DHS Financial Services

12/03/2019

Giving Tuesday and Charitable Donations - Did You Know?

Giving Tuesday is an annual event that highlights charitable giving after Thanksgiving.

If you are considering charitable donations, you may be able to donate to a Donor-Advised Fund (DAF) every two or three years instead of every year. This may qualify you to receive tax benefits now, allow the amount to grow tax-free, and the decision on which qualified charity to fund can be made later.

If you are 70.5 years or older, you may be able to make a qualified charitable distribution (QCD) from your IRA this year, and this may satisfy all or part of the required minimum distribution (RMD) each year.

The IRS has released a tool to make it easier to get information about qualified charitable organizations. The Exempt Organizations Select Check tool can be found at: https://www.irs.gov/charities-non-profits/tax-exempt-organization-search.

11/26/2019

IRS Announces New Per Diem Rates – Did You Know?

The IRS recently raised the per diem rates for employee travel expenses, effective October 1, 2019. Within the Continental U.S., the new basic daily rates are $297 for high-cost regions (of which $71 is allotted for meals), and $200 for low-cost areas (with $60 for meals). The "incidentals only" per diem, which covers expenses like tipping bellhops, remains at $5 for all locations.

Per diems allow companies to reimburse employees for travel expenses at fixed rates, rather than having to process receipts for actual expenses. In most cases, per diem reimbursements can be deducted on the employer's tax return and do not count toward employee wages, as long as employees file appropriate expense reports showing the location, dates and purpose of the trip. Note, however, that the meals portion of a per diem is subject to the standard 50% deduction limit for meal expenses.

Because the Tax Cuts and Jobs Act (TCJA) eliminated most deductions for unreimbursed employee expenses, finding the most efficient way to reimburse employees for travel expenses is more important than ever. An experienced tax pro can help you determine whether it is best for your company to use standard per diems or to track actual employee travel expenses.

11/19/2019

Renewing ITINs - Did You Know?

Individual Taxpayer Identification Numbers are used for taxpayers who are required for U.S. tax purposes to have a U.S. taxpayer identification number but do not qualify to get a social security number.

If you use an ITIN, you should check if it expires this year. If it does, information about how to renew your ITIN can be found at: https://www.irs.gov/credits-deductions/individuals/how-do-i-renew-my-itin. Keeping your ITIN current helps avoid tax refund and processing delays.

Taxpayers who have not used their ITIN to file a federal return at least once in the last three years will see their number expire Dec. 31, 2019. Additionally, ITINs with middle digits of 83, 84, 85, 86 or 87 (e.g. 9NN-83-NNNN) will also expire at the end of the year.

11/12/2019

Claiming the Other Dependent Tax Credit – Did You Know?

If you have a dependent who does not meet the criteria for the Child Tax Credit (CTC), you may still qualify for a $500 credit called the Other Dependent Credit. Also called the Family Tax Credit, this nonrefundable credit was created under the Tax Cuts and Jobs Act (TCJA) of 2017. Examples of qualifying dependents include children of age 17 or 18 (or up to age 23 if they are full-time students), and adult relatives who are unable to support themselves due to a disability.

Your claimed dependents must be US citizens, resident aliens, or nationals, and must have a taxpayer ID number (SSN or ITIN). Children must not have been claimed for the CTC by you or anyone else, must rely on you for at least half of their financial support, and generally must live with you for over half the year. Claimed adult dependents (called “qualifying relatives” by the IRS) must have a gross income of less than $4,200 for 2019, and must either be your true relative or live with you full time. The term “true relative” covers a broad range of relationships, including in-laws and stepchildren.

A qualified tax advisor can help you determine your eligibility for the Other Dependent Credit. If you have more than one qualifying dependent, you may be able to take the credit for each of them.

11/05/2019

Tracking Utilities for Home Office Expense – Did You Know?

If you plan to claim a deduction for Expenses for Business Use of Your Home (home office expense) on your tax return, you need a reliable method to calculate your deductible utility costs. IRS rules require that you separate utility expenses that apply to only the residential portions of your home (such as cooking gas or electricity used by your refrigerator) from those that pertain to the entire property. Only the latter type can qualify as home workspace expenses.

