Federal and state tax returns for the year 2020
Your Tax Preparer
January 30, 2021
Foreign Bank Account Traps – If you have any bank account, retirement account, investment account and/or business ownership interest with a value of $10,000 or more in a foreign country, you must advise us since special reporting rules now apply. Failure to disclose this on your tax return could result in severe penalties, as well as additional fees in representing you in any dispute with the Internal Revenue Service. The United States has negotiated agreements with foreign countries to require them to report foreign income to the United States to ensure U. S. citizens report and pay on foreign income.
Filing of dependent tax returns – We strongly advise that we prepare your dependent children's tax returns, especially if that child is a student, to avoid a discrepancy that could cost you hundreds or thousands of dollars in lost tax credits or penalties. We want to make sure all information matches when the IRS electronically crosschecks returns.
Rental Property – The IRS is requiring more information from rental property owners. You must list the physical location, type of property (commercial or residential), the number of days it was rented and the number of personal use days (if any). Regulations also require repairs costing more than $500 per item cannot be deducted all at once, but must be deducted over several years. Example, bathroom repairs of $1,860 ($300 new toilet, $200 paint, $550 new linoleum, $160 faucets/plumbing, $650 new tile job) would now give a current deduction of $660 (toilet, paint, faucets) while $1,200 (linoleum and tile) would be deducted over several years. Please take time to compile this information and provide it to us so we can correctly prepare your tax returns.
Pension plan deductions 2020 – IRA contribution limits: under the age of 50, $6,000, 50 and over, $7,000.
• Elective Deferral Limits: Simple IRA plan: under the age of 50, $13,500,50 and over $16,500.
• 401(k),403(b) and 457 plans: under the age of 50, $19,500,50 and over $26,000.
• Profit sharing plan and SEP plan: Contribution limit $57,000.
The office of Moats & Hebebrand CPAs makes a concerted effort to stay on top of the changes in the tax laws so you don't have to. Let us prepare your 2020 tax returns so you know they are done right! Due to COVID-19 you can drop off your information at our office and we will prepare your return and call you to get information we may need, or you can set up an appointment for an interview. We are also open all year to assist with tax planning and to take care of our clients.