Sweetenburg's Accounting & Tax Services

SWEET'S TAX TIPS: PLEASE SHARE!!!! Question: Henry and Hannah are a married couple who will be filing a joint tax return for tax year 2020. If they are non-itemizers and make $900 in qualified charitable contributions of cash, can they claim a $600 above-the-line deduction for the qualifying charitable contribution?... Answer: No. Under the Corona virus Aid, Relief, and Economic Security (CARES) Act, for tax years that begin in 2020, an individual who does not elect to itemize deductions can deduct up to $300 of qualified charitable contributions. The $300 limit applies to the tax-filing unit. A married taxpayer filing a joint return is considered a tax-filing unit; therefore, Henry and Hannah can take $300 as an above-the-line deduction for the qualifying charitable contribution.

SWEET'S TAX TIPS: I FOUND THIS INTERESTING ARTICLE , PLEASE SHARE!!!

SWEET'S TX TIPS: PLEASE SHARE!!!! Question: Robert is an insurance agent who received a Form W-2 from his employer. He also received a Form 1099-MISC with an amount in Box 7 for commissions earned. This concerns him because it is his understanding that Box 7 is almost always subject to SE tax. Is Robert’s commission income subject to self-employment tax or can he just claim it as Other Income?... Answer: Yes, the commissions reported in Box 7 of the Form 1099-MISC are subject to self-employment tax. Form 1099-MISC (Miscellaneous Income) is used to report payments to independent contractors who provide trade or business services. Compensation reported on Form 1099-MISC includes: commission, prizes, awards or other forms of compensation for services rendered to the taxpayer’s trade or business by someone who is not an employee. When taxpayers like Robert receive both Form W-2 and Form 1099-MISC, they will report the commission income on Line 1 of Schedule C. Robert will use Schedule C to report commission income even if he receives a W-2.

SWEET'S TAX TIPS: A credit card billing cycle is the period of time between billing statements. Credit card billing cycles typically range from 28 to 31 days. ... Federal law requires your credit card billing cycles to be consistent. Your due date must remain the same from month to month. Your card issuer reports your credit card balance and other information at the end of your billing cycle.

SWEET'S TAX TIPS: Hey Guys, I found this to be interesting . Ex-policeman who killed George Floyd charged with tax evasion... By Michael Cohn July 23, 2020, 1:23 p.m. EDT Derek Chauvin, the former Minneapolis police officer who was fired for kneeling on the neck of George Floyd until he died, sparking worldwide protests, has been charged with multiple counts of felony tax evasion over five years. Washington County Minnesota Attorney Pete Orput said Wednesday that Chauvin, 44, and his wife Kellie May Chauvin, 45, both of Oakdale, Minnesota, have been charged with nine counts of multiple tax-related felonies. The charges came after an investigation conducted by the Minnesota Department of Revenue and Oakdale Police Department. The Chauvins in June for failure to timely file Minnesota individual income tax returns from 2016 to 2019 and fraudulently filing tax returns from 2014 to 2019. The complaints allege that the Chauvins knew of their obligation to file state income tax returns due to their filings in previous years and from multiple correspondences sent in 2019 by the department regarding their missing 2016 individual income tax return. The complaints state that the Chauvins, who were both employed at the time, failed to file income tax returns and pay their state income taxes, underreported and underpaid taxes on income generated from various employments each year, and failed to pay proper sales tax on a vehicle purchased in Minnesota. Kellie Chauvin filed for divorce shortly after Floyd's death.

SWEET'S TAX TIPS: PLEASE SHARE!!! Currently, the IRS is experiencing delays in processing paper tax returns due to limited staffing as a result of COVID-19.... Taxpayers who filed a paper tax return and expect a refund may experience a significant delay beyond the normal time frame of four to six weeks from the time they mailed the return. The IRS will process these returns in the order received and there is no need to file a second tax return or call the IRS.

SWEET'S TAX TIPS: Tax returns are due today; taxpayers who can’t pay should still file today Today, 2019 tax returns are due. Taxpayers should remember to file or request an extension of time to file and pay any taxes they owe by the July 15 deadline to avoid penalties and interest. Here are some tips for taxpayers who owe tax, but who can’t immediately pay their tax bill.... Taxpayers should: File their tax return or request an extension of time to file by the July 15 deadline. People who owe tax and do not file their return on time or request an extension may face a failure-to-file penalty for not filing on time. Taxpayers should remember that an extension of time to file is not an extension of time to pay. An extension gives taxpayers until Oct. 15, 2020 to file their 2019 tax return, but taxes owed are still due July 15, 2020. Pay as much as possible by the July 15 due date. Whether filing a return or requesting an extension, taxpayers must pay their tax bill in full by the July filing deadline to avoid penalties and interest. People who do not pay their taxes on time will face a failure-to-pay penalty. IRS.gov has information for taxpayers who can’t afford to pay taxes they owe. Set up a payment plan as soon as possible. Taxpayers who owe but cannot pay in full by the deadline don’t have to wait for a tax bill to request a payment plan. They can apply for a payment plan on IRS.gov. Taxpayers can also submit a payment plan request in writing using Form 9465, Installment Agreement Request. Some disaster victims, military service members and eligible support personnel in combat zones have more time beyond the July 15 deadline to file and pay their taxes. Taxpayers should also check their state filing and payment deadlines, which may be different from the federal July 15 deadline. A list of state tax division websites is available through the Federation of Tax Administrators. The IRS is processing tax returns, issuing refunds and accepting payments. Taxpayers who mail or who have already mailed a tax return will experience a longer wait. The IRS will process these returns in the order received and there is no need to file a second tax return or call the IRS.

