Harless Tax Blog

Harless Tax Blog

CARES Act Business Tax Moves to Make Before Year End

Thursday, October 15, 2020

Original article by Fuoco.com >

The financial challenges which Coronavirus brought forced companies to reimagine themselves and change how they do business to survive. Reducing your business income tax burdens has become more important than ever. Through the CARES Act, the government granted many forms of relief, so be sure that by December you are taking advantage of available tax changes that can provide liquidity.

  1. When the TCJA repealed the corporate AMT, it allowed corporations to claim all their unused AMT credits in the tax years beginning in 2018, 2019, 2020 and 2021. The CARES Act accelerates this timeline, allowing corporations to claim all remaining credits in either 2018 or 2019. The fastest method for many companies to get a quick refund will be filing a tentative refund claim on Form 1139, but you must file by December 31, 2020 to claim an AMT credit this way.
  2. The CARES Act also resurrected a provision allowing businesses to use current losses against past income for immediate refunds. Net operating losses (NOLs) arising in tax years beginning in 2018, 2019 and 2020 can be carried back five years for refunds against prior taxes. These losses can even offset income at the higher tax rates in place before 2018. Consider opportunities to accelerate deductions into a loss year to benefit, but remember any non-automatic changes you want to make effective for the 2020 calendar year must be made by the end of the year. The fastest way to obtain a refund is generally by filing a tentative refund claim, but these must be filed by December 31, 2020, for the 2019 calendar year. If your losses will be in 2020, start preparing to file early because you cannot claim an NOL carryback refund until you file your tax return for the year.
  3. The CARES Act fixed a technical problem with bonus depreciation, a generous provision that allows companies to immediately deduct the full cost of many types of business investments. The legislation expands bonus depreciation to apply to a generous category of qualified improvement property (QIP). QIP is commonly thought of as a retail and restaurant issue, but it is much broader and applies to almost any improvement to the interior of a building that is either owned or leased. The fix is retroactive, so you can fully deduct qualified improvements dating back to January 1, 2018, which may offer relatively quick refunds. Taxpayers who filed 2018 and 2019 returns before the law changed can amend both the 2018 and 2019 returns to apply bonus depreciation for QIP in each of those years.
  4. The CARES Act allows employers to defer paying their 6.2% share of Social Security taxes for the rest of 2020. Half of the deferred amount is due by December 31, 2021, with the other half due by December 31, 2022. This provides a great liquidity benefit, but taxpayers should consider the impact on deductions before the end of the year. Businesses generally cannot deduct their share of payroll taxes until paid.
  5. The Cares Act increases the ceiling for business interest deductions from 30% to 50% of adjusted taxable income for tax years 2019 and 2020. https://www.fuoco.com/component/content/article/596-cares-act-modifies-business-interest-deductions-
  6. Be sure you are fully taking advantage of Family Leave and Paid Sick Leave credits, as well as the Employee Retention Credit. If you need a credit “refresher” click the links below:

Estate Planning With 2021 Vision

Monday, October 12, 2020

Original article by Fuoco.com >

You can’t predict the political future but you can plan for it! Here are some estate planning ideas for consideration based on uncertainty as to what proposed income tax law changes might be in 2021 and beyond. Keep in mind that due to fluctuating political winds there are also proposals on the table related to estate, gift and generation-skipping taxes. Many of these have been bandied about for a while now; we would be remiss if we did not mention them:

  • Reduce the current estate and gift tax (and probably the generation-skipping tax) exemption from $11.58 million per person ($23.26 million for married couples) to an inflation adjusted $5.49 million per person ($10.98 million for married couples).
  • Increase the current estate, gift and generation-skipping tax rates from a flat 40% to a progressive scale with rates from 40% to 77%.… or more.
  • Limit the number of $15,000 annual exclusion gifts.
  • Eliminate the use, or reduce the effectiveness, of valuation discounts.
  • Eliminate the use, or reduce the effectiveness, of Intentionally Defective Grantor Trusts (“IDGT”) and Grantor Retained Annuity Trusts (“GRAT”).
  • Eliminate the basis step-up at death.
  • Impose a capital gains tax at death on unrealized gains.

