Tehachapi's Online Community News & Entertainment Guide
Tehachapi's Online Community News & Entertainment Guide
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The SECURE Act of 2019 dramatically changed the rules governing how IRA and retirement plan assets are distributed to beneficiaries. The new rules, which took effect for account owner deaths occurring in 2020 or later, are an alphabet soup of complicated requirements that could result in big tax bills for many beneficiaries. RMDs and RBDs IRA owners and, in most cases, retirement plan participants must start taking annual required minimum distributions (RMDs) from their non-Roth accounts by...
I get calls all the time from a parent that wants to add their child to their home. Typically this is done to avoid probate. I looked at several articles on the internet and this is what I saw. Adding an adult child to your house deed, or giving them the home outright, might seem like a smart thing to do. It usually isn't. Transferring your house to your kids while you're alive may avoid probate, the court process that otherwise follows death. But gifting a home also can result in a big,...
Tax-related identity theft occurs when someone uses a taxpayer's stolen Social Security number and name to file a tax return to claim a fraudulent refund. Often the taxpayer doesn't know this has occurred until they try to file a legitimate tax return and have their return rejected with an error code stating that a return has already been filed using that name and Social Security number. This article discusses the steps to take when a taxpayer's identity has been stolen, along with helpful sugge...
As a business owner, do you mix personal transactions and business transactions? It is a common issue. One survey found that more than one-quarter of small businesses say they co-mingle finances. And it is easy to see why given the wide range of priorities a small business owner oversees every day, using a bank account that is already set up often seems like the easiest and most logical choice. But, while it might seem simpler to only manage one account, that is not actually the case. Here are...
Proving tax deductions without cancelled checks There is a growing trend toward remote deposit of checks. Because of the increasing sophistication of smart phones, you can now photograph a check written out to you and digitally send it to your bank for deposit. Most banks discontinued the practice of retaining a paper version or copy of your checks. Banks are allowed to truncate each of your checks, create a new electronic negotiable instrument called a substitute check and then destroy the...
I get calls all the time from a parent that wants to add their child to their home. Typically this is done to avoid probate. I looked a several articles on the internet and this is what I saw. Adding an adult child to your house deed, or giving them the home outright, might seem like a smart thing to do. It usually isn't. Transferring your house to your kids while you're alive may avoid probate, the court process that otherwise follows death. But gifting a home also can result in a big,...
It's been an interesting year with important tax changes that will impact you. Here are some of the changes and issues you need to know about. Tax return due dates: • Individuals must file returns by April 15 for the 2023 tax year. • Partnerships must file returns by the 15th day of the third month following the close of the taxable year (March 15 for calendar-year taxpayers); • C corporation returns are generally due by the 15th day of the fourth month following the close of the taxable year...
If you've invested in an IRA for many decades, it may well turn into a key source of income for your retirement. Still, you might not deplete your IRA in your lifetime, especially if you also have a pension or a 401(k) and other investment income. So, if your IRA still has sizable assets after your passing, it would likely end up in your estate plan. If you leave your IRA to grown children or other family members, could they be hit with a big tax bill? Here's a little background: Up until the Se...
If you own a business, you've always got a lot on your mind. But no matter how busy you are today, you need to think about tomorrow. Specifically, you'll want to create an exit strategy for the day you want to move on from your business to a new phase in your life. To develop this strategy, you'll need to address these key questions: • How much do you need (or want) for your business? Ideally, you'll want the sale of your business to meet your retirement and estate-planning goals. So, you'll n...
If 2023 has been financially challenging, why not take a moment to reflect on the progress you've made and the setbacks you've faced? Getting into the habit of reviewing your finances midyear may help you keep your financial plan on track while there's still plenty of time left in the year to make adjustments Goal overhaul Rising prices put a dent in your budget. You put off a major purchase you had planned for, such as a home or new vehicle, hoping that inventory would increase and interest...
I'm sure you've heard about or seen ads for Virtual Private Networks (VPNs). But what are they, how do they work, and why would you need one? If you don't subscribe to a VPN service, when you use the internet, your computer connects to your service provider (AT&T, Race, Spectrum, or somebody else) and then to the site you want to visit. With a VPN, your computer connects to your service provider as usual but then gets re-routed to the VPN company's equipment, which could be anywhere. When you...
Extensions Whether you file a tax return by the April due date, or obtain an extension to file, filing an annual tax return is mandatory if your income is above a certain level, which will vary depending upon your filing status. Filing an extension will grant you another six months for individuals and corporations (five month extension for partnerships, LLCs, estates and trusts) to file the tax return. Filing an extension, however, will not allow you to delay payment on any tax you may owe. The...
Proving tax deductions without cancelled checks There is a growing trend toward remote deposit of checks. Because of the increasing sophistication of smartphones, you can now photograph a check written out to you and digitally send it to your bank for deposit. Most banks discontinued the practice of retaining a paper version or copy of your checks. Banks are allowed to truncate each of your checks, create a new electronic negotiable instrument called a substitute check and then destroy the...
