McKay Tax Annual Letter: 2020 Tax Update

McKay Tax Annual Letter 2020 Tax Updates

Most of the COVID-related tax changes were related to the extension of your 2019 tax year filing. However, there are some tax strategies that are still available until the end of the year.  

COVID-19 Tax Strategies Still Available:

 

  • 2020 401k and IRA distributions up to $100,000 can be taken penalty-free and you can pay the regular tax over three years or have it nontaxable if you make a re-contribution (“put it back”) within three years rather than the normal 60 days.  
  • Minimum retirement account distribution (taxpayers over 70½ years of age) can be ignored for 2020.  
  • If you did not get a stimulus 2020 check and qualified based on your 2020 tax return there is a reconciliation in the 2020 tax return that could give you more money.

2020 Standard Deduction Guidelines:

The new 2020 standard deductions are $12,400 single, $18,650 for the Head of Household, and $24,800 for those filing as Married/Jointly.  The Child Tax Credit remains the same at $2,000 for dependents under 17 and $500 for dependents over 16.

Here are a few things to think about for year-end tax planning:

 Charitable Donations

If you think that you will itemize and you need to make a trip to the DI or Salvation Army do so before December 31st. Be sure to get a receipt and write the items and value of each item on the receipts.  

Some taxpayers strategize by bunching charitable deductions in one year. This means they itemize one year and take the standard deduction the next year.  To do this you would wait to pay your 2020 charity or make 2020 donations.  Instead, make your donations in January 2021 and make any additional 2021 donations by December 31, 2021, to include your donations in one year. This will give you twice the deduction in one year and allow you to take the standard deduction on your off year.  

You could also do this with other itemized deductions, such as medical expenses if you can manage them into a specific calendar year.  

Without itemization, you can deduct a maximum of $300 if you gave it to a qualifying charity.

IRA Deduction

Depending on your income, you may be able to get a deduction for an IRA contribution for 2020 of up to $6,000 (or $7,000 if you are over 50 years old). Your IRA deduction will count even if you wait until tax filing day in 2021 (Thursday, April 15, 2021).  

If you are over 70½ years old and choose to take a 2020 distribution from your IRA account, you can make that distribution payable to the charity of your choice tax-free. 

Stock Sales

If you have a few underperforming stocks that you wouldn’t mind unloading, now is the time. If you have them, you can sell your stocks at a loss to offset any capital gains you may have for profitable stock sales throughout the year. If you end up with a capital loss, you can carry that loss for later years and even write off up to   $3,000 against your normal income for the year.

Flex-Spending Accounts

This time of the year is when employees must specify how much salary they will set aside in Flex Spending Accounts (section 125) for medical and child care expenses.  

Using flex funds to pay for medical and child care expenses save federal and state taxes but also saves an additional 7.65% in FICA and Medicare taxes.  Be sure to estimate medical and child care expenses low. Extra money left in your Flex Spending Accounts at the end of the year is lost.

Retirement

Please call me for the answers to your questions about early distributions from a retirement fund or planning your retirement. A simple phone call may save thousands of dollars in additional taxes and penalties. 

As always feel free to call me anytime for answers to your tax questions (including major events) at no additional cost.  Look for your appointment confirmation and questionnaire to come in the mail by January 5th or sooner. 

Have a Merry Christmas and Happy New Year!

Sincerely

Rich McKay

801-731-1857

RMcKay@McKayTax.com

 


Important Filing Due Dates To Remember for 2020 Tax Forms

2019 Tax Form Due Dates

Can you believe it is that time of year again!  I’ve comprised a list of the tax forms and their due dates for 2020.  On the left, you’ll find the form type and on the right, you’ll see the date the form needs to be filed for the 2019 tax season.

We know that can be confusing, so let’s reiterate that: These are 2020 dates for 2019 tax forms regarding the 2019 tax year.

As always, if you have any questions feel free to jump over to our Contact page and reach out to us.

