Read NSA's article here.
2018 FACTS on WHO PAYS TAX
The top 1% of individual filers paid 40.08% of all U.S. income taxes for 2018 per IRS (up from 2017’s figure of 38.47%).
The top 1% earned at least $540,009.
The top 5% earned at least $217,913 and paid 60.30% of total income tax.
The top 10%, those with AGIs (Adjusted Gross Income) of at least $151,935, paid 71.37% of the tax burden.
The bottom 50% of filers paid 2.94% of the total federal income tax take.
Nonitemizers can claim an above-the-line deduction max of $300
for charitable 2020 cash contributions.
Individuals not itemizing Schedule A can take both the standard deduction
and a max deduction of up to $300 in cash contributions. This is per return, meaning couples who file jointly can deduct only $300, not $600.
The 60%-of-AGI limit on charitable gifts of cash by individuals is suspended
§139 of the Internal Revenue Code (the “Code and if you ever tried to read it you will know why they call it Code)”) excludes from a taxpayer’s gross income certain payments to individuals to reimburse or pay for expenses related to a qualified disaster. CONVID-19 is considered a Qualified Disaster in all states....
A “qualified disaster relief payment” is defined by §139(b) of the Code to include any amount paid to or for the benefit of an individual to reimburse or pay reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a qualified disaster. Qualified disaster relief payments do not include qualified wages paid by an employer, even those that are paid when an employee is not providing services.
We interpret these expenses to be things like... the purchase of masks, hand sanitizers, computers so you work online or receive education online and probably many others we have not thought of. The employer can deduct and pay this to employees with no tax consequences to the employee.
Thank you to Attorney Jon Alper www.AlperLaw.com for the heads up on this.
When a premature distribution is made, it needs to be marked as a coronavirus-related distribution. The distribution can be made any time in 2020 up to an aggregate limit of $100,000 and the 10% additional tax is waived. You can also spread out the tax burden over three years (2020, 2021, and 2022) or decide to include the entire distribution in your income for the year of the distribution.https://www.irs.gov/newsroom/coronavirus-related-relief-for-retirement-plans-and-iras-questions-and-answers
March 18, 2020
The Treasury Department and the Internal Revenue Service are providing special payment relief to individuals and businesses in response to the COVID-19 Outbreak. The filing deadline for tax returns remains April 15, 2020. The IRS urges taxpayers who are owed a refund to file as quickly as possible. For those who can't file by the April 15, 2020 deadline, the IRS reminds individual taxpayers that everyone is eligible to request a six-month extension to file their return.
This payment relief includes:
Individuals: Income tax payment deadlines for individual returns, with a due date of April 15, 2020, are being automatically extended until July 15, 2020, for up to $1 million of their 2019 tax due. This payment relief applies to all individual returns, including self-employed individuals, and all entities other than C-Corporations, such as trusts or estates. IRS will automatically provide this relief to taxpayers. Taxpayers do not need to file any additional forms or call the IRS to qualify for this relief.
Corporations: For C Corporations, income tax payment deadlines are being automatically extended until July 15, 2020, for up to $10 million of their 2019 tax due.
This relief also includes estimated tax payments for tax year 2020 that are due on April 15, 2020.
Penalties and interest will begin to accrue on any remaining unpaid balances as of July 16, 2020. If you file your tax return or request an extension of time to file by April 15, 2020, you will automatically avoid interest and penalties on the taxes paid by July 15.
The IRS reminds individual taxpayers the easiest and fastest way to request a filing extension is to electronically file Form 4868 through their tax professional, tax software or using the Free File link on IRS.gov. Businesses must file Form 7004.
This relief only applies to federal income tax (including tax on self-employment income) payments otherwise due April 15, 2020, not state tax payments or deposits or payments of any other type of federal tax. Taxpayers also will need to file income tax returns in 42 states plus the District of Columbia. State filing and payment deadlines vary and are not always the same as the federal filing deadline. The IRS urges taxpayers to check with their state tax agencies for those details. More information is available at https://www.taxadmin.org/state-tax-agencies.
A net operating loss (NOL) is when business losses exceed income.
Prior toJanuary 1, 2018, NOLs were able to offset 100% of taxable income. They were allowed to be carried back two years and carried forward for twenty years. You could affirmatively elect with a timely filed return to NOT carryback (the default) and instead carry forward only (permanent, could not change it for that year).
Under the new law effective in 2018, an NOL can offset only 80% of taxable income in any given tax year. NOLs can be carried forward only. The 20-year carryforward period is changed to an indefinite carryforward period NOLs created in tax years beginning before January 1, 2018 are subject to the old rules. Only NOLs generated in tax years beginning after December 31, 2017 are subject to the new rules.
Can unreimbursed employee expenses be deducted?
No, not for a W2 employee. Any of the 2017 expenses and years prior that were subject to a 2% of AGI limitation are no longer deductible.
Yes, for independent contractors.
Yes, for Statutory employees.
The best example of a Statutory Employee is an outside insurance agent.
Apr 23, 2018 · Statutory Employees. An individual who works at home on materials or goods that you supply and that must be returned to you or to a person you name, if you also furnish specifications for the work to be done. A full-time traveling or city salesperson who works on your behalf and turns in orders to you from wholesalers, retailers, contractors,...
I have never seen a mortgage agent classified as a statutory employee.
Now, what if you are both a W2 employee AND an independent contractor?
No for employee expenses.
Yes for independent contractor expenses.
BUT we are talking about the same business field. It would be fair if unreimbursed expenses should are pro-rated……
i.e. W2 $80k Form 1099 Independent $5k
$80 + $5 = $85k
$4k/85k = 4.7%
4.7% x $4k expenses = $188 Sch C expenses to reduce the $5k F1099.