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Ted Phillips, The Del Ray CPA
(571) 312-1169
FAX (571) 227-7907
114 E. Randolph Avenue
Alexandria, VA 22301
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PREFERRED DELIVERY METHOD?
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IMPORTANT DATES
November 1 - December 15, 2020
December 31, 2020
Last day to make charity, medical, real estate, property tax, 529 plan, or other deductible payments for the year. I recommend you make payments a few days before the year end to ensure they are processed.
January 15, 2021
Fourth quarter 2020 estimated tax payments due
January 31, 2021
Forms W-2 due to household employees; Forms 1099-NEC due to contractors.
If we prepared these forms for you last year, we will reach out in January. If you would like us to prepare them for the first time, please let me know.
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LET'S VIDEO CHAT
During this tax season, for COVID safety and to better fit your busy schedules, I will be testing out video chat meetings with some clients. If we usually meet by phone or in person during tax season, and you would like to try a video conference instead, let me know once you have gathered up most of your 2020 income info and any questions for me. I look forward to seeing you again--even if virtually!
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I hope all my clients are having a good holiday season so far. Our tax organizers will be mailed out in early January, with an engagement letter to sign and some questions to answer so that I can begin preparation of your 2020 taxes. I look forward to working with you again, and going through the process with some new clients for the first time.
If we regularly send documents back and forth via the Intuit portal, I will upload your organizer there; otherwise, we default to mailing it to your home address.
If you would like to start using the portal this year, use the mail instead, or get your package delivered elsewhere, please let us know now. Thank you!
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YEAR-END PLANNING IS ESSENTIAL
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As we wrap up 2020, year-end tax planning has never been more crucial. This year brought challenges and disruptions that may have significantly impacted your personal and financial situations – COVID-19, economic relief measures, new tax laws and political shifts. Now is a great time to take a closer look at your current tax strategies to make sure they are still meeting your needs, and to take any last-minute steps that could save you money.
I'm here to help you take a fresh look at the wellbeing of your taxes and finances. Feel free to contact the office now to discuss your tax situation so we can develop a customized plan. Some of the special issues that might impact you this year include:
- The Economic Impact Payment (EIP) paid to most Americans last summer
- Above-the-line charitable deductions--everyone can deduct up to $300 of donations
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Required Minimum Distributions--these were not required for 2020, and taxpayers could take out up to $100,000 in coronavirus-related distributions from retirement plans without penalty. More about retirement contributions below.
- Moving to work-from-home or self-employment situations may have tax implications.
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Fraud activity--there are many reported scams this year attempting to steal money and information from taxpayers. See below for more details.
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The future of the Affordable Care Act: The U.S. Supreme Court is expected to rule on the constitutionality of the ACA in 2021.
- Sales and receipt of virtual currency must be treated in a particular way under current tax law: we will ask about cryptocurrency transactions for your 2020 taxes.
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DEFERRING SALARY & RETIREMENT PLANS
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Many taxpayers choose to defer a certain portion of their salary in a given tax year by contributing some of it to 401(k) plans, SIMPLE plans or other retirement options. No matter how many of these retirement plans you have, there is a limit to how much you can defer overall each calendar year.
If you are younger than 50,
The maximum salary deferral you can contribute is $19,500 for both 2020 and 2021.
If you are 50 or older,
The maximum salary deferral you can contribute is $26,000 for both 2020 and 2021. This higher limit is known as a catch-up contribution.
If you realize that you have contributed more than your limit when totaling annual deferrals into all retirement plans, you should return the excess by April 15th of the following year. Otherwise, you may be subject to double taxation.
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DON'T FALL FOR COVID SCAMS
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IRS is warning taxpayers about a new form of scam intended to trick people into revealing bank information. Taxpayers have received texts, sometimes disguised as a message from their bank, stating that they will receive a direct deposit of $1,200 from "COVID-19 TREAS FUND" after they confirm their bank account information.
At this point, Economic Impact Payments are not being widely distributed, and there is no reason for most taxpayers to expect payments from IRS right now (unless you have recently filed a return or applied for the EIP). Neither the US Treasury nor your bank should need you to text or email them your account number before a refund is deposited. If you receive a refund you did not expect, it's usually fine to keep it, but feel free to contact the office if you'd like us to track down what it was for.
Also, remember that IRS will never text or email you requesting information, and you should not receive a call demanding payment unless there has been significant written correspondence first. IRS and state taxing authorities will never request that you pay in cryptocurrency or with gift cards, and will not threaten you with legal action if you do not immediately give them your credit card information. These are all the hallmarks of scammers.
You can report any scam attempts you encounter to phishing@irs.gov. If possible, include a screenshot of the text, the fraudulent email, or any other documentation you can collect.
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Ted Phillips, The Del Ray CPA
(571) 312-1169 | FAX (571) 227-7907
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