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Lake Wylie Tax Service | Bookkeeping | Payroll Service

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Beware of New Text Scam Related to Stimulus Payments

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on November 10, 2020 by Lake Wylie Tax Services StaffNovember 10, 2020

New Text Scam Related to Stimulus PaymentsThe IRS has warned taxpayers of a clever scheme by internet scammers to dupe tax-payers into revealing their bank account information under the guise of receiving the $1,200 Economic Impact Payment (EIP) that Congress authorized last Spring.

Criminals are relentlessly using COVID-19 and Economic Impact Payments as cover to try to trick taxpayers out of their money or identities. This new scam is a twist on those the IRS has been seeing much of this year, and the IRS urges people to remain alert to these types of scams.

The current scam is a text message that reads: “You have received a direct deposit of $1,200 from COVID-19 TREAS FUND. Further action is required to accept this payment into your account. Continue here to accept this payment …” The text includes a link to a fake phishing web address.

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Posted in Tax Central | Tagged Tax Planning

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

Keeping Your Designated IRA Beneficiary Current is Important

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on September 29, 2020 by Lake Wylie Tax Services StaffSeptember 29, 2020

Update your IRA BeneficiariesKeeping your designated IRA beneficiary current is very important. You may not want your account going to your ex-spouse, and you certainly do not want a deceased individual to be your beneficiary.
What’s more, a periodic review of your named IRA beneficiaries is vital to ensure that your overall estate planning objectives will be achieved in light of changes in the performance of your IRAs and your personal, financial, and family situations. For example, if your spouse was named your beneficiary when you first opened the account several years ago and you’ve subsequently divorced, your ex-spouse will remain the beneficiary of your IRA unless you notify your IRA custodian to change the beneficiary designation.

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Posted in Retirement Planning | Tagged IRA

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

Ready for the 1099-NEC?

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on September 15, 2020 by Lake Wylie Tax Services StaffSeptember 15, 2020

The 1099-NEC for Independent Contractors | non-employee compensationThe Internal Revenue Service has resurrected a form that has not been used since the early 1980s, Form 1099-NEC (the NEC stands for non-employee compensation). This form will be used to report non-employee compensation in place of the 1099-MISC, which has been used since 1983 to report payments to contract workers and freelancers. Form 1099-MISC has also been used to report rents, royalties, crop insurance proceeds and several other types of income unrelated to independent contractors.

The revival of the 1099-NEC was mandated by Congress with the passage of the PATH Act back in 2015. However, there have been some complications with implementing the form, so its use has been delayed. It will now make its return debut in 2021 for payments made in 2020.

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Posted in For Business | Tagged Independent Contractor, Tax Planning

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

Is the Temporary Deferral of Employee Payroll Tax Worth It?

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on September 1, 2020 by Lake Wylie Tax Services StaffSeptember 1, 2020

Deferral of Employee Payroll TaxPresident Trump issued a Presidential Memorandum on August 8, 2020, that directs the Treasury Secretary to use his authority to defer the withholding, deposit and payment of employees’ portions of Social Security taxes from September 1 through December 31, 2020. The goal is to put more money in the pockets of workers during the COVID-19 pandemic emergency. The deferral applies to the 6.2% tax on wages or compensation paid for a bi-weekly pay period of less than $4,000 or the equivalent threshold amount for other pay periods. In other words, employees with annual wages up to $104,000 are generally eligible for the deferral.

Just a few days before the start of the deferral period, the IRS has issued guidance explaining that the due date for withholding and paying Social Security taxes has been postponed; they are now due between January 1, 2021 and April 30, 2021. This means that Social Security taxes not withheld in the last 4 months of 2020 are to be ratably withheld from employees’ wages during the first 4 months of 2021, along with the required withholding on the 2021 wages.

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Posted in For Business | Tagged Covid-19, Employee, taxes

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