Category: Tax Write Off

Hidden Tax Breaks for 2020

3/17/2021

Still figuring out your tax deductions for your 2020 taxes? Here are a few you might have missed helping you save even more than you expected!

Hello readers, and welcome to the Hoods Tax and Accounting Services Blog! We are just a little under two months away from tax day on April 15th, are you ready? Have you already sent in your taxes and are already enjoying your tax return? Or are you still working on a few odds and ends before sending it in? Where ever you might be in your tax preparation journey, we are here to help. Just as a reminder for those new to Hoods, we have recently moved and we have updated our hours! We moved right around the corner to 105 Etling Ave. in Goose Creek, SC and we are open Monday-Tuesday 9-5 pm, Wednesdays from 1-7 pm, and Thursday-Friday 9-5 pm! We are currently offering Zoom meetings for tax prep and quick and easy drop-offs. Please contact us with any concerns or questions! Tax day is getting closer and closer and we are getting busier by the day! Make sure to contact us as quickly as possible to schedule working with us if you're still wanting Hoods to prepare your taxes this year!

Are you still looking for ways to cut down your tax bill? The secret and sometimes the most overlooked element in helping you save money when it comes to your taxes are tax deductions. Before we get started, it is very important to remember that these write-offs and deductions need to be handled with respect, handled correctly, and never made with any assumptions. The IRS pays very close attention to these when you add them to your taxes, and if done improperly they can lead to an audit. Improperly using deductions can also lead to not getting your return promptly, tax fees, and many other issues. While you are adding up and including deductions, make sure to do your research on what exactly you can write off and how to properly do so before writing off everything and the kitchen sink. However, with that being said, there are still many "hidden" and overlooked tax breaks and deductions that so many people don't know about. To help make your tax season a little less stressful, we wanted to share and talk about the many hidden tax breaks and deductions you might still be missing out on!

One of the main reasons why so many tax breaks and deductions aren't used is because they're not common knowledge. With tax laws changing all the time it also makes it difficult to keep up with what you can and cannot write off, and how much you can and cannot write off. Remember that there is a difference between deductions and tax credits. A deduction lowers the amount you're taxed on and a credit will lower your tax bill directly. It's important to know how they work and to use them to your advantage! When working with a tax deduction, once you have gathered and reported all that you're going to use as a deduction, you subtract the amount of your deduction from your income, lowering the amount you'll be taxed on. A tax credit is an actual dollar-for-dollar reduction in your overall tax bill. There are some refundable tax credits out there, for example, if you owe $500 in taxes but you qualify for a $1500 tax credit, you would get a check for the difference of $1000. While this sounds fantastic, most tax credits aren't refundable.

Today, we are primarily going to be focusing on tax write-offs and deductions, to focus on lowering the amount of money you are going to be taxed on. With this list, we hope to help you save money and to make sure you don't overpay your taxes! There are two different types of deductions, the standard deduction, and the itemized deduction. While it would be nice to be able to do both on your taxes, you have to pick one or the other when filing. Make sure to do your research on which will be best for you and which will lower the amount you'll owe the most.

The standard deduction is a simple way of doing your deductions, it is very cut and dry and to the point, and relies on how you plan to file; single, married and filing together, married and filing separately, or filing as head of the household. It is also very important to remember that those who are 65 and over and those who are blind are eligible for a larger standard deduction. This standard deduction is a set amount of money that you will not be taxed on depending on your filing status, your age, and your spouse's age. The standard deductions are listed below:

Single filer $12,400 (add $1,650 if blind)
Married and filing jointly $24,800 (add $1,300 if blind)
Married and filing separately $12,400 (add $1,650 if blind)
Head of household $18,650 (add $1,650 if blind)

Like we mentioned before, if you are 65 and older and/or blind, your deduction amount will be more. Also, if you and your spouse are filing as a married couple but filing separately, you must both choose the same kind of deduction. You both will either have to choose the standard deduction or itemized deduction, it can't be both.

Itemized deductions are a little bit different. Instead of a set amount of money based on how you're filing that's not taxed, itemized deductions are qualified expenses that are subtracted from your adjusted gross income. You may have one item that you would like to write off in your itemized deductions, but most taxpayers who choose this option will have many qualified expenses they are subtracting from the AGI. When a taxpayer chooses to do an itemized deduction instead of a standard deduction, it usually means that the number of qualified expenses that they are writing off is more than what they would be writing off for the standard deduction. Please note that choosing to do an itemized deduction will take you much longer to prepare your taxes compared to doing a standard deduction. An itemized deduction takes more detailed work to claim and prove everything you're writing off. Depending on what you do and how many deductions you can take will be the deciding factor in choosing if you should do an itemized or standard deduction. It has been noted that the standard tax deduction has gone up a significant amount in the last few years, so it might be best to take that standard deduction. This choice will vary from person to person, and you will need to consider what is best for you when deciding! Here are a few other tax-saving options to help as you prepare your return!

