As tax season draws near, you may be concerned that you won't be able to pay your tax bill. If you're simply broke after holiday credit card bills, you have until April 15th to pay your tax bill in full once you learn how much you owe. If your financial situation is more dire than that, you have some time to explore your options and come up with the funds or a plan. However, if your tax problems or finances are so severe that you don't think you'll be able to pay the bill ever, you may need to file for a genuine hardship plea and be declared uncollectible. If you can't pay your taxes, don't panic. Here's what you need to do if you anticipate being unable to pay your tax bill. First, File Your Tax Return It sounds counterintuitive, but it’s necessary that you file your current tax return. Failing to file on time can result in additional penalties plus interest on the unpaid taxes, which will only compound your financial stress. At the very least, file your tax return on time if you can. If you don't think you'll be able to, file for an extension — but bear in mind that the extension only gives you extra time to file your tax return without penalty, it doesn't give you extra time to pay. If you can, include partial payment with your tax return so you will pay less interest over time. Having your latest tax return on file also helps the IRS properly determine what you owe. If you go too long without filing, they will file substitute returns on your behalf based on the information in their system, and substitute returns never claim any benefits beyond the bare minimum for the last filing status you used. This could overstate your tax bill, thus making your tax problems even worse. Explore Payment Plans and Alternatives After you've filed your tax return, it's time to assess the following: How much you owe How much you can reasonably pay now How much time you would need to pay the entire bill The options available to you Many taxpayers find that they can't pay their tax bills once they've prepared their taxes, so the IRS has payment plans. These plans have setup fees, but they will be waived or reduced for low-income taxpayers as well as those experiencing hardships such as health problems or fleeing domestic violence. Paying your taxes with a credit card is also an option, although IRS interest is often lower than credit card interest.

Article Highlights: Medicare B Premiums Medicare D Premiums Modified AGI 2020 Premiums Table Effect of Recreational Gambling Appealing the Social Security Administration’s Decision If you are receiving Social Security, then you have just recently received your annual letter from the Social Security Administration letting you know that your Social Security benefits for 2020 have increased by 1.6 percent as a result of a rise in the cost of living. The letter also lets you know how much will be withheld from your monthly retirement benefit for Medicare Parts B (medical insurance) and D (Prescription Drug Plan). Not everyone realizes their Part B and Part D benefits are based upon their modified adjusted gross income (MAGI) from two years prior. This means the premiums for 2020 are actually based on your MAGI for 2018. The MAGI for making the adjustment is the federal AGI plus the following: Tax-exempt interest income; United States savings bonds interest used to pay higher education tuition and fees, if the interest was excluded from income; Excluded foreign earned income and housing costs; Income derived from sources within Guam, American Samoa, or the Northern Mariana Islands; and Income from sources within Puerto Rico. 2020 MEDICARE PREMIUMS TAXPAYER FILING STATUS Medicare Part B Monthly Premiums Medicare Part D** Individual* Married Filing Joint MAGI Increase Total Surcharge 2018 MAGI less than or equal to $87,000 2018 MAGI less than or equal to $174,000 $0.00 $144.60 $0.00 2018 MAGI greater than $87,000 and up to $109,000 2018 MAGI greater than $174,000 and up to $218,000 $57.80 $202.40 $12.20 2018 MAGI greater than $109,000 and up to $136,000 2018 MAGI greater than $218,000 and up to $272,000 $144.60 $289.20 $31.50 2018 MAGI greater than $136,000 and up to $163,000 2018 MAGI greater than $272,000 and up to $326,000 $231.40 $376.00 $50.70 2018 MAGI greater than $163,000 and less than $500,000 2018 MAGI greater than $326,000 and less than $750,000 $318.10 $462.70 $70.00 2018 MAGI greater than or equal to $500,000 2018 MAGI greater than or equal to $7500,000 $347.00 $491.60 $76.40

Article Highlights: Independent Contractors Non-employee Compensation 1099 Filing Requirement Due Dates Penalties Form W-9 and 1099 Worksheet If you engage the services of an individual (independent contractor) in your business, other than one who meets the definition of an employee, and you pay him or her $600 or more for the calendar year, then you are required to issue that person a Form 1099-MISC to avoid penalties and the prospect of losing the deduction for his or her labor and expenses in an audit. Payments to independent contractors are referred to as non-employee compensation (NEC). Because so many fraudulent tax returns were being filed right after e-filing opened up in January and before the old 1099-MISC due date at the end of February, the IRS had no way of verifying NEC. That opened the door for the IRS to be scammed out of millions of dollars in erroneous earned income tax credit (EITC). To plug that hole, the IRS moved the filing date for NEC 1099-MISCs to January 31 and no longer releases refunds for returns that include EITC until the NEC amounts can be verified. Thus, the due date for filing 2018 1099-MISC forms for NEC is now January 31, 2019. That is also the same due date for mailing the recipient his or her copy of the 1099-MISC. It is not uncommon to have a repairman out early in the year, pay him less than $600, use his services again later in the year, and have the total for the year be $600 or more. As a result, you may have overlooked getting the needed information from the individual to file the 1099s for the year. Therefore, it is good practice to always have individuals who are not incorporated complete and sign an IRS Form W-9 the first time you engage them and before you pay them. Having a properly completed and signed Form W-9 for all independent contractors and service providers will eliminate any oversights and protect you against IRS penalties and conflicts. If you have been negligent in the past about having the W-9s completed, it would be a good idea to establish a procedure for getting each non-corporate independent contractor and service provider to fill out a W-9 and return it to you going forward.

