time you call. But, part of the appeal of using the same tax professional over time is that your tax professional knows your financial story. If you're constantly having to remind her about the specifics of your situation, it may be a sign that the relationship is one-sided. A basic understanding of your financial picture and your goals is desirable. If she can't be bothered to familiarize herself with that information before a meeting or call, consider finding someone who will.

2. He doesn't have a PTIN. Anyone who prepares or assists in preparing federal tax returns for compensation must have a valid PTIN before preparing returns. The best way to ensure that your preparer has a PTIN is to ask. You can also search the IRS online PTIN directory.

3. She pressures you to be too aggressive. Part of being a good tax professional involves being proactive and suggesting how to improve your life as a taxpayer. But it always means being honest and doing what is legally correct.

4. He doesn't know the rules. You shouldn't realistically expect your tax professional to be able to cite IRS Regs on command or quote from an IRS Pub. Your tax professional should be familiar with the basics. If your tax professional is constantly struggling to answer your questions or can't seem to interpret correspondence from IRS, then find someone who is willing to do their homework. Credentialed tax professionals like Enrolled Agents and Certified Public Accountants are required to take extra tax courses throughout the year to stay on top of an ever-changing and expanding Tax Code. If your tax professional doesn't seem to know much beyond data entry, it might be time to switch.

5. She doesn't return phone calls or e-mail. I'm a firm believer that regular communication is important. Demanding immediate service is going overboard. But your tax professional should be able to respond within a reasonable amount of time. If you find yourself waiting days for that return phone call, consider finding someone who will respond to you in a more timely fashion.

6. He doesn't play well with others. Your tax professional is not an island. He should be part of a team (investment advisor, insurance broker, attorney, etc.) that you can trust to carry out a plan from start to finish. There are questions that may require that your tax professional interact with others on your team. If he seems reluctant, it may be time to ask some difficult questions.

7. She can't explain why the cost of services is always changing. Costs do go up. It's not unfair or unlikely that the cost of preparing your return or other tax related services might increase from time to time. If prices are often volatile, it's time to ask questions. Prices that constantly spike and fall without warning might be an indication that there is some financial stress inside the office. Always get your pricing schedule in writing and if your tax professional isn't willing to talk cost with you, time to move on.

8. He's under indictment. It happens. Trust me. An indictment isn't the same as a conviction. It's simply a formal charge. If you have any concerns about your tax professional's ability to do his job honestly, run far, far away.


Do you have a job or a career?

“Choose a job you love, and you will never have to work a day in your life.” – Confucius

Most people have jobs.  They faithfully go to work each morning, do their best to execute their duties, come home tired, and look forward to weekends and vacations. They do this to make ends meet, hoping something better will come along.  And better things do come now and then, along with setbacks.  But the drudgery continues.  Week in. Week out.  Forty years pass.  Life has been half miserable.  But it’s time for retirement.

Retirement means getting out of job jail. No more hated work.  It’s now time for relaxation and fun. 
Just kidding! As it turns out, retirement today is this:  After giving up a fairly well-paid full-time job, you take on several poorly paid part-time jobs (without benefits) to pay for your ever-increasing retirement expenses. But it doesn’t have to be that way. 

You can spare yourself the misery by ditching the job early on and replacing it with a career. What’s the difference?  A career is a life’s vocation. You work a job to make money. You work a career to build something you value.  With a job, you are always thinking about the time you won’t be working.  With a career, you are always thinking about it even when you aren’t working. 

The reason for this is a matter of focus.  A job looks inward: “I do this to make money for myself.”  A career looks outward:  “I am building  something  that others can appreciate or use.” The litmus test for determining whether you have a job or a career is this question:  If you could afford to, would you do it for free? You shouldn’t work for money.  You should work on having a career.

If you don’t like your work but are doing it because you have to support  yourself and/or a family, start working on a Plan B.  Plan B is titled: “Doing Something I Care About.” Measured in mundane, day-to-day terms, having a career can be challenging since you are constantly focused on the work, and the work sometimes does not go as well as you might want.  But even when the work is frustrating, it involves you in a way that is somehow satisfying.  And when the work goes well, there’s nothing like it.