Not all of these will have the same impact on every TFGFA client, but if any of them might be of particular concern to you in your situation, you may want to discuss your options before the end of 2020 in order to mitigate the effect on your portfolio and estate:

  • Make gifts to use up some or all of your $11.58 million exemption. The IRS has already said that gifts in excess of a future reduced exemption amount will NOT be “clawed-back” for purposes of computing the estate tax on your estate. If you are a NY resident and survive the gift by three years, the gift will not be taken into account in computing the NY estate tax on your estate.
  • Make gifts in excess of your $11.58 million exemption and pay a gift tax at a 40% rate. Unless you believe that the gift and estate taxes will be repealed, or that rates will be reduced, paying a gift tax is less expensive than paying an estate tax.
  • If you are married and concerned that the gifts would reduce cash flow to an unacceptable level, consider creating a Spousal Lifetime Access Trust (“SLAT”) where one spouse uses his/her gift tax exemption to create a trust for the other spouse.
  • Make gifts of other than cash or marketable securities in order to take advantage of valuation discounts.
  • With interest rates at historical lows (the September Applicable Federal Rates (“AFR”) are 1% or less), make AFR loans to family members and/or create GRATs. See our prior article HERE.

The suggestions above are just the tip of the iceberg. There are additional estate planning tactics like putting your gifts into Intentionally Defective Grantor Trusts (“IDGTs”), and other options we would be happy to discuss with you.

Reach Out To Us: There is no crystal ball. However waiting until after the election, and the myriad delays promised due to the pandemic and the counting of the mail-in ballots, may prevent you from accomplishing what financial moves you might want to make before December 31st. Now is the time to set up, review, or to finalize your estate planning documents with your attorney, Fuoco Group accountants and your TFGFA financial advisory team all working in tandem.

Feel free to contact me, Paul Wieseneck, CPA, Senior Financial Advisor, at 561-209-1102, with any questions regarding financial planning for your estate. At TFGFA, we believe in customized investment portfolio design and personalized asset management.

Still Looking For Your Refund?

Friday, October 09, 2020

Original article by Fuoco.com >

Many clients are waiting for their tax refunds, even though they were filed well in advance of the July 15th deadline. Electronic filing generally yields a refund check in about three weeks. However, this is no ordinary tax season.

Due to COVID and staffing shortages, the IRS is extremely backlogged. If you are using the Where's My Refund link, and getting a "still being processed" message - that is actually good news. Remember that tax returns, even those filed electronically, may need additional review for a number of reasons.

For example, if you filed on the early side and claimed the EITC or the additional child tax credit (ACTC), you will have to wait a bit longer for your refund. Often a return needs review because of an uncommon deduction, or the claim appears excessive, or there may be suspected identity theft. Owe back taxes, or made a mistake on your direct deposit info? These reasons may be why there is a delay. If the IRS has questions or needs more information, you will receive a letter explaining what it requires to move forward.

You can try to call 800-829-1954. If that doesn’t help and it’s been 21 days since the return was accepted by the IRS, then call the general toll-free number 800-829-1040. Under normal circumstances, it can take some time to get to a live IRS representative. It’s a frustrating experience. You will probably face a long wait or be steered to electronic messages that provide little insight into why your refund is delayed.

The good news is, since the original Tax Day was postponed due to the pandemic, the IRS will pay up to 5% interest on refunds issued after April 15. But you must have filed by July 15th.

Main Street Lending Program Funds Still Available

Tuesday, September 29, 2020

Original article by Fuoco.com >

Beyond the PPP loans and EIDL $$$ we now have the little known Main Street Lending Program. It is the best kept secret for mid-size businesses in need of financial relief.

The Main Street program is one of a series of programs the Federal Reserve announced in April to provide up to $2.3 trillion in loans to households, businesses, non-profits, and state and local governments struggling to deal with the COVID-19 pandemic. Specifically, the Main Street program supports loans to U.S. companies with less than $2.5 billion in 2019 revenue that were in good financial standing before the COVID-19 crisis and subsequent quarantines stalled the American economy.

Bolstered by $75 billion in equity provided by Treasury through the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Main Street program supports lenders that register for the program by purchasing 95% of each loan that meets eligibility and documentation requirements.

The Main Street program’s minimum loan size is $250,000, but this loan program geared for midsize businesses is also very different from others that have come before it because the debt must be repaid, and banks must retain some of the credit risk. Companies have five years to pay back the loans, and principal and interest are initially deferred.

A number of changes have been made to the program since its debut, to make it easier to apply.

