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Happy New Year! We look forward to helping you navigate the tax laws once again. See you soon!
Tax organizers are available to assist you in gathering your tax information. Please contact the office at 208-452-5700 to have one emailed to you.
Standard Deduction – 2019 and 2020
The Standard Deduction is as follows, based on your filing status:
- Single or Married Filing Separately: $12,200 (2019); $12,400 (2020)
- Head of Household: $18,350 (2019); $18,650 (2020)
- Married Filing Jointly: $24,400 (2019); $24,800 (2020)
As a reminder, the personal exemption deduction is no longer available, effective with 2018 tax returns.
Child Credit Increased
As a reminder, the child credit, for children under 17 that qualify as your dependent, has increased to $2,000 (from $1,000), effective with 2018 tax returns.
Dependent children are claimed on the tax return where the dependent spent the most nights during the year. The IRS does not refer to/accept divorce decrees for the claiming of child dependents. While there is no longer an exemption deduction for dependents, the dependents must be on your return to claim the Child Credit, Dependent Care Credit, and the Education Credits.
Mileage Rates – 2019 and 2020 (per mile)
- Business: 58 cents (2019), 57.5 cents (2020)
- Medical: 20 cents (2019), 17 cents (2020)
- Charity: 14 cents (both years)
If you did not verify your withholding, especially state withholding, during 2019 you could be in for an unpleasant surprise with your 2019 tax results. The Federal and many states (including Idaho and Oregon) tax withholding tables were adjusted during the year by their respective agencies. You may have had less withheld due to this, which may impact your expected refunds (or what you owe).
The tax laws may make up for the table changes (which was the intent), but not all taxpayers are affected the same. Oregon and Idaho have their own Form W4s that you must complete. Please see our website at https://treasurevalleytax.com/tax-forms/tax-forms-2/ for links to the forms.
The Transit Tax was in effect for the full 2019 year, which requires Oregon employers to withhold 0.1 percent from each employees’ gross pay.
The Corporate Gross Receipts Tax is a 0.57 percent tax that generally applies to all businesses with Oregon-source receipts over $1 million.
OregonSaves is a state retirement program providing Oregonians an opportunity to save for the future. Employers are required to enroll in the program, employees are automatically enrolled and have an opt-out option. This program has been phasing in, and the last remaining employer base are employers with 4 or fewer employees who are required to register no later than January 15, 2021. For more information visit Oregonsaves.com.
While there is no longer an Exemption Deduction on the Federal return, Oregon still has a Personal Exemption Credit on the State return.
New! Tax Law Changes – 2019
The “Further Consolidated Appropriations Act, 2020“ was signed into law December 20, 2019. This year-end spending package includes various tax provisions, extenders, and retirement plan changes.
The bill has a host of “extenders” which extended certain expired tax laws, and they were extended through 2020. Some of these were also made retroactive to 2018. A few of the more common extenders include reduction of the AGI (Adjusted Gross Income) floor for medical from 10% to 7.5%, the above-the-line deduction for tuition and fees, the treatment of mortgage insurance premiums (PMI) as deductible qualified residence interest, and the exclusion of forgiven qualified principal residence indebtedness from gross income. There were also business extenders in the package for unique situations.
The Act also included the SECURE Act, which makes major changes to 401(k) plans and IRAs, as follows:
- Moves the start date for required minimum distributions (RMDs) to the year in which the owner turns 72 (effective for year 2020; anyone who turned 70.5 prior must follow the prior rules);
- Ending the 70.5 age limit for IRA contributions (effective for year 2020);
- Shortening the distribution period for non-spouse inherited IRAs to a ten year maximum.
401(k) changes: employers are required to make some changes to their plan, while others are optional. If you need more detail, please contact us.
Affordable Care Act Tax: The excise tax on high cost employer-sponsored health coverage and medical devices are fully repealed. And, as passed in 2018, the individual penalty no longer applies starting in tax years 2019 for not having health insurance.
Kiddie Tax: The application of the estates and trusts tax rate to certain unearned income of children (the ‘kiddie tax’) has been reverted to the prior use of the parent’s tax rate for tax years beginning after 2019. The original change was meant to simplify the application of the kiddie tax, but had the unintended consequence of increasing the tax on the unearned income, such as military income death benefits, of children in low-income families.
We will work with your individual situation to determine how the new tax law changes impact you.
Tax Related Theft – Exercise Caution!
Tax related identity theft occurs when someone uses your stolen Social Security number to file a tax return claiming a fraudulent refund. You may be unaware you are a victim until you receive an IRS notice or you file your return and it is rejected because your SSN has already been used. It’s important you take steps to protect all your personally identifiable information.
- Don’t fall for common scams (examples): The IRS does not initiate contact with taxpayers by email or social media to request personal or financial information; the IRS does not make phone calls threatening you with arrest or deportation.
- Protect your SSN and identifiable information: Keep your information in a safe place – do not carry your card routinely; only share your SSN when necessary; protect your financial information at home on your computer check your credit report annually; check your SSA earnings annually; protect your computers by using firewalls, anti-spam/virus software, update security patches, and change passwords frequently.
- If you are a victim, follow the steps as recommended by the Federal Trade Commission at www.identitytheft.gov.
Business Deduction – Up to 20% of Business Income
Small businesses may be eligible for a new (in 2018) deduction of up to 20% of their qualified business income. In order to calculate the deduction and other required reporting items, an accurate set of accounting records is mandatory. Please submit your records to us early so we can assist with getting the records accurate to maximize this valuable deduction.
1099-MISC Certain business expenditures require the filing of Form 1099-MISC. These forms are due to the recipients by January 31 and many of them are also due to be filed with the IRS by January 31. Please submit your information timely so we can help you meet the deadline Penalties may apply for non-reporting or late reporting.
How soon can we file?
The IRS will begin accepting e-filed tax returns for businesses and individuals on Monday January 27, 2020. You can bring your information to us as soon as you have it.
Filing an Extension
If you need an extension, please provide us your information as soon as possible as we need to determine, to the best of our ability, what you may owe (or not). An extension does not extend the date due of any tax owing, and if pay late, you are subject to late payment interest and penalties.
Extended Tax Returns
As always we will help you with filing your extended tax return as needed. We do ask extended returns be dealt with timely so they can be completed, if possible, no later than August 31.
Tax Season Hours
- Monday to Thursday ~ 8am to 6pm
- Friday ~ 8am to 5pm
- Saturday ~ 9am to 3pm
- Phone: 208.452.5700
- Fax: 208.452.5711
- firstname.lastname@example.org (if we process your payroll)