If you have a job now, can you transform it into a career?  Well, it may depend on what you are doing. 
So that is the first and main thing.  But there are requirements for your work to be a career:

  • The work should be challenging.  It should require the best of you – your intelligence, your intuition, your stamina, and your care.  Ideally, it should require both knowledge and skill and thus give you the opportunity to learn and improve forever.
  • It should produce things or provide services that are enjoyable and/or useful to other people.  This adds a social component to the experience.
  • It should be accretive.  That is, the value of the goods or services you produce should increase as your career continues.

Not everyone can make a career out of his or her job.  An architect certainly could. Instead of designing commercial crap for the highest bidder, she could gradually develop her own style, one that she likes and that would serve people, and she could produce work over her lifetime that would endure for generations.

Think about it.  Start creating your Plan B.  Satisfaction comes from doing something you care about.  And if you can make money for 40 years doing something you care about and creating something that has value to others – you have a career! 


Made a mistake or overpaid? Amend your Tax Return

You must file an amended return (Form 1040X) if there has been a change in your filing status, income, tax deductions, or tax credits reported on your original return. There are other reasons for amending a return as well. For example, you may not have had complete information at the time you filed. Or, you may have been unaware that a certain item was taxable and then you received a reporting document indicating otherwise.

The procedure for filing an amended return is relatively straightforward. Note that you can only file an amended return after you’ve filed your original return. Additionally, you cannot e-file an amended return — you will have to mail it in. To begin, you will need IRS Form 1040X (Amended U.S. Individual Income Tax Return).

Form 1040X contains 3 columns. In Column A, you’ll need to provide the amounts you entered on the original tax return. In Column C, you must provide the corrected figures. In Column B, enter the “net change” from Column A to Column C, which is the difference between the two amounts. On the second page of the form, you must explain each change, taking care to make the information as complete as you can (so the IRS can process your amended return as quickly as possible).

Did you pay too much on last year's tax reutrn? Now that you filed last year's tax return, we can look it over at no charge. If we find that we can help you save more money, we will! Absolutely no obligation. Give us a call today! 702.998.0224


Hugging is Good Medicine

What does hugging do?

It transfers energy and gives the person hugged an emotional lift.

You need four hugs a day for survival, eight for maintenance, and twelve for growth. Scientists say that hugging is a form of communication because it can say things you don't have the words for. And the nicest thing about a hug is that you usually can't give one without getting one.

Hugging is healthy. It helps the body's immune system. It cures depression. It reduces stress. It's rejuvenating. It has no unpleasant side effects. It is God's miracle drug! It is all natural, it contains no chemicals, artificial ingredients, no pesticides, and no preservatives!

Hugging is practically perfect. There are no parts to break down, no monthly payments, non-taxable, non-polluting, and of course - fully returnable!


I Need a Clever Tax Pro

I need a clever tax pro
One with a nimble mind
Someone who thinks like I do
Who'll cover my behind

My pro must understand me
And never cause a fuss
My details may be fuzzy
But she'll curb the urge to cuss

We won't count Mom's deposit
Coming from the SSA
For five years I've enjoyed it
Ever since she passed away

It turns up just like clockwork
I just can't make it stop
A plea to call it off
Would cause a needless income drop

My home's a custom call site
For an extra little gig
My nifty IRS badge
Helps legitimize the jig

My pug is my true business
I therefore write him off
He's lavished with deductibles
At which most pros would scoff

My tax pro won't be bothered 
To check out what I say
She'll get me every credit
And make my tax go ‘way

She'll prove she's indispensable
And worth her weight in salt
But when we go to Tax Court
I'll say it's all her fault


Top 12 Tax Return Preparation Errors

  1. Number of transposition  and spelling errors.  This includes Social Security  numbers, addresses, etc.

  2. Unreported  1099 income.

  3. Tax payments. Client must provide proof.  Incorrect amounts  is a major cause of tax notices.

  4. Keeping review notes after the return is completed.  This can create liability issues.

  5. Not correcting  reason for tax notices for prior year on this year's return.

  6. Not questioning numbers that stretch the imagination.

  7. Not following up enough with clients to get missing information.

  8. Not specifically asking clients if they have, can sign or control a foreign bank account.

  9. Not telling clients about items that aren't  on return, such as IRA 's, flex spending, charitable contributions with appreciated stock, etc.

  10. High mortgage interest deductions.  This is a red flag for the IRS.

  11. Alternative minimum  tax. Watch for unapplied AMT credits and NOL 's and state tax refunds reported as income though not deducted in prior years because of AMT.