Chapter 5 May Provide A Fresh Start Post-COVID

Thursday, September 24, 2020

Original article by Fuoco.com >

COVID -19 has stressed many businesses to the breaking point. In spite of PPP loans and EIDL $$$ many small business owners are facing financial challenges, but want to stay in business. Up until now their options were limited. See our prior article HERE: Is Bankruptcy The Best Choice In Bad Economic Times?

What are your choices when your company is small and unable to afford the time-consuming, expensive and difficult Chapter 11 reorganization process? If you wish to restructure privately, you will not have the protection of the bankruptcy court. Don’t take a chance and wind up closing your doors, consider instead a new option made possible by the Small Business Reorganization Act (SBRA) passed on February 19, 2020.

What is the NEW option? Known as “Chapter 5,” the new bankruptcy chapter seeks to streamline and simplify the Chapter 11 process, give the borrower company more control and make it less costly so that it has a better chance of exiting bankruptcy in a stronger position. The CARES Act temporarily allows companies with up to $7,500,000 (up from $2,725,625) in secured and unsecured non-contingent and liquidated debt to use Chapter 5 to reorganize.

Differences include:

  • 90 days to file a plan compared to 300 for Chapter 11.
  • No creditors’ committee required. Under Chapter 11, a creditor committee adds time and expense, and one unsatisfied creditor can hold up the whole process.
  • Chapter 5 retains the trustee, however debtor companies can spread the trustee commissions over the life of the reorganization.
  • The “absolute priority” rule has been eliminated under Chapter 5, thus providing flexibility in giving all creditors a chance to recoup a portion of their balances.
  • Under Chapter 5 a debtor can keep their equity, and may make payments to creditors of residual or disposal income over a three- to five-year period.

Early Peek at 2021 Tax Rates

Thursday, September 24, 2020

Original article by Fuoco.com >

Curious about what your tax bill may look like next year? For starters, the inflation adjustments may seem smaller, only about 1% for the threshold dollar amounts for 2021 tax rate brackets.

Here are the projected 2021 Tax Rates, Brackets, and Standard Deductions for the tax year beginning January 1, 2021.

Tax Brackets

The tax brackets by filing status and income are as follows:

Capital Gains

Just as you saw above capital gains rates won’t change but the brackets will. Remember a 20% tax rate applies where taxable income exceeds the thresholds set for the 37% ordinary tax rate. Exceptions also apply for art, collectibles and section 1250 gain (related to depreciation).

Standard deduction

It is predicted that the standard deduction for an individual who may be claimed as a dependent by another taxpayer will not be more than $1,100, or the sum of $350 plus the individual’s earned income. The additional standard deduction amount for the aged or the blind will be $1,350. The additional standard deduction amount will increase to $1,700 if the individual is also unmarried and not a surviving spouse.

Section 199A or “Pass Through” Deduction

Sole proprietors and owners of pass-through businesses are eligible for a deduction of up to 20% to bring the tax rate lower for qualified business income.

Alternative Minimum Tax (AMT)

The AMT exemption rate is also subject to inflation.

Other items of interest:

  • For 2021, the $2,500 deduction for interest paid on student loans begins to phase out when modified adjusted gross income (MAGI) hits $70,000 ($140,000 for joint filers) and is completely phased out when MAGI hit $85,000 ($170,000 for joint filers).
  • For 2021, the foreign earned income exclusion amount is $108,700.
  • The federal estate tax exemption for decedents dying will increase to $11.7 million per person or $23.4 million per married couple in 2021.
  • The annual exclusion for federal gift tax purposes will remain at $15,000 in 2021. That means that you can gift $15,000 (or $30k with spouse) per person to as many people as you wish with no federal gift tax consequences in 2021.

2020 Tax Minimization Tips

Thursday, September 24, 2020

Original article from Fuoco.com >

There is no question that higher taxes for wealthy might be in the cards post-pandemic. This is not the time to take tax planning lightly – tax minimization is more important than ever. The pandemic has us in a panic about our health and our wealth as it has changed the world as we know it, do not take anything for granted, especially your finances.

States and the federal government will be looking to refill their coffers with tax revenues the longer COVID drags on and further depletes them. A reduction in the federal estate and gift tax exemption might be in play. There may be talk of increasing tax rates on the highest brackets, and taxes on investments. Loss “harvesting” will become even more attractive with higher capital gains tax rates.

