January 1, 2022 to January 31, 2022 – Monday thru Friday 9:00AM to 5:00PM
February 1, 2022 to April 14, 2022 – Monday thru Friday 9:00AM to 7:00PM
April 15, 2022 – 9:00AM to 4:30PM
April 19, 2022 to December 31, 2022 – Tuesday thru Thursday 9:00AM to 3:00PM
Denise will not be available, due to a tax conference, from July 24, 2022 to July 28, 2022.
Our goal is not only to provide you with a high-quality professional service, but to keep everyone safe and healthy. Since COVID is still hindering our health, we are asking our clients to be honest and up front with us and tell us if they did or did not receive the vaccination(s) and booster. We also understand there are some of you for health purposes could not receive the vaccine, and others who have concerns about health issues by receiving the vaccine. Your honesty is most important at helping us keep our staff and clients healthy. We are asking you to respect us and our clients and be honest with us like you would any of your family members. If you have not received the vaccination(s) and booster we ask you to please wear a mask when entering our office. Any person entering our office will be asked the COVID vaccination question. If you are not feeling well the day of your appointment, please drop off your tax information before your appointment, letting the office staff know you are not feeling well. You will receive a phone call about ½ to 1 hour after the start of your appointment from Denise to ask you additional questions and review the final numbers with you. Please remember we are a small business; our co-workers and clients are like family members to us; please be honest.
Throughout the entire year our tax professionals are available by appointment only.
We hope everyone is doing well and staying healthy. The past two years have been different for all of us. As we all get back to some type of normalcy, we should look at the positives over the past two years and learn from the negative moments. This should make the past two years a little less stressful for all of us, plus help us go forward in a much more positive manner.
How will we handle the tax interviews this year? This will be up to you. During COVID times some of you enjoyed the experience of being at home and either having a virtual interview (Zoom) or phone call interview. This year those who have an appointment can decide which interview process they prefer. No matter which method you prefer, Denise will review your returns with you as she has always done in the past. We are offering 4 different interview procedures, none of them being new:
- Telephone prescheduled appointment – This procedure is not new to those of you who drop off your tax information every year. This is probably the most popular way for most of our clients to schedule their tax interview. We will review, over the phone, the same questions and tax summary review we do during our in-person tax appointments. We will ask you to complete the questionnaire, answering as many of the questions that you can. We need your tax information in our office before your scheduled appointment time. At your scheduled appointment time Denise will start to review and enter your tax documents (this takes ½ to 1 hour). After she has completed the data input and quick review, she will call you and complete the tax review with you over the phone.
- Person-to-Person – (In-Person appointment) – You come into the office at your prescheduled date and time and the interview is completed in the office. You will bring your tax information with you to your appointment, the data input will be completed while you are in my office along with the final review.
- Virtual appointments – This is the same as the telephone prescheduled appointment. The difference is you can see and talk to Denise through a smartphone, tablet or computer. We will review the same questions and tax summary review we do during our in-person tax appointments. We do ask you to complete the questionnaire, answering as many of the questions that you can. We need your tax information in our office before your scheduled appointment time. At your scheduled appointment time Denise will start to review and enter your tax documents (this takes ½ to 1 hour). She then will contact you via zoom to complete the interview.
- Drop-off appointments – There really is no change to this process. If you decide you would like a virtual appointment or a prescheduled telephone interview you will need to call our office so we can schedule your appointment.
Those who decide to not have a person-to-person interview have various ways you can get your tax information to us.
- Using the US Postal system and mail us your documents
- Dropping off your documents using the secure mail slot located at the office entrance.
- Come into our office and drop off your tax information
- We can email you a secure link through Sharefile and you can upload all of your tax documents to us in a very secure way. You need to call our office to request this link.
Our greeter Boomer is doing well and really misses seeing everyone. He did enjoy some of the Zoom meetings especially when your four-legged friends were involved.
We still have ‘Good Things’ on our website, so any new pictures you would like to send us please do. We will get them on the website as soon as we can. The scammers have been going full force since COVID; Sarah has done her best to keep the ‘Security Awareness’ section updated on our website. Please review and share with your friends and family the Security Awareness section of our website.