Charitable deductions that you make throughout the year are a very common itemized deduction, however, you might be missing a part of your charitable deduction that you can write off. You can write off the donation, but you can also write off all the out-of-pocket expenses you rack up when doing work for a charity. This can include the groceries you buy for meals you're donating or dishes you're donating to a non-profit soup kitchen. You can also write off your gas if you are using your car to drive for charity and charity events. You can deduct 14 cents for every mile you drive, and the money you spent on parking, tolls, and more. Please keep your receipts from everything you do and give when involved with a charity. If you do give more than $250 in contributions and you wish to write this off, you'll need to provide proof to the IRS from the said charitable organization to prove that you did indeed donate the amount you're claiming.
While trips to Las Vegas and other casinos were out of the question in 2020, gambling was still available virtually thanks to our electronic devices. If 2020 was not a good gambling year for you, you might have the opportunity to deduct these losses. To do this you have to choose to itemize your taxes, and you must keep all of your receipts that track and prove what you spent on gambling throughout the year. To take advantage of this write-off, it is limited only to the number of winnings that you report on your taxes as taxable income.
Have you been spending a lot on childcare, especially throughout the last year due to the pandemic? There might be an opportunity for a tax credit for you! Remember, credit is so much better than a deduction, and this is one of those rare dollar for dollar refundable examples! If you pay your childcare bills with a reimbursement account through your job, you might be eligible for a tax credit. You have $5000 that, by law, you can spend in a tax-favored reimbursement account through your job. If you hit that maximum amount, but you spend more on work-related childcare, you can claim up to $1000 of that extra money spent.
Taxpayers who have children that are probably very familiar with the $2000 tax credit for children 16 years and younger. You can also get a $500 tax credit for your children that you still claim who are over the age of 16, and you can also claim older relatives that you're taking care of in your home.
For all of our teachers and educators, you can deduct up to $250 every year in what you spent on supplies for the classroom. Please remember to keep all of your receipts for this!
Many of us have been working from home thanks to the pandemic, so don't forget about your home office deductions. Be very careful with this deduction as the IRS has very strict rules about it. You can write off expenses connected to rent, utilities, repairs made on the home, real estate taxes, and a few other options!
If you've been contributing to your Health Savings Account (HSA), those contributions are tax-deductible. For an individual HSA, you can contribute up to $3550 and $7100 for a family for 2020 taxes. If you are 55 and older, you can contribute an extra $1000 to your HSA.
There are some qualified health care expenses that you can also deduct. This includes what was spent on the diagnosis, treatment, and prevention of disease, and this amount is subtracted from your AGI. However, you can only deduct medical expenses that cannot be reimbursed up to 7.5% of your AGI, and you can only deduct necessary procedures. Procedures like cosmetic surgery can not be used as a deduction.
For all of our homeowners, don't forget about the option for mortgage interest deductions. This option can help make owning a home more affordable, and make tax season a little less expensive. This option cuts a homeowner's federal income tax by subtracting the amount of mortgage interest they pay!

To all of our readers and taxpayers, know that these ten common examples are only a few examples. This is one of the many reasons why it is so beneficial to work with a tax preparation company like Hoods! There are so many tax credits and deductions out there that are constantly being changed and added, it's hard to keep track of them all! It's part of our job to keep up with each of the common and uncommon tax credits and deductions. While it might seem like it costs a lot to work with a tax preparation company upfront, it can save you money and then some. Working with a tax preparation company can lower your tax bill and can get you an even larger refund. Sounds pretty great, right? We think so! We are here for all taxpayers, so please give us a call today! Remember, if you are looking for the best accounting services in Goose Creek, the best tax preparation in Goose Creek, business consulting in Goose Creek, bookkeeping in Goose Creek, or payroll services in Goose Creek, we are here for you! Our phone lines and inboxes are waiting for you. Don't hesitate! Please stay safe, everyone. We will see you soon!

0 Comments

How To Claim Unpaid Stimulus Money On Your 2020 Tax Return

2/17/2021

0 Comments

hile many of us received both of our stimulus payments, for many Americans that was not the case. Today, we are going to be talking about how to claim your stimulus payments on your 2020 tax returns.

Tax season will officially be here on Friday, February 12th, and while all Americans are preparing to get their taxes in by April 15th, many are still waiting for one or both of their stimulus payments to arrive. Great news, the two go hand in hand! You can claim your missing stimulus money on your 2020 tax return. Even if you are a nonfiler, you are still able to file a 2020 tax return and receive your stimulus funds. Today, we are going to be talking about how best to do that and why you will want to file your taxes as early as possible to help benefit future stimulus payments.

How Do I Claim My Missing Stimulus Payments On My 2020 Tax Return?
While tax season might bring on stress and worry, take comfort in the fact that if you've not received one or both of your stimulus payments or you feel like you were not given the correct amount by the IRS, filing your taxes can help you take action to get the money you're owed!

Tax preparation companies, like Hoods, are already accepting returns. However, you can not begin filing until Friday, February 12th. The faster you prepare your taxes, the quicker you can file them. The quicker you file your taxes, the quicker your tax return and missing stimulus money will be returned to you!
When filing, look for line 30, which will be labeled as Recovery Rebate Credit. It will appear on both 1040 and 1040-SR tax forms. 1040-SR tax forms are for those aged 65 years and older. Nowhere on your taxes will it mention stimulus checks or economic impact payments, it will only be referred to as your Recovery Rebate Credit.
On line 30, you will need to list what you have been given in total from the IRS (even if that is $0) and what you are owed. It is as simple and as easy as that. This will then increase the amount of the refund you will receive or it will decrease the amount that you will owe the IRS. Do not include any other amounts, writeoffs, or tax credits on line 30. Only list the amount you are owed from missing stimulus money.
Please remember that the first stimulus payment was worth up to $1,200 per adult earning $75,000 a year and below. If you made more, the amount provided decreased. The payment for couples was up to $2,400 for those who earned $150,000 a year and below. The amount also decreased depending on how much more filing couples made together over that amount.
The second payment was up to $600 per individual and up to $1,200 per couple, depending on the same regulations and guidelines as the first stimulus.
For the first stimulus, individuals could also receive an additional $500 per child under the age of 17 and $600 per qualifying child in the second round of stimulus payments. If you did not properly claim your children or guardians or did not receive these funds in either stimulus payment, these funds are still available for you to claim in your 2020 tax return as well. Please add this amount to what you write in on line 30 of your Recovery Rebate Credit. Please also make sure to adjust who you claim on your taxes to avoid any other issues like this in the future.
You also might qualify for more money if your income or household size has changed. Stimulus payments were based on 2019 and 2018 income and household sizes. If this has changed for you and your family, it could mean you are owed more stimulus money.
Even if you don't normally file your taxes, according to the IRS, you must file a 2020 tax return to claim the credit that you're owed.
By visiting the IRS website, you can see when and how you were issued both payments. However, as of January 29th of this year, the Get My Payment page on the IRS website will no longer be updated for the first and second economic impact payments. If you are not provided with a payment date for either stimulus payment or have not received one or both, then you can claim your payments on your 2020 tax return.
Filing your tax return early might even help out with guaranteeing any future stimulus payments. While a third has not officially been set, the president has made moves to propose one and it is currently being discussed. Filing sooner might also guarantee that you receive all the money you're owed next time, meaning less hassle for your future tax filing and more money when you need it.
The current bill being proposed by the government could lower the income amount for those who receive the full stimulus amounts. For example, single filers who make $50,000 and below instead of those who make $75,000 and below would receive the full amount. So, filing now will help make sure that you receive your full amount of economic relief according to the 1st and 2nd payment standards.
If you do file sooner rather than later, the third proposed stimulus check could be paid properly and in full, and it will be based on your 2019 and 2020 tax return, whichever they have most recently on record. If you made less in 2020 or had a baby, and the IRS only has your 2019 taxes on file, your stimulus payments would reflect your status of 2019 and not 2020.
Please remember that the fastest way to receive your return and your missing stimulus funds is to file online and to have an active direct deposit account on file with the IRS. The IRS is saying that 90% of filers will receive their refunds in 21 days or less!
If you owe money to the IRS, the money you are owed from the Recover Rebate Credit will be applied to the debt. Even if you are still owed stimulus money, you might not receive all of it if you owe the IRS.
Please remember that you will not have to pay any taxes on any of the stimulus money you have received or any that you will receive in the future.

