Time to check and adjust your stock portfolio

Is this a good time to adjust and make changes to your portfolio?

SUMMARY:

What is the answer to that question? Indeed, it will depend on the stocks you are holding.   Here is another question for you. Are your stocks have more room for growth? Do you think your stocks have given you gains to justify keeping them longer?  Do you want to protect some of your gains?  Do you want to realize some gains this year?  Do you need some cash to reinvest in other investment vehicles?  These are some of the questions most investors are facing as we are getting closer to year-end.

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SMALL BUSINESS relief for Self-Employed

You may be able to get some help from the federal Small Business Administration (SBA), which is authorized to provide loans to small businesses on an as-needed basis. These are the two options:

Option 1-The Economic Injury Disaster Loan (EIDL) Program- Under this program, funds are commonly granted on a local level following a natural disaster (such as a hurricane or a tornado). The SBA is providing advances of up to $10,000 on EIDLs for businesses experiencing a temporary loss of revenue.

Option 2-The Paycheck Protection Program- Under this program, small businesses that employ 500 or fewer employees are eligible for payment relief. 

Business categories:

You find S and C corporations, sole proprietors, partnerships, certain non-profits, veterans’ organizations, and tribal businesses.

No employees?
Both the sole proprietor with no employees and the single-member LLC with no employees qualify.

I’m here to help you in any way you need in this process. Don’t hesitate to call me on my direct line at 832-498-1012.

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 Changes in Tax Due Dates

On March 21, 2020, the Treasury Department and IRS announced that the federal income tax filing due date is automatically extended from April 15, 2020, to July 15, 2020.

TAX payments:

Tax Payments due on April 15, 2020, are also deferred to July 15, 2020, without penalties and interest, regardless of the amount owed. This deferment applies to all taxpayers, including individuals, trusts and estates, corporations and other non-corporate tax filers as well as those who pay self-employment tax.

No need to file an extension:

Taxpayers do not need to file any additional forms or call the IRS to qualify for this automatic federal tax filing and payment relief. Individual taxpayers who need additional time to file beyond the July 15 deadline, can request a filing extension by filing Form 4868 through their tax professional, tax software or using the Free File link on IRS.gov. 

Businesses who need additional time must file Form 7004.

Advantages of filing earlier?

The IRS urges taxpayers who are due a refund to file as soon as possible. Most tax refunds are still being issued within 21 days.

Filing electronically with direct deposit is the quickest way to get refunds. 

IRS employees are very busy:

Although we are curtailing some operations during this period, the IRS is continuing with mission-critical operations to support the nation, and that includes accepting tax returns and sending refunds. 

For information:

The IRS will continue to monitor issues related to the COVID-19 virus, and updated information will be posted on a special coronavirus page on IRS.gov.

Source: IRS.gov 

IR-2020-58

Tax, Accounting, and Auditing: Hit CounterBeware, Taxpayers- “Be On High Alert...

Tax, Accounting, and Auditing: Hit Counter Beware, Taxpayers- “Be On High Alert...: Hit Counter Beware, Taxpayers- “Be On High Alert” For Coronavirus Relief Payment Scams The Treasury Inspector General fo...

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Beware, Taxpayers- “Be On High Alert” For Coronavirus Relief Payment Scams The Treasury Inspector General for Tax Administration (TIGTA) today urged taxpayers to be on high alert for potential scams related to government assistance to taxpayers impacted by the coronavirus. If you receive letters, calls, emails, or other communications from individuals claiming to be from the IRS and offering coronavirus stimulus payments in exchange for personal financial information, an advance fee, or charge of any kind, including the purchase of gift cards, please do not respond. These are scams. Please contact TIGTA so these scammers can be identified and stopped. Inspector General George offered the following tips to taxpayers: The IRS is not going to contact you by telephone to ask you for your personal identification or financial information in order to provide you with an economic impact payment. The IRS will never contact you and ask you to make any kind of payment using an iTunes card, gift card, prepaid debit card, money order, or wire transfer. The IRS will never request personal or financial information by e-mail, text messages, letters, or any social media. If you receive a call from someone claiming to be from the IRS asking for your personal identification or financial information in exchange for an economic impact payment, take the following action: Hang up. If you owe Federal taxes or think you might owe taxes, call the IRS at 1-800-829-1040. IRS employees can help you with your payment questions. If you do not owe taxes, report suspicious communications on TIGTA’s website at www.TIGTA.gov, and follow the prompts to report IRS-related coronavirus scams. Inspector General George encourages taxpayers to be alert to phone and e-mail scams that use the IRS name and logo. Forward suspected scam e-mails to phishing@irs.gov. Do not open any attachments or click on any links in those e-mails. Also, be aware of other unrelated scams (such as saying you are a lottery or sweepstakes winner) and solicitations (such as debt relief offers) that fraudulently claim to be from the IRS. April 7, 2020 TIGTA-2020-2 Contact: David Barnes David.Barnes@tigta.treas.gov

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Who is eligible for the Economic Impact Payment?

