Educator Expense Deduction – Did You Know?
If you are a teacher, principal, counselor, or classroom aide who works at least 900 hours a year in a state-accredited school (grades K-12), you may qualify for the Educator Expense Deduction. This IRS rule allows you to deduct up to $250 on your tax forms ($500 for joint filers who are both educators, but not more than $250 each) for classroom supplies that you purchase at your own expense.
Allowed expenses include traditional school supplies like rulers and markers, computer equipment and software, along with specialty items like athletic gear for physical education classes. A qualified tax advisor can help you determine which of your expenses qualify for the deduction.
You may not have to itemize deductions in order to claim the Educator Expense Deduction, but the IRS does require that you have written evidence for every expense. During this hectic back-to-school period when classroom expenses are most likely to occur, it is important to remember to save your receipts.
Quarterly Estimated Tax Payments - Reminder
If you are making quarterly estimated tax payments to the IRS, the due date for the June 1 - August 31 quarter of the year is September 15.
For payments made using IRS Direct Pay, you can make payments until 8PM EST, and for payments using a credit or debit card, payments can be made up to midnight on the due date.
If the due date for making an estimated tax payment falls on a Saturday, Sunday, or legal holiday, the payment will be considered on time if you make it on the next day that's not a Saturday, Sunday, or legal holiday.
MESSENGER
Wheeler's Tax Service updated their info in the about section.
Renewing ITINs - Did You Know?
Individual Taxpayer Identification Numbers are used for taxpayers who are required for U.S. tax purposes to have a U.S. taxpayer identification number but do not qualify to get a social security number.
If you use an ITIN, you should check if it expires this year. If it does, information about how to renew your ITIN can be found at: https://www.irs.gov/credits-deductions/individuals/how-do-i-renew-my-itin. Keeping your ITIN current helps avoid tax refund and processing delays.
Taxpayers who have not used their ITIN to file a federal return at least once in the last three years will see their number expire Dec. 31, 2020. ITINs with middle digits 90, 91, 92, 94, 95, 96, 97, 98 or 99, that were assigned before 2013 and have not already been renewed, will also expire at the end of the year.
Giving Tuesday and Charitable Donations - Did You Know?
Giving Tuesday is an annual event that highlights charitable giving after Thanksgiving.
If you are considering charitable donations, you may be able to donate to a Donor-Advised Fund (DAF) every two or three years instead of every year. This may qualify you to receive tax benefits now, allow the amount to grow tax-free, and the decision on which qualified charity to fund can be made later.
If you are 70.5 years or older, you may also be able to make a qualified charitable distribution (QCD) directly from your IRA this year. QCDs may allow the donation to be deducted from your income. A tax advisor can help you structure your charitable giving.
The IRS has released a tool to make it easier to get information about qualified charitable organizations. The Exempt Organizations Select Check tool can be found at: https://www.irs.gov/charities-non-profits/tax-exempt-organization-search.
'Tis the Season for Important Tax Paperwork
Keeping your records organized will help make sure you don't miss out on valuable deductions when it is time to file.
Some documents to be on the lookout for:
- Wage and income statements (like W-2 or 1099-MISC)
- Health Insurance statements (like Form 1095)
- Proof of qualifying educational expenses (like Form 1098-T)
- Mortgage interest statements
- Retirement distribution statements
- Investment account statements
- Charity donation receipts
Update on the additional Tax Stimulus Payments: Payments are going out now. Should be $600 for the taxpayer, $600 for the spouse, and $600 for each child under 17 on the 2019 tax return.
What we know:
1. The credit phases out if your income is more then $150k for a joint return and $75k for all other statuses.
2. There is no way at this point to tell the IRS a different bank account number then what was used for the payment earlier in the year. Payments will go out by the same method as before, to the same banks, and to the same address.
3. Payments will be based on the $$$ on your 2019 tax return. If you have not filed a 2019 return of it was filed recently and had to be mailed, there is no way to get that processed between now and the deadline.
4. All payments must be made/deposited/mailed out by NLT 1/15/21 (yes two weeks from now) or they will have to be claimed on the 2020 tax return when it is filed.
5. If you did not get a payment earlier in the year for any reason other then not filing a 2018 or 2019 tax return, you will probably not get one this time around.
