Tax Season Is Here Jason Arsenault, CPA

Man, 2020 is a year to forget. COVID-19 has affected all of us in some way or another. The pandemic kept Congress busy. They passed a number of laws that benefited businesses and individuals that suffered financial hardships due to COVID-19. Lots of things happened in 2020 that might affect your taxes.

INDIVIDUALS

Unemployment Income

wasn’t sufficient, and If you took the extra $600 weekly federal pandemic benefits you would have needed even more withholding.

Retirement Plan Distributions

Another change due to the pandemic would be the required minimum distribution (RMD) for 2020. Not taking your distribution might not be the best tax move. With this rule in place, you might be able to determine an amount that will result in no or minimal taxes.

For Individual you want to consider if you received unemployment income this year? Unemployment income is taxable at the federal and state levels. This means you might have an unpleasant surprise at the end of the year. Especially if the tax withheld from the payment

Disaster Loss

Disaster losses have special rules and the calculation can be very involved. It is often very different than what you expected. This is something you will probably want to get help

with so you maximize your tax benefit.

Have You Paid Enough Tax

Tax planning is so important if you want to take control of your money and advert year-end surprises. If you haven’t paid enough through withholding or estimated tax payments you could have a penalty. You might still have some steps you can take to avoid a penalty for an underpayment.

BUSINESSES

Qualified Improvement Property

You might think that Congress is out to get you, but the opposite is what is taking place. Congress wants you to succeed in business so you can grow, hire employees, and contribute to our Country’s economic growth. That is why they change laws that benefit you. Like the law change that allows you to expense the cost of qualified improvement property in the year it goes into service. Instead of taking depreciation for say your air conditioning system over the life of the depreciable property it is in, you get that benefit now by expensing it. They are allowing you to also look back at tax years 2018 and 2019.

Business Loss

Changes made by the CARES Act allows taxpayers that had a net operating loss (NOL) in 2018 or 2019 to carry those losses back 5 years. You might be able to get a refund for income taxes paid in those years. This is a very powerful change if you had a loss and you should review your situation.

Did You Get a Paycheck Protection Program (PPP) Loan

The Small Business Administration (SBA) has released their challenging forgiveness application and you will need to apply for this forgiveness. Plus, they have provided a second round of funding and you will want to see if your business meets the requirements to apply for this SBA loan.

The tax law is complicated and can be very overwhelming to take on alone. Make sure you seek out your local Certified Public Accountant (CPA) to get the guidance you need and start tax-planning so you can make those tax laws work for you.