WOW! What a year 2020 was. I don’t know about you, but I am ready for a fresh start this New Year. 2020 had its challenges for Everyone. At Abacus, we are so grateful for our Transportation clients, who helped keep our country strong during these difficult times. We hope you and your family got to spend time with each other through these holidays whether that be in person, on the front lawn, or by video calls.
Here at Abacus, we have been diligently working on getting ready for this upcoming tax season which hasn’t been easy with all the new legislation that has been signed and most likely more to come. If you plan to have Abacus prepare your tax return please be aware that our 2020 Tax Organizer is now available. Please fill it out and remit it back so we can get started on your tax return.
In order for you to prepare for this upcoming tax season, we want to make you aware of some of the tax changes that may affect you.
- Charitable Deductions: Gifting cash by December 31, 2020, will have made a larger impact on your taxes this year. The CARES Act added a new $300 Charitable contribution deduction that directly reduces your Adjusted Gross Income, in other words, you don’t have to itemize to get this $300 deduction you simply had to have gifted $300 in cash to a qualified charity. As a reminder, be sure to keep your receipts and turn them in to your accountant.
- Economic Impact Payments (EIP): If you have not received your EIP payment or the EIP payment was not in full. Then your EIP will be reconciled on your 2020 taxes. For example, if you had a child in 2020 and you’re eligible to claim your child on your 2020 taxes then the amount you would be eligible for with the additional child included will be reconciled on your 2020 taxes.
- Paycheck Protection Program (PPP): Those who received PPP loans do not have to claim the loan as income and all qualified business expenses paid with loan proceeds are tax-deductible.
- Retirement: Covid-19 related* retirement withdrawals up to $100k aren’t subject to the early 10% distribution penalty. The retirement distribution is still subject to income tax. The repayment of the retirement distribution and the income allocation can be done over a three-year period. For example, if you were eligible to withdraw $6k then you have the option to claim $2k per year, starting on your 2020 taxes, and over the next three years. The $6k must also be repaid in three years. *Check with your accountant or IRS.gov regarding Covid-19 related requirements.
Our Abacus professionals are dedicated to keeping our clients informed and as additional information becomes available, we will be sure to share those with you. Although the world may not be as “normal” as it once was we are open and ready to serve our clients.
At Abacus™ CPAs, our focus is you! Contact us today if you need help or more information on this valuable topic.
We believe that our employees and clients deserve to interact in an environment that fosters growth, trust, and confidence. Abacus™ professionals provide leadership by relentlessly pursuing the best guidance possible so those we serve can make smarter decisions.
We are here to serve you and your business. Contact us today by calling 417-380-5000, or visiting our website at www.abacustrucking.com.