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COVID-19 UPDATE
Posted on April 9, 2020 at 9:04 PM |
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THE WORLD HAS CHANGED, WE LOST JOBS, WE LOST BUSINESSES, WE GOT LAID OFF. WHAT IN THE WORLD DO WE DO NOW? Here are some basic, basic hints on what to do next. I made these very, very general guidelines. As always, with tax law, and especially THESE new laws which seem to be modified and interpreted differently each day, take this as a guide, not intended to be used in your particular case without consulting specifically with your own tax advisor. IF YOU ARE A W2 EMPLOYEE: If you have been laid off, AND your employer HAS NOT already filed a “PARTIAL UNEMPLOYMENT CLAIM” on your behalf (you would have received a letter from GA DEPT OF LABOR if he has), then you can file your own unemployment online at GA DEPT OF LABOR. (www.dol.georgia.gov) If your employer HAS filed the PARTIAL claim, you must respond to the letter you received from GA DOL, and set up your bank account info, following instructions they send you. Combined with the federal unemployment benefit, this should be at least $ 600 to $ 800 per week, for a total period up to four months. Note that normally, Georgia unemployment ranges only from $ 130 to $ 300 per week maximum, but the federal government has supplemented with an additional $ 600 weekly. IF YOU ARE A SUBCONTRACTOR (HAVE YOUR OWN BUSINESS AND DO NOT GET A W2) GA Dept of Labor has not finalized the application process on its website, but should the week of April 13. This will allow you to file a claim online which when combined with Federal benefits could be $ 600 to $ 800 per week. BUSINESSES, CORPORATIONS, SOLE PROPRIETORS, LLCS The SBA (www.SBA. gov) has several options to try to work through: ECONOMIC INJURY LOAN (EIDL) On their website, you will find a yellow menu bar that shows “Corona Virus- Relief Options” info. If you click on that, and search for “ Coronavirus Funding Options” ,you should find an application for EIDL (which mentions up to a $ 10,000 grant). Some business info is requested regarding gross revenues, expenses, ownership, and a bank account must be supplied in order to submit. So far, none of my folks have received any email updates or monies regarding that form. PAYCHECK PROTECTION PROGRAM (PPP) This program was created to encourage employers to not lay off their employees by offering a loan that is forgivable, under certain circumstances, which would be used to cover the payroll for employees not layed off over the next 2 and a half months. The requested loan amount is based on the monthly average of your last year’s W2 payroll paid to employees (not subcontractors or 1099 individuals), times two and a half (so only W2 payroll is used in this category). Note that some banks actually will add payments to sub contractors into this category, but the Treasury Department has stated only W-2 employees should be in this category, so there is still confusion here. For a very rough example, last year’s W2 payroll, including the owner’s W2, was $100,000. To that number, we add medical insurance paid for employees, payroll taxes paid by employers, and retirement paid for employees. So if those amounts add $ 20,000, making our total $ 120,.000, this averages monthly to $ 10,000. That times two and a half is $ 25,000, which would be the loan amount. Note that only up to $ 100,000 of the owner’s annual salary is used in the computation. Very generally, if at least 75% of this loan is used to cover the payroll, along with rent and utilities, and you don’t lay off any employees ,the loan is forgiven. The PPP application form (Treasury Form 2483) is sent by you to your local bank (most banks restrict the application to customers who already have accounts there). After receiving that application, the bank then requests additional info, tax returns, payroll summaries, copies of W2s, organizational documents, etc. in order to process the request. So a lot of homework needs to be done. PPP FOR THOSE WHO HAVE NO W2 EMPLOYEES (SOLE PROPRIETORS, SINGLE MEMBER LLCS) The same PPP application would be used, except the “payroll” amount used is the actual net profit of the business. For example, the business makes $ 250,000 gross , with $ 175,000 of expenses, leaving a profit of $ 75,000. This would be the total “payroll” of the business, along with medical, retirement, etc. So the lower your profit (which is the normal strategy for tax preparers like me), the lower the amount used to compute the average payroll. So in this example, the monthly average would be $ 6250 per month, times two and a half, so the loan amount would be $ 15,625. Remember, the "payroll amount" used for purposes of the PPP includes only the "profit" of the business which was reported as self-employment income