Tax Form

2020 Filing Due Date
(for Tax Year 2019)

Form W-2 & certain 1099-Misc (electronic or mail) January 31st
Form 1065 – Partnerships March 16th 
Form 1120-S – S Corporations March 16th 
Form 1040 – Individuals April 15th
FinCEN 114 – FBAR (will be allowed to extend) April 15th
Form 1041 – Trusts and Estates April 15th
Form 1120 – C Corporations April 15th 
Form 990 series – Tax Exempt Organizations  May 15th 
Form 5500 series – Employee Benefit Plan July 31st
Form 1065 Extended Return September 15th
Form 1120-S Extended Return September 15th
Form 1041 Extended Return September 30th
Form 1120 Extended Return October 15th
Form 1040 Extended Return October 15th
FinCEN 114 (Extended with Form 1040) October 15th
Form 5500 series – Employee Benefit Plan Extended Return October 15th
Form 990 series – Tax Exempt Organization Extended Return November 16th

 


Important Tax Dates for 2019

Important Tax Dates for 2019 now on McKay Tax blog

IRS official tax dates you need to stay on top of your taxes.

2019 Federal Legal Holidays

  • January 1 – New Year’s Day
  • January 21 – Martin Luther King Jr.’s Birthday
  • February 18 – Washington’s Birthday
  • April 16 – District of Columbia Emancipation Day
  • May 27 – Memorial Day
  • July 4 – Independence Day
  • September 2 – Labor Day
  • October 14 – Columbus Day
  • November 11 – Veterans’ Day
  • November 28 – Thanksgiving Day
  • December 25 – Christmas Day

2019 E-File Dates

  • January 28 – First day to e-file and first IRS acknowledgements of e-filed returns
  • April 15 – Last day to e-file timely returns and extension requests
  • April 21 – Last day to retransmit rejected timely filed returns and extensions
  • June 17 – Last day to e-file timely extension request for overseas taxpayers
  • October 15 – Last day to e-file returns that received 6-month extension
  • October 22 – Last day to retransmit rejected late or extension returns

Important 2019 Tax Dates

  • January 10 – Report tips of $20 or more to employer
  • January 15 – Make last 2018 estimated tax payment
  • February 11 – Report tips of $20 or more to employer
  • March 11 – Report tips of $20 or more to employer
  • April 10 – Report tips of $20 or more to employer
  • April 15 – Due date to file calendar year 2018 tax returns or request an automatic 6-month extension of time to file. Pay any tax that is due, even if you file a 6-month extension of time to file.
  • April 15 – First 2019 estimated tax payment due
  • May 10 – Report tips of $20 or more to employer
  • June 10 – Report tips of $20 or more to employer
  • June 17 – Second 2018 estimated tax payment due
  • July 10 – Report tips of $20 or more to employer
  • August 102– Report tips of $20 or more to employer
  • September 10 – Report tips of $20 or more to employer
  • September 16 – Third 2018 estimated tax payment due
  • October 10 – Report tips of $20 or more to employer
  • October 15 – Final due date to file calendar year 2017 tax returns for taxpayers who received a 6-month extension
  • November 12 – Report tips of $20 or more to employer
  • December 10 – Report tips of $20 or more to employer

Your 2018 Business Tax Forms

2018 Business Forms Announcement from McKay Tax & Accounting

Hi Business Clients!

I’ve pieced together all of the forms and calculators you should need to be ready for filing your 2018 business taxes.

The attached Corporate and LLC guidelines and other various forms are to help keep your corporation valid with the state and the federal government in addition to tax planning.   If you do not have a corporate book (Corporation) we can tell you where to obtain one.

Continue reading →


2018 Tax Changes Announcement

2018 Annual Tax Year Update from McKay Tax & Accounting

It’s that time of year again!  Tax season.

We talked a little bit about this in last year’s newsletter.  But here is a reminder —

The Tax Cuts and Jobs Act of 2017 brought on the biggest changes in tax law history.  Overall, new deductions have been added and some old, common deductions have been completely repealed.

Below, I will highlight some of the big changes for the 2018 tax year — both for Individuals and for Businesses. Please give me a call if you have questions.

Continue reading →