Advanced Child Tax Credit Payments

If you are anticipating the Child Tax Credit (CTC) on your 2021 tax returns, the IRS is paying this credit out to you now. This will reduce the amount of credit you receive when filing your tax returns next year, thus reducing your expected refund amount unless you OPT OUT NOW.         

Important changes were made to the Child Tax Credit for the upcoming 2021 tax year, allowing many families to receive advance monthly payments of the credit starting in July 2021.

Families have the ability to opt out of these advance payments if they wish, as the amount of the credit paid in advance will reduce the amount of the Child Tax Credit you will claim on your 2021 tax returns.

To see if you qualify for advance Child Tax Credit payments please go to: https://www.irs.gov/credits-deductions/advance-child-tax-credit-eligibility-assistant

To opt out of the advance Child Tax Credit payments please go to: https://www.irs.gov/credits-deductions/child-tax-credit-update-portal     

For any other questions, please go to the IRS page using the link below, or contact our office at (480) 839-3110.

https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021        

Where is my Stimulus Money!?

Wondering why you haven’t received your stimulus money yet? All I can say is, be PATIENT. The IRS first needs to figure out how much to give you, and then how to distribute it to you, so there are several reasons that could delay their ability to do both. Below is a great article that should answer most of your questions as to the amount you should receive, how it is calculated, when you should receive it and how you will receive it. Once you’ve received it, the IRS has said they will send a letter explaining how the amount you received was calculated.

https://smartasset.com/financial-advisor/coronavirus-stimulus-checks-how-much-will-you-get

If you have further questions, you can always go directly to the IRS at https://www.irs.gov/ or call them at 800-829-1040.

TAX REFUND!? TAX RELIEF? TAX REQUEST! = TAX RETURN

TAX REFUND!? – Originally the most dreaded day of the year, other than going to the dentist, today you might actually want to look at you bank account! Why? Today is the first day many Americans have received a stimulus payment called the ECONOMIC IMPACT PAYMENT.

If you filed your 2018 or 2019 tax return and had direct deposit, you might have already received this. If not, be patient as you will in the next week or so because they started with the lowest income and are working from there. If you did NOT file in 2018 or 2019, or you did NOT have a refund direct deposited, or you do NOT have the SAME direct deposit account, you need to go to the IRS website online tool for Non-Filers. Then to track your payment you can go to Get My Payment. But please be patient as the website is slow due to so much traffic.

Eligibility is largely based on income, and it excludes individuals earning more than $99,000 and married couples (without children) earning more than $198,000. Those who can be claimed as a dependent for tax purposes, like many college students, are also ineligible for the payments, as well as undocumented immigrants who don't have Social Security numbers. In general, individuals and heads of households are due up to $1,200 and married couples will receive up to $2,400, plus $500 per child. The payments start phasing out for individuals with adjusted gross incomes of more than $75,000, heads of households earning more than $112,500, and married couples who earn more than $150,000. The amount will then be reduced by $5 for every additional $100 of adjusted gross income and won't be offset by any back taxes owed and won't affect refund payments for 2019. To see how much you are eligible, click here.

TAX RELIEF? – Originally the most dreaded day of the year, on April 9, 2020, the IRS extended the filing deadline from today, April 15th to July 15, 2020. There is NOTHING you need to do to get this relief and it also extends the time to pay any 2019 tax liability, extends the time to fund any retirement accounts for 2019, and extends the first and second quarter estimates for 2020, all WITHOUT penalty. Should you still need more time to file beyond July 15, 2020, you would then need to file the normal extension Form 4868 for individuals and Form 7004 for businesses on or before July 15, 2020 to request an extension to FILE ONLY (any taxes are still DUE!) until October 15, 2020.

 TAX REQUEST! – Originally the most dreaded day of the year, if you file an Arizona state return and have a tax liability, today is the LAST day you can make an Arizona state Tax Credit donation and we REQUEST that if you received a stimulus payment, and if you are financially able to, please donate to one of these charities as you will receive a dollar for dollar tax credit on your Arizona state tax return. We REQUEST that you donate to any charitable organization you believe in because they are in desperate need of your financial support. And most importantly, we REQUEST that you help support your neighborhood restaurants, businesses and neighbors as there are far too many people and families in need.

So with your REFUND and RELIEF today, please extend KINDNESS as we all cope with our new normal and you will definitely see the RETURN.

Tax Reform – Now What?

Tax Reform – Now What?