SWEET'S TAX TIPS: PLEASE SHARE!!! Defaulting on a loan can have long-lasting effects. You might have to file for bankruptcy. Student loan defaults can follow you into retirement by lowering your social security payments and reducing any tax refunds.

SWEET'S TAX TIPS: Question: If my client Eloise receives a Paycheck Protection Program (PPP) loan and the entire loan is forgiven, is she allowed a deduction for the business expenses she paid with the loan proceeds? Answer: No. IRS Notice 2020-32 describes how business expense deductions are not allowed against loan income that was forgiven under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) 1106(b). Because loan proceeds are considered exempt income, t...axpayers cannot take business deductions against this income. Please share. Thanks!!!

SWEET'S TAX TIPS: FYI !!!!!!! IRS not processing paper tax returns due to Corona virus... By Michael Cohn April 14, 2020, 1:15 p.m. EDT The Internal Revenue Service has stopped processing paper tax returns, with much of its staff now working remotely because of the novel corona virus pandemic, and is encouraging taxpayers to file their taxes electronically during the three-month extension period for this year’s tax season. The IRS said Friday that to protect the public and its own employees, and in compliance with orders of local health authorities across the U.S., some IRS services such as live assistance on telephones, processing paper tax returns and responding to correspondence are extremely limited or suspended until further notice. All of the IRS’s in-person Taxpayer Assistance Centers are temporarily closed along with many volunteer tax preparation sites until further notice. However, that won’t affect the IRS's ability to deliver economic impact payments, the stimulus payments of at least $1,200 that it began directly depositing Saturday in some taxpayers’ bank accounts. While the tax-filing deadline has been extended from tomorrow’s original due date until July 15, the IRS noted that it’s continuing to process electronic tax returns, issue direct deposit refunds, and accept electronic payments. As of April 3, the IRS has received more than 97.4 million tax returns and issued over $213 billion in tax refunds. However, paper tax returns are a problem this tax season with most of the IRS staff out of the office. The IRS wants all taxpayers to file electronically through their tax preparer, tax software provider or IRS Free File if possible. This year, more than 90 percent of taxpayers have filed electronically. The IRS said it’s not currently able to process individual paper tax returns. If you already have filed via paper but it has not yet been processed, do not file a second tax return or write to the IRS to inquire about the status of your return or your economic impact payment, said the IRS. Paper returns will be processed once processing centers are able to reopen. Similarly, the IRS's National Distribution Center is closed until further notice. The IRS said it’s unable to take any orders for forms or publications to be mailed during this time. Most forms and publications can be downloaded electronically at IRS.gov/forms.

SWEET'S TAX TIPS: Question:... I received a Form 1099-MISC with an amount in box 7 for non-employee compensation. What forms and schedules should I use to report income earned as an independent contractor? Answer: Independent contractors report their income on Schedule C (Form 1040 or 1040-SR), Profit or Loss from Business (Sole Proprietorship). Also file Schedule SE (Form 1040 or 1040-SR), Self-Employment Tax if net earnings from self-employment are $400 or more. This form allows you to figure social security and Medicare tax due on your net self-employment income. You may need to make estimated tax payments. Refer to Form 1040-ES, Estimated Tax for Individuals for more details on who must pay estimated tax. If you need to make estimated tax payments and don't pay them timely, you may also need to file Form 2210, Underpayment of Estimated Tax by Individuals, Estates & Trusts.

SWEET'S TAX TIPS: Question: The taxpayers withdrew money from a qualified tuition program (QTP) or 529 plan to pay for their child’s qualified higher education expenses, including room and board. Due to COVID-19, the dorms closed, so the university refunded part of the room and board expenses that were paid for with QTP funds. Can the taxpayers redeposit the refunded room and board money back into the same QTP? Answer: Yes. When taxpayers receive a refund for qualified higher education expenses, including room and board, the refunded amount can be recontributed to the QTP within 60 days of receiving it. However, the recontributed amount cannot exceed the refunded amount. [IRC Sec. 529(c)(3)(D)].

SWEET'S TAX TIPS: Economic Impact Stimulus Payment Updates This week, the IRS announced recipients of VA benefits will automatically receive economic impact payments. Timing on the payments is still being determined.... The IRS also provided refund anticipation loan (RAL) guidance, noting that if a refund settlement product or the associated account is closed or no longer active, the bank is required to reject the deposit and return it to the IRS. Once the returned payment is processed, the IRS will automatically mail it to the address on the 2019 or 2018 tax return, or the address on file with the U.S. Postal Service, whichever is more current. The status in Get My Payment will update accordingly. The IRS also noted there was a reporting error that started showing up in recent days on Get My Payment, which inaccurately indicated rejected payments were being sent back to the same taxpayer account a second time. These payments are actually being mailed to the taxpayers. The IRS has quickly taken steps to correct this reporting error. Get My Payment will be updated starting Tuesday, April 21, to reflect that the taxpayer’s payment has actually been mailed, not rerouted to a closed bank account.