We appreciate your trust, loyalty, confidence and friendship. If you have any questions or concerns, please call our office. Remember, do something special for someone to make them smile and always be kind and considerate to others. Stay safe and healthy, most importantly enjoy each moment. We hope all of you and your families have a very prosperous and healthy New Year; wishing you joy and happiness in 2022.
Your Friends at Main Street Tax
Denise, Barb and Sarah
DISCLAIMER: Any tax advice noted below is based on the facts provided to us and on current tax law interpretation. Tax law is subject to continual change, at times on a retroactive basis and may result in incremental taxes, interest or penalties. Should the information below be incorrect or incomplete or should the law or its interpretation change, our advice may be inappropriate. We are not responsible for updating our advice for changes in law or interpretation after the date noted above. The following cannot be used as support in any tax audit.
Please be sure to include with your tax information this year the letter you received along with the dollar amount of your 2021 stimulus payment. For those who did not receive their stimulus payment, you might be able to receive the stimulus payment, if you qualify, when you file your 2021 income tax return.
ADVANCE CHILD TAX PAYMENTS RECEIVED
Just as a reminder I will need to know the date and dollar amount of each of your advance child tax payments you received in 2021. These payments started in July 2021.
REQUIRED MINIMUM DISTRIBUTIONS (RMD)
change starting 01/01/2020
The Secure Act increased the age for required minimum distributions to age 72. This legislation does not affect the rules for 2019. If you were 70 ½ or older on December 31, 2019 you will be required to continue to pull your RMD and follow the old rules. This legislation change only effects individuals who were not 70½ or older on December 31, 2019.
As I am writing this there is still some confusion with the 2021-dollar amount for the above-the-line deduction for charitable contributions. Beginning in 2020 those taxpayers who did not qualify to itemize their deductions were able to take up to a $300.00 adjustment for the amount they made in charitable contributions. We were told in Spring 2021 this dollar amount would increase to $600.00. The way the law is currently written this amount would only increase for those who file a joint return. There could be more to this story by tax time.
NEW VIRTUAL CURRENCY GUIDANCE
The IRS has issued new guidance to help taxpayers better understand their reporting obligations for specific transactions involving virtual currency. The new guidance includes Revenue Ruling 2019-24 and frequently asked questions. Please call our office if you are dealing with virtual currency so we can assist you in your required recordkeeping.
TUITION (FORM 1098-T) AND BILLING STATEMENTS
If you have a child attending college we will need the 1098T from the college (this will be in your child’s name). We will also need the tuition and fees billing statements from the college for the full calendar year. We want to be sure we are not missing any qualified expenses. You may have to go on the school’s website to retrieve the billing statements. The information will most likely be in the student’s name. The student most likely will have access to this information. Tax preparers are mandated by IRS to verify the numbers we enter on your return. The only way for us to verify this information is to review the billing account statement for the calendar and Form 1098T.
What is sharing economy? Sharing economy is a term for a new way of distributing goods and services – a way that differs from the traditional model of corporations hiring employees and selling products to consumers. An economic system in which assets or services are shared between private individuals, either free or for a fee, typically by means of the Internet. Thanks to the sharing economy you can easily rent out your car, your house, your apartment, your bike, even your Wi-Fi network when you do not need it. Sharing economy activity is generally taxable even when:
- The activity is only part time
- The activity is something you do on the side
- Payments are in cash
- You receive a 1099 form or W-2 form for your service
You will want to call Denise if you are participating in sharing economy. We will review the items you will want to track and receipts you will want to save in order to take a deduction for these expenses to offset the income.
MARKETPLACE SALES or commonly known purchasing items online (PA Rules)
PA has issued guidance on its website related to the Marketplace Sales legislation that was passed by the General Assembly in 2017. The legislation required certain remote sellers and referrers facilitation, making or referring sales to PA customers to make an election to either
- Register to collect and remit sales tax or
- Comply with tax notification and reporting requirements
Beginning April 1, 2018 PA customers will begin receiving information notices from businesses who have elected not to collect sales tax. The information notice will list the purchases and the purchase price of the products for which sales tax was not collected by the seller.
It is important you bring to me these notices which will give me the proper information I need to file your PA use tax when we file your PA income tax return. Please remember PA Dept of Revenue is receiving copies of these notices and will be looking for this information on your PA-40.
