01/28/2021
Five Star Balanced Books
228 Cabrillo Ave.
Vallejo, Ca 94591
707-333-0243
707-731-2622
Emails: [email protected]
Website: fivestarbalancedbooks.net
Go to for appointments https://five-star-balanced-books.appointlet.com
February 16, 2021 is the first day we can file tax return.
To my valued and appreciated clients,
I hope you and your family are safe and healthy and will remain so. I want you to know that under the current order to remain at home, I can continue operating my business under the protection of the “essential business” exemption. Essential businesses such as tax preparation help keep our communities and our nation running smoothly.
Everyone agrees that this has become a very unusual tax season. The extension of the filing deadline to July 15 for both federal and California taxes is just one example of how things are changing on a near-daily basis. New legislation has changed so much more than just the filing deadline, and I am receiving constant updates and guidance from the IRS on all the tax areas that are affected.
Although we have more time to file tax returns, it is still important to complete your return as soon as possible, especially if you are expecting a refund. I strongly encourage you to use this time to get your tax papers in order and send them to me, if you have not already done so.
Current Office Procedures
Your safety and well-being are my highest priorities – in addition to providing you with expert guidance on taxation – and I have new office procedures to help keep our families, staff and clients safe.
• I am not meeting clients in person, so we will communicate over the phone or email.
• Data security is something that cannot be allowed to slip, and we cannot risk exposing you to identity theft. Here are the ways we can exchange documents safely:
We have a Document Management Program, RUBEX that will be using to securely receive you documents.
New Tax Rules
The amount of new legislation affecting individuals and business is staggering, and the tax community is working around the clock to make sense of it. I’ve summarized some of the new rules below.
• Extensions for Individuals: Federal the IRS extended many – but not all (yet) – of the filing and payment deadlines. Besides extending the regular income tax return date, the following were also extended to July 15, 2020:
• first quarter estimated tax payments,
• traditional IRA contributions
• HSA contributions.
Note: the second quarter estimated tax payment deadline is still June 15, 2020.
• Extensions for Individuals: California For California taxes, the Franchise Tax Board has also extended the filing and payment deadline to July 15, 2020. This extension includes both first and second quarter estimated tax payments.
• Extensions for Businesses: It’s complicated and may continue to change. The best course for now is to wait for further developments and know that I’m paying attention to this important topic.
• Stimulus Payments: All US residents with a valid Social Security number are eligible. Payments will be calculated based on the Adjusted Gross Income (AGI) shown on your 2019 tax returns. If you haven’t filed a 2019 tax return, the payment will be based on your 2018 tax return. You’ll receive the full amount based on these AGI limits:
• Single taxpayers up to $75,000 AGI
• Married taxpayers up to $150,000 AGI
• Head of Household up to $112,500 AGI
This is not income and you will not be taxed on the amount you receive – this is actually an advance of a refundable credit. When you file your 2020 tax return this refundable credit will be calculated and reconciled based on your 2020 AGI. If you qualify for more than you received in the advance payment, then the difference will be refunded to you with your 2020 tax return. If your situation changes and you qualify for less than you received, there is no requirement to pay it back.
There are many factors involved here and the IRS has just published a FAQ which will probably answer most of your questions. It can be found here.
Watch for Scammers! Scammers are already attempting to take advantage of the confusion generated by all of these rapid changes. Please know that the IRS will NOT call you for your banking information nor will they charge a fee to update your banking information. IRS will use the direct deposit information provided on your tax return. If you did not use direct deposit, they are working on a secure web portal that will allow you to update your banking information before the payments are issued. This portal does not exist yet. Please wait for an update from me or you can look for updates directly from the IRS at www.irs.gov.
• Unemployment Relief: Expanded and increased relief is available for both employees and self-employed individuals. This was part of the CARES act that was just signed into law on Friday, March 27, 2020. Full details and guidance are still being finalized, but in California all claims will still be processed by the Employment Development Department.
• Required Minimum Distribution: This has been waived from retirement accounts for 2020 only.
• Charitable Contributions: Taxpayers who no longer itemize their deductions will be able to deduct up to $300 of charitable contributions on their 2020 tax return.
• For Employers – Families First Coronavirus Response Act (FFA): This requires certain employers to provide employees with paid sick leave or expanded family and medical leave for specified reasons related to COVID-19.
• For Employers – Economic Injury Disaster Loan Program (EIDL) and the Paycheck Protection Program (PPP): These programs are available for small business owners to help keep your business open and employees paid during this challenging time. They are complex programs. If you have specific questions or would like to discuss which option may be the best fit for your business, please reach out to my office for an appointment.
What Comes Next?
We all receive an overwhelming amount of information each day about the economic recovery programs that Congress enacted. We all have questions and are looking for answers so we can make good decisions. It is important to remember that while these laws may have passed quickly it will take time for the IRS to formalize guidance and procedures. I am staying on top of these updates as new information is released. I want to answer your questions as soon as possible, but also ask for your patience and trust.
In closing, thank you for entrusting me with your tax preparation and planning. We are certainly navigating through unusual times, and I want to assure you that my commitment to you remains unchanged.
Sincerely,
Five Star Balanced Books
Get My Economic Impact Payment Get Coronavirus Tax Relief Get Your Refund Status File Your Taxes for Free Get Your Tax Record View Your Account Make a Payment Apply for an Employer ID Number (EIN) Forms and Instructions 1040 and Schedules 1-3 Individual Tax Return Other 1040 Schedules Information Ab...