U.S. citizens or resident aliens who:

• Have a valid Social Security number,
• Could not be claimed as a dependent of another taxpayer, and
• Had adjusted gross income under certain limits.

Who will receive the Economic Impact Payment automatically (EIP) without taking additional steps?

Most eligible U.S. taxpayers will Automatically receive their EIP payments are individuals who: 

• Filed a federal income tax for 2018 or 2019
• Receive social security retirement, disability (SSDI), or survivor benefits, and
• Individuals who receive Railroad Retirement benefits

What about Non-Filers taxpayers: 

Eligible U.S. citizens or permanent residents who:

• Had gross income < than $12,200 ($24,400 for married couples) for 2019
• Were not otherwise required to file a federal income tax return for 2019, and didn't plan to file.

What to do?  You can provide the necessary information to the IRS easily and quickly for no fee through "Non-Filers: Enter Payment Info", see below.  After providing this information you won’t need to take any additional action.

Non-Filers: Enter Payment Info Here

Information you need to provide?

• Full name, current mailing address and an email address
• Date of birth and valid Social Security number
• Bank account number, type, and routing number, if you have one
• Identity Protection Personal Identification Number (IP PIN) you received from the IRS earlier this year if you have one
• Driver’s license or state-issued ID, if you have one
• For each qualifying child: name, Social Security number or Adoption Taxpayer Identification Number and their relationship to you or your spouse

What to Expect

Clicking “Non-Filers: Enter Payment Info Here” above will take you from the IRS site to Free File Fillable Forms, a certified IRS partner. The IRS claims this site is safe and secure.

Expected steps to follow, are:

• Create an account by providing your email address and phone number; and establishing a user ID and password.
• You will be directed to a screen where you will input your filing status (Single or Married filing jointly) and personal information.
• Make sure you have valid Social Security numbers.
• If applicable to you; Adoption Taxpayer Identification Number for each dependent you want to claim for. 
• Check the “box” if someone can claim you as a dependent or your spouse as a dependent.
• Complete your bank information (otherwise we will send you a check).
• You will be directed to another screen where you will enter personal information to verify yourself. Simply follow the instructions. 
• You will need your driver’s license (or state-issued ID) information. If you don’t have one, leave it blank.

A confirmation email of information submitted.

You will receive an e-mail from Customer Service at Free File Fillable Forms that either acknowledge you have successfully submitted your information, or that tells you there is a problem and how to correct it. 

Free File Fillable forms will use the information to automatically complete a Form 1040 and transmit it to the IRS to compute and send you a payment.  Source IRS.gov

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Click the link below to get general information regarding the Fed Small Business Loan.


https://www.natptax.com/TaxKnowledgeCenter/covid19resources/Documents/irs-payments-poster.pdf?utm_source=mkt&utm_medium=email&utm_content=040620commish&utm_campaign=gen

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The Economic impact federal check.

IR-2020-61, March 30, 2020

According to The Treasury Department and the Internal Revenue Service, the distribution of economic impact payments will begin in the next three weeks and will be distributed automatically, with no action required of your part. 

Taxpayers who typically do not file returns will need to submit a simple tax return to receive the economic impact payment.

Social security beneficiaries who are not required to file tax returns will not need to file an abbreviated tax return to receive an economic impact payment. The IRS will use the information on Form SSA-1099 to generate a $1,200 payment. 

Who is eligible for the economic impact payment?

Tax filers with adjusted gross income up to $75,000 for individuals and up to $150,000 for married couples filing joint returns will receive the full payment. For filers with income above those amounts, the payment amount is reduced by $5 for each $100 above the $75,000/$150,000 thresholds. 

Single filers with income exceeding $99,000 and $198,000 for joint filers with no children are not eligible. Social Security recipients and railroad retirees who are otherwise not required to file a tax return are also eligible and will not be required to file a return. 

Eligible taxpayers who filed tax returns for either 2019 or 2018 will automatically receive an economic impact payment of up to $1,200 for individuals or $2,400 for married couples and up to $500 for each qualifying child.