We know 2020 taxes and future stimulus payments might be difficult to navigate, but we are here to help in every way possible. If you are still concerned about filing your 2020 taxes or about receiving your stimulus payments, please don't hesitate to reach out! Please know that all of us at Hoods are here to help you, and we want to help you receive your tax return as quickly as possible! Please reach out to us if you'd like to begin working with us or have any questions or comments! Is there a topic about taxes that you would like to learn more about? Let us know and comment below! Remember, if you are looking for the best accounting services in Goose Creek, the best tax preparation in Goose Creek, business consulting in Goose Creek, bookkeeping in Goose Creek, or payroll services in Goose Creek, we are here for you! Our phone lines and inboxes are waiting for you. Don't hesitate! Please stay safe, everyone. We will see you soon!

0 Comments

Tax Preparation Tips for 2021 (Part two!)

2/3/2021

2 Comments

We are here to finish up part two of this current blog series dedicated to tips, preparation, and planning for getting through your 2021 tax season!

Hello readers, and welcome back to the blog. With the recent announcement that the very first tax day doesn't begin until February 12th, we've all had a little more time to prepare for doing this year's taxes. We've mentioned and hinted at the fact that this year could be a little more difficult than the last and possibly more difficult than ever before. We understand your worries, concerns, fears, trepidation's, and want to make sure you feel prepared and are prepared for filing your taxes by April 15th of this year. With that in mind, we wanted to offer a few more tips and ideas on how to prepare for doing your upcoming taxes. We also wanted to offer some more information to plan for this whole process as well.

Preparing for your 2021 Tax Season, Continued

Remember that as you are preparing for your taxes, the stimulus money that you received is not being treated as taxable income. It is being treated like money the government would have given you as part of your refund, a sort of tax refund advance you might say.
Many Americans received unemployment benefits throughout 2020 due to losing a job, being furloughed, being unable to work, and being unable to return to work. When you signed up and did your paperwork to begin your unemployment benefits, you had the option of choosing how much you wanted to be taken out of your payments for tax purposes. Depending on how much you allotted the government to take out of these payments will determine how much you'll owe in taxes on your employment benefits. Remember, any unemployment benefits you received last year will count on your tax returns as taxable income.
Many Americans took up a side job or two throughout the pandemic, and are still working them to make up for other lost income. Even if you are self-employed or working for a stand-alone company, you will still be required to pay taxes. You'll receive a 1099 form from the companies you worked for or you'll need to pay a self-employment tax. Make sure to fill out and look out for your 1099 forms, and realize that this self-employment tax is a 15.3% tax that covers your social security and Medicaid taxes, according to Dave Ramsey. If you made more than $400 as a self-employed individual, you'll have to pay taxes on this income. Make sure to discuss this with your tax preparer, and make them aware of how much money you made during self-employment. You could potentially write off up to half of this on your tax return.
Remember, if you're working from home but your employer is in another state you might be looking at paying taxes in more than one state. This can be difficult as each state has different tax laws, which is another great reason to work with a tax professional. We can make sure that no mistakes are made since we are up to date on tax codes and tax laws in each state.
For all of our small business owners or those who work for a company who chose to defer payroll taxes, be advised. If this is something you chose to do, you could see smaller paychecks until these payroll taxes have been paid back. If your company chose to partake in this, you might have seen a little bump in your paychecks throughout last year. This wasn't free money, this was the action of payroll taxes being deferred, and now it's time to pay everything back.
Make sure you choose if you are going to do standard or itemized deductions before filing. Knowing that going into the process can help you organize all of the paperwork you'll need to use for either option ahead of time. While taking the standard deduction is always the easier option, itemizing could allow you to save more money. Just make sure you can prove all of your deductions.
Pick ahead of time if you and your spouse will file together or not. Do your research to see which option is best for you and your family.
If you're planning to prepare your taxes with us or on your own, one of the best ways to get all of your necessary tax documents without having to call the IRS directly is to create an online tax account with the IRS. This will also let you check your payment balance, set up payment arrangements, and view your tax forms and returns from previous years.
Remember that if you don't receive one or both of your stimulus payments, you can claim them on your 2020 tax return through the recovery rebate credit. This will either increase how much your tax refund will be or it will lower how much you owe to the IRS.
The IRS eliminated the 1040EZ and 1040A forms in 2019 and introduced a new form in 2020, the 1040-SR, which is designed for seniors. It has larger print and increased attention to detail to the standard deduction for those 65 years and older. It also added a new question regarding your cryptocurrency. Do not skip this question, the IRS is very aware of cryptocurrency and has been very open about the fact that many tax payers are not being open about reporting their cryptocurrency transactions.
As you're finalizing your paperwork, dotting your I's and crossing your T's, make sure to go back and double-check your work! Check your math, that all names and SSNs are correct, that you've chosen the proper filing status, and that everything is marked appropriately on all of your tax forms, and that you've signed everywhere you need to sign.

Preparation to Planning
Now that you have some excellent tips and suggestions on how to prepare your taxes, how about starting to plan for them? Thanks to both the CARES and SECURE Acts, there is a lot to plan for 2021!