CHANGES FOR THE BUSINESS COMMUNITY
Qualified Improvements on Nonresidential Real Property
Qualified Improvements on nonresidential real property is now 15 year property qualifying for a 100% deduction. Examples of such qualifying improvements include installation or replacement of drywall, ceilings, interior doors, fire protection, mechanical, electrical and plumbing. Excluded from the definition are improvements attributable to internal structural framework, enlargements to the building, and elevators or escalators.
PA Withholding Might Be Required For Payments To Contractors
Payments you make to out of state subcontractor doing work here in PA might need to have PA income tax withheld before you submit your payments to the subcontractor. The moment you hire someone to do work on your PA property and their business is NOT located in the State of PA please call Denise before hiring the contractor or submitting any payments to the contractor. Denise will help you decide if PA tax must be withheld.
MEALS AND ENTERTAINMENT CHANGES
Effective 01/01/18 entertainment expenses are non-deductible no matter what. Your business can still pay for the cost of the entertainment; the expense will be non-deductible on the tax return.
However, team-building activities, including the purchase of tickets for your staff is allowed and 100% deductible. The tax code states that “expenses for recreational, social or similar activities primarily for the benefit of employees” qualify for the 100% deduction. There could be more to this story by tax time.
Meals– Are your meals 100% deductible, 50% deductible, or non-deductible?
As part of the Consolidated Appropriations Act (2021), the deductibility of business meals is changing. Food and beverages will be 100% deductible if purchased from a restaurant in 2021 and 2022. This temporary 100% deduction was designed to help restaurants, many of which have been hard-hit by the COVID pandemic. It is my understanding of the law, as long as the meal is eaten at the restaurant it is 100% deductible. If the meal is not eaten at the restaurant, it is 50% deductible. There could be more to this story by tax time.
Please remember if you are traveling on business and away from your office the meals you purchase for yourself, while you are away will be deductible. Per the law if you eat the meal in the restaurant, it is 100% deductible. If you eat the meal in your car or take it back to your hotel room it is 50% deductible. There could be more to this story by tax time. Always remember to document.
Documentation – you will still need all the documentation you needed in the past.
You are allowed to deduct ordinary and necessary expenses paid or incurred during the tax year in carrying on your trade or business. You will still need to discuss business and document the cost with a receipt. Briefly noting what was discussed will help you back up the cost; verifying it is an ordinary and necessary business expense for you to carry out your trade or business.
HOTEL AND TRAVEL
As of the writing of this document there has not been any change as to the deductibility of hotel and travel expenses for business purposes. You need to note the business purpose and of course who, what, when, where and why for the expense to be deductible to the entity.
If you are giving a client hockey or baseball tickets: This could be classified a gift. The tax laws state you can deduct business gifts given to your clients up to $25.00 per recipient; this is per year per recipient. You cannot give a client 2 deductible gifts in one year. Your business can pay for the expense. If the cost is above $25.00, the difference will be non-deductible. Be sure to note on your receipt the client’s name and business.
RENTAL PROFITS SECTION 199A RENTAL REAL ESTATE TRADE OR BUSINESS ACTIVITY Federal update 01/18/2019
The following is not a summary of the entire law related to rental activities or 199A. The following is related to the revenue procedure for treating a rental activity as a trade or business for purposes of 199A.
Safe Harbor Test
- Separate books and records are maintained which reflects income and expenses for each rental activity
- For taxable years beginning prior to January 1, 2023, taxpayers must perform 250 or more hours of rental services per year for each rental activity. For taxable years beginning after December 31, 2022, taxpayers must perform 250 or more hours of rental services per year for each rental activity in any three of the five consecutive years that end with the taxable year (every year if the activity was held for less than five years).
- The taxpayer must maintain contemporaneous records, including time reports, logs or similar documents:
- Hours of all services performed
- Description of all services performed
- Dates the services were performed
- Who performed the services
May be performed by owners or by employees, agents, and/or independent contractors of the owners. They include:
- Advertising to rent or lease the property
- Negotiating and executing leases
- Verifying information on prospective tenant applications
- Collection of rent
- Daily operation, maintenance and repair of the property
- Management of the real estate
- Purchase of materials
- Supervision of employees and independent contractors
Rental Services DO NOT include financial or investment management activities such as:
- Arranging financing
- Procuring property
- Studying and reviewing financial statements on operations
- Planning, managing or construction long-term capital improvements
- Hours spent traveling to and from the rental property
There are other rules and issues which might have you excluded from using the safe harbor method. Please be sure to review this entire law with your tax professional.