Be ready for the “new normal” by looking for opportunities and rethinking your tax planning. For example, you might consider converting a traditional IRAs into Roth IRAs, or decide to take advantage of transferring or selling assets. Estate planning techniques such as inter-family loans or grantor retained annuity trusts to remove future appreciation and avoid estate, gift and generation-skipping transfer taxes in the future, might be wise to consider. And of course there is the tried and true: You might wish to accelerate your income into this year and postpone your deductions until next year if you expect to be in a higher marginal tax bracket next tax year, or if you know you’ll be using a less favorable filing status next year.

Here are the top 2020 tips from our tax experts:

  • The CARES Act waived required minimum distributions (RMD) this year. Small-business owners who are falling into lower income tax brackets due to the effect of the Coronavirus on their business might pay less to convert their traditional tax-deferred IRAs into tax-free Roths now, to get an overall lower tax bill on retirement monies in the future.
  • The SECURE Act raised the age for RMDs to 72. It also allows owners of traditional IRAs to make contributions past the age of 70½ starting in 2020. In addition, folks having a baby or adopting a child can now take payouts from IRAs and 401(k)s of up to $5,000 without having to pay the 10% fine for pre-age-59½ withdrawals.
  • Keep Roths top of mind because the SECURE Act did away with stretch IRAs, which forces those who inherited individual retirement accounts to remove their funds within 10 years rather than stretching out the distributions over time, you want to get money out of taxable funds at lower brackets. Best utilized for those under age 60, and with the watchful eye of your Fuoco Group CPA.
  • If realizing long-term capital gains plays a significant role in how you will fund your retirement lifestyle next year, it may be cheaper to take those gains in the 2020 tax year rather than wait until 2021.
  • Harvesting positions in your taxable portfolios will help offset/reduce any realized gains you may have this year. Try to keep excess losses to $3,000, as losses beyond that figure carried into future tax years may be less valuable.
  • Consider tax-efficient succession planning due to lower valuations tied to the pandemic, lower interest rates and the uncertainty as to whether the current lifetime gift tax exemption of $11.58 million will continue post-election. Transfers to younger family members have tax advantages: income generated by the assets shift to individuals with a lower tax rate, and moving assets to other family members can be a good strategy for lowering estate taxes. Assets transferred during the life of an owner may be lower than at the owner’s death, when the cost basis normally is stepped up to fair market.
  • You can make non-taxable gifts to your beneficiaries at a maximum of$15,000 per recipient. $30k for you and a spouse.
  • Got a new grand-kid? Section 529 college savings plan rules allow them to front-load the equivalent of five years in annual gifts — or $75,000 ($150,000 per couple) — to this type of tax-free account.
  • The CARES Act added a new above-the-line deduction to encourage charitable giving. If you take the standard deduction on your 2020 tax return, you can deduct up to $300 for cash donations to charity you made during the year. Donations to donor advised funds and certain are not deductible.
  • Contribute to your IRA to boost your retirement savings and trim your tax bill at the same time. The contribution limit is $6,000 ($7,000 if you’re 50 or older) for 2020. You may make 2020 IRA contributions up until April 15, 2021.
  • The maximum 401(k) contribution for 2020 is $19,500, but if born before 1971, you can put in $6,500 more. The caps apply to 403(b) and 457 plans as well. This year's cap on contributions to SIMPLE IRAs is $13,500 ($500 more than last year), plus $3,000 extra for people age 50 and up.
  • You get an above-the-line deduction for contributions to your HSA, assuming you made them with after-tax money, and have a high deductible health care plan. Maximum contribution amounts for 2020 are $3,550 for self-only and $7,100 for families. The annual “catch- up” contribution amount for individuals age 55 or older will remain $1,000.
  • Considering solar? The residential solar credit falls to 26% for 2020,and drops again to 22% next year and ends after 2021.
  • The 2020 threshold for deducting medical expenses on Schedule A is 7.5% of AGI. The mileage allowance for medical travel is 17¢ a mile in 2020. The limits on deducting long-term-care premiums are higher in 2020.
  • A key dollar threshold on the 20% deduction for pass-through income was increased for 2020. The threshold amounts for 2020 are $326,600 if you are married filing jointly or $163,300 if you are single, head of household, or married filing separately.
  • If you have mutual fund dividends automatically reinvested to buy more shares, remember that new purchases increases your tax basis in the fund which reduces taxable capital gains when shares are redeemed. A costly mistake is forgetting to include reinvested dividends in your basis which results in double taxation of the dividends (when paid out and reinvested, and again when included in the proceeds of the sale).
  • Did you buy a home? Don’t forget you get to deduct the points paid to get your mortgage.
  • Check with us if you have college tuition to pay – depending on your income level, you may be missing out on the American Opportunity Credit, the Lifetime Learning Credit, student loan interest deductions, or 529 plan opportunities.
  • Should the corporate tax rate jump to 28% and bonus depreciation be cut, companies with gains may wish to sell their assets before the year ends. Others may be interested in buying assets to take advantage of the bonus depreciation, before it is cut.
  • Not working in the office, but from home? Your vacation home in another state? Make sure you are not taxed twice due to telework! State income tax is withheld and paid to the state in which the taxpayer’s services are performed, not necessarily the state in which the employee resides. Many different laws can kick in when different states try to tap non-residents for income taxes. Exceptions can apply for states that do not have an income tax or have reciprocal agreements. Track the number of days at each location where work is performed and save your documents to establish proper tax reporting and residency. Work with your employer to ensure adequate withholdings for the correct state.
  • Work for yourself? You have to pay both the employer and the employee share of Social Security and Medicare taxes, but at least you get to write off half of what you pay as an adjustment to income. You can also deduct contributions to a self-directed retirement plan such as a SEP or SIMPLE plan. Also deductible as an adjustment to income: the cost of health insurance for the self-employed (and their families)—including Medicare premiums and supplemental Medicare, up to your business’ net income.
  • Don’t forget state sales tax. This deduction is particularly important if you live in a state that doesn't impose a state income tax.
  • If you itemize, you may be able to deduct your gambling losses from the casino or race track, etc., but it is limited to the amount of gambling winnings you report as taxable income. • Be sure to let us know if you have a new baby or a dependent parent this year. It could mean tax savings! You may be eligible for the Child Tax Credit offering up to $2,000 per qualifying dependent child 16 or younger. There is a $500 nonrefundable credit for qualifying dependents for older children and elderly relatives. Child and Dependent Care Tax Credits may come into play as well.
  • Last but not least – Remember that rebate check you got? Most clients received economic recovery rebate payments of $1,200 ($2,400 for couples filing jointly), plus $500 more for each child under age 17. Technically, the rebate is an advance payment of a special 2020 tax credit to be reconciled on your 2020 return.