to the owner. This would include the net profit for sole proprietors, Single member LLCs, regular 1099 workers who file taxes on Schedule C of their Form 1040. This does not include Sub S corporations (see below). If you are a 1099 worker, self employed, you can not receive a PPP and unemployment benefits at the same time, so it may actually be more beneficial to go through the GA Dept of Labor website, and apply for unemployment benefits, which could be $ 2400 to $ 3000 per month for up to four months at least, rather than seek a PPP loan. So far, only a few of my clients have been able to submit their PPP application and nobody has received any funding yet. Some banks have stopped temporarily taking new applications. Smaller banks may allow you to submit the application even if you don’t have an account there. None of my folks have received responses regarding the Economic Injury Grant (EIDL) either. PPP FOR C CORPORATIONS OR SUB S CORPORATIONS For these taxpayers, the PPP payroll amount includes only those amounts paid out by the corporation on which EMPLOYMENT taxes were paid. This includes W2 payroll for the owner or other W2 employees. This DOES NOT include owner distributions paid out in the form of pass through K1 income. Note that a big benefit of S Corporations is the ability to minimize self employment taxes on the pass through income (owner distributions). However, the PPP payroll amount only includes that portion reported as wages to the owner (which is usually a smaller amount compared to the owner distributions). Again, this information is intended to be very, very general so let me know if more details are needed. Good luck! It will get better! Dan McNeely CPA |
WHAT TO BRING
Posted on April 9, 2020 at 8:58 PM |
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WHAT KIND OF STUFF DO YOU NEED TO BRING ME? Important things to track down and bring to me to assist in your 2019 taxes: ---LAST year’s return but ONLY if I did not prepare it for you --- ALL copies of your W-2 from your employer ---Copies of Social Security cards for children born in 2019 --- Form 1095-A ( ONLY if you had medical insurance from the OBAMACARE Marketplace website last year) --- Forms 1099 for any extra income you might have earned during the year --- Forms 1099 for dividends and interest earned --- Forms 1098 from stock brokerage accounts (sometimes those don't get mailed out til mid February) --- Information on any stock sales made during the year (and including any information on your cost of the stocks you may have sold) ---Forms 1099 for any pension retirement income or IRA distributions ---Forms reporting any unemployment income you may have received ---End of the year statement from your mortgage or home equity loan detailing the total interest paid along with the property tax amounts ---Closing documents (usually just the settlement statement – front &back) for all real estate sales and purchases ---Forms reporting any college tuition (1098-T) paid for you or children ---Forms reporting any interest paid on student loans ---Schedule K-1 for partnerships, corporations, and trusts ---Year end receipts from churches, Goodwill, and other charities ---The name, address, and tax id number of child care providers ---Summary of any expenses and income you may have earned in any side businesses you operated during the year ---A voided check for use in electronic filing ---Copies of your drivers licenses for you and spouse (sometimes needed to verify identity for IRS) ---And as always any Chic Fil A or Diet Mt Dew you have laying around!! |
Welcome Letter
Posted on February 5, 2018 at 10:08 AM |
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TO: ALL SURVIVORS OF THE U.S. GOVERNMENT
CLOSURE, THE GA BULLDOGS
LOSING, THE FALCONS LOSING, THE BRAVES
LOSING, AND GOOD OL’ GA SNOW BLIZZARDS FROM: R.
Daniel McNeely, CPA
(770) 594-8796 875 Old Roswell Rd., St F-500 fax(770) 594-7406 Roswell, GA 30076
[email protected]
website: danmcneelycpa.com Here we go
once again! Time for you to panic, run to Walmart and buy file
folders and Tupperware boxes to put piles of tax forms and receipts together.
Then spend your perfectly good evening sorting out forms on your
living room watching “The Bachelor” on ABC! TAX TIME!!! This year,
again, we have made it through quite a lot of good news and bad news, finally
culminating in the news that our wonderful government was taking a small
vacation. Fortunately, they opened back up and will soon be back at full
speed, so go ahead and plan that vacation to the Grand Canyon! Even
through all the bad news, lots of good things happened. We had jobs, we made
money, we might have had kids, we might have gotten married (or
unmarried), we saw kids graduate and get jobs and enter the working world, and
we all survived the best way we could.