The taxpayer must include a statement attached to the return claiming or passing through the 199A deduction information that the requirements in Section 3.03 of this revenue procedure have been satisfied. The statement must be signed by the taxpayer, or an authorized representative of an eligible taxpayer which states:
“Under penalties of perjury, I (we) declare that I (we) have examined the statement, and, to the best of my (our) knowledge and belief, the statement contains all the relevant facts relating to the revenue procedure, and such facts are true, correct, and complete.”
TAX PLANNING WHY OR WHY NOT?
If you are planning on improving your home how are you going to pay for the cost? Pulling the money from your Retirement Savings might cost you way too much in income tax. Using a home equity loan might be a good idea; the problem might be your home equity loan you had for the past 10 years may not be set-up properly. Here is where tax planning might be helpful. I will give you ideas on how to fund the improvements and at the same time review the tax advantages or disadvantages with each scenario.
Do you want to buy a vacation property or rental property? Again proper planning may just save you income taxes. You have a child or grandchild attending college and you would like to gift them some money towards their college tuition. Call Denise so she can tell you the best way you can assist your child or grandchild.
Remember prior to refinancing, purchasing or taking out a home equity loan please call Denise for proper guidance.
Since the standard deduction is so much higher a lot of our clients will not qualify for itemizing. Those clients who fall under Required Minimum Distribution requirements can make special contributions to their favorite charities, when pulling their required minimum distributions from their IRA accounts. This is part of tax planning and might save you quite a few tax dollars. Let Denise know your plans when donating to your favorite 501C3 organization.
Some of you might be able to just call Denise, ask the question and she will give you a pretty quick answer. Others, additional time might be needed depending on the complexity of the question.
Most important to remember is Denise is here to save you time and tax dollars. Please call her anytime.
BEFORE BAD WEATHER AND DISASTER STRIKES – BE PREPARED!
Being prepared for the worst is always a good idea. Your plan shouldn’t only include bottled water, batteries, candles and an evacuation plan — but also your financial and family documents. While putting together your emergency kit, don’t neglect your financial kit:
- Update emergency plans. Taxpayers should review and update their emergency plans annually because personal and business situations are constantly evolving.
- Create electronic copies of documents. Documents should be kept in a secure place. Secure places include a password-protected WiFi, encryption of the documents and/or perhaps an external drive or flash drive that is disconnected to your computer after loading documents. Documents include, but are not limited to, bank statements, tax returns and insurance policies. Saving electronic copies is much easier right now since most institutions provide you with electronic statements. If you only have access to paper copies, you should scan them to a flash drive or CD or in the cloud.
- Document valuables. Taking pictures or videos of valuables before disaster strikes helps with your insurance claim and tax benefits, if necessary. gov has a disaster loss workbook to help taxpayers document room-to-room items of their belongings.
- Know what tax relief is available in disaster situations. Information on disaster assistance and emergency relief for individuals and businesses is available at IRS.gov. Also review the itemized deduction for casualty and theft losses. Net personal casualty and theft losses are deductible only to the extent they are attributable to a federally declared disaster. Claims must include the FEMA code assigned to the disaster.
- Remember, the IRS is ready to help. In the case of a federally declared disaster, people can visit Around the Nation on IRS.gov and click on their state to review the available disaster tax relief. Taxpayers who live in a county qualifying for tax relief receive automatic filing and payment extensions for many different tax forms do not need to contact the agency to get relief. Any disaster-related questions, call the IRS at 866-562-5227 to speak to an individual trained to answer disaster-related questions.
DISCLAIMER: Any tax advice noted above is based on the facts provided to us and on current tax law interpretation. Tax law is subject to continual change, at times on a retroactive basis and may result in incremental taxes, interest or penalties. Should the information below be incorrect or incomplete or should the law or its interpretation change, our advice may be inappropriate. We are not responsible for updating our advice for changes in law or interpretation after the date noted above. The above information cannot be used as support in any tax audit.