Rogers Wood Hill Starman & Gustason, Certified Public Accountants

Halloween from RWHSG!!

Happy Halloween from RWHS&G! 🎃

Happy Halloween from RWHS&G! Always fun with this crew. 🎃🎃🎃

An intrafamily loan may be an attractive estate planning tool if you’ve already used up your gift and estate tax exemption or if you wish to save it for future transfers. But if you have exemption to spare, forgiving an intrafamily loan allows you to transfer the entire loan principal plus any accrued interest tax-free, not just the excess of the borrower’s returns over the applicable federal rate. It can be a strategy for taking advantage of the increased exemption amount before it disappears at the end of 2025. Of course, if you need the funds for your own living expenses, loan forgiveness may not be an option. We can assist you in determining whether forgiving loans is a good strategy.

The Setting Every Community Up for Retirement Enhancement (SECURE) Act and the Coronavirus Aid, Relief, and Economic Security (CARES) Act have had a direct effect on IRAs and estate plans. The CARES Act waives required minimum distribution rules for IRAs (and certain defined contribution plans) for calendar year 2020. If you’re fortunate enough that you don’t need to make withdraws from your IRA, there’s an opportunity to leave more for your heirs in your retirement plan. However, bear in mind that because the SECURE Act generally put an end to “stretch” IRAs, the estate planning benefits of inheriting IRAs are somewhat muted. Contact us for details.

If philanthropy is an important part of your legacy, now is a good time to make as many donations as possible. The novel coronavirus (COVID-19) pandemic and the resulting economic fallout is dealing a crushing blow to charitable organizations. Your gifts reduce your taxable estate, and the Coronavirus Aid, Relief, and Economic Security (CARES) Act has expanded charitable contributions deductions. For example, the CARES Act loosens the limitation on charitable deductions for cash contributions made to public charities in 2020, boosting it from 60% to 100% of adjusted gross income. No connection between the contributions and COVID-19 is required. Contact us with questions.

If you’re planning to move abroad, it’s important to understand the potential tax and estate planning implications. If you don’t, you could be hit with unpleasant surprises. For example, if you’re a U.S. citizen, U.S. taxes will apply even after you move to another country. So you may be subject to gift and estate taxes in your new country andin the U.S. One option for avoiding U.S. taxes is to relinquish your U.S. citizenship, but that obviously has downsides. Or, if you own real estate or other property in a foreign country, you may run up against unusual inheritance rules. In some countries, for example, your children have priority over your spouse, regardless of the terms of your will.

The coronavirus (COVID-19) pandemic has affected many Americans’ finances. You may have questions about the implications. For example, if your employer is requiring you to work from home, can you claim home office deductions on your tax return? Unfortunately, if you’re an EMPLOYEE who telecommutes, home office expenses aren’t deductible through 2025. What about unemployment compensation? Is it taxable for federal tax purposes? Yes. This includes state unemployment benefits plus the temporary $600 per week from the federal government. (Benefits may also be taxed for state tax purposes.) Contact us if you have questions or need more information about these or other COVID-19-related tax issues.

You still have time to make your 2019 traditional and Roth IRA contributions. The deadline is generally April 15 but because of the novel coronavirus (COVID-19) pandemic, the IRS extended the deadline until July 15, 2020. If you qualify, deductible contributions to traditional IRAs can lower your 2019 tax bill. Even nondeductible contributions can be beneficial because of tax-deferred growth. If you’re eligible, the 2019 contribution limit is $6,000 (plus $1,000 for those age 50 or older on Dec. 31, 2019). However, your deduction or contribution may be reduced or eliminated based on your income. Contact us to learn more about retirement saving in your situation.

The CARES Act contains a range of relief, notably the “economic impact payments” that will be made to people under a certain income threshold. But the law also makes some changes to retirement plan rules. The additional 10% tax on early distributions from IRAs and 401(k) plans is waived for distributions made between Jan. 1 and Dec. 31, 2020 by a person who (or whose family) is infected with COVID-19 or is economically hurt by it. Penalty-free distributions are limited to $100,000, and may, subject to guidelines, be re-contributed to the plan or IRA. Income from the distributions may be spread out over 3 years. Other rules may apply. Contact us with any questions.

On March 27, President Trump signed into law another coronavirus (COVID-19) bill, which provides extensive relief for businesses and employers. The new law provides a refundable payroll tax credit for 50% of wages paid by eligible employers to certain employees during the crisis. It also allows eligible taxpayers to defer paying the employer portion of Social Security taxes through Dec. 31, 2020. Instead, employers can pay 50% of the amounts by Dec. 31, 2021 and the remaining 50% by Dec. 31, 2022. In addition, there are changes to net operating losses, the business interest expense deduction and more. Other rules and limits may apply. Contact us if you have questions about your situation.

The recently enacted Coronavirus Aid, Relief, and Economic Security (CARES) Act provides a refundable payroll tax credit for 50% of wages paid by eligible employers to certain employees during the COVID-19 pandemic. The employee retention credit is available to employers, including nonprofits, with operations that have been fully or partially suspended as a result of a government order limiting commerce, travel or group meetings. The credit is also provided to employers who have experienced a greater than 50% reduction in quarterly receipts, measured on a year-over-year basis. The IRS released FAQs about the credit. Here’s a link: https://bit.ly/2R8syZx . Contact us if you need assistance.