Learning Center for Tax and Financial Insights

Many people are neglecting their retirement savings or simply planning for their Social Security income to take care of their needs. To encourage better preparation for retirement, tax laws offer a variety of tax incentives for retirement savings plans. Watch this video for an overview of the options. .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%; }

Gambling is a recreational activity enjoyed by individuals. Nevertheless, there are far more tax issues related to gambling than you might expect. Watch this video for a quick overview. .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%; }

Article Highlights: Early Distributions Distributions After Age 59½ Minimum Required Distributions After Age 72 Excess Accumulation Penalty Estate Tax Issues Advance planning can, in many cases, minimize or even avoid taxes on IRA distributions and other qualified plan distributions. When contemplating future retirement and when to begin tapping taxable IRA and other qualified retirement accounts, taxpayers need to consider a number of important issues. Early Distributions (before 59½) - If funds are withdrawn before the taxpayer reaches age 59½, the distribution is subject to a 10% early withdrawal penalty (and state penalties, if applicable) in addition to income taxes, unless what is referred to as the substantially equal payment exemption is utilized. Under this exception, an early retiree can begin taking substantially equal payments at least once a year over their projected lifetime or the joint lives of themself and a designated beneficiary. The payments must not cease before the end of a five-year period beginning with the date of the first payment AND must continue until after the taxpayer reaches age 59½. Age 59½ to age 72 Distributions – After attaining age 59½, an individual can take funds out of their IRA in whatever amount they wish in any year until reaching age 72. This withdrawal flexibility leaves the retiree to plan their distributions to minimize taxes. Techniques involve matching distributions with no- or low-income years. Age 72 and Older – Once a taxpayer reaches age 72, they must withdraw at least a minimum amount from their Traditional IRA each year. A taxpayer who fails to take the required minimum distribution (RMD) in the year age 72 is reached can avoid a penalty by taking that distribution no later than April 1st of the following year. However, that means the IRA owner must take two distributions in the following year, one for the year in which they reached age 72 and one for the current year. When a taxpayer takes distributions that are less than the required minimum distribution for the year, the amount not distributed as required is subject to a 50% excise tax (excess accumulation penalty) for that year. In many cases the excess accumulation penalty can be reduced or totally eliminated by following IRS abatement procedures. Generally, you must show that the failure to take the required distribution was due to reasonable cause and that steps are being taken to remedy the shortfall.

This is our annual reminder for you to file worker 1099s if you use workers other than employees to perform services for your business. Furthermore, there are some significant changes that you should know about this year. .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%; }

January 4 - Time to Call For Your Tax Appointment - January is the beginning of tax season. If you have not made an appointment to have your taxes prepared, we encourage you to do so before the calendar becomes too crowded.January 11 - Report Tips to Employer - If you are an employee who works for tips and received more than $20 in tips during December, you are required to report them to your employer on IRS Form 4070 no later than January 11.

January 15 - Employer’s Monthly Deposit Due - If you are an employer and the monthly deposit rules apply, January 15 is the due date for you to make your deposit of Social Security, Medicare and withheld income tax for December 2020. This is also the due date for the nonpayroll withholding deposit for December 2020 if the monthly deposit rule applies. Employment tax deposits must be made electronically (no paper coupons), except employers with a deposit liability under $2,500 for a return period may remit payments quarterly or annually with the return. NOTE: Delayed Payment of Employer Payroll Taxes from 2020The CARES Act allows employers to delay paying 2020 payroll taxes, with 50% of the employer’s share of the 2020 Social Security tax due by December 31, 2021, and the remainder due by December 31, 2022. Any payments or deposits the employer makes before December 31, 2021, are first applied against the payment due on December 31, 2021, and then applied against the payment due on December 31, 2022.