First of all, you'll need to keep your eyes sharp. Both the SECURE and CARES Act brought a good amount of changes into tax law. SECURE was passed in late December of 2019 and it expanded retirement saving options and provided the option for individuals to adjust their tax and estate plans.
If you decide to take a CRD or a Corona Virus Related Disruption in 2020, you can recognize the income over three years or recognize it all this year for tax purposes. If you could potentially be in a higher tax bracket over the next few years, it might be best to recognize all of it this year.
Married taxpayers that have taxable income below $80,000 and $40,000 and below for individuals are allowed to realize tax-free long term capital gains this year. If your income goes above this over the next few years, your long term gains could be subject to a 15% tax rate.
A very beneficial advantage of gifting a 529 college savings plan right now is that five years' worth of gifts can be made in a single year. At one time, a taxpayer can gift up to $75,000 in one sitting to a 529 college savings plan, and if the gift comes from a couple it can be doubled!
You do have the option to defer the current year's tax liability to another year, which will increase your availability for cash investments, personal needs, or business. This is something that can help right now for those still struggling with Covid related financial strain.
Due to the changes of the SECURE Act, IRA and 401(k) accounts might have to be cleared out within ten years of the death of the owner. Exceptions include payouts over the beneficiary's lifetime for spouses, minor children until they're 18, and for the disabled or chronically ill.
Be prepared and familiarize yourself with tax bracket changes that came in with 2020 and how your financial standings might have changed within this bracket due to the financial hit the pandemic caused.
The standard deduction has gone up for all filing statuses. Single and married but filing separately filers deductions went up $200, those married and filing jointly will see an increase of $400, and filing as head of household will see an increase of $300. The standard deduction for single filers is $12,400 and $24,800 for married couples filing together.
Please note that the income tax brackets have increased due to inflation.
2020 caused millions of Americans to spend time in the hospital, and if you've found yourself stuck with a pile of medical bills you might be in luck. You will be able to deduct any medical expenses that are 7.5% above your adjusted gross income or your AGI.
Your children can help you when filing your taxes! Families can claim up to $2,000 per eligible child. Also, because this is considered a refundable credit, your family might be able to receive up to $1,400 per child as a refund!
For businesses that received PPP loan money, according to the IRS, any expenses you paid with money from these loans can't be deducted from your taxable income.
Please remember if you did take money out of your IRA or 401(k) during 2020, don't dread a huge tax bill coming your way. You have three years to return these funds and to get a refund on the taxes you might have paid on that money!

2020 was a difficult year, and we imagine that we'll be feeling its effects for a long time to come. Our goal through these two blogs, and more to come, is to help with the potential shock or difficulties that could potentially come your way for this tax season. Please know that all of us at Hoods are here to help you, and we want to help you receive your tax return as quickly as possible! Please reach out to us if you'd like to begin working with us or have any questions or comments! Is there a topic about taxes that you would like to learn more about? Let us know and comment below! Remember, if you are looking for the best accounting services in Goose Creek, the best tax preparation in Goose Creek, business consulting in Goose Creek, bookkeeping in Goose Creek, or payroll services in Goose Creek, we are here for you! Our phone lines and inboxes are waiting for you. Don't hesitate! Please stay safe, everyone. We will see you soon!

2 Comments

Tax Preparation Tips for 2021 (Part One)

1/19/2021

1 Comment

This might be one of the most unique tax seasons we will ever see in our lifetime, so we want to make sure you're prepared. Here are ten tips to help prepare you for your 2020 taxes!

Hello to all of our readers here in Goose Creek and beyond! All of us here at Hoods hope that you had a wonderful holiday season and that you're ready for tax season to begin. The IRS has announced that the nation's tax season will start on Friday, February 12, 2021. They will begin accepting and processing your 2020 tax year returns. After the tumultuous year that 2020 was, and the difficulties that are still with us, one thing we want to make sure of is that you're prepared for this current tax season. This might be the most unique tax season any of us will experience in our lifetime, but we want to make sure it is as pain-free as possible.

First and foremost, if you are overwhelmed and would like to work with a professional tax company, we will be happy to work with you! However, make sure to sign up for our services as quickly as possible before we run out of time and space to help you file your taxes on time. Remember, the sooner you file, the faster your tax return will be in your pocket! For those who didn't receive their $1,200 or $600 stimulus checks, make sure to include this in your tax paperwork to receive these funds as quickly as possible. With so many individuals still struggling with financial issues, we want to help get all of your money to you as quickly as possible. With all of that being said, we wanted to create a checklist filled with important suggestions to prepare you for doing your taxes. Our goal is to eliminate any stress, worry, and fear with this list!

