Tax Tip of the Month: Required Minimum Distributions Return in 2021

After being halted last year, Required Minimum Distributions (RMDs) from retirement accounts have resumed in 2021. Folks 72 and older must take annual RMDs from traditional IRAs or pay a 50% penalty. For 2021, you start with your IRA balances as of December 31, 202, and use IRS pu. 590-B to come up with the amount required to be withdrawn. The amounts can be taken from any IRA you pick. The same rules apply to 401(k)s and other workplace defined-contribution plans, with two important exceptions. First, people who work past 72 can delay RMDs from their current employer's 401(k) until they retire, provided they don't own more than 5% of the firm that employs them. Second, for people with multiple 401(k)s, the RMD must be taken from each account. If 2021 is your first RMD year, you have until April 1, 2022 to take the RMD. The distribution will still be based on your total IRA balance as of December 31st, 2020. If you opt to defer your first RMD to 2022, you will be taxed in 2022 on two payouts: The one for 2021 that you deferred and the RMD for 2022. This doubling up would hike your 2022 income and could push you into a higher income tax bracket. Call our office if you need help figuring out how much your withholding should be from the amount you distribute from your retirement accounts. Reminder: Personal tax returns due on October 15th for those who filed for an extension As a reminder, if you filed for an extension on filing your personal tax return last spring, the new due date is October 15th. If this applies to you and you need assistance preparing and filing your return, contact our office (for those of you we are not already assisting with this, that is).

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Picture of the Month For the September picture of the month, Ben shares a photo he took on a hike out to Roaring Springs near Roanoke in August. It was a perfect hike for a hot day as there was plenty of shade and water to keep things cool.

Latest Firm News

This month, one of our main focuses is on helping non-profit organizations with some of the things they need to prepare for this time of year. There are many specific requirements non-profits must follow with the IRS to maintain their status, and we have extensive experience working with these organizations.

Featured Video: Common Bookkeeping Mistakes In the video below, Ben covers some of the most common bookkeeping mistakes small business owners make, including not keeping track of some deductible expenses and thus paying more in taxes than they should. This time of year he encourages small business owners to do an audit of their accounting system so that they can ensure everything is set up properly before the end of the year.

Featured Resource: IRS Cryptocurrency FAQs

As more and more Americans dabble in investing in cryptocurrencies such as Bitcoin, the IRS has begun taking a closer look at these transactions to make sure people are paying all the taxes that they need to. They put together a list of frequently asked questions about cryptocurrency, also known as virtual currency, which you can read here.

Featured Customer: Madeline's House

Madeline's House is the domestic violence program of the Southside Center for Violence Prevention. It was named after Madeline Gearheart Mitchell, who was killed by her abusive husband in 1998. When Madeline and her children needed safe haven, there was no shelter available. Since Madeline's House was founded in her honor in 1999, we have worked to ensure vital services were available to victims. Our most well-known program, Madeline's House includes our shelter. We offer temporary emergency shelter to those in imminent danger from domestic or sexual violence. While in our shelter, clients receive individualized case management, are provided with items to meet their basic needs, and are served along a continuum of care to make sure that all of their needs are addressed. Survivors of domestic violence who need help but do not need shelter are also served under Madeline's House through community client support, which includes advocacy, accompaniment to interview/appointments related to the violence,counseling, and other services to meet their needs. Click here to learn more about Madeline's House.