Required Minimum Distributions waved for 2020

 

The CARES Act did more for us than give us a stimulus payment.  It also waives required minimum distributions (RMDs) during 2020 for IRAs and defined contribution retirement plans. RMDs are also waived for beneficiaries with inherited IRAs and accounts inherited in a retirement plan. You’re not required to have been affected by the coronavirus to waive your RMD for 2020.

Distributions of an amount that would have been an RMD in 2020 can generally be rolled over to another workplace retirement plan or IRA within 60 days of the distribution. RMDs rolled over by August 31, 2020, have special relief.

Distributions from inherited IRAs are not required in 2020. If you were required to take a distribution within 5 years following the year of the account holder’s death, 2020 does not count toward the 5 years. So, you would essentially have six years, instead of five, to distribute the inherited IRA.

Also, if the account holder died in 2019, you would normally be required to begin taking distributions by the end of 2020 to be able to take distributions over your lifetime. Since 2020 does not count, you have until the end of 2021 to begin taking distributions over your lifetime.

 

Why is this good news not to take a distribution?  If you pay federal income tax on your distributions, not taking a distribution will lower your taxable income for 2020.  

 

If you have questions about this topic, please feel free to contact me at 702-469-9426 or cstevens@numbercruncherllc.tax

 

Candace Stevens, CEO/President of

Number Cruncher LLC

cstevens@numbercruncherllc.tax

 

www.numbercruncherllc.tax

Coronavirus-related withdrawals from IRA

 If you had to dip into your IRA during 2020 to help you get through tough times, you may be able to repay your IRA over a 3-year period or have the taxes due on the distribution spread over three years if you are a qualified individual.  

To be eligible for COVID-19 relief, coronavirus-related withdrawals or loans can only be made to an individual if:

• The individual (or the individual’s spouse or dependent) is diagnosed with the virus SARS-CoV-2 or with coronavirus disease 2019 (collectively, COVID-19) by a test approved by the Centers for Disease Control and Prevention (including a test authorized under the Federal Food, Drug, and Cosmetics Act);
• The individual experiences adverse financial consequences as a result of:
  • The individual being quarantined, being furloughed or laid off, having work hours reduced, being unable to work due to lack of childcare, having a reduction in pay (or self-employment income), or having a job offer rescinded or start date for a job delayed, due to COVID-19;
  • The individual’s spouse or a member of the individual’s household (that is, someone who shares the individual’s principal residence) being quarantined, being furloughed or laid off, having work hours reduced, being unable to work due to lack of childcare, having a reduction in pay (or self-employment income), or having a job offer rescinded or start date for a job delayed, due to COVID-19; or
  • Closing or reducing hours of a business owned or operated by the individual, the individual’s spouse, or a member of the individual’s household, due to COVID-19.

If you have questions concerning withdrawals made from your IRA during 2020, please contact me at 702-469-9426 or cstevens@numbercruncherllc.tax.

 

Candace Stevens, CEO/President of

Number Cruncher LLC

cstevens@numbercruncherllc.tax

 

www.numbercruncherllc.tax

Another Awesome Benefit of the CARES Act.

There is a benefit of the CARES Act which has not been given much attention.  This will help most people who donate to charity.  Usually, when a taxpayer takes the standard deduction they cannot claim a deduction for charitable contributions.  The CARES Act will allow individuals to claim a limited deduction on the 2020 federal income tax returns for cash contributions made to certain qualifying charitable organizations AND still claim the standard deduction.  

This is an "above-the-line" deduction that individuals can claim of up to $300 for cash contributions made to qualifying charities during 2020.  The maximum above-the-line deduction is $150 for married couples who file separately.

Cash contributions include those made by check, credit card, or debit card as well as amounts incurred by an individual for unreimbursed out-of-pocket expenses in connection with the individual’s volunteer services to a qualifying charitable organization. Cash contributions don’t include the value of volunteer services, securities, household items, or other property.

 

If you or someone you know is in need of a tax preparer, please feel free to contact me at 702-469-9426 of cstevens@numbercruncherllc.tax.

Candace Stevens, CEO/President of

Number Cruncher LLC

cstevens@numbercruncherllc.tax

www.numbercruncherllc.tax

What the heck is form 1099-NEC???

 What is Form 1099-NEC?  This form will be used to report Nonemployee Compensation ONLY starting in January 2021.  Nonemployee Compensation will no longer be reported on 1099-MISC.

1099-MISC will still be used for:

• At least $10 in royalties (see the instructions for box 2) or broker payments in lieu of dividends or tax-exempt interest (see the instructions for box 8).