The House and Senate have approved a reconciled version of the tax bill, which will be signed into law shortly. Most of the changes become effective for tax years beginning on or after January 1, 2018, but expire after 2025.

Here are the details of the final tax agreement, according to highlights from the conference committee:

· Eliminates penalty under the Affordable Care Act for failing to have health insurance

· Lowers corporate tax rate from 35 percent to 21 percent (higher than the original 20 percent in the House and Senate bills)

· Reduces top effective marginal tax rate for S corporations to a top rate of 29.6 percent, allowing for a 20 percent tax deduction that applies to the first $315,000 of joint income earned by all S-corporations

· Eliminates corporate Alternative Minimum Tax (AMT)

·         Does NOT eliminate the individual AMT, but increases the exemption amount from the AMT for individuals so that fewer households will pay the AMT

·         Keeps seven individual tax brackets, although those brackets would generally decrease for all individuals, with a maximum rate of 37% (previously 39.6%).

· Continues to exempt the value of tuition waivers from taxes (the GOP had considered counting tuition waivers as income, and thus, taxable.)

· Increases the refundable portion of the child tax credit to $1,400, in response to Sen. Marco Rubio's insistence. The overall child tax credit will increase from $1,000 to $2,000.

· Roughly doubles the standard deduction, from $6,350 to $12,000 for individuals, and from $12,700 to $24,000 for married couples filing jointly

· Preserves the child adoption tax credit

· Allows individuals to write off the cost of state and local taxes, but only up to $10,000. Filers must choose to deduct sales tax, state income tax, or property taxes, instead of being able to deduct all local taxes.

· Preserves the mortgage interest deduction for all homeowners with existing mortgages, and for homeowners with new mortgages, the home mortgage interest deduction will be available up to $750,000

· Preserves the charitable deduction as-is

· Adds a deduction for up to 20% of “qualified business income.” (Also adds a lengthy and complicated definition of qualified business income)

With these changes, there are a few things that you can do in the remaining days of 2017 to permanently reduce your taxes.  Here are 3 suggestions:

1. Pre-pay your 2018 property taxes, if possible

Taxpayers who itemize their deductions may want to consider prepaying their 2018 property taxes before Dec. 31. Because the tax bill will cap the deduction for state and local taxes (SALT) at $10,000 starting next year, homeowners can maximize their SALT deductions in 2017 by prepaying next year's property taxes before Dec. 31.

2. Make bigger charitable donations

The GOP tax bill almost doubles the standard deduction to $12,000 for single people and $24,000 for married couples. That means taxpayers whose deductions fall below those caps won't be able to itemize starting in 2018.

Because of that, taxpayers may want to consider contributing more to charity in 2017 while they're more likely to be able to itemize their deductions. The value of those deductions will be greater this year compared with 2018, when many taxpayers will be pushed into a lower tax bracket under the new GOP provisions.

We always recommend accelerating deductions to the extent that you can. It is better to take a deduction now, against a 39.6 percent tax rate, rather than in 2018 with a 37 percent rate.

3. Defer income until 2018

Many taxpayers will find themselves in a lower tax bracket next year under the GOP provisions. For instance, married couples who earn a combined income of $80,000 will be in a 22 percent tax bracket next year, compared with 25 percent under the current law.

That creates an incentive to defer income until next year, when tax rates may be lower. Of course, that's not possible for those Americans who receive a paycheck every two weeks from their employers. But workers who expect year-end bonuses could talk with their employers about delaying payment until 2018. Likewise, contractors can ask clients to delay payment until after January 1, and small business owners can consider pushing their own income payouts into the new year.

Please call our office if you would like clarification on any of these items or further guidance on how to maximize the benefits!

New Arizona Sick Pay Law Effective July 1st, 2017

Entitlement and Amount

• Beginning July 1, 2017, employees are entitled  to earned paid sick time and accrue a minimum of one hour to earned paid sick time for every 30 hours worked, subject to the following limitations:

  • Employees whose employers have less than 15 employees may only accrue or use 24 hours of earned paid sick time per year

  • Employees whose employers have 15 or more employees may only accrue or use 40 hours of earned paid sick time per year

  • Employers are permitted to select higher accrual and use limits

Terms of Use

• Earned paid sick time may be used for the following purposes: (1) medical care or mental or physical illness, injury, or health condition; or (2) a public health emergency; and (3) absence due to domestic violence, sexual violence, abuse, or stalking. Employees may use earned paid sick time for themselves or for family members.

We would be happy to help you with any questions you have regarding this new law. Please contact our office today!