Rebalancing Your Pandemic Portfolio

Tuesday, September 22, 2020

Original article from Fuoco.com >

Portfolio rebalancing according to your age and goals is really all about asset allocation. At different stages in your life your financial concerns shift, and so you look for your investment portfolio to shift too - from growth to income - as you get older. During these pandemic times, with market volatility, your risk tolerance will also come into play.

Investors at Age 25

Should young investors place a high percentage of their money in stocks? At age 25-35 it would seem so, since you have a long time before retirement and good stocks do tend to perform long term. But asset allocation is influenced by more than your age, it also depends on your risk tolerance. If stock market plunges during the pandemic cause you to panic, you have a lower risk tolerance than someone who would see that same market plunge as a buying opportunity.

Studies abound about the long term performance of hypothetical portfolios invested 80% in stocks, 20% in bonds, or 70% in stocks and 30% in bonds, vs what a 60/40 investor would have earned, and the studies show minimal differences. What the studies are really telling us is that the most important thing is to invest in something tried and true, not something which is still considered highly speculative like Bitcoin.

At the end of the day an investment strategy that leaves you comfortable with the amount of risk you’re taking, and is diversified enough to help you stay on course during pandemic volatility and market corrections, is the best financial plan for you. So although you are 25-35 years old and keep hearing that you should be invested 80% in stocks, if you’re only comfortable with 50% in stocks and want to keep the other 50% in bonds, that’s fine. Just be sure to monitor your situation semi-annually (at a minimum), and communicate with your financial advisor when you believe you are ready for a change.

Be sure to take advantage of any retirement plans that are available through your employer. Many have a matching contribution, and over time the power of compounding does the heavy lifting of increasing your nest egg. Saving via direct payroll deduction makes it almost painless.

Investors at Age 45

As you mature and start climbing up the corporate ladder, maybe get married, have kids, buy a house, even come into an inheritance from a parent or grandparent, events in your life will drive decisions and begin to have an impact on your investment strategy. You now have a family to protect, kids to send to college, and maybe a business idea you want to invest in. How do you make those goals and dreams a reality? Having more money to invest may lead you down the path to a more conservative allocation, but think again. Now you may not need to take on as much risk to achieve growth, but you may want to depending on how close you are to achieving your financial goals. That is why financial planning and identifying goals is so important early on, and then revisiting them periodically to see how you are progressing is imperative.