• At least $600 in:

  1. Rents (box 1);

  2. Prizes and awards (box 3);

  3. Other income payments (box 3);

  4. Generally, the cash paid from a notional principal contract to an individual, partnership, or estate (box 3);

  5. Any fishing boat proceeds (box 5);

  6. Medical and health care payments (box 6);

  7. Crop insurance proceeds (box 9);

  8. Payments to an attorney (box 10) (see Payments to attorneys, later);

  9. Section 409A deferrals (box 12); or

  10. Nonqualified deferred compensation (box 14).

You must also file Form 1099-MISC for each person from whom you have withheld any federal income tax (report in box 4) under the backup withholding rules regardless of the amount of the payment.

If you need help filing your 1099-NEC and 1099-MISC, please feel free to contact me 

at 702-469-9426 or cstevens@numbercruncherllc.tax

 

Candace Stevens, CEO/President of

Number Cruncher LLC

cstevens@numbercruncherllc.tax

www.numbercruncherllc.tax

Tax Compliance-The KEY to Resolving Your Tax Debt

Even though Number Cruncher LLC is physically in Nevada, we help people all over the USA to be in tax compliance with the IRS.   What exactly does it mean to be in tax compliance with the IRS?  Tax compliance is being aware of and observing the state, federal, and international tax laws and requirements set forth by government officials and other taxing authorities.    A basic example is filing personal tax returns by the April deadline or in other words, you need to file your taxes every year.  

What if you haven't filed tax returns in a while?   Get missing tax returns filed as soon as possible.  To be in compliance you only need the last 6 years of returns filed.  

If you or anyone you know is behind in filing taxes, I can help you.  Please feel free to contact me at 702-469-9426 or cstevens@numbercruncherllc.tax

Candace Stevens, CEO/President of

Number Cruncher LLC

cstevens@numbercruncherllc.tax

www.numbercruncherllc.tax

What do you do when you receive Letter 11, the Final IRS notice?

The focus of my practice is to help taxpayers, from all over the USA, with IRS issues.  One issue a lot of taxpayers have is late or nonpayment of tax.  Often clients feel if they don't open letters from the IRS, the problem will go away.  Unfortunately, the problem does not go away, it only gets worse.  

When clients get brave enough to open a letter, often it is Letter 11, the Final IRS Notice.  This leaves them shaking in their boots, calling me for help.   

The first thing that needs to be done is to file the Form 12153 within 30 days of the date on Letter 11.  Filing this form will cause the following to take place:

    *  The IRS will Cease all collection action against the taxpayer for the tax periods in question.

    *  The taxpayer's case is forwarded to Appeals

    *  The taxpayer has the right to go the Tax Court if the taxpayer cannot work out an arrangement with Appeals

    *  The taxpayer has additional time to prepare any missing returns and sort out the proposal for resolving the outstanding tax debt. 

Most taxpayers don't realize the seriousness of the need to file the appeal and miss a valuable opportunity.  

If you have any questions about IRS issues, please feel free to contact me at 702-469-9426 or cstevens@numbercruncherllc.tax

Candace Stevens, CEO/President of

Number Cruncher LLC

cstevens@numbercruncherllc.tax

www.numbercruncherllc.tax

What do the IRS notices mean?

Most taxpayers have some sort of a freakout moment when they receive a notice from the IRS. It is important that you OPEN LETTERS FROM THE IRS.  The issue will not go away if you ignore it, it will actually get worse.  If you wait to open the notices, you will continue to be assessed penalties and interest, you won't know what is going on, you won't know when to call the IRS or when it's time to seek professional tax help.  You will find yourself in a mess.

Below is an explanation of the IRS Notices:

Notice CP-501:  This notice is to inform you that you have a balance due (you owe the IRS money) on one of your tax accounts.  

Notice CP-503:  This notice is letting you know that the IRS has not heard from you.  You still have an unpaid balance on one of your tax accounts.  

Notice CP-504:  This is the Intent to Levy Notice.  You have an unpaid amount due on your account.  If you do not pay the amount due immediately, the IRS will seize your assets in an attempt to pay the balance due.  

Letter 11:  Notice of Intent to Levy.  30 days after this notice the levy action may start.  The only way to stop the levy action is by requesting a hearing with Form 12153.  

As you can see, if you don't open the mail from the IRS, you won't know what stage of the collection process you are in or what can be done.  If you wait to long there may not be anything that can be done to help you.

If you or someone you know has IRS issues, please feel free to contact me at 702-469-9426 or cstevens@numbercruncherllc.tax.

Candace Stevens, CEO/President of

Number Cruncher LLC

cstevens@numbercruncherllc.tax

www.numbercruncherllc.tax