  12. Not calling a client to give them unexpected final results.

The Top 10 Most Endangered Jobs in America

We knew it was happening: Automation is changing the way America works. Here are 10 jobs that could see big changes as a result.

Based on the job search platform CareerCast's new report of the 10 jobs with the worst growth outlook between now and 2024 found U.S. postal worker are the most endangered. Like many of the other positions on the list, automation is mostly to blame. But the bots can't shoulder all the blame for lost jobs in America; market preferences and cost-efficient outsourcing are just as responsible. While automated sorting and delivery has undoubtedly taken a toll on the career trajectory of mail carriers, whose jobs the report says will decline 28 percent by 2024 to become the most endangered job in America, the biggest culprit is email, text messaging, and social media. The low-cost platforms have become preferred ways to stay in touch for many. And that grim job outlook for jewelers and seamstresses? It's partially due to the cost saving benefits of outsourcing these roles.

Here's the full list of the top 10 endangered jobs in America, in order of expected decline in job growth outlook by 2024:

  1. Mail Carrier

  2. Typist/Word Processor

  3. Meter Reader

  4. Disc Jockey

  5. Jeweler

  6. Insurance Underwriter

  7. Seamstress/Tailor

  8. Broadcaster

  9. Newspaper Reporter

  10. Computer Programmer

-Originally published in


5 Highest Property Tax Cities

Bridgeport,  CT     


Detroit, MI



Aurora, IL    



Newark, NJ 



Milwaukee,  WI





5 Lowest Property Tax Cities

Boston, MA


Birmingham, AL



Denver, CO



Cheyenne,  WY



Honolulu, HI





Why You Should Never Do Your Own Taxes

Never do your own taxes. The U.S. tax system is overly complicated. Until that gets reformed, don’t do your own taxes. You might save a few hundred bucks by using TurboTax instead of hiring an accountant but you will lose thousands in the long run. As you start to make more money, get married, buy a home, invest in stocks, run other businesses and so on, your taxes will continue to get more complicated. The bad news is that there will be lots more paperwork. The good news is that there will be a lot more loopholes that you can use to your advantage. Not only will you save time and avoid audits by using a CPA, you will essentially be increasing your annual income. So, is a CPA telling you it's going to cost $500 to do your taxes? Trust me…smile and pay them.

-Len Kendall "Get ready to retire at 50…Not because you want to but because you'll have to."



15 Worst places to retire

  1.  Washington, DC            9.  Utah   
  2.  California                     10.  Texas 
  3.  New Mexico                11.  Illinois 
  4.  New York                   12.  Montana
  5.  Minnesota                    13.  Maryland
  6.  North Carolina             14.  Massachusetts                
  7.  Nebraska                     15.  Indiana


10 Best places to retire

  1.  Delaware                     6.  Arizona       
  2.  Florida                         7.  Hawaii
  3.  West Virginia               8.  Iowa
  4.  Pennsylvania                9.  Kansas
  5.  South Dakota              10.  Wyoming





1. Wyoming
2. Alaska
3. South Dakota
4. Texas
5. Louisiana
6. Tennessee
7. New Hampshire
8. Nevada
9. South Carolina
10. Alabama
11. Mississippi
12. Oklahoma
13. Minnesota
14. New Mexico
15. North Dakota
16. Georgia
17. Arizona
18. Missouri
19. Colorado
20. Florida
21. Virginia
22. Iowa
23. Utah
24. Washington
25. Kansas

26.  Nebraska
27.  Idaho
28.  Kentucky
29.  Indiana
30.  Michigan
31.  Hawaii
32.  West Virginia
33.  Ohio
34.  North Carolina
35.  Oregon
36.  Delaware
37.  Maine
38.  Illinois
39.  Arkansas
40.  Massachusetts
41.  Pennsylvania
42.  Vermont
43.  Rhode Island
44.  Maryland
45.  Minnesota
46.  Wisconsin
47.  California
48.  Connecticut
49.  New Jersey
50.  New York



Five Financial Lessons For Your Children

One of the greatest lessons you can pass on to your children is teaching them how to budget,
save, and spend wisely. Some basic money value concepts are:

1. Money isn't free -you have to earn it
The saying, "Money doesn't grow on trees" means that we have to find ways to earn
money in order to be able to spend money. Helping children understand the value of
work can be one of the most important lessons they will learn.