How will the IRS know where to send my payment?

The IRS will calculate and automatically send the economic impact payment to those eligible.

For people who have already filed their 2019 tax returns, the IRS will use this information to calculate the payment amount. For those who have not yet filed their return for 2019, the IRS will use information from their 2018 tax filing to calculate the payment. 

The economic impact payment will be deposited directly into the same banking account reflected on the return filed.

Taxpayer who failed to provide direct deposit information in their tax return. Can do the following:

Wait for the IRS web-based portal for taxpayers to provide their banking information to the IRS.  This facilitates receive payments immediately as opposed to checks in the mail.

Where can I get more information?

The IRS will post all key information on IRS.gov/coronavirus as soon as it becomes available.

Can my Health Savings Account (HSA) covers my Novel Coronavirus (COVID-19) testing expenses?

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COVID-19 Testing and treatment cost

According to the IRS, and taking into consideration that most corporate high deductible plans differ from others, you could be able to use your health savings account (HSA) account to pay for these testing and treatment expenses.  This also means that an individual with a High Deductible Health Plan (HDHP) can cover these costs.

The IRS said that health plans that otherwise qualify as HDHPs will not lose that status merely because they cover the cost of testing for or treatment of COVID-19 before plan deductibles have been met. 

As in the past, any vaccination costs continue to count as preventive care and can be paid for by an HDHP.

Today's notice applies only to HSA-eligible HDHPs. Employees and other taxpayers in any other type of health plan with specific questions about their own plan and what it covers should contact their Plan Administrator.  Source IRS.gov

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What I need to know if I received an inceptive option in the form of company stock

What is an incentive stock option?

Some time companies give employees the right to buy shares of the company in lieu of compensation. Other times the intention is to give the right as an incentive in exchange for work performance, meet some goals, due dates, etc. The option price at which the employee paid could vary. 

What is the Taxpayer Tax Treatment?

If you receive an option as an incentive, the taxpayer needs to keep a few dates in mind: Date was granted, the date is exercised.  Also: when and what is considered compensation or capital gain.   

The best option for taxpayers is to consult a CPA.

Source: IRS.gov

Do you know your rights as a Taxpayer?

Taxpayer Rights 

The IRS explains your rights as a Taxpayer and the processes for examination, appeal, collection, and refunds in Publication 1.  This is a summary list of those rights:

1- Your rights to be informed.

2- The right to quality service

3- The right to pay no more than the correct amount of tax

4- The right to appeal an IRS decision

5- The right to finality

6- The right to privacy

7- The right to confidentiality

8- The right to retain representation

9- The right to a fair and just tax system

10- The right to challenge an IRS position

Click below for a copy of the IRS publication. 

file:///C:/Users/modesto/Desktop/Tax%20master%20folder/2020%20Newsletter%20articles/p1%20taxpayer%20rights%202020.pdf

Source: IRS.GOV

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Moving Expense Deduction

Who qualified to deduct moving expenses?

Individuals who are members' of the Armed Forces on active duty and you move because of a permanent change of active duty station. 

What is considered "Permanent Change of Station"?

• A move from one permanent post of duty to another, and 
• A move from your last post of duty to your home or to a nearer point in the United States. 

What moving expenses can be deducted?

• The taxpayer household goods and personal effects (including in-transit or foreign-move storage expenses).
• Any traveling (including lodging but not meals) to your new home, and
• You can't deduct any expenses for meals.

Is there any dollar limitation or restriction?

Yes, you can deduct only those expenses that are reasonable for the circumstances of your move. 

The move must occur within 1 year of ending your active duty or within the period allowed under the Joint Travel Regulations.

Please consult your CPA to determine how the regulations could benefit you.

Source: IRS.gov

  

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Credit Card Purchases

In dealing with credit card purchases, the year you made the purchase is the year that you get to take the deduction.  This rule applies generally for both individuals and businesses. 

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Taxpayers can view their tax account going to the IRS website. 

The first step is to set-up an account.  (Go to blue link below)  Under this step, you must provide key tax information to the IRS. That requires registration and providing the IRS with the information they are requesting. Along this process, you are required to identify yourself by providing unique information about you. 

Individual taxpayers can go to IRS.gov/account 

Second Step, you are logging in and can have access to the following:

• View their balance.
• See their payment history.
• Pay their taxes.
• Access tax records through Get Transcript.

It is very helpful for taxpayers to go here first Secure Access: How to Register for Certain Online Self-Help Tools 

CPAs and tax practitioners can be very helpful in helping you navigate on these sites.