For example, if your cooking range, water heater and furnace all run on natural gas, you may need to figure out the gas cost associated specifically with heating your home. One way to do this is to average your gas bills from summer months when you did not use heat. This average shows how much of your gas bill is attributable to your range and water heater. By subtracting this amount from your gas bill for every month, you can calculate how much money you spent specifically on heat during the year. You may then be able to deduct a portion of this total as a home office utilities expense, based on the area of your workspace.

An experienced tax pro can give you other ideas for tracking and calculating the allowed utility costs associated with your home office. The IRS does not require perfect accuracy, but your calculation methods must be logical, reasonable and based on written evidence such as monthly utility bills.

10/29/2019

QBI Tax Deduction for Self-Employed Individuals – Did You Know?

If you are a freelancer or otherwise participate in the “gig economy”, you may be able to claim a new tax deduction under the Tax Cuts and Jobs Act (TCJA). The Qualified Business Income (QBI) Deduction applies to self-employment earnings (basically, any income you receive in a setting where you are not classified as an employee). Under the provision, individuals may be able to deduct up to 20% of their self-employment income on their tax returns.

Because the QBI deduction is claimed “above the line,” you can reduce your gross income without itemizing deductions. However, the deduction is subject to a number of rules, including income restrictions for certain self-employment activities, and limits on the size of the deduction relative to your taxable income. A qualified tax advisor can help you understand how these rules apply to your situation.

10/24/2019

Saving Receipts to Document Expenses – Did You Know?

For most personal or business expenses that you claim as deductions on your tax forms, the IRS requires that you preserve written documentation of each expense. Acceptable forms of written evidence include receipts, invoices, canceled checks, and credit card and bank account statements. These documents should clearly show the date, location, amount and, if possible, nature of each expense. An experienced tax pro can help you review your supporting evidence to make sure it satisfies IRS rules.

Importantly, your documents need not be originals. Photocopied, scanned or photographed receipts are okay, as long as they clearly show all the information on the original document. However, since you may be required to present your evidence on paper in the event of an audit, you should save digital files in a form that allows you to print hard copies.

In most cases, IRS rules require you to save your written documentation for three years after you file your return. However, if there is any chance that you have omitted income from your tax return that you should have reported, you must maintain your records for six years after filing.

10/15/2019

IRS Removes Computers from Listed Property – Did You Know?

Historically, the IRS classified many computers and computer peripherals (such as printers) as “Listed Property.” If your business use of Listed Property is less than 50%, you are usually required to distribute the business portion of the property's cost over your tax returns for multiple years, using a depreciation method that is unfavorable to the taxpayer.

However, computer equipment placed in service after December 31, 2017 has been removed from the Listed Property category. This change in classification makes it much easier to deduct computer costs as business expenses on your tax returns. Under the new rules, you may be able to deduct the business-use portion of the cost of computer equipment put in service in 2018 or later using any appropriate depreciation method, even if your business use is less than 50%.

In particular, you may be able to use the 100% bonus depreciation option that is available through 2022 under the Tax Cuts and Jobs Act (TCJA). This option could allow you to deduct the entire business-use portion of the cost of computer equipment in a single year, usually the year in which you put the equipment into service. If you use your computer for both business and personal tasks, a qualified tax advisor can help you determine the proper business-use percentage to use in order to calculate your deduction.

10/07/2019

Six Month Filing Extension Deadlines

If you requested an extra six-month extension in April to file your 2018 personal income tax return, that deadline to file is coming up on Tuesday, October 15th.

If you are an employer that makes contributions into employee Simplified Employee Pension IRA accounts, October 15th is also the six-month extension deadline to make those deposits.

10/05/2019

Do you have a plan to pay the expenses if you get sick? Will you receive care at home or at a nursing home? Who will be your caregiver? Where will the money come from? Having gone through this with my family, I can help you. Call me at (540) 438-0288 to arrange a confidential interview.

10/04/2019

If you have a Medicare plan or if you are turning 65 years old, we have plans that will fit your budget. Medicare Supplements and Medicare Advantage plans with additional benefits not offered by Original Medicare. Visit: plan.direct/medicareplans4u to view your options or call me at (540) 438-0288 today.

Medicare Insurance Direct is contracted with Medicare for PDP plans, HMO and PPO plans in select states, and with select state Medicaid programs. Enrollment in these plans depend on contract renewal.

10/01/2019

Annual Election Period for Medicare Advantage plans starts in 2 weeks on October 15-December 7. If you need information, let me know. Call (540) 438-0288.

Also, if you have Medicare and Medicaid, I can provide information on that too.