My dead relative received a stimulus check. What do I do?

05-10-2020Tax Information

On May 6, 2020, the IRS came out with the following guidance for Economic Stimulus checks sent to dead people.  The whole answer is at www.irs.gov/coronavirus/economic-impact-payment-information-center#more (See question 41)

In summary,

A Payment made to someone who died before receipt of the Payment should be returned to the IRS in full.  For payments made to joint filers and one spouse had not died before receipt of the Payment, you only need to return the portion of the Payment made on account of the decedent. This amount will be $1,200 unless adjusted gross income exceeded $150,000.

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CARES Act Retirement Plan Relief Provisions

04-24-2020Retirement

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020.

For those seeking access to their retirement funds, these include special provisions for coronavirus-related distributions and loans. For those seeking to preserve their retirement funds, certain required minimum distributions from retirement funds have been suspended.

Coronavirus-related distributions

A 10% penalty tax generally applies to distributions from an employer retirement plan or individual retirement account (IRA) before age 59½ unless an exception applies. Due to the coronavirus pandemic, the penalty tax will not apply to up to $100,000 of coronavirus-related distributions to an individual during 2020. Additionally, income resulting from a coronavirus-related distribution is spread over a three-year period for tax purposes unless an individual elects otherwise. Coronavirus-related distributions can also be paid back to an eligible retirement plan within three years of the day after the distribution was received.

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IRS Economic impact payments: What you need to know

03-31-2020Tax Information

The Treasury Department is working on a web-based portal (www.irs.gov) that will allow individuals to submit direct deposit details in order to “receive payments immediately as opposed to checks in the mail.”  Treasury Secretary Steven Mnuchin said Friday that people can expect to receive their checks in three weeks – April 17 is when the direct deposits will go into people’s accounts.  A check in the mail could take longer.

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CARES Act Summary Article

03-29-2020Legislation

The Coronavirus Aid, Relief, and Economic Security Act (CARES) (P.L. 116-136), signed into law March 27, features several different relief programs to help businesses stay afloat, but some of them are mutually exclusive, meaning business owners need to understand each one.

Like you, our firm is monitoring the situation and awaiting guidance from the IRS to implement many of these provisions. In addition, our firm needs to await software companies to make coding changes to allow us to process some of these provisions for our clients.

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IRS Economic impact payments: What you need to know

03-31-2020Tax Information

The Treasury Department is working on a web-based portal (www.irs.gov) that will allow individuals to submit direct deposit details in order to “receive payments immediately as opposed to checks in the mail.”  Treasury Secretary Steven Mnuchin said Friday that people can expect to receive their checks in three weeks – April 17 is when the direct deposits will go into people’s accounts.  A check in the mail could take longer.

READ MORE

CARES Act Summary Article

03-29-2020Legislation

The Coronavirus Aid, Relief, and Economic Security Act (CARES) (P.L. 116-136), signed into law March 27, features several different relief programs to help businesses stay afloat, but some of them are mutually exclusive, meaning business owners need to understand each one.

Like you, our firm is monitoring the situation and awaiting guidance from the IRS to implement many of these provisions. In addition, our firm needs to await software companies to make coding changes to allow us to process some of these provisions for our clients.

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Charitable Donations

02-20-2020Tax Information

When it comes to tax planning, there are few more emotionally charged decisions than those around charitable giving. People tend to have deep, personal attachments to the causes they support and may have been donating to their chosen charity for years or even decades. They see their donations as a vital way to give back to society and to feel connected to a broader community, whether it be on a local, national or even spiritual level.

Any good financial adviser understands that it’s hard for clients to make a pragmatic cost-benefit analysis around such personal decisions. However, it’s our responsibility to make sure that clients understand how to optimize their charitable donations and ensure that they’re getting the most bang for their buck, both for their charitable causes and their own personal tax benefit. And there’s no better time to do that than at the beginning of the year, after the mad scramble around the holidays has died down.

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The need to properly document travel deductions for tax purposes

02-06-2020Tax Information

You are generally entitled to deduct the cost of your travel expenses, within certain limits. But the tax law imposes strict substantiation requirements. Recently, the Tax Court denied a deduction because the taxpayer didn’t establish the requisite relationship between his business and the travel expenses. (Near, TC Memo 2020-10, 1/14/20)

Most self-employed individuals can deduct ordinary and necessary expenses incurred when traveling on business. This includes transportation costs back and forth from your business destination, as well as any business-related expenses at your business destination, such as lodging. The full amount is deductible if the trip is completely business-related.

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Key Changes to 2019 Arizona Income Tax Returns

01-30-2020Tax Information

The individual income tax filing season for state and federal returns opened this week. Here are some key changes when filing for 2019 tax year.

  • Matches the federal standard deduction amount
    • $12,200 single/married filing separate
    • $18,350 head of household
    • $24,400 married filing joint
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