Chapman CPA Consulting PC

The IRS and other government agencies have noted a rise in scams and other fraudulent activities surrounding the COVID-19 crisis. Things are hard enough these days - don't let yourself become a victim of fraud, too. Here's what to look out for.

How to Protect Yourself Against Coronavirus-Related Fraud There are bad actors seeking to take advantage of taxpayers and business owners. Here are some common types of fraudulent activities occurring during the COVID-19 crisis.

In the midst of the COVID-19 pandemic, more and more individuals are performing volunteer charity work. Although no tax deduction is allowed for the value of services performed for a charity, some deductions are permitted for out-of-pocket costs incurred while performing the services. The normal deduction limits and substantiation rules also apply.

Charity Volunteer Tax Breaks If you volunteered your time for a charity or governmental entity during the COVID-19 pandemic, you probably qualify for some tax breaks. These rules actually apply to all charity volunteers not just COVID-19 volunteers. Although no tax deduction is allowed for the value of services performed for a....

Wednesday Wisdom

If you are one of those taxpayers that doesn't feel the need to keep home improvement records, because you assume any potential gain will never exceed the amount of the exclusion for home sale gains ($250,000 or $500,000 if both filer and spouse qualify), you may want to consider the consequences if you have a gain and a portion of it cannot be excluded.

You Should Be Keeping Home Improvement Records Individuals who meet the 2-out-of-5-year use and ownership tests can exclude up to $250,000 ($500,000 if both filer and spouse qualify) of gain from the sale of their home, and generally don’t need to keep a record of improvements made to the home. However, in many instances the gain from the home...

Assuming a child is suitable for the job, a reasonable salary paid to a dependent child who is under the age of 19 or a full-time student under the age of 24 reduces the self-employment income and tax of the parents (business owners) by shifting income to the child. In 2020 the child can earn up to $12,400 tax-free, and the next $9,875 is only taxable at 10%. Plus, children under 18 are not subject to payroll taxes.

Big Tax Breaks for Hiring Your Children in the Family Business With jobs at a premium during the COVID-19 pandemic, you might consider hiring your children to help out in your business. Financially, it makes more sense to keep the family employed rather than hiring strangers, provided, of course, that the family member is suitable for the job. Note, however, th...

The Paycheck Protection Program was initially passed within the $2 trillion CARES Act coronavirus relief package. The first round of funding was quickly depleted, so a second was passed - but with $130 billion in unspent funds, why did Congress need to extend the program?

What Led to Congress Extending the Paycheck Protection Program? The Paycheck Protection Program was passed to help SMBs through COVID-19. Congress passed 2 rounds of funding and have now extended the program.

Thanks to recent tax legislation, employers who are willing to help disadvantaged individuals can benefit from a substantial federal tax credit. Hiring certain new employees can qualify the employer for the work opportunity credit, which is generally $2,400 per employee but which can be as much as $9,600 in certain circumstances.

Employers, Don't Miss Out on the Work Opportunity Credit The Taxpayer Certainty and Disaster Tax Relief Act of 2019 extended the Work Opportunity Tax Credit (WOTC) allowing employers who are willing to help disadvantaged individuals to benefit from a substantial federal tax credit.

Rising deficits at the state and federal levels as a result of skyrocketing spending in government programs and drops in tax revenue due to COVID-19 ensure that taxes will go up in coming years, especially for the highest earners, who should plan now to avoid higher taxes in future years.

Wealthy Taxpayers May Want to Strategize for Potential Tax Increases The outcome of the November elections could have a significant impact on taxes for the wealthy. The COVID-19 pandemic has wreaked havoc on the economy, as the government’s tax revenues have declined while government spending has soared. Although the President has not revealed his tax policies for ...

A pending Supreme Court case may find that the extra 0.9% Medicare tax on wages or self-employment income and the 3.8% tax on net investment income, both taxes created as part of the 2010 Patient Protection and Affordable Care Act (ACA), are retroactively invalid, and you may need to file a 2016 protective claim before July 15, 2020.

You May Need a Protective Claim Before July 15 Taxpayers who in the last few years have paid the extra 0.9% Medicare tax on wages or self-employment income, or the 3.8% tax on net investment income, both taxes that were created as part of the 2010 Patient Protection and Affordable Care Act (ACA; often called Obamacare), may be able to claim a re...