12/16/2020
Dec 16, 2020
Dear Friends and Clients:
This year has been a challenging one for many of us. I personally know that many of you who are reading this have had very difficult, even tragic, years. You have my deepest sympathies, and condolences when unfortunately appropriate.
As we come to the end of 2020 (and can’t happen soon enough), there are some tax tips and notes that I wish to share with you, some of which I’ve previously mentioned, but merit repeating.
1) For those of you who normally take RMD’s (required minimum distributions) from IRA’s and 401k’s, you DON’T have to take them for 2020. So, if you don’t NEED that money to live on, don’t take the distribution as you’re taxed on everything you take out. For those of you under age 70 this is not an issue.
2) Given the above, the next 2 weeks can yield a double tax benefit. Capital gains are not taxed (or technically taxed at a zero rate) if total income is less than $40k for single, $80k for married. Now everyone’s situation is different, and most of you (if not all) have at least social security income coming in (assuming you’re at the age of taking RMD’s). So while the math might be a little tricky to get perfect, it is a GREAT year, no matter what, to take capital gains. No matter what, they’re taxed at 15% up to the $400k range, married and single (married filing separate down around $240k). Not to mention, with the Biden administration coming in, while I don’t think increasing tax rates will affect most of you, they certainly won’t be getting any lower than they are now.
3) In regard to the above (no RMD distribution), another strategy could be to convert Traditional IRA’s to Roth’s to take advantage of the resulting lower brackets.
4) For those of you with businesses that we do a yearly payroll for, we need to discuss what you want to do this year. Let’s make sure to touch base in the next few weeks (payrolls can be done through mid, even end of January, but let’s not wait until the last minute).
5) For those of you that received PPP loans, as long as it was spent as least 60% on payroll, and then other business related expenses, there will be no tax consequences for receiving the money (no payback, and not taxed). Whether the expenses it was used to pay will be an allowed deduction is still not clear.
IMPORTANT OFFICE UPDATE:
Due to COVID-19, I’m automating as many procedures as possible. A big step we’re taking is the creation of a client portal. Many of you have already been sending your documents via e-mail, and then I’ve often been sending your returns back the same. Going forward the client portal will do this much more efficiently. Right now, many of you send me multiple e-mails, and it is easy for us here to miss one occasionally. With the new system you will load your documents directly into your personal portal. As you get more documents you can continue to do the same, and they will be in “your” file, which I will of course have access to (and of course no one else will). Upon completion of your returns, I will place them in same portal for you to print out, or just save electronically, as many of you do now. You’ll be able to access on your own any time you need to. I’ll be putting 2019 and 2018 returns there in the next few weeks along with your 2020 client organizer (for those of you that choose to use that), and encourage everyone to log in and get a feel for it early, that way any glitches can be worked out prior to you calling me on April 14 yelling I CAN’T LOG ON! (Not that any of my clients would yell like that, but I’ve heard stories from OTHER CPA’s). When the portal is up and running you will receive an e-mail invite, at which point you will set up your own password. I will also be setting up a we**am for those of you who wish Zoom type meetings. Masks are required for all clients who come in to the office.
I wish all of you a Happy Channukah, Merry Christmas, Happy Festivus, and a very Happy New Year!
Todd Pinchevsky, CPA
