What you need to know about changes to retirement and 529 plans

What you need to know about changes to retirement and 529 plans

What you need to know about changes to retirement and 529 plans The new budget bill passed by Congress on December 20, 2019, impacted both retirement and college savings plans. While many are still waiting for further guidance from the IRS on several details of the bill, we compiled a shortlist of the major changes that may affect you. Retirement plan changes: The rule that restricted deposits to an IRA after the age of 70 and ½ has been repealed. Under the new bill, starting in 2020, any person of any age can make a deposit to an IRA with earned income (e.g., wages or self-employment).The mandatory age to begin distributions has changed from 70 and ½ to 72.Recipients of stipends and fellowships can now use these funds to make IRA contributions.Up to $5,000 can be withdrawn without penalty for the birth or legal adoption of a child up to one year after birth or adoption. Withdrawals are taxable; however, if redeposited within 60 days, funds will not be taxed.If an IRA is inherited from someone who passed in 2020 (other than a spouse and a few other exceptions), funds must now be distributed within 10 years.Long-term part-time workers will be able to join their company’s 401k plan. Except in the case of collectively bargained plans, the law now requires employers to maintain a 401k plan to offer one to any employee who worked more than 1,000 hours in one year or 500 hours over 3 consecutive years. Small business owners can receive a tax credit for starting a retirement plan—up to $5,000. College saving (529) plan changes: Withdrawals...
Beat the tax deadline

Beat the tax deadline

If April 15 always seems to sneak up on you, get out in front of this year’s tax deadline and file early. Here are a few top reasons why you should… Reduce your stress. When you wait until the last minute, it can spike stress levels. The dread of the impending tax deadline, the worry of compliance—it all adds up to tax season anxiety. Make this the year you file early and cut back on the stress of the season.Reduce the risk of identity theft. Once your return is filed with the IRS, personal information (such as SSNs) is locked and cannot be used again by anyone. Filing your taxes early really can help reduce or eliminate the risk of identity theft.Expedite your refund. If you believe you are due a refund this year, the sooner you file the sooner you’ll receive your refund. And who doesn’t want that?!Additional time to identify other potential tax savings. When you supply our team with all your documentation early, it offers extra time to prepare your return and identify any additional savings. Filing earlier also affords you more time to gather your documentation and search for any additional paperwork needed. More time to pay your tax bill. If you owe the IRS money, filing early gives you more time to save in order to pay your tax bill by the individual tax return deadline. read...

COVID-19 FAQ in Reference to the IRS

Tax Update Announcement – 03/27/2020 In an effort to provide continued clarity around changes to tax law, we are offering this update to our previous tax announcements. As such, we have removed a few of our previous tax update posts. Below, you will find a list of frequently asked questions in reference to the Internal Revenue Service’s (IRS) Notice 2020-18 (PDF). In this Notice, the Treasury Department and the IRS announced special Federal income tax return filing and payment relief in response to the ongoing COVID-19 emergency. read...

Congress Cares …

The CARES Act includes 14 new tax provisions as well as additional IRS funding for operations and implementation ($293.5 million for taxpayer service; $170 million for operations support; $37.2 million for enforcement).. Here is what I see as the most important tax elements: Individual Provisions §2201. 2020 Recovery Rebates for Individuals Recovery rebate for each taxpayer of $1,200 ($2,400 for joint returns). Plus $500 for every qualifying child. Rebates are means tested and begin phasing out after $75,000 adjusted gross income (AGI) (single), $112,500, (HoH), and $150,000 (MFJ). The rebate amount is reduced by $5 for each $100 a taxpayer’s income exceeds the phase-out threshold and completely phased-out at $99,000/$198,000 (single/MFJ). No payment without proper tax identification numbers. IRS will base these amounts on the taxpayer’s 2019 tax return 2018 tax return if 2019 not yet filed If no filing for either year, then based on information provided by Form SSA-1099 or RRB-1099, 2019 Social Security Benefit Statement The Department of Treasury is required to conduct a public awareness campaign. §2202. Special Rules for Use of Retirement Funds Waiver for the 10-percent early withdrawal penalty for distributions up to $100,000. Coronavirus-related distributions may be: repaid any time during the three years from distribution. included in gross income ratably over three-taxable-year period. Loan limit increased from $50,000 to $100,000. Sections 2203, 2204, 2206. RMDs; Non-Itemized Charitable; Employer-Paid Education Loans Minimum distribution rules for certain retirement plans and accounts are waived for 2020. A $300 deduction for cash contributions allowed for taxpayers not itemizing beginning in 2020. Employer payment of any qualifying education loan is excluded from income. §2205. Modification of...
KDA UPDATE: What You Need to Know About The Economic Relief Package

KDA UPDATE: What You Need to Know About The Economic Relief Package

It is official; Congress has agreed to pass a $2 trillion economic relief package. This stimulus package comes at the precipice of the Covid-19 virus affecting millions of American households. This package includes stimulus payments to particular taxpayers, expanded unemployment coverage, and more. The President is expected to sign it very soon. Here are the main takeaways from the relief package:  Direct Payments: The economic relief package includes one time payments for taxpayers: The aid package allows for checks of $1,200 to taxpayers with adjusted gross income up to $75,000 for individuals and $150,000 for married couples. The package also states that individuals and couples are eligible for an additional $500 per child. However, your income can make a big difference in what money you may receive. The payments decline by $5 for each $100 of income over those thresholds and phase out for individuals whose revenues exceed $99,000.  read...

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