May 2020 E-Newsletter |
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Our team at KVLSM is thinking of you and your families and we hope you are staying safe and healthy during these times. A limited staff is working in the office, while the rest is working remotely. We can be reached via email or by calling the office. Please continue to check our COVID-19 resource page on our website for updates and options available to you.
Our staff is available to work with you remotely to help you with your needs, including addressing your tax issues and helping you apply for PPP loans for your small business. We also advise you to review our latest Treasury Notice.
KVLSM is dedicated to helping our community through this difficult time, so if you require any assistance, please call us at (516) 294-0400 or visit our contact page and we will work with you to address your needs.
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CPA NEWS |
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Key 2020 Coronavirus Tax Changes
Coronavirus uncertainty abounds. Thankfully, by monitoring tax changes on your behalf, we can work together to navigate the right path for you and your family. Here is a round-up of tax-related laws and information to help with tax planning for 2020.
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IRS: Companies Who Receive PPP Loans Will Not Qualify for Tax Deductions
The IRS on Thursday released guidance stating that expenses related to forgivable loans through the Paycheck Protection Program (PPP) won't be tax-deductible.
Under the PPP, a small business loan program created as part of the third, $2.2 trillion coronavirus relief bill, small businesses wouldn't have to repay the low-interest loan they received as long as the loan went to essential expenses such as maintaining payroll.
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Coronavirus-Related Relief for Retirement Plans and IRAs Questions and Answers
Section 2202 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), enacted on March 27, 2020, provides for special distribution options and rollover rules for retirement plans and IRAs and expands permissible loans from certain retirement plans.
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Business Security
In last month's ClientLine, we highlighted some of the Setting Every Community Up for Retirement Enhancement (SECURE) Act's new headlines for business owners. This month, we share some of the details for you.
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Mind the RMD Gap
The SECURE Act pushes required minimum distributions (RMDs) from an IRA, SIMPLE IRA, SEP IRA or retirement plan account to age 72, up from age 70 1/2. However, you're out of luck if you are younger than 72 but were 70 1/2 in 2019. You'll have to begin taking withdrawals by the former age limit of 70 1/2 limit.
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They're Back!
A basketful of tax breaks that either expired last year or were scheduled to end before 2020 have been brought back to life, courtesy of Congress. Lawmakers packed end-of-year appropriation bills with these extenders.
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Steps to a Successful Company Audit
While few companies will experience tax audits, all public and some closely held companies should undergo periodic company audits to stay on top of their businesses. This is an exercise that can fray nerves without preparation. But there are steps you can take to ensure audit success.
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How to Correct Tax Filing Mistakes
The last thing most taxpayers want to think about so soon after the tax-filing deadline is filing another tax return. Yet, that's something you'll have to do if you made an error and a task you'll want to perform if you shorted yourself. Here's what you need to know if you have to file an amended return due to a mistake on your tax return.
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Additional Updated Information
April 2020 E-Newsletter
March 2020 E-Newsletter
February 2020 E-Newsletter
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May 2020 Q & A
Q: My company is facing a retirement plan audit. How do I best prepare?
A: First, understand that besides talking to your tax professional, there are few similarities between an overall company audit (see accompanying article) and a retirement plan audit. You may want to consult a plan consultant to gather necessary documents and begin a series of tests. This includes doing compliance testing to ensure your highly compensated employees don't contribute more than allowed to your company plan. You'll also want to check that all eligible employees know they can contribute, you follow IRS and other government rules when offering automatic plan tools, and the plan is fulfilling other fiduciary responsibilities.
Q: I'm a self-employed delivery driver who volunteers to deliver meals to seniors and the disadvantaged. Can I deduct the cost of my time?
A: No, you can't deduct your time, but you can deduct your mileage. In 2020, the IRS allows taxpayers to deduct the standard mileage rate of 14 cents per each mile their vehicles were used for eligible charitable work. Incidentally, the business standard mileage rate is 57.5 cents and the mileage rate for driving to and from medical care is 17 cents in 2020. Talk to your tax professional for more information, including whether you’ll need to itemize on your return to get these tax breaks.
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SHORT BITS |
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EMPLOYER COSTS
Compensation costs for private industry workers increased 2.7% in 2019 compared to an increase of 3% the year before, according to the Department of Labor. Wages and salaries increased 3% in 2019, a tick under the 3.1% rise in 2018. Benefit costs rose 1.9%, with health insurance benefits rising 2.2%. That was also lower than 2018, when benefit costs increased 2.6%.
JOB HAPPY
Looking for your first job or to advance your career? Follow the jobs. According to the Bureau of Labor Statistics, Texas, California and Florida created more than 800,000 new jobs from December 2018 to December 2019. Texas registered the highest number of new jobs at 342,800, but 25 other states also saw an increase in jobs. Utah, Idaho and Arizona led the way in percentage increases.
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BOOMERS UNPREPARED
The Insured Retirement Institute (IRI) reports that about 45% of Baby Boomers have saved nothing for retirement. So it's not surprising one-third of baby boomers plan to retire at age 70 or older or not at all, and another third of employed boomers ages 67 to 72 postponed retirement, according to IRI.
INCOME UP
The median weekly income of fulltime workers rose a healthy 4.0% in 2019, increasing from $900 in 2018 to $936 last year. Women saw their weekly median earnings rise to $843, which was 82.5% of the $1,022 median for men. While men saw their income rise 2.9%, women had a 6.2% increase last year, making up a little lost ground. Inflation, as measured by the Consumer Price Index for All Urban Consumers (CPI-U) over the same period, rose just 2.0%.
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