Whether you inherit assets or stocks, you have to decide how to fit them into your current portfolio and if you need to rebalance. Inheriting stocks might mean you need to sell off some stocks in order to buy bonds. If particular assets are handed down, consider if those are things you would buy with your own money. Should you keep them? When you inherit cash, the money can be used to purchase both stocks and bonds, or to invest in another financial vehicle.

Set up a 529 plan, which is a tax-advantaged account that helps you save money for college and other education expenses. When your kids are young, an aggressive asset allocation with a high percentage of stocks makes sense. As your kids get closer to college age, your asset allocation should be more conservative. The plan’s value needs to become more stable over time so you’ll be able to withdraw money for your child’s education when you need it. Age-based 529 plans are popular and act like target-date retirement funds, but they have a shorter time horizon associated with sending kids to college.

Also at age 45 - 55, if you’ve been highly successful, watched your spending carefully, and been serious about saving, you might be on track to invest in a business idea or even decide to retire early. If instead of growth you are now thinking about income, it may be the signal to rebalance toward a more conservative asset allocation. How you feel about stock ownership during retirement boils down to your risk tolerance, which incidentally may have changed during these times of economic uncertainty due to the pandemic and looming recession ahead.

Fast forward to about 10 years away from retirement, and your portfolio is in the transition stage. You might be thinking about moving toward an asset allocation that’s more heavily bonds than stocks. But remember you still need some growth so you don’t outlive your portfolio $$$. Instead of moving toward the 40% bond, 60% stock asset allocation that might be recommended for someone planning to retire shortly, you might consider a move toward a 50/50 allocation.

Investors at Age 65

Age 65 certainly no longer represents the early years of retirement for most people who are healthy and want to keep a focus in their lives and get deep satisfaction from their career. Many who can afford to retire, now choose to work for fulfillment, or to beef up their retirement nest egg even more so as not to have to compromise their lifestyle. By age 70-75 though, you might start to think about withdrawing retirement account assets for income, earlier if you have lost your job due to the pandemic and have decided not to return to work due to the threat to your health.

Rebalancing your portfolio in your sunset years could mean gradually selling stocks to move your portfolio towards bonds for safety. Be wary of selling stocks at a loss. The investments you sell for income should be what you can sell for a profit. Being diversified gives you a better chance of always having assets to sell at a profit. Look at each major asset class with your financial advisor; you may want to hold both large-cap and small-cap stock funds, both international and domestic stock funds, and both government and corporate bonds!

Draft a retirement withdrawal strategy to put in place, and don’t forget to account for inflation. Portfolio rebalancing will require a different approach when you are taking regular withdrawals, as opposed to making mostly contributions. Also keep in mind your required minimum distributions (RMDs) from 401(k)s and traditional IRAs will eventually kick in. The CARES Act has those on hiatus for now, you may want to read our prior article: RMDs For 2020 Waived For Retirees.

When you take RMDs, you can rebalance your portfolio by selling an overweight asset class. Keep in mind that you’ll be paying taxes on withdrawals of earnings and pre-tax contributions unless it’s a Roth account. People with significant assets outside of retirement accounts can rebalance in a low-cost, tax-efficient way by gifting appreciated investments to charity or gifting stock shares with large capital gains to family members.

CONTACT US: Get educated about the potential impact of life changes and investment decisions on your portfolio and income. No matter what your age, our TFG financial advisory team will work with you to help you build a tax–efficient, well-diversified portfolio, allocated and tailored to your risk profile. Feel free to contact me, Cory Lyon, Financial Advisor, directly at 561-209-1120, with any questions regarding financial planning. TFG Financial Advisors offers a complimentary, no obligation, 360 degree portfolio audit to help you assess where you stand and what opportunities may exist. At TFG, we believe in customized investment portfolio design and personalized asset management. I act as a fiduciary for my clients.

TFG Financial Advisors, LLC is a registered investment advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities, and past performance is not indicative of future results. Investments involve risk and are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed here.

