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Category Archives: Tax Central

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IRS Releases Inflation Adjustments for 2021

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on November 3, 2020 by Lake Wylie Tax Services StaffNovember 3, 2020

Tax Adjustments for Inflation 2021To cope with inflation, the tax code requires the IRS to adjust the tax rates, standard deductions, and a variety of other tax related numbers each year. Due to the relatively low rate of inflation from 2020 to 2021 (at least according to the calculation method prescribed by law for this purpose), several categories had no or only a slight change. The following is a summary of the most commonly encountered items for 2021.

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Posted in Tax Central | Tagged Tax Planning, Tax Rates for Filing 2020 Taxes

Don’t Miss Out on Year-End Tax-Planning Opportunities

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on October 26, 2020 by Lake Wylie Tax Services StaffOctober 26, 2020

Tax Planning Opportunities for 2020To say COVID-19 has made 2020 a disastrous year for just about everyone would be an understatement. In response to the economic slowdown and losses of income, Congress passed several extensive laws to benefit individuals and businesses that suffered financial hardship because of COVID-19. However, 2020 has given rise to more than the usual tax-planning opportunities. Thus, you may find it appropriate to schedule a tax-planning appointment well before the close of the year to take advantage of the tax benefits and strategies available for 2020. Although everyone’s situation is unique, the following are examples of tax opportunities and strategies that may apply to your circumstances.

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Posted in For Business, Tax Central | Tagged Covid-19, Tax Planning

There is More to Deducting Health Insurance than Meets the Eye

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on October 20, 2020 by Lake Wylie Tax Services StaffOctober 20, 2020

Deducting Health Insurance and How to Maximize your Deduction
Health insurance premiums, especially in the wake of the Affordable Care Act, have risen dramatically and are one of the greatest expenses that most individuals pay. Although the cost of health insurance is allowed as part of an individual’s medical deductions when itemizing deductions, only the amount of total medical expenses that exceeds 7.5% of the taxpayer’s adjusted gross income (AGI) is deductible. The 7.5% limitation is increased to 10% for years after 2020.

The purpose of this article is twofold: first, to remind you what insurance can be included as a medical deduction; and second, to inform you of an alternate means of deducting health insurance for certain self-employed individuals—a means that avoids the AGI limitation and allows for deduction without itemizing.

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Posted in Tax Central | Tagged Medical, Medical Insurance

Is a Living Trust Appropriate for You?

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on October 6, 2020 by Lake Wylie Tax Services StaffOctober 6, 2020

Should I have a living trustYou have probably heard others discussing living trusts but may not understand the reasons for them or whether you should have one.

Living trusts are an estate-planning tool, and there is not a one-type-fits-all living trust. Each one is customized to suit the special circumstances of the individual for whom it was created. The vast majority of the population can get by without using a living trust, and a simple will is perfect for most people, unless their estate is large or there are some special circumstances to deal with.

There actually are two types of these trusts: revocable and irrevocable. As the names imply, an irrevocable trust generally cannot be undone once made, while the provisions of a revocable trust can be changed or rescinded as long as the grantor (the individual who established the trust) is still living. A living trust becomes irrevocable when the grantor passes.

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Posted in Life Events, Tax Central | Tagged Living Trusts, Tax Planning

Still Waiting for the IRS to Cash Your Check?

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on September 22, 2020 by Lake Wylie Tax Services StaffSeptember 22, 2020

Still waiting for IRS to cash your checkDuring the COVID-19 pandemic, the IRS has furloughed many of its employees or had them work from home to mitigate the spread of the virus. Many IRS offices remained shuttered for months, and a backlog of millions of pieces of unopened mail accumulated in trailers set up outside IRS facilities.

This includes unopened mail with payment checks, which creates a problem for many e-filed returns with tax due because the IRS computer shows a tax return filed but no payment made. Because the IRS utilizes a significant amount of automation, its computers began automatically spitting out tax-due notices, including to those who had mailed in payments. While most IRS facilities have reopened and IRS employees have returned to work, it will take them weeks, if not months, to get all of the backlogged mail opened and processed.

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Posted in Tax Central | Tagged Covid-19, taxes

If You Are Facing Foreclosure, Here Are Tax Issues You Will Confront

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on September 8, 2020 by Lake Wylie Tax Services StaffSeptember 8, 2020

Facing Foreclosure, Here Are Tax Issues You Will Confront As this pandemic continues to wreak havoc on people’s finances, the Federal Housing Finance Agency said that Fannie Mae and Freddie Mac will extend foreclosure moratoriums to December 31, 2020 and perhaps longer.

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Posted in Tax Central | Tagged Covid-19, Home and Mortgage

What President Trump’s Executive Order Means for You

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on August 11, 2020 by Lake Wylie Tax Services StaffAugust 11, 2020

What_ President_Trumps_Executive_Order_MeansWe are still waiting for the dust to settle on what President Trump’s executive orders mean for taxpayers and business owners. There is a lot of talk about legal challenges and how Congress may react. But here is a summary of what we know now.

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Posted in Tax Central | Tagged Covid-19, Tax Central

Don’t Ignore Household Employee Payroll Tax Rules

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on August 7, 2020 by Lake Wylie Tax Services StaffAugust 7, 2020

household employeesIf you hire a domestic worker to provide services in or around your home, you probably have a tax liability that you don’t know about – or one that you do know about but are ignoring. Either situation can come back to bite you. When the worker is your employee, your liability includes both withholding and paying payroll taxes as well as issuing a W-2 after the close of the year.

Sure, it is a lot easier simply to pay your worker in cash so as to avoid federal and state payroll taxes – and all the paperwork that goes with them. Your domestic worker will likely be fully cooperative with a cash deal because he or she can also avoid paying taxes. However, if the IRS or your state employment department finds out about these payments, the result could be very unpleasant for you.

Not everyone who performs services in or around your home is classified as an employee. For instance, a plumber or electrician who makes repairs in your home will generally be a licensed contractor; the government does not classify contractors as employees.

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Posted in Friendly Reminders, Tax Central | Tagged Employee, Tax Planning

Watch Out for Tax Penalties

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on August 4, 2020 by Lake Wylie Tax Services StaffAugust 4, 2020

Avoiding Tax PenaltiesMost taxpayers don’t intentionally incur tax penalties, but many who are penalized are simply not aware of the penalties or the possible impact on their wallets. Let’s look at some of the more commonly encountered penalties and how they may be avoided.

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Posted in Tax Central | Tagged Individual Taxes, Tax Planning

Thinking of Dumping Old Tax Records?

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on July 30, 2020 by Lake Wylie Tax Services StaffJuly 30, 2020

disposing of old tax recordsTired of having all those old tax records taking up drawer or closet space and collecting dust. Want to dump as much as you can? People often ask how long records must be kept and the amount of time IRS has to audit a return after it is filed.

How long to keep the records depends on the circumstances! In most cases, the federal statute of limitations can be used to help you determine how long to keep records. With certain exceptions, the statute for assessing additional tax is 3 years from the return due date or the date the return was filed, whichever is later.

However, the statute of limitations for many states is one year longer than the federal limitation. The reason for this is that the IRS provides state taxing authorities with federal audit results. The extra time on the state statute gives states adequate time to assess tax based on any federal tax adjustments.

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Posted in Record Keeping Tips, Tax Central | Tagged Tax Planning

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