Tax-related identity theft occurs when someone uses a taxpayer's stolen Social Security number and name to file a tax return to claim a fraudulent refund. Often the taxpayer doesn't know this has occurred until they try to file a legitimate tax return and have their return rejected with an error code stating that a return has already been filed using that name and Social Security number. This article discusses the steps to take when a taxpayer's identity has been stolen, along with helpful sugge...
It's been an interesting year with important tax changes that will impact you. Here are some of the changes and issues you need to know about. Tax return due dates: • Individuals must file returns by April 18, 2023, for the 2022 tax year. • Partnerships must file returns by the 15th day of the third month following the close of the taxable year (March 15 for calendar-year taxpayers); • C corporation returns are generally due by the 15th day of the fourth month following the close of the taxab...
You may have noticed that the IRS is in a bad way. It has a backlog of millions of unprocessed paper tax returns, and taxpayers can't get through to the agency on the phone. Congress noticed and took action by passing a massive funding of the IRS in the recently enacted Inflation Reduction Act. The IRS will get an additional $80 billion over the next decade. This includes $35 billion for taxpayer services, operations support and business systems. Among other things, the IRS plans to use these fu...
Now that it's the holiday season, gifts are probably on your mind – and you might intend for some of those gifts to go to charities. Although your intentions are good, you could be shortchanging both your recipients and yourself with your method of giving. But with some guidance, you can make choices that work well for you and those charitable groups you support. Of course, you could simply give money to these groups. However, by donating other types of assets, can you increase the value of y...
The passage of the SECURE Act in 2019 effectively eliminated the stretch IRA, an estate planning strategy that allowed an inherited IRA to continue growing tax deferred, potentially for decades. Most nonspouse beneficiaries, including children and grandchildren, can no longer stretch distributions over their lifetimes. Moreover, proposed IRS regulations require most designated beneficiaries to take annual required minimum distributions (RMDs) within the 10-year distribution period if the...
Blocking and reporting spam calls Are you tired of getting spam and scam calls on your cell phone? You know, those calls about elections, solar panels, IRS problems, dubious charity donations, energy retrofits, health insurance and all the rest. Current cell phone technology offers ways to block these calls. But, of course, the spammers know this and have adapted. Almost all scammers and robocallers use "number spoofing" to make it hard to block them. Just because a number starts with 661...
You can find many ways to support charitable organizations. One method that's gained popularity over the past few years is called a donor-advised fund. Should you consider it? The answer depends on your individual situation, because donor-advised funds are not appropriate for everyone. However, if you're in a position to make larger charitable gifts, you might at least want to see what this strategy has to offer. Here's how it works: • Contribute to the fund. You can contribute to your d...
Do you qualify for the Employee Retention Credit (ERC)? Did you claim it? It's not too late. You can still amend your 2020 and 2021 payroll tax returns. Remember, this can be worth up to $5,000 per employee in 2020 and up to $7,000 per employee per quarter for the first three quarters of 2021, for a 2021 total of $21,000 ($26,000 per qualifying employee for 2020 and 2021 combined). Example. Let's say you have 10 employees who fully qualify for the credit. That's a $260,000 tax credit (think...
Do you own a corporation, limited liability company (LLC), limited partnership, limited liability partnership, limited liability limited partnership, or business trust? Or are you planning to form one of these entities? If so, be alert. There's a new federal filing requirement coming. Back in 2021, Congress passed a new law called the Corporate Transparency Act (CTA) that requires corporations, LLCs, and other business entities to provide information about their owners to the Department of the...
Cryptocurrency, such as Bitcoin, is all the rage these days. Crypto is not legal money. It is property, similar to gold. Like gold, its use can result in taxable income. The IRS is concerned that you and millions of Americans are using crypto without paying tax on the earnings. To clarify, it expects you and other taxpayers to report crypto earnings, the IRS added the following question about cryptocurrency to the top of Form 1040: At any time during 2021, did you receive, sell, exchange, or...
Extensions Whether you file a tax return by the April due date, or obtain an extension to file, filing an annual tax return is mandatory if your income is above a certain level, which will vary depending upon your filing status. Reasons to file an extension include waiting for an important document such as a late 1099 or K-1 form showing income which needs to be reported, you may be overseas and unable to file by the April deadline, or you may just be a habitual procrastinator. Whatever the...
Tax-related identity theft occurs when someone uses a taxpayer’s stolen Social Security number and name to file a tax return to claim a fraudulent refund. Often the taxpayer doesn’t this has occurred until they try to file a legitimate tax return and have their return rejected with an error code stating that a return has already been filed using that name and Social Security number. This article discusses the steps to take when a taxpayer’s identity has been stolen, along with helpful sugge...