Voluntary Classification Settlement Program (VCSP)

VOLUNTARY CLASSIFICATION SETTLEMENT PROGRAM (VCSP)

As Revised by the IRS on December 4, 2019.

What is the VCSP?

The VCSP is a voluntary program that provides an opportunity for taxpayers to reclassify their workers as employees for employment tax purposes for future tax periods with partial relief from federal employment taxes. Apply to a taxpayer who has consistently treated the workers as independent contractors or other nonemployees (who have filed all required Forms 1099) and want to reclassify these workers as employees.

How do you apply to participate in this program?

The taxpayer (TP) must apply to participate by filing Form 8952, "Application for Voluntary Classification Settlement Program", and enter into a closing agreement with the IRS.

The application should be filed at least 60 days prior to the date the taxpayer wants to begin treating its workers as employees. The IRS will make every effort to process Form 8952 with sufficient time to allow for the voluntary reclassification on the requested date. 

Along with the application, the taxpayer may provide the name of a contact or an authorized representative with a valid Power of Attorney (Form 2848).  However, the taxpayer, and not the taxpayer's representative, is required to sign Form 8952. The IRS will contact the taxpayer or authorized representative to complete the process after reviewing the application and verifying the taxpayer’s eligibility. 

Background and History:

The VCSP allows eligible taxpayers to obtain relief similar to that currently available through the Classification Settlement Program for taxpayers under examination.  Exempt organizations and government entities may participate in VCSP. 

This program, originally released in Announcement 2011-64, was later modified in Announcement 2012-45 including:

• Permit a taxpayer under IRS audit, other than an employment tax audit, to be eligible to participate in the VCSP
• Clarify the current eligibility requirement that a taxpayer who is a member of an affiliated group within the meaning of section 1504(a) is not eligible to participate in the VCSP if any member of the affiliated group is under employment tax audit
• Clarify that a taxpayer is not eligible to participate if the taxpayer is contesting in court the classification of the class or classes of workers from a previous audit by the IRS or Department of Labor; and
• Eliminate the requirement that a taxpayer agrees to extend the period of limitations on assessment of employment taxes as part of the VCSP closing agreement with the IRS.

Announcement 2012-45 (2012-51 I.R.B. 724) provides notice and information about the revised program.

Who are not eligible/are eligible to participate under this program?

Additionally, the taxpayer cannot currently be under employment tax audit by the IRS and the taxpayer cannot be currently under audit concerning the classification of the workers by the Department of Labor or by a state government agency.

If the IRS or the Department of Labor has previously audited a taxpayer concerning the classification of the workers, the TP will be eligible only if the taxpayer has complied with the results of that audit and is not currently contesting the classification in court.

What the TP agrees to do:

A taxpayer participating in the VCSP will agree to prospectively treat the class or classes of workers as employees for future tax periods. In exchange, the taxpayer will:

• Pay 10 percent of the employment tax liability that would have been due on compensation paid to the workers for the most recent tax year, determined under the reduced rates of section 3509(a) of the Internal Revenue Code. See VCSP FAQ 15, for information on how payment under the VCSP is calculated. Also, see Instructions to Form 8952;
• Not be liable for any interest and penalties on the amount; and
• Not be subject to an employment tax audit with respect to the worker classification of the workers being reclassified under the VCSP for prior years. 

Eligible taxpayers accepted into the VCSP will enter into a closing agreement with the IRS to finalize the terms of the VCSP and will simultaneously make full and complete payment of any amount due under the closing agreement.

IRS Expands Voluntary Worker Classification Settlement Program; Relief From Past Payroll Taxes Available to More Employers Who Reclassify Their Workers As Employees

Consult your CPA or the IRS.


More information is available on IRS.gov, keyword “VCSP



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What else (other than cash), you can contribute to your favorite charitable organization?

•  You can contribute your time (e.g., Volunteer Services)...
•  Volunteer with out-of-pocket expenses...
•  Publicly and non-publicly traded stocks...
•  Artwork...
•  Autos, boats, and planes...
•  Patents and other intellectual property, and
•  Non-cash donations.

The form of the written documentation acknowledging your varies by amount and type of donations. You may be required to attach with your 1040, IRS Form 8283, and/or Form 1098-C, or any other statement(s) as prescribed by the IRS. Sometimes you are required to obtain an appraisal in the form prescribed by the IRS. 

The IRS had established the definitions of the following terms:  "Written Records",  "Acknowledgement", and what is a "Pledge Card". 

