October 2020 Tax & Accounting Insight

Dear Clients, Colleagues and Friends,

With the upcoming October 15th deadline, the 2019 tax filing season is drawing to a close. As this deadline passes, most think there is no need to worry about taxes again until next year, but the truth is there may be some simple steps you could take this year to potentially improve your tax situation next year. Tax planning can help businesses and individuals alike reduce their tax bills and meet their financial goals.

We would like to encourage you to consider tax planning prior to the end of the year. For example, a few simple, but important, tax planning items to review are:

• Withholding & Estimated Taxes – It is important to confirm your expected net income for 2020. This includes determining whether any net investment income will be subject to the net investment income tax, to ensure the appropriate amount of tax has been paid for the year. It also includes other nonwage income for which you may not have had withholding or been making estimated tax payments.
• Year-end Gifts – Now is a good time to evaluate whether you should be making year-end gifts. A year-end gift of appreciated property can move taxable gain to family members in a lower tax bracket. Also, a client can make gifts to any number of donees before year end, and, as long as each gift is no more than $15,000, the gifts will not be taxable or count against the donor’s unified estate and gift tax exemption. Gifts must be made prior to December 31, 2020 for the gifts to count as a 2020 gift for gift tax purposes.

Other items to contemplate are retirement and estate planning, providing for college educations, and reviewing deductions. Remember, Shilts CPA is here to advise and support you. In order to take full advantage of the benefits tax planning can have your return, contact our office to schedule your appointment today.

Josh Shilts, CPA/ABV/CFF/CGMA, CFE

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Some of the articles and content we want to make you aware of are

• Taking Early Withdrawals From Retirement Accounts – While taking money out of a retirement fund before age 59 1/2 is usually not recommended, in certain cases, it may be unavoidable, especially during times of economic crisis.
• Choosing a Retirement Destination: Tax Considerations – With health care, housing, food, and transportation costs increasing every year, many retirees on fixed incomes wonder how they can stretch their dollars even further.
• What to Think About Before Accepting Early Retirement – With so many companies seeking to cut costs to survive the Covid-19-induced economic downturn, many corporate executives are now weighing the answer to a simple question: “Does it make sense to take an early retirement?”
• Six Tips for Starting Your Own Business – Starting your own business can be an exciting prospect, but there is more to it than simply writing a business plan.
• Tax Treatment of Virtual Currency Transactions – Whether you’ve invested in Bitcoin and sold it at a profit or loss or received it for services performed, you’ll need to report it on your tax return.
• Be Wary of Charity Requests in Wake of COVID-19 – In distressing times like the current novel coronavirus pandemic, you can count on people’s giving spirits to help their community face the worst of a crisis through donations.

Tax Tips

• Health Coverage Terms Employers Should Know
• Final Regulations for 100 Percent Bonus Depreciation
• Avoid Refund Delays by Renewing Expiring ITINs Now
• File Cash Transaction Reports Electronically

Quickbooks Tips

• How To Track Employee Time, Part 2

Upcoming Events

The following are events Mr. Shilts will be speaking at. If you have questions or are interested in attending refer to the links below or contact us by clicking here.

1. October 14, 2020 – The Insolvency 2020 Virtual Summit is current happening and we’re thrilled to have our own Josh Shilts speaking at this powerhouse event. Mr. Shilts will be speaking on Wednesday, October 14th from 5:00 pm – 6:15pm EDT as part of the panel “AICPA: Solvency, Considerations for Financial Advisors” Register now to join the experience and walk away with a wider network of leading industry professionals, applicable best practices, and expert insights and strategies around our global economy. Click here to register today!
2. October 28, 2020 – We are pleased to announce that Josh Shilts will be speaking in an upcoming Strafford live webinar, “Divorce and Income Tax Problems: Strategies for Resolving IRS Disputes and Liabilities in Divorce Proceedings” scheduled for Wednesday, October 28, 1:00pm-2:30pm EDT. Because of your affiliation with our firm, you are eligible to attend this program at half off. For more information or to register click here or call ask for Divorce and Income Tax Problems: Resolving IRS Disputes on 10/28/2020 and mention code: ZDFCA.

Tax Due Dates

• October 13 -Employees who work for tips – If you received $20 or more in tips during September, report them to your employer. You can use Form 4070.
• October 15 – Individuals – If you have an automatic 6-month extension to file your income tax return for 2019, file Form 1040 and pay any tax, interest, and penalties due.
• October 15 – Corporations – File a 2019 calendar year income tax return (Form 1120) and pay any tax, interest, and penalties due. This due date applies only if you timely requested an automatic 6-month extension.
• October 15 – Employers – Nonpayroll withholding. If the monthly deposit rule applies, deposit the tax for payments in September.
• October 15 – Employers – Social Security, Medicare, and withheld income tax. If the monthly deposit rule applies, deposit the tax for payments in September.
• November 2 – Employers – Social Security, Medicare, and withheld income tax. File form 941 for the third quarter of 2020. Deposit any undeposited tax. (If your tax liability is less than $2,500, you can pay it in full with a timely filed return.) If you deposited the tax for the quarter in full and on time, you have until November 10 to file the return.
• November 2 –Certain Small Employers – Deposit any undeposited tax if your tax liability is $2,500 or more for 2020 but less than $2,500 for the third quarter.
• November 2 – Employers – Federal Unemployment Tax. Deposit the tax owed through September if more than $500.

Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. If desired, we would be pleased to perform the requisite research and provide you with a detailed written analysis. Such an engagement may be the subject of a separate engagement letter that would define the scope and limits of the desired consultation services.