6. If you did not get either or both payments you can claim them as a credit on your 2020 tax return when you file it in the next couple of months.
What we don't know (and neither does anyone else, including anyone you could speak to at the IRS):
1. When or if you specifically are going to get your check/deposit. There is supposed to be a tool on the IRS website in the next few weeks that will tell you all that, https://www.irs.gov/coronavirus/economic-impact-payments but it is not currently turned on.
2. If the amounts will increase to the $2k that is being talked about on TV, call your Senator as it is in the Senate for them to pass right now.
3. Your tax professional can't confirm or deny anything other then what is listed above for you until the IRS issues some type of additional guidance.
Thanks, and Happy New Year, signed: Your Tax Professional.
Feel free to share!
Last night, President Trump signed the Consolidated Appropriations Act that Congress passed a week ago. This bill includes a number of stimulus relief provisions. Here are some of the highlights:
~ Additional Economic Impact Payments in the amount of $600 per individual or $1200 per married couple, with $600 per dependent that qualifies for Child Tax Credit (under age 17). If your 2019 AGI exceeds $75,000 for a single person, $112,500 for head of household, or $150,000 for married filing jointly, the payment will be reduced by 5% of the difference between your AGI and the income threshold for your filing status.
~Federal unemployment benefits have been extended. Remember that unemployment benefits are taxable, and WI requires you to go online to get your 1099-G reporting how much received. The 1099-G will be available on the unemployment website beginning in mid January.
~Businesses that received EIDL grants and PPP loans do not need to reduce their PPP forgiveness by the amount of the grant. Additionally, expenses paid with the forgiven PPP funds are now deductible business expenses.
~Energy credits for solar energy have been extended, as has the credit for energy efficient property (windows, doors, hot water heater, furnace, air conditioner)
~Taxpayers who take the standard deduction can also take an above the line deduction for cash charitable donations up to $300. This deduction will be available for 2021 as well.
These are just some of the highlights of the more than 5,000 page bill. If you have questions related to your individual situation, please call our office. We are currently closed for the holidays, but will reopen on January 4th at 9am.
MESSENGER
Wheeler's Tax Service updated their business hours.
Quarterly Estimated Tax Payments - Reminder
If you are making quarterly estimated tax payments to the IRS, the due date for the September 1st - December 31st quarter of the year is January 15th. You may be able to skip the January 15 payment if you file your 2020 return by February 1, 2021 and pay all tax due.
For payments made using IRS Direct Pay, you can make payments until 8PM EST, and for payments using a credit or debit card, payments can be made up to midnight on the due date.
Tax Filing Season Start - Did You Know?
The IRS has announced that the individual tax filing season will start on Friday, February 12, 2021 and the current deadline to file 2020 tax returns and pay any taxes owed is Thursday, April 15, 2021.
Although the IRS systems open for processing on February 12, you do not have to wait until then to begin preparing for your tax return.
Our phones are working again. We apologize for any inconvenience while they were unavailable.
We are currently experiencing technical difficulty with our phone system. If you need to reach us, please email us at info@wheelerstax.com. We apologize for the inconvenience.
2021 Mileage Rate Changes
Starting on Jan. 1, 2021, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
- 56 cents per mile of business travel driven, a decrease of 1.5 cents from the rate for 2020.
- 16 cents per mile driven for medical or moving purposes (for qualified active duty members of the Armed Forces), a decrease of 1 cent from the rate for 2020.
- 14 cents per mile driven in service of charitable organizations, remaining unchanged from 2020.
You may also have the option of calculating the actual costs of using your vehicle rather than using the standard mileage rates.
How to Set Yourself Up for a Hassle-Free Tax Season (1/4)
By taking a few simple steps now, you can greatly reduce uncertainty and stress during the 2020 tax filing season. These actions will help set you up to complete your return efficiently, without unpleasant surprises:
Gather Documents Showing Wage, Business And Other Income
If you work as an employee, you should receive a W-2 from your employer(s) by early February, showing your earnings for the year and the total tax withheld from your paychecks. If you are self-employed (including gig economy work) or own a business, you should receive 1099 forms from your clients showing fees paid to you.