Article Highlights:Standard Mileage Rates for 2020Business, Charitable, Medical and Moving RatesImportant Considerations for 2020Switching between the Actual Expense and Standard Mileage Rate MethodsEmployer ReimbursementsEmployee Deductions SuspendedSpecial Allowances for SUVs The Internal Revenue Service (IRS) computes standard mileage rates for business, medical and moving each year, based on a number of factors, to determine the standard mileage rates for the following year. As it does annually around the end of the year, the IRS has announced the 2020 optional standard mileage rates. Thus, beginning on Jan. 1, 2020, the standard mileage rates for the use of a car (or a van, pickup or panel truck) are: 57.5 cents per mile for business miles driven (including a 27-cent-per-mile allocation for depreciation). This is down from 58 cents in 2019; 17 cents per mile driven for medical or moving* purposes. This is down from 20 cents in 2019; and 14 cents per mile driven in service of charitable organizations.* For years 2018 through 2025, the deduction for moving is only allowed for members of the armed forces on active duty who move pursuant to a military order.The business standard mileage rate 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 determined by the same study. The rate for using an automobile while performing services for a charitable organization is statutorily set (it can only be changed by Congressional action) and has been 14 cents per mile for 22 years). Important Consideration: The 2020 rates take into account 2019 fuel costs. Based on the potential for substantially higher gas prices in 2020, it may be appropriate to consider switching to the actual expense method for 2020 or at least to keep track of the actual expenses, including fuel costs, repairs and maintenance, so that the option is available for 2020. Taxpayers always have the choice of calculating the actual costs of using their vehicle for business rather than using the standard mileage rates. In addition to the potential for higher fuel prices, the extension and expansion of the bonus depreciation as well as increased depreciation limitations for passenger autos in the Tax Cuts and Jobs Act may make using the actual expense method worthwhile during the first year when a vehicle is placed into business service. However, the standard mileage rates cannot be used if you used the actual method (using Section 179, bonus depreciation and/or MACRS depreciation) in previous years. This rule is applied on a vehicle-by-vehicle basis. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles simultaneously. Employer Reimbursement – When employers reimburse employees for business-related car expenses using the standard mileage allowance method for each substantiated employment-connected business mile, the reimbursement is tax-free if the employee substantiates to the employer the time, place, mileage and purpose of the employment-connected business travel, and returns any excess payment to the employer. This reimbursement arrangement is referred to as an accountable plan. The Tax Cuts and Jobs Act eliminated employee business expenses as an itemized deduction, effective for 2018 through 2025. Therefore, during this period employees may not take a deduction on their federal returns for unreimbursed employment-related use of their autos, light trucks or vans. Since they no longer get any tax benefit, employees with significant job-related auto usage should ask their employers to set up an accountable plan to reimburse them. Members of a reserve component of the U.S. Armed Forces, state and local government officials paid on a fee basis and certain performing artists continue to be allowed to deduct unreimbursed employee travel expenses, including the business standard mileage rate, because they are deductible from gross income rather than as an itemized deduction. Self-employed individuals continue to be able to deduct use of their personal vehicle for business purposes as an expense of the business if properly substantiated. Faster Write-Offs for Heavy Sport Utility Vehicles (SUVs) – Many of today’s SUVs weigh more than 6,000 pounds and are therefore not subject to the limit rules on luxury auto depreciation. Taxpayers who purchase a heavy SUV and put it into business use in 2020 can utilize both the Section 179 expense deduction, up to a maximum for 2020 of $25,900, and the bonus depreciation (if the Section 179 deduction is claimed, it must be applied before the bonus depreciation) to produce a sizable first-year tax deduction. However, the vehicle cannot exceed a gross unloaded vehicle weight of 14,000 pounds. Caution: Business autos are 5-year class property. If the taxpayer subsequently disposes of the vehicle before the end of the 5-year period, as many do, a portion of the Section 179 expense deduction will be recaptured and must be added back to the taxpayer’s income (self-employment income for self-employed individuals). The future ramifications of deducting all or a significant portion of the vehicle’s cost using Section 179 should be considered. Generally, for vehicles weighing more than 6,000 pounds, using 100% bonus depreciation is the better option. If you have questions related to the best methods of deducting the business use of your vehicle or the documentation required, please give this office a call.

The number-one threat to your business isn't an external factor at all. It's the people you've cofounded that business with. Watch the video to learn more. .embed-container { position: relative; padding-bottom: 56.25%; height: 0; overflow: hidden; max-width: 100%; } .embed-container iframe, .embed-container object, .embed-container embed { position: absolute; top: 0; left: 0; width: 100%; height: 100%; }

February 1 - Tax AppointmentIf you don’t already have an appointment scheduled with this office, you should call to make an appointment that is convenient for you. February 10 - Report Tips to Employer If you are an employee who works for tips and received more than $20 in tips during January, you are required to report them to your employer on IRS Form 4070 no later than February 10. Your employer is required to withhold FICA taxes and income tax withholding for these tips from your regular wages. If your regular wages are insufficient to cover the FICA and tax withholding, the employer will report the amount of the uncollected withholding in box 12 of your W-2 for the year. You will be required to pay the uncollected withholding when your return for the year is filed.