Category Archives: Taxes

Tax News from EJK Accounting & Tax

12.30 2020

Standard Mileage Rates for 2021

The Internal Revenue Service (IRS) issued the standard mileage rate for 2021 to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purpose.

 

 

Standard Mileage Rates for the beginning on January 1, 2021 for the uses of car, vans, pickups or panel truck will be:

Period Business Charity Medical Moving
2021 56 14 16
2020 57.5 14 17

 

  • 56 cents per mile driven for business use, down 1.5 cents from the rate for 2020
  • 14 cents per mile driven in service of charitable organizations, the rate is set by statute and remains unchanged from 2020
  • 16 cents per mile driven for medical or moving purposes for qualified active duty members of the Armed Forces, down 1 cent from the rate for 2020

 

The standard mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

 

 

Important Note:

  • Under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses.
  • Taxpayers also cannot claim a deduction for moving expenses, unless they are members of the Armed Forces on active duty moving under orders to a permanent change of station. For more details see Moving Expenses for Members of the Armed Forces.
12.29 2020

Form 1099-MISC

What is Form 1099-MISC?

Form 1099-MISC is to report payments made in course of a trade or business to non-employee. Although the 1099MISC is still in use, contractor payments made in 2020 and beyond will be reported on the new form 1099-NEC.

Form 1099-Misc and Instructions

 

 

 

  • Rents (Box 1)

Enter amounts of $600 or more for all types of rents

 

  • Other Income (Box 3)

Enter other income of $600 or more required to be reported on Form 1099-MISC that is not reportable in one of the other boxes on the for

 

  • Gross Proceeds Paid to an Attorney (Box 10)

Enter gross proceeds of $600 or more paid to an attorney in connection with legal services (regardless of whether the services are performed for the payer)

 

  • Fishing Boat Proceeds (Box 5)

Enter the individual’s share of all proceeds from the sale of a catch or the FMV of a distribution in kind to each crew member of fishing boats with normally fewer than 10 crew members. A fishing boat has normally fewer than 10 crew members if the average size of the operating crew was fewer than 10

 

  • Medical Payments (Box 6)

Enter payments of $600 or more made in the course of your trade or business to each physician or other vendor or provider of medical or health care services. Include payments made by medical and health care insurers under health, accident, and sickness insurance programs. If payment is made to a corporation, list the corporation as the recipient rather than the individual providing the services. Payments to persons providing health care services often include charges for injections, drugs, dentures, and similar items. In these cases, the entire payment is subject to information reporting. You are not required to report payments to pharmacies for prescription drugs

 

  • Direct Sales (Box 7)

Enter an “X” in the checkbox for sales by you of $5,000 or more of consumer products to a person on a buy-sell, deposit-commission, or other commission basis for resale (by the buyer or any other person) anywhere other than in a permanent retail establishment. Do not enter a dollar amount in this box. The report you must give to the recipient for these direct sales need not be made on the official form. It may be in the form of a letter showing this information along with commissions, prizes, awards, etc.

 

  • Substitute Payments in lieu of dividends or interest (Box 8)

Enter aggregate payments of at least $10 of substitute payments received by a broker for a customer in lieu of dividends or tax-exempt interest as a result of a loan of a customer’s securities. Substitute payment means a payment in lieu of (a) a dividend, or (b) tax-exempt interest to the extent that interest (including original issue discount) has accrued while the securities were on loan. For this purpose, a customer includes an individual, trust, estate, partnership, association, company, or corporation.

 

  • Crop Insurance Proceeds (Box 9)

Enter crop insurance proceeds of $600 or more paid to farmers by insurance companies unless the farmer has informed the insurance company that expenses have been capitalized under section 278, 263A, or 447 of Instructions for Forms 1099-MISC and 1099-NEC.

 

  • Excess Golden Parachute (Box 13)

Enter any excess golden parachute payments. An excess parachute payment is the amount over the base amount (the average annual compensation for services includible in the individual’s gross income over the most recent 5 tax years). Find additional detail on page 11 of the Instructions for Forms 1099-MISC and 1099-NEC.

 

  • Federal tax withheld (Box 4)

Enter backup withholding. For example, persons who have not furnished their TINs to you are subject to withholding on payments required to be reported in box 1. For more information on backup withholding, including the rate, see Instructions for Forms 1099-MISC and 1099-NEC

 

12.23 2020

Financial Relief Before Year is Over

 

 

This year is end in a week. A spike in COVID-29 cases and related restrictions and shutdown, more people have been laid off and millions of people have received jobless help and benefit.

 

 

Don’t miss out!!!

Before 2020 is over, we still have time to gain some financial relief to help reduce the effects of the pandemic.

Paid sick leave

Fully refundable tax credits are available, as part of the Families First Coronavirus Response Act.

  • Up to $511 per day, or
  • $200 per day if caring for a family member or children if school is closed.

 

Paid family leave

One provision of FFCRA is fully refundable tax credits equal to two-thirds of the employee’s regular pay.

  •  Up to $200 per day, for an employee to care for a child due to school or place of care closure.

 

 

Employee Retention Credit

As part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, provides a fully refundable credit that is 50% of qualified wages.

  • $10,000, for a maximum credit per employee of $5,000 paid from March 13 – Dec. 31, 2020.

 

Important notes about COVID-19 tax credits:

  • For businesses to receive the credits, wages paid must occur by Dec. 31, 2020 or earlier.
  • If a Paycheck Protection Program loan was taken, the employer would not be eligible for the Employee Retention Credit.
  • Employers who choose to file one or more Forms 7200 to request an advance payment of the tax credits, the last day to file is either Feb.1, 2021, or the date employer’s Forms 941 are filed for forth quarter 2020, whichever is earlier. Any Forms 7200 received after that date will be rejected by the IRS

 

 

05.10 2016

IRS Workshops for Non-profits

In an effort to provide better access to popular workshops, the Internal Revenue Service (IRS) has posted virtual versions of workshops on their website. The most recent installment focuses on tax compliance for exempt organizations including small to medium-sized 501(c)3 organizations.

Lessons include topics such as how to apply for 501(c)3 status, 990 overview course, and hiring employees. They are designed to help both new and pre-existing organizations. The IRS also offers certificates of attendance to encourage comprehensive education around a variety of topics.

01.25 2016

2016 Tax Season

January starts a new year and a new tax season. In the next month, you’ll receive an array of IRS forms reminding you that it’s time to file. The deadline this year is Monday, April 18, 2016, but once you’ve received all your forms it’s never too early to file. For standard filers, here’s what you might expect to get in the mail:

  • Form W-2 from your current or past employers.
  • Form 1099-INT or 1099-DIV from any financial institutions from whom you earn interest.
  • Contractors will receive form 1099-MISC with total miscellaneous income earned.
  • Homeowners will receive form 1098 with total mortgage interest payments.
  • Students will receive form 1098-T with total tuition paid; students with loans will receive form 1098-E with total interest paid on student loans.

If you’re a small business owner, you’ll need to provide your tax preparer with a profit and loss statement so that they can complete a Schedule C.

Give us a call or talk to your preparer for a complete list of forms needed to complete your return.