Deadline to Rollover 2020 Required Mandatory Distributions Is Quickly Approaching

Monday, August 17, 2020

Original article by Barbara E. Bel, Partner and Laura Rodriguez, Senior Associate for www.pkfod.com >

Not only has the Corona Aid, Relief, and Economic Security (CARES) Act passed last March injected trillions of dollars into the economy via the Paycheck Protection Program and the economic stimulus payments, it has also made an important, and very beneficial, change to the required mandatory distribution (RMD) law in 2020 for IRAs and defined contribution plans. In June, IRS Notice 2020-51 clarified some open issues.

New 2020 Rules

Under the CARES Act, any IRA owner who would normally be required to take an RMD in 2020, may choose to skip taking their RMD this year.

What happens to an individual who already took their RMD in 2020?

If an individual had already taken an RMD, the CARES Act reclassified those distributions as voluntary distributions, which typically can be rolled over within 60 days of distribution. The IRS notice extends the 60-day deadline to rollover or repay 2020 RMDs to August 31, 2020 and makes this relief available to all 2020 RMDs, including those taken as early as January 1, 2020.

In addition to expanding the ability to rollover or repay 2020 RMDs, the IRS issued the following guidance in relation the CARES Act and changes to the IRA rules for 2020:

  • The RMD waiver does not change an individual’s RMD required beginning date.
  • The 2020 RMD waiver applies to RMDs that would normally be treated as part of a series of substantially equal periodic payments.
  • The 2020 RMD waiver applies to beneficiaries of inherited IRAs.
  • A 2020 RMD is also waived for those individuals who turned 70½ in 2019 and whose first RMD was April 1, 2020.
  • The “one rollover per 12 months” restriction on IRAs has been waived to allow 2020 RMDs to be rolled over even if there was prior rollover in the last 12 months.

IRS reminder: June 15 tax deadline postponed to July 15 for taxpayers who live and work abroad

Wednesday, June 03, 2020

IR-2020-109, June 2, 2020

WASHINGTON – The Internal Revenue Service today reminded people who live and work abroad that they have until Wednesday, July 15, 2020, to file their 2019 federal income tax return and pay any tax due. The usual deadline is June 15.

This extension was included in a wide range of Coronavirus-related relief announced in early April. The extension generally applies to all taxpayers who have an income tax filing or payment deadline falling on or after April 1, 2020, and before July 15, 2020.

This means that anyone, including Americans who live and work abroad, nonresident aliens and foreign entities with a U.S. filing and payment requirement, have until July 15 to file their 2019 federal income tax return and pay any tax due. Visit IRS.gov/coronavirus for details.

Need more time beyond July 15?

Individual taxpayers who need additional time to file beyond the July 15 deadline can request a filing extension to Oct. 15 in one of two ways:

  • Filing Form 4868 through their tax professional, tax software or using the Free File link on IRS.gov.
  • Submitting an electronic payment with Direct Pay, Electronic Federal Tax Payment System or by debit, credit card or digital wallet options and selecting Form 4868 or extension as the payment type. The automatic extension of time to file will process when taxpayers pay all or part of their taxes, electronically, by the July 15 due date. An extension to file is not an extension to pay. Taxes are still due by July 15.

Businesses that need additional time to file income tax returns must file Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns.

Combat zone extension

Members of the military qualify for an additional extension of at least 180 days to file and pay taxes if either of the following situations apply:

  • They serve in a combat zone or they have qualifying service outside of a combat zone or
  • They serve on deployment outside the United States away from their permanent duty station while participating in a contingency operation. This is a military operation that is designated by the Secretary of Defense or results in calling members of the uniformed services to active duty (or retains them on active duty) during a war or a national emergency declared by the President or Congress.

Deadlines are also extended for individuals serving in a combat zone or a contingency operation in support of the Armed Forces. This applies to Red Cross personnel, accredited correspondents, and civilian personnel acting under the direction of the Armed Forces in support of those forces.

Spouses of individuals who served in a combat zone or contingency operation are generally entitled to the same deadline extensions with some exceptions.

Extension details and more military tax information is available in IRS Publication 3, Armed Forces' Tax Guide.

IRS.gov assistance 24/7

Tax help is available 24/7 on IRS.gov. The IRS website offers a variety of online tools to help taxpayers answer common tax questions. For example, taxpayers can search the Interactive Tax Assistant, Tax Topics, Frequently Asked Questions, and Tax Trails to get answers to common questions. Go to IRS.gov/payments for electronic payment options.

More information

The IRS will post frequently asked questions on IRS.gov/coronavirus and will provide updates as soon as they are available.

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