Interest and dividend income, along with royalties from past work, are also reported on 1099 forms. Recipients of unemployment benefits (including $600 federal Pandemic Unemployment Assistance payments) and/or taxable Social Security benefits should receive a year-end statement detailing these payments as well. Store all of these documents with your tax records.
How to Set Yourself Up for a Hassle-Free Tax Season (3/4)
By taking a few simple steps now, you can greatly reduce uncertainty and stress during the 2020 tax filing season. These actions will help set you up to complete your return efficiently, without unpleasant surprises:
Be Aware of Refund Interest And Stimulus Payments
Because the processing of some tax refunds was delayed in 2020 due to the pandemic, the IRS paid interest to many refund recipients. Unlike refunds themselves, these interest payments are classified as taxable income. If you received a tax refund interest payment, the IRS will send you Form 1099-INT in January, which you will need when preparing your return.
Recipients of a 2020 Economic Income Payment (EIP, also called a stimulus payment) should have also received IRS Notice 1444, Your Economic Impact Payment. Make sure to keep this notice handy. If your EIP amount was lower than it should have been, Notice 1444 will give you the information you need to claim a tax refund for the balance owed to you.
How to Set Yourself Up for a Hassle-Free Tax Season (2/4)
By taking a few simple steps now, you can greatly reduce uncertainty and stress during the 2020 tax filing season. These actions will help set you up to complete your return efficiently, without unpleasant surprises:
Organize Records of Other Potentially Taxable Transactions
The sale of major assets like stock, a house or any other “big ticket” item may yield a taxable capital gain. Many cryptocurrency transactions (such as buying and selling Bitcoin) also have tax implications, since the IRS classifies cryptocurrencies as property. Make sure you have complete records of all your significant financial and property transactions during 2020.
How to Set Yourself Up for a Hassle-Free Tax Season (4/4)
By taking a few simple steps now, you can greatly reduce uncertainty and stress during the 2020 tax filing season. These actions will help set you up to complete your return efficiently, without unpleasant surprises:
Start Early!
The IRS opens for tax filing season tomorrow, February 12th. With all the unpredictability of life during a pandemic, staying ahead of the tax game is more important than ever. Assemble your records as soon as possible. If you have any questions, a tax advisor can help you identify and organize the documents you need. Tax professionals will have far greater availability early in the tax season than at the last minute.
Unfortunately, one of our staff members has tested positive for Covid-19. We will be closed to the public for at least one week. If you have an appointment scheduled within the next week, you will be contacted soon about your options.
Where's My Refund? - Did You Know?
You can use the IRS 'Where's my Refund' (https://www.irs.gov/refunds) tool to check the status of your refund. The 'Where's my Refund' tool is updated once daily, usually overnight. Your status is generally available within 24 hours upon the IRS receiving your e-filed return. If you have filed a paper return, the IRS is currently experiencing processing delays for paper filed returns, but will process them in the order received.
Crystal, our tax manager, was featured on Fox Investigates explaining some of the details of the proposed changes to the Child Tax Credit. See the report here: https://fox11online.com/news/fox-11-investigates/bidens-stimulus-plan-would-expand-the-child-tax-credit-heres-what-that-means-for-you
FOX11ONLINE.COM
Biden's stimulus plan would expand the child tax credit -- here's what that means for you
IRS Extends Filing and Payment Deadlines Due in April – Did You Know?
In response to the pandemic, the IRS has extended both the 2021 federal income tax filing and payment deadlines for individual taxpayers. Here are the important details:
- The filing deadline for 2020 federal individual income tax returns has been automatically moved from April 15, 2021 to May 17, 2021.
- The payment deadline for individual taxpayers to pay their 2020 tax due has also been automatically extended from April 15, 2021 to May 17, 2021. This extension also applies to those who pay self-employment tax.
- The same extension does not apply to estimated tax payments with the due date of April 15, 2021. (For most payers of estimated taxes, this is their first-quarter payment for 2021).
Taxpayers do not need to file any additional forms or call the IRS to qualify for this automatic federal tax filing and payment relief. Individual taxpayers who need additional time to file beyond the May 17 deadline can request a filing extension to October 15, but this does not include an extension to pay.