While we ended 2020 with tips on how to financially wrap up your new year and ways to potentially save money come this current tax season, we are going to take you to the next step. We need to prep for what's coming, and this should not be a painful or stressful process. One way to prepare and help cut down on costs is to make a last-minute estimate tax payment. Paying the IRS before even filing? Yes, this is a thing! It is a possibility that throughout the year you didn't pay enough to the IRS, which could create a huge tax bill for you and you might also be owing penalties and interest already due to not paying enough. If you can pay a little to the IRS right now, you can cut down on the huge chunk payment coming your way in April, and you can budget to pay what you'll ultimately end up owing. Make sure not to overpay though, it is better to owe a few dollars than expect the IRS to send it back in a refund. According to the IRS, to avoid an underpayment penalty, you have to pay 100% of the previous year's tax liability or 90% of the current year's taxes. If you make an estimated payment by January 15th, you can erase the penalities you had for the 4th quarter of your taxable year. Making an early payment can help you in the future.
Always make sure to have all of your paperwork printed out, organized, and accessible before you sit down to do your taxes or work with a tax professional. You will need last year's tax return, all of your W2's and 1099's for 2020, all the receipts you're planning on using for write-offs, and more. One of the best ways to organize and make sure you have all the correct paperwork that you need is to print off a checklist to help you gather everything you need.
Handle your mail very carefully this time of year. Tax documents have or will start to arrive very soon, and it is easy to mistake them for junk mail or a bill that you already paid online. Make sure to not throw away any tax-related documents! Contacting multiple companies to get another copy of your tax documents can take weeks this time of year, and can delay your tax preparation as you work to send your taxes off.
Make sure all of your tax paperwork is organized and grouped in similar piles for easy access and to go through your tax documents more efficiently. Make sure to spend a good amount of time organizing your yearly receipts for your write-offs. Utilizing paperclips and folders in this process can help you save time and frustration!
While this tip might not be directly related to filing this year, attention still needs to be paid. As we saw and discussed last year, tax and stimulus scams and frauds are now at an all-time high. During tax season and with the release of the most recent stimulus check, scams and frauds are at their peak season right now, and you need to be on high alert with these delicate situations. You might begin receiving phone calls, texts, emails, and even letters in the mail from someone posing to be the IRS. Believe us, these scams and frauds are looking more believable by the day, so you need to be extra careful. The IRS nor the U.S Treasury department will ever call or text you. Don't respond to these emails or phone calls you're receiving. Remember, when it comes to money, these criminals know how to use fear tactics to their advantage. The mail is the only way the IRS is going to reach out to you, so please take caution.
For all of our readers who are over 70, please begin to consider and think about your RMDs, or your required minimum distributions. While you might have been enjoying sitting back and watching your IRA or 401(k) grow as you contributed to it every year, now that you're 70, things are going to be a little different. The IRS wants its share once you turn 70 1/2. Make sure that you take out your required RMD amount every year before the 31st of December, or you'll be facing a tax penalty of 50% of what your RMD amount is! If you didn't do this by the cut-off date of December 31, 2020, you will more than likely see a penalty on your taxes this year. The more you know now about how to handle this, it will help make sure you don't make the same mistakes next year.
We will put this tip on repeat because it is so very important. We all worked from home in 2020 more than ever, if not for the very first time. Do not skip out on writing off your home office tax deductions. However, you must be vigilant in this. You can't just write off anything and everything that you want to, the IRS is very smart and particular about this! Every space and everything you write off must have exclusively been used for business only and nothing else! Based on the square footage of your office to the total size of your home, you can write off a portion of the expense of your home like rent, insurance, utilities, and even housekeeping!
Please do not put preparing, doing, and filing your taxes off until the last minute. Rushing through your taxes will result in stress, mistakes, and potentially leading to getting your taxes in late. Mistakes and getting your taxes in late will lead to penalty charges, which will lead to owing the IRS even more money. This will also lead to your tax return taking longer to get into your pocket.
Please make the decision sooner rather than later if you need help with doing your taxes or not. There is no shame or harm in admitting this or working with a tax professional. Please do yourself the favor of filing and paying on time.
If you decide to not work with us at Hoods or with another tax professional, we do urge you to file electronically. This will help you file quicker, it is a much easier process, it will help guarantee that you don't make any mistakes or forget anything, and you might even have the option to pay electronically with a credit card or debit card so you don't have to worry about sending a check off to the IRS.
The February 12th start date for individual tax return filers allows the IRS time to do additional programming and testing of IRS systems following the December 27 tax law changes that provided a second round of Economic Impact Payments and other benefits.
To speed refunds during the pandemic, the IRS urges taxpayers to file electronically with direct deposit as soon as they have the information they need.
You can file your tax returns immediately with Hoods Tax and Accounting Service. We can prepare the returns now so you are in a queue for transmission to the IRS on February 12th. Contact us today. 843-797-5153

As we said, tax season takes preparation and that is no joke! It takes time and dedication, but it is well worth it. Over the next few months, our blogs are going to be dedicated to tax preparation and things you should know about doing your 2020 takes. Make sure you stick around and keep checking back in with us throughout tax season and beyond! Remember, if you are looking for the best accounting services in Goose Creek, the best tax preparation in Goose Creek, business consulting in Goose Creek, bookkeeping in Goose Creek, or payroll services in Goose Creek, we are here for you! Our phone lines and inboxes are waiting for you. Don't hesitate! Please stay safe, everyone. We will see you soon!

To help you prepare for this tax season to the fullest extent, we have also included a few helpful links for you to enjoy and use below!

Corona Virus Tax Information: https://www.irs.gov/coronavirus-tax-relief-and-economic-impact-payments
Where to report a tax scam or fraud to the IRS: https://www.usa.gov/stop-scams-frauds#:~:text=Call%201%2D800%2D269%2D,%2D800%2D366%2D4484.

1 Comment

End of the Year Tax Preparation (Part Two!)

12/24/2020

0 Comments

In part two of this blog, we are going to be finishing up our recommendations on how to prepare for your end of the year tax prep. Our gift to you is to suggest that you get it done now so that when tax season is here in a blink, you'll be ready for it no matter what!

Hello Goose Creek and to all of our readers! As we are now sitting in the last few days of 2020, and we hope that this blog reaches each of you and helps you prepare for the coming tax season. We have always believed at Hoods that being prepared way ahead of time can not only save you huge amounts of stress and worry, but it can also potentially save you huge amounts of money. This year has been difficult, we've touched on it in almost every blog of 2020. This pandemic has been a devastating blow in more ways than one, and our finances have taken some of the biggest hits and blows. While there is still so much uncertainty about what is to come with the future of our finances, what is in our power now is to control what we do know and what we do have.

Being prepared can help make any transition or event that may or may not come from the government easier to deal with and easier to move forward with. Who knows what financial help we might receive between now at April 15th or what might even happen between now and April 15th. What we do know is that there will still be tax day and that we have the power in our own hands to organize our tax documents from this current year and get ready to face 2021 head-on. This season might not be as jolly or bright as the years past, we understand. However, we are here to make it as holly and jolly as possible. If you have any questions, concerns, or need help finishing out this year or starting off strong in 2021, please never hesitate to reach out. We believe in our community and what to help and support each of you as best we can, let us do our job for you!

What is left of 2020 is still ticking down, so let's hop back into part two of this blog. We will be continuing and wrapping up with our tips, suggestions, and ideas on how to wrap up your finances and taxes this year, and get ready for the upcoming tax season!