Now what? We do our
taxes! Like the last few years, there have been quite a few changes to
our income taxes. Last minute changes, IDENTITY THEFT issues,
and the government shutdown will cause delays in processing our
returns. The IRS will not even start processing returns until the end of January
and not issue refunds until the end of February. Some tax credits for some
folks and GA refunds may even take up to three months to process! Fortunately
for this year’s tax returns, most folk’s returns will look somewhat similar to
last year’s returns. Many of you won't
see many differences in the return for
this year compared to last year. As normal, the more you make, the higher
tax bracket you are in, the less credit you get for having kids and mortgages
and making church contributions. My job is to figure all that out for you,
and try not to make you scream at your kids or dog in the meantime! WHAT MAY AFFECT MOST PEOPLE? The NEW TAX PLAN will not kick in until next year’s return, as most of its laws
kicked in on January 1, 2018 (more later). If you HAD insurance through your employer, or you paid for it all year through
your own individual plan, and you had it all year, the insurance part probably
won’t be a big deal. We dohave to report to the IRS that you did have insurance. If you HAD NO insurance, or you obtained it by logging into
the Insurance Marketplace (the website that was so slow to work last year), we might
have a problem. For those with no insurance, the IRS wants you to pay a small
penalty which may cause you to owe when we file the return or will reduce your
refund. For those who USED THE MARKETPLACE to sign up for insurance last year, and especially
if you received a reduction or credit in
the amount of the monthly medical premiums you had to pay, your refund will probably be affected. If you
underestimated your income when you applied for insurance, your refund could be reduced or eliminated in
some cases. And the government will be sending you a brand new fancy tax form,
a 1095-A, that summarizes all of
your insurance activity, which is needed before your return can be done. IDENTITY THEFT is another big issue this year. The most common problem
related to identity theft and income taxes happens when someone uses your
Social Security
number and files a “fake” tax return. Then, when you file your real
return, the IRS sends me a nice message that we have a PROBLEM. Eventually,
we get it straight, you get your refund, and all is put back to normal but it
normally takes an extra 6 to 9 months to clear it up! So to combat that issue, the
IRS is doing more checkups on addresses, birthdates, employer information,
etc. and all that will lead to delays in you getting your refund and
possible questions from the IRS. In fact, Georgia has already indicated they will
hold up on refunds for up to 3 months to combat this issue! I am
sending you this tax package, with all of this wonderful information, to help
you prepare your tax documents to bring to me. I really do read updates and fancy
tax books and go to boring seminars to understand all the weird rules and
laws that affect most people. I actually probably know more than that guy
you met on MARTA that said you can deduct the cost of your entire
house as long as you store business files there (you can’t by the way)! We do keep
up with the tax changes, and all the new forms, and all the laws that
affect your taxes. One of my goals is to try and legally reduce how much the IRS
keeps of your hard earned money, while making this process as painless and simple
as possible. WHAT DO YOU NEED TO
DO! Right now, you are probably getting in the
mail all of that junk that says “IMPORTANT TAX DOCUMENT”, from banks, mortgage
companies, brokerages, your employer, etc. Start now by keeping all that stuff
in one big file, along with any other documents you may have accumulated over
the year pertaining to your taxes. That
really prevents you from spending a pretty Saturday
morning digging through your pile of Arby coupons, offers from internet
and cable companies, and all those notices telling you that tree companies are in
your area, looking for important documents that ended up stuck between the pages
of that Better Homes and Garden magazine. When you
start assembling your information, just do your best to gather the documents
and shove all the stuff you think might be important into an envelope and bring
it all to me, and I will sort it out. Remember,
my daughter works at a doctor’s office and I get free samples of
aspirin! Many
people simply mail their package to me, or you may just drop it off at
your convenience. If you have questions, or need to go over events and
transactions which happened during the year, please call and set up
a quick drop off appointment. We also have a mail slot for “after hour” drop
offs. Remember , the earlier you bring
your information in, the earlier I can start working on getting you your BIG
PILE OF TAX REFUND MONEY back in your wallet. We do encourage you to drop off
your package before March 15 (earlier
is better!) to assure timely completion before the dreaded date of April 15. Even with
extra staff working here, and my sleeping on the floor at night here, and eating
any leftover food from Subway the night before, it is almost impossible to even
look at last minute returns, let alone finish them on time!!! In
closing, I really appreciate your assistance in this job. I hope I make a
stressful job a little bit easier for you. Please call if you have questions,
unusual circumstances, or if you need to see me personally to tell me about
when you fell down on the ice taking your garbage can out the last time it
snowed! I do look
forward to helping save you time, headaches, arguments, and all
the aggravation of working on an entire year’s worth of paperwork and
confusing tax documents. Maybe, just maybe, I will save you enough money for a
fun dinner at the QuickTrip roller food counter! DAN MCNEELY, CPA |
Tax law changes for 2018