2. Take money seriously
Money is something that should be handled carefully. Teach your kids to be wise about
their purchases. The value of their hard earned dollars should be appreciated.

3. Saving money builds a better future
It is easy for young people to get excited about having money and coming up with ways
to spend it. _It's important to demonstrate how saving for a particular goal can result in a
big payoff. Help your kids find a specific spending .goal and encourage them to set aside
money to meet that goal, like saving for college.

4. Don' t spend what you don't have
Since credit is easily obtained, help your children understand how to live within a budget.
Discuss when it may be acceptable to take on debt, such as making payments on a car.
Teach them how to calculate payments that are well within their grasp, so that your kids
can remain in control of their debt in the future.

5. Time is on your side
As you begin to talk to your children about investing, emphasize the biggest financial
advantage they have - time. The sooner they can begin setting money aside for a larger
goal, the more their money can work for them. Discuss the benefits of saving on a
regular basis.

These points can help your children set a solid foundation for their financial future. Keep in
mind that one of the best ways to make financial lessons stick is to live by them yourself.


Get Your Financial House In Order

Tips for each month that can help you reduce fees, lower the cost of insurance and thwart identity theft.

File your taxes ASAP. The earlier you file your taxes, the less likely a thief will beat you to the punch, claiming a refund using your stolen Social Security number.

Prep for bigger payments. If you are among the millions who took out a home equity line of
credit before the housing bust, your monthly payment could soon jump by hundreds of dollars.
These loans usually allow interest-only payments for the first 10 years, then require borrowers
to begin repaying principal too.

Convert to a Roth. Consider taking advantage of falling stock prices to transfer some shares
from a traditional IRA into a tax-friendly Roth IRA. You'll pay ordinary income tax on the value of the shares transferred. Once in the Roth, those shares will recover and future gains won't be taxable.

Fund a Health Savings Account. More employers offer a high-deductible health plan combined
with this savings account. You have until April 15 to contribute for 2019. Individuals can invest
$3,500 pretax and $7,00 for families- plus another $1,000 if age 55 and up. Monies from this account can be withdrawn tax-free to pay medical expenses. Money used for non-medical expenses will be taxed and if under age 65 will be charged a 20% penalty.

Build an emergency fund. You should know about setting aside 3 to 6 months' worth of living expenses to pay for unexpected expenses. One out of five people ages 50 to 64 raided their retirement savings last year to pay for an emergency. Those withdrawals can trigger taxes as well as penalties. Build that "rainy day account" today.

Check those fees. How much of the money in your 401K, and IRAs is being eaten up by fees?
Most people thought they didn't pay anything. If you don't know how much you are paying, you are probably paying too much! Get that information now by checking, a free service.

Fix your credit card. Most cards have a variable interest rate. If you carry a balance, look for a low fixed-rate card which can save you money as well as hedge against future rate hikes by the
Federal Reserve.

Crunch your net worth. This simple yet critical check-up should be done every year to show you
where you stand financially. Add up all your assets, and then subtract your liabilities. This is
your net worth. You can use an online calculator at to help determine your net
worth. If your net worth keeps dropping year after year, do something to control your spending.
See your financial advisor, CPA or Enrolled Agent to assist you.

Shop for insurance. Insurance premiums should be reviewed annually. If you become
complacent, some insurance companies will set premiums using "price optimization," charging
as much as 25% more if they think you are not shopping coverage elsewhere.

Open enrollment. Buying health insurance through a state-sponsored exchange starts Oct. 15
and runs through Dec.7. You MUST have insurance either from your employer, an exchange or
be self-insured. The penalty for not being insured is steep, and rising annually. The flat dollar penalty will be adjusted annually for inflation.

Break up with your bank. Is your bank taking you for granted? Paying nothing on savings and
charging you for checking? Maybe it is time to switch! There may be better alternatives. Free
checking is available at credit unions, online banks and small community banks. Many online
banks pay more than 1% on savings requiring no minimum deposits. Search for federally
insured online banks at

Sell those gift cards. About one quarter of people who receive a gift card have yet to spend it
after one year. Don't let cards go to waste. If you are not going to use them, sell the cards for a
discount at, or


Should your Small Business Create a Blog?