Please consult with your tax professional or the IRS.gov.



Health Savings Accounts 

Annual contribution limitation. For the calendar year 2019, the annual limitation on deductions under § 223(b)(2)(A) for an individual with self-only coverage under a high deductible health plan is $2,250. 

For the same calendar year, the annual limitation on deductions under § 223(b)(2)(B) for an individual with family coverage under a high deductible health plan is $4,500.

There is an additional contribution of $1,000 for people over 55-year-olds.

Please consult the IRS or your tax professional for more information and applicability. 

Source: IRS.gov

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How long should a Taxpayer keep their tax records and any other related documents?

The general answer is.

It may depend on the action, expense, or event or the type of document and/or records. 

As a general rule, a taxpayer (TP) must keep records that support an item of income, deduction or credit shown on your tax return until the period of limitations for that tax return runs out.

The period of limitations is the period of time in which you can amend your tax return to claim a credit or refund, or the IRS can assess additional tax. The information below reflects the periods of limitations that apply to income tax returns. 

Caveats: Unless otherwise stated, the years refer to the period after the return was filed. Returns filed before the due date are treated as filed on the due date.   Keeping copies of your filed tax returns help you in preparing future tax returns and making computations if you file an amended return.

Period of Limitations that apply to income tax returns:

1. Keep records for 3 years if situations (4), (5), and (6) below do not apply to you.
2. Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return.
3. Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction.
4. Keep records for 6 years if you do not report income that you should report, and it is more than 25% of the gross income shown on your return.
5. Keep records indefinitely if you do not file a return.
6. Keep records indefinitely if you file a fraudulent return.
7. Keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.

What about tax records connected to a property?

Generally, keep records relating to property until the period of limitations expires for the year in which you dispose of the property. You must keep these records to figure any depreciation, amortization, or depletion deduction and to figure the gain or loss when you sell or otherwise dispose of the property.

If you received property in a nontaxable exchange, your basis in that property is the same as the basis of the property you gave up, increased by any money you paid. You must keep the records on the old property, as well as on the new property until the period of limitations expires for the year in which you dispose of the new property.  Example: Your residence.

What should I do with my records for nontax purposes? (e.g., your insurance company, creditors, financial planning, etc.)

After they are no longer needed for tax purposes, you may need them for other purposes.  When in doubt, consult your tax advisor CPA.

Source IRS.gov

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Taxpayers may consider paying your taxes electronically or by phone.

The IRS suggests EFTPS; it claims the following: The system is secure, convenient, and improve accuracy.

What is the EFTPS?

• It is a government website that allows register users to make federal tax payments electronically.
• Every user must have a secure Internet browser (e.g., Microsoft Explorer.) with 128-bit encryption in order to access the site. 
• To log on, an enrolled user must be authenticated with three pieces of unique information: Taxpayer Identification Number (EIN or SSN), EFTPS® Personal Identification Number (PIN) and an Internet Password. The combination of these three pieces of identification adds to the security of the site and the privacy of taxpayer data.
• The IRS claims the system is available 24/7.

Some of the available features

• You are able to keep track of your payments by opting in for email notifications when you enroll or update your enrollment for EFTPS. An email notification you will receive will contain the confirmation number you receive at the end of a payment transaction. 
• Businesses and Individuals can schedule payments up to 365 days in advance. 
• Scheduled payments can be changed or canceled up to two business days in advance of the scheduled payment date.
• You can use the system to make all your federal tax payments, including income, employment, estimated and excise taxes.
• You can check up to 16 months of your payment history online or by calling Customer Service.
•  Using your bank account, you submit payment instructions to move funds to the Treasury's account for payment of your federal taxes. Funds will not move from your account until the date you indicate. 
• You will receive an immediate acknowledgment of your payment instructions, and your bank statement will confirm the payment was made. 

Word of caution: You will only receive an email from EFTPS if you've requested the service.

To enroll in the government payment system

To enroll, or for more information on enrollment, visit EFTPS® or call EFTPS® 

Customer Service to request an enrollment form:

1-800-555-4477 

1-877-333-8292 (Federal Agencies)

1-800-733-4829 (TDD Hearing-Impaired)

1-800-244-4829 (Español)

Source: IRS.gov

Last updated by the IRS was Nov 19, 2018, as of Feb. 6, 2019

Trump Calls For Review Of Rule Requiring RMDs At 70 1/2

Trump Calls For Review Of Rule Requiring RMDs At 70 1/2: His executive order may lead to money staying longer in tax-deferred retirement accounts.

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