HELLO, 2021!
Now that you've read part one of this blog and you have a few ideas on how to prepare for the end of this current year, let's focus on how to prepare for the beginning of this new year. Remember, one of the first things we will always recommend in these situations is to work with a tax advisor or a tax preparation company. Of course, we would recommend working with us, but we understand if you work with another company currently. We've said it before, but please note that tax law does change every year. With how uniquely challenging this year has been, there are bound to be some very new and unique things we will be facing with our 2020 taxes. Working with a company like ours will help ensure that all of these new compliances are followed and that nothing is missed. This will help you avoid any tax penalties, avoid underpaying your taxes, will help avoid overpaying your taxes, and will help get your refund much faster!

Don't begin your filing process until you've received all of your 1099s or W2s. Don't be quiet if a client or your employers are taking their time getting you your tax papers. Make sure to reach out and mention it to them once it's getting a little late in the year. If you haven't received anything by the end of February, it's time to start making phone calls!
When you sit down to file your taxes, make sure you have all of your 2019 tax documents organized and ready to use. Make sure you have all of the documents that you will need and will be used to file for 2020 organized and within reach. This will help the process go faster and will be much less of a headache for you.
Make sure to be prepared for and aware of tax scams and fraud that will begin to pop up starting January 1st!! We've already seen our fair share of scams this year involving our stimulus checks and promising to provide the vaccine early as long as you provide very personal and vital information about yourself, most of the time about your bank account. Please do your research about what scams and frauds are looking like right now, how to spot them, and how to protect yourself from them. Also, if you have loved ones who are unfamiliar with these scams, please make sure you help keep them aware of these possibilities and teach them about what scams are and what they can do.
Decide who's going to prepare your taxes this year as quickly as possible. Decide if it is going to be a tax professional like us here at Hoods or an online option filled out by you. Make the choice now to save money and not miss out on working with a tax pro. The closer you get to tax season, the higher their rates will be. Also, take the time to familiarize yourself with the programs you're going to use and understand how much you will be paying to use them.
Please do not ignore the IRS. If you owe late fees, back taxes, or penalties, please take care of them. Go one step farther and make sure to prepare your taxes on time, if not early, to avoid these issues again.
Make sure your salary is correct, that all of your deductions from your paycheck are correct, and that you've been paid the proper amount throughout the year. This will determine a lot in your taxes.
Consider turning your IRA into a Roth IRA, which will help you save money over time. With a ROTH IRA, withdraws are not looped into your income and you won't have to take out RMPs once you turn 70 and a half.

Just to make sure that we didn't overwhelm you with either part of this blog, we listed only the top things and tasks you need to be thinking about and preparing for now for both your end of the year tax preparation and the tax prep you should be starting 2021 off with. Don't worry, there will be more to come over the next few months and as we inch closer and closer to tax day 2021. We hope that both of these checklists help prepare you to close this year out strongly and to start 2021 out focused and prepared. If you need help to make this upcoming tax season the most stress-free of them all, never hesitate to reach out!

Remember, if you are looking for the best accounting services in Goose Creek, the best tax preparation in Goose Creek, business consulting in Goose Creek, bookkeeping in Goose Creek, or payroll services in Goose Creek, we are here for you! Our phone lines and inboxes are waiting for you. Don't hesitate! Please stay safe, everyone. As our last blog of 2020, we want to thank all of you for your support, your business, and for letting us be apart of this wonderful community. We will continue to work hard for the people of Goose Creek and our whole community. From our family to yours, we hope you had a wonderful holiday and have a fantastic New Year! We will see you soon!

0 Comments

End of the Year Tax Preparation (Part One!)

12/18/2020

0 Comments

While the holidays are on the minds of so many of us, the end of this fiscal year and getting ready for the upcoming tax season needs to be just as important right now. Don't lose your holiday joy, but add this awareness to your to-do list before and after we ring in the new year!

Hello, Goose Creek! Can you believe that we're almost at the end of this fiscal and taxable year? 2020 has seemed to drag on and pass by in a very strange flash. It has been a difficult year for our financials with a cut-off tax date of July 15th, a stimulus check, working from home, being furloughed, losing jobs, and starting all over again. While you might not have checked all of those boxes, we're sure you checked some of them. While the holidays are already difficult for so many people and their fiances, 2020 might be even more difficult. We also need to keep in mind that tax season, regardless of where we all are right now, is still going to be a lot sooner than you might think. The end of the year might seem like it's a long way off, but only a few weeks between us and the New Year remain on our calendars. Once January arrives, we'll blink and April 15th will be here in no time. With the strain of the holidays, 2020's toll, and an ending fiscal year, and another one starting soon, we wanted to give you a like holiday cheer with this blog. In this two-part blog, we will be sharing some tips and suggestions on how to prepare for the end of the year and the beginning of the year when it comes to doing your taxes, properly and professionally getting them done, and how to save as much money as possible.

Goodbye, 2020!

Please remember that tax planning and making moves to reduce what you'll be paying next year is unique and different for everyone. You need to find what works for you.
Right now, one of our biggest suggestions is to get all of your tax paperwork collected now. This year came with its own brand of unique things that have changed and affected our financial standings. You might have filed for unemployment, lost your job, gained a new job, didn't receive your tax returns until late summer since tax season ended on July 15th, and we've all been given a stimulus check. For a lot of us, all of these things were new. If not that, the entire timeline of getting your taxes completed and refunds received were way off. Even these small, or for some, huge changes can throw off your organization and preparedness for the upcoming tax season. Avoid any headaches when dealing with what's left of 2020, stay prepared, and stay organized.
Right now is the perfect time to make choices and moves to help cut what you owe on your next tax return, and you have just enough time to tie up these last few decisions to make tax paying a little less painful next year.
Look into ways to make those end of the year last-minute tax deductions. Lower your tax bill by giving a little more, all while giving back to your community, helping your company, and more. A great way to add to your deductions is by giving to charity. Make sure, no matter how much you donate, that you keep all of your paperwork and receipts when doing so. You can make your donation count even more when you donate property or stocks instead of cash. According to TurboTax, if you've owned what you're donating for a year or more, you can deduct what the property value is on the day you give the gifts, and you can "avoid paying capital gains tax on the built-up appreciation".
Make donations now to your HSA account and your 401(K). You can contribute to your HSA up to tax day of next year, but you only have until December 31st of this year to contribute to your 401(K). These donations will decrease your taxable income. Plus it's a great investment into yourself.
If you've had a very difficult year financially, and you need to dip into your retirement savings to help you get by and make it through, make sure to do so by the end of the year. Thanks to the CARES Act, according to US News, you can take up to $100,000 out of your retirement savings and not pay the penalties for doing so as long as you take it before Jan 1st. You will also have three years to pay off your withdraw.
Make sure to plan and start saving if you haven't already for what you'll be owning and paying for your taxes in 2020.
Save all documents for deductible items.
Are you a small business owner or are you self employed? You can save a ton of money now by purchasing goods and services for your company. If you are working from home, please make sure to double and triple check all of the things you and are not allowed to write off. For example; some of you, you'll be able to claim your home office if you strictly use it for work.
Make time to meet with us or your tax advisor and dig into your 2020 taxes early to see if they can find any deductions or to cut back this year or other ways to cut down your taxes in the upcoming year. Our advice? When they give you a suggestion, take it!!

There is a lot to do before the end of the year, and we hope these tips and suggestions have gotten you geared up and ready to get started. While it is so easy to just sit back and relax this time of year, we encourage you to get ahead of the game and end this year out strong. We hope you enjoyed the first part of this blog, and we look forward to bringing the second half to you soon. Until now and then, if you have any questions, please don't hesitate to reach out to us! Remember, if you are looking for the best accounting services in Goose Creek, the best tax preparation in Goose Creek, business consulting in Goose Creek, bookkeeping in Goose Creek, or payroll services in Goose Creek, we are here for you! Our phone lines and inboxes are waiting for you. Don't hesitate! Please stay safe, everyone. We will see you soon!

0 Comments

New Beginnings for Tax Day

3/30/2020

0 Comments

The face of tax day has been changed by the state of the world. But what does this all mean for us as individuals? How is this going to affect how each of us is expected to pay our taxes?

Tax day truly means something very different than it has in all of its history now than ever before. This year, as of recent legislation, tax day has been moved from April 15th to July 15th due to the COVID-19 pandemic. Even in very normal situations, this is a very stressful time for everyone. During this unknown and uncharted time, it has become very stressful at a whole new level for businesses, closed businesses, employees who have been temporarily laid off, and for everyone not knowing what to do next. The government and the IRS hoped that this 90-day extension would ease the stress of not having funds on hand to pay for your taxes by their original due date, due to the loss of your job or paycheck, all in hopes that by July 15th everything will have returned to normal. It's is a very optimistic hope and wish that it is, and all of us are hoping that by July all of this will have blow over, but who knows what could happen.

If you have already filed your taxes, we hope that your tax return is safely in your hands and has helped you through this difficult time. If you're planning to file and pay your taxes before the new July 15th deadline, the IRS is still processing paperwork and is ready to get your tax return back to you. But, if you still need more time, then you're in luck. Unlike a traditional extension, this is allowing filing and payment to be both sent in by July 15th. But, the IRS understands that you might be needing your return more than ever this year. This new deferment is just giving you a chance to take more time to file if you need it. All of us here at Hoods are ready to support our Goose Creek family through these new changes and to help guild, instruct and file for you. But, with all of the changes, do you know what this deferment means and who it applies to? Is this going to help you individually or not?

As of March 20th, the IRS made the official statement that federal income tax filing was moved to its new date of July 15th. Taxpayers are also able to defer federal income tax payments without any penalties and interest, no matter how much is owed. Thankfully this new deferment applies to all taxpayers. This means individuals, those who pay self-employment taxes, corporations, businesses, and trusts and estates. Everyone can benefit from these changes without any penalty. There is also limited paperwork that comes with this change. Unlike a traditional deferment, you do not need to let the IRS know that you're filing later. If you haven't filed by April 15th, the assumption will be made that you are going to be using the new due date as your official tax day. If you do decide to follow the new deferment, and July 15th is still not enough time, you can still ask for an additional extension. This is where the new paperwork comes in. If you need more time as an individual, you will need to file Form 4868, and businesses will need to file Form 7004. Outside of that, no new paperwork is needed!

Even with this extra relief, the IRS still recommends that you file as soon as possible, as the future is still very unknown. To help your financial situation and to get your return back to you as quickly as possible, they are taking no longer than 21 days to get your paperwork filed and refund to you. As we mentioned in past blogs, filing closer to the due date can cause your return to take up to 30 days if not longer to get back to you. This is no longer the case. The IRS is working harder and faster to help out where ever they can.

With the daily changes happening in our country, and the IRS being a vital key to keeping our government afloat in the days ahead, there could be a few bumps along the way with your taxes. Please be patient with them. We also recommend filing online if you were planning to do otherwise. All IRS workers have moved to remote work, and will no longer be accepting appointments in person. Hoods is still here to help you, but we suggest for all business to be done over the phone, through email, and other digital forms of communication for safety sake.

Tax time has never been more unique or shrouded with so many unknowns. During this time, if you have any questions or concerns, we continue to be your tax specialist in Goose Creek. We will get through this together, successfully get your taxes filed, and happily get your tax return back to you and your family. Continue to stay safe and stay at home!

0 Comments

Hidden Financial Changes

8/2/2019

0 Comments

Our most recent blog was dedicated to all the known and unknown items you can look forward to writing off your personal taxes this year. But with new tax cuts and the Job Act of 2017 are you aware of everything you can no longer write off on your personal taxes this year?

It was a delight to share in our last blog all of the wonderful known, and possibly unknown items, that you can write off of your personal taxes come April 15th. These write-offs can be such a relief to any family and a surprise to your bank account when Uncle Sam comes knocking. But it's just as important to know what you cannot write off your family's taxes, so there are no unpleasant surprises. This year could be one of the most difficult years of write-offs thanks to Tax Cuts and the Job Act of 2017. Tax code has changed dramatically, and once you have filed your 1040 (your personal federal income return) this tax season - these write-offs will no longer be available to you.

Understandably, you may not know about these new laws. Tax law for your personal taxes are hard to keep up with or hard to follow - the documents are all available for research, but they can be difficult volumes to understand and interpenetrate. But these new changes are credited to be the largest tax overhaul in over 30 years. A lot of people won't even know about these changes until they go to file. Beat this statistic and read up now - this way you can prepare your finances to pay for items this tax season that you've never had to pay for before.

Personal Exemptions. You can no longer claim a deduction for yourself, your spouse, or for any of your dependents. Thankfully the tax credit for children under 17 has been raised to $1000 and is much easier to access. There is also a new credit for all other dependents (although not of spouses or the taxpayer) for $500.
Alimony. As of December 31, 2018 alimony is no longer a deductible and is no longer included in taxable income. But if you were divorced before this date you can continue to deduct and report alimony payments.
Home Equity Loan Interest. Home equity interest money, which is interest on mortgage debt to pay for anything, used outside of helping to buy, build, or improve your home is no longer deductible. Existing home equity debt is no longer grandfathered in either.
Personal theft losses can no longer be deducted.
Casualty losses that are not declared a disaster by the President are no longer deductible.
Investment expenses are no longer deductible.
Tax preparation fees are no longer deductible.
Legal fees paid on an award, judgment, or a settlement are no longer deductible.
Nonmilitary job-related moving expenses. These expenses are will now be included in taxable wages, tips, ad compensations reported on a W2.

Were you aware of all of these changes? How much are they going to affect you and your family this coming tax season? These are the general changes - but there are more fine print restrictions that live in much grayer areas that have changed as well and are no longer offered.

Unlimited state and local tax deductions.
A $1 million mortgage interest deduction.
Deductions for unreimbursed employee expenses.
Miscellaneous itemized deductions.
Deductions for certain school donations.
Deductions from tax extenders.

For many families, this might be one of the most difficult tax seasons they experience. But knowing ahead of time may help ease the shock. Be prepared and if you can, save as much as you can to begin paying for these new tax items or for what you will no longer be able to write off. Hoods is here to help you prepare for it all, and here to answer any questions you might have!

0 Comments

The Most Wonderful Time of the Year!

7/18/2019

0 Comments

Businesses and Corporations aren't the only ones who can have write-offs and deductibles. As a tax-paying citizen, you can too! Do you know all of the common and most important write-offs for you and your family? Don't worry - this will explain them all!

You might think it crazy that some people look forward to doing their taxes every year. But really, they're letting you in on a really important secret. Taxes DON'T have to be as painful as they have been played off to be. What have taxes done to you? I mean - besides taking your hard earned money every April 15th. But maybe think about it from another angle - what can doing your taxes give back to you? Just two magic words: itemized deductions. That is the golden ticket. But are you keeping track of all of your expenses and are you writing off everything that you can? It's so easy to overlook some of the most common and lucrative tax deductions. So we are here to shine a light on all of them - so maybe next tax season, you can save a couple extra of those hard earned dollars.

Tax season is still nine months away, but we always recommend staying on top of your expenses, keeping track of all your important paperwork, and staying organized. There are TONS of amazing apps and programs that can help you do that. You just need to find the right one that works for you. It's so easy now to go paperless too - if you aren't totally paperless yet, maybe look into that. It'll cut down on the number of pieces of paper you have to keep your eyes on. And might open up a drawer or two in your desk. Always make the most out of any available tax deductions and exemptions. Each one that you claim gets subtracted from your gross income so your actual taxable income is automatically lowered.

First, I want to address those who work from home. This does span between the world of business tax and personal tax and can sometimes be a grey area. But be just as dedicated in keeping track of all of your work records and receipts as you would your own personal papers. You can write off your home workspace, no matter the size. Even if it's just a small corner of the kitchen or your den. But this dedicated space can ONLY ever be used for work purposes. The tip on knowing how much to write off is this: measure the workspace and divide it by the square footage of your home. The percentage you come up with is the amount of housing payment and utility that you can deduct every year. You can also write off other business expenses such as paper, pens, computers, and other commonly used goods and services. But again, similarly to your workspace, you can only use these dedicated items for your business. This also includes your phone lines. You can only write off the percentage of your cellphone bill of how much time you're using it for business. If you still have a landline (kudos to you!) you cannot write it off unless you have two landlines. The IRS doesn't recognize your first landline as a deductible, but it will recognize your second landline as a deductible. That way they know your first line is used for anything but business, while the other is used only for business.

If you don't own your own business and work from home - don't worry. There are still plenty of other write-offs for you and your family. Of course, tax law and tax code do change every year. So if you personally do your taxes yourself and use a program like Quickbooks or have your accountant do your taxes every year - always make sure you're up to date on any changes to any tax law. Most big changes will quickly be made into very public knowledge - what else do we love to talk about more than changes that will affect our income? But always double-check! Your next step is to decide how you're going to file. There are four common deduction categories, but there are more. Make sure you look into all of them before you file. But if you're filing as a single person the total number of deductions is $12,000. If you married and filing jointly or you're a qualified widow(er) with a dependent child the standard deduction is $24,000. If you're filing as the Head of Household, the standard deduction is $18,000.

To receive your deductions, itemizing all of them might help you save some more money. But you still might have to do a little extra math. So keep your calculator close. If your itemized deductions add up to more than your standard deduction - you will end up saving money on your taxes by taking the extra steps to itemize your deductions!
COMMON ITEMIZED DEDUCTIONS! (Don't overlook these gems!)

Charitable Contributions
Value-based car requisition fees
Medical and Dental expenses
Traditional IRA & HSA contributions
Home mortgage points and property tax
College tuition and student loan interest
Work-related expenses
Self Employment Income
State and local income, sales and property tax
Child Care
Business use of your home
Earned income tax credit

How incredible are all of those? How much did you already know and what was news for you? Hopefully, these tips and insights will help keep a little more money in your bank account this coming tax season!

0 Comments

Hoods Tax &
Accounting Blog

Hidden Tax Breaks for 2020

How To Claim Unpaid Stimulus Money On Your 2020 Tax Return

Tax Preparation Tips for 2021 (Part two!)

Tax Preparation Tips for 2021 (Part One)

End of the Year Tax Preparation (Part Two!)

End of the Year Tax Preparation (Part One!)

New Beginnings for Tax Day

Hidden Financial Changes

The Most Wonderful Time of the Year!

Author

Archives

Categories

​Hoods Tax &Accounting Blog

Author

Archives

Categories

Hoods Tax &
Accounting Blog