As a small business owner trying to keep shelves stocked, employees paid, and customers satisfied, why should you create a web log or "blog"? What if you've already got a website? What blogging pitfalls should you avoid? And, most importantly, what will a blog cost in terms of time and dollars?

  • The benefits of blogging Like a personal journal that's posted to the Internet, a blog is simply a place for sharing ideas about your business. Easier to update than a website, a blog offers an inexpensive way to talk directly to customers via text, audio, or video. With a blog you don't have to learn web design or hire someone to create web pages. Timely feedback from your readers can provide ideas for targeting products and services to address specific customer needs — like standing at the service counter and chatting with regular patrons. Blogging sites such as and are good places to visit for software tools and ideas.
  • Drawbacks Don't expect more from a blog than it can reasonably produce. A blog is not a substitute for a website. A blog, for example, generally won't provide the functionality to allow online purchasing, and its contribution to your bottom line may be difficult to measure. Like a magazine article, a blog is primarily a place to communicate ideas.
  • Pitfalls If you're publishing a blog for general consumption, it should be well-written. Grammatical errors, poor punctuation, spelling mistakes — these can damage your business reputation, causing readers to question the quality of your products and services. Don't use a blog as a forum for in-your-face sales. Its purpose is to inform, to build relationships, to connect. And don't leave it static. Vary your blog's content routinely by adding links to helpful resources, video interviews, and podcasts.
  • Costs Besides minimal subscription expense for a business blogging site, time will be your biggest expenditure. By allocating the task of blog updates among several employees — with final edits by a good writer — you can ensure that content stays fresh, readers remain engaged, and a single employee isn't saddled with blogging duty. You might start by updating posts every other week, increasing your frequency later.

Like any new product or promotion, a business blog probably won't generate revenue right away. So be patient and find a format that works well for your company.


The Tax System Explained in Beer

Suppose that once a week, ten men go out for beer and the bill for all ten comes to £100.If they paid their bill the way we pay our taxes, it would go something like this..

The first four men (the poorest) would pay nothing.
The fifth would pay £1.
The sixth would pay £3.
The seventh would pay £7.
The eighth would pay £12.
The ninth would pay £18.
And the tenth man (the richest) would pay £59.
So, that ' s what they decided to do.

The ten men drank in the bar every week and seemed quite happy with the arrangement until, one day, the owner caused them a little problem. "Since you are all such good customers," he said, "I'm going to reduce the cost of your weekly beer by £20.” Drinks for the ten men would now cost just £80.

The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free but what about the other six men? The paying customers? How could they divide the £20 windfall so that everyone would get his fair share? They realized that £20 divided by six is £3.33 but if they subtracted that from everybody's share then not only would the first four men still be drinking for free but the fifth and sixth man would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fairer to reduce each man's bill by a higher percentage. They decided to follow the principle of the tax system they had been using and he proceeded to work out the amounts he suggested that each should now pay.

And so, the fifth man, like the first four, now paid nothing (a100% saving).
The sixth man now paid £2 instead of £3 (a 33% saving).
The seventh man now paid £5 instead of £7 (a 28% saving).
The eighth man now paid £9 instead of £12 (a 25% saving).
The ninth man now paid £14 instead of £18 (a 22% saving).
And the tenth man now paid £49 instead of £59 (a 16% saving).
Each of the last six was better off than before with the first four continuing to drink for free.

But, once outside the bar, the men began to compare their savings. "I only got £1 out of the £20 saving," declared the sixth man. He pointed to the tenth man, "but he got £10!"
"Yeah, that's right," exclaimed the fifth man. "I only saved a £1 too. It's unfair that he got ten times more benefit than me!"
"That's true!" shouted the seventh man. "Why should he get £10 back, when I only got £2? The wealthy get all the breaks!"
"Wait a minute," yelled the first four men in unison, "we didn't get anything at all. This new tax system exploits the poor!" The nine men surrounded the tenth and beat him up.

The next week the tenth man didn't show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important - they didn't have enough money between all of them to pay for even half of the bill!

And that, boys and girls, journalists and government ministers, is how our tax system works. The people who already pay the highest taxes will naturally get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy and they just might not show up anymore. In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier.


David R. Kamerschen, Ph.D.
Professor of Economics.
For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible

Esta Klatzkin, EA
Network Tax Solutions
"Helping You Keep More of the Money You Make"





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