Jeanclaude Denis Income Tax Service

IRS Allows Medical Expense Deduction for COVID PPE Did You Know? If you have bought personal protective equipment (PPE) during the pandemic, you may be able to deduct those expenses on your tax return. Alternatively, you may choose to reimburse yourself with funds from a tax-advantaged medical savings plan. Eligible PPE includes sterile gloves, face masks and shields, and hand sanitizer and sanitizing wipes, as long as these items were purchased primarily to prevent the spr...ead of coronavirus. The IRS recently confirmed that taxpayers who itemize deductions may deduct the cost of COVID-related PPE as a medical expense. For tax year 2020, you may generally only deduct medical expenses that exceed 7.5% of your adjusted gross income (AGI). For example, since 7.5% of $40,000 is $3,000, a couple with an AGI of $40,000 could not deduct their first $3,000 of medical expenses. However, if their unreimbursed medical expenses total $5,000, they can generally claim a $2,000 deduction ($5,000 $3,000) if they itemize. If you do not claim the tax deduction, you may instead use a qualified medical savings plan to reimburse yourself for eligible PPE costs. Qualified plans may include health flexible spending arrangements (FSAs), health savings accounts (HSAs) and Archer MSAs. Just remember that reimbursed medical expenses cannot be claimed as tax deductions. In other words, you may EITHER claim a tax deduction for your coronavirus PPE expenses OR use your qualified medical savings plan to reimburse yourself, but not both. A tax professional can help you determine which tax strategy works out better for you.

Common Tax Filing Errors Did You Know? (3/3) Every year, many taxpayers make mistakes on their returns that cause IRS processing delays. Some common errors can also result in paying too much or too little tax. A miscalculation in either direction can be costly, since the IRS may assess penalties for underpayment. The following mistakes often cause filers to pay the wrong amount of tax:... Incorrectly Figuring Credits or Deductions: Once you determine that you qualify for a tax deduction or credit, you must carefully compute the amount that you can claim. Many taxpayers fail to take into account income limitations (including the calculations that must be made if your income falls within a phase-out range) and other restrictions. Others claim less than they could, or miss out on deductions and credits entirely by not filing the required forms and schedules. The IRS notes that filing errors are common among taxpayers eligible for the earned income credit (EIC) and/or Child and Dependent Care Credit. Expired ITIN: Those who file their IRS returns using individual tax identification numbers (ITINs) must keep in mind that ITINs periodically expire. Although a return filed with an expired ITIN may be accepted, the IRS generally will not allow any of the exemptions or tax credits claimed. The taxpayer must renew their ITIN in order to obtain the full refund that they are owed. To avoid costly mistakes, the IRS recommends having a tax professional prepare or check your return and file it electronically. A tax pro might also help you claim deductions and credits that you would otherwise miss.

IRS Extends Additional 2021 Filing Season Deadlines to May 17 Did You Know? Recently, the IRS moved the deadline for individuals to file 2020 federal income tax returns and pay any tax due from April 15 to May 17, 2021. The same automatic extension now applies to several other key tax deadlines, including: DEADLINE FOR 2020 IRA CONTRIBUTIONS: If you have not reached your contribution limit for tax year 2020, you may continue to make 2020 contributions to traditional or Roth... IRAs up until May 17. Taxpayers also have until May 17 to pay any tax due on 2020 IRA distributions, including the 10% penalty on non-exempt early withdrawals. DEADLINE TO CLAIM 2017 TAX REFUNDS: If you are owed a federal tax refund for 2017, you have until May 17, 2021 to file any returns or amended returns necessary to claim the refund. FILING DEADLINE FOR CERTAIN FOREIGN TRUSTS: Foreign estates and trusts that file Form 1040-NR have until May 17 to meet their federal tax filing and payment requirements. Again, all of these deadline changes are automatic. You do not need to take any action in order to receive the extensions. As of now, one critical deadline for many taxpayers has NOT changed. The due date for making an estimated tax payment for the first quarter of 2021 remains April 15. You may need to make estimated tax payments if you have significant income that is not subject to paycheck withholding, such as interest, dividend or self-employment income. A tax professional can help you determine if you owe estimated taxes.

Common Tax Filing Errors Did You Know? (2/3) Every year, many taxpayers make mistakes on their returns that cause IRS processing delays. Some common errors may also result in paying too much or too little tax. A miscalculation in either direction can be costly, since the IRS may assess penalties for underpayment. The following mistakes often cause filers to pay the wrong amount of tax:... Math Mistakes: Even mathematicians sometimes make errors in simple addition and subtraction, and some of the calculations required for 1040 schedules can be complicated. Thoroughly double-check every bit of math on your return. Incorrect Filing Status (Single, Married Filing Jointly, etc.): The IRS will not accept a return showing a filing status that you are not eligible to claim. If you qualify for more than one status (for example, filing jointly or separately if you are married), the option you choose may significantly change your tax. The difference can be especially great for single taxpayers who qualify to file as a head of household. Make sure that you have not chosen a filing designation that causes you to pay more tax than you owe. To avoid costly mistakes, the IRS recommends having a tax professional prepare or check your return and file it electronically. A tax pro might also help you claim deductions and credits that you would otherwise miss.

Common Tax Filing Errors Did You Know? (1/3) Every year, many taxpayers make mistakes on their returns that cause IRS processing delays. Some common errors may also result in paying too much or too little tax. A miscalculation in either direction can be costly, since the IRS may assess penalties for underpayment. The following mistakes may not change your tax, but they can cause processing problems. The IRS may even withhold your refund until the errors are corrected.... Missing or Inaccurate Social Security Number (SSN): Even when filing electronically, many people mistype their SSNs and do not catch the error. If the SSN on your return does not match the number on your Social Security card, the IRS may not be able to process your return. Misspelled Name: Take your time when filling in every blank on your return, even your name. A misspelling or illegible writing can prevent proper processing. Incorrect Bank Account or Routing Number: Getting your return filed electronically and requesting direct deposit is the fastest way to get your refund, IF you provide accurate information. An error in your banking info can cause big headaches. Missing Signature: Remember that in most cases, couples filing jointly must both sign their return. To avoid costly mistakes, the IRS recommends having a tax professional prepare or check your return and file it electronically. A tax pro might also help you claim deductions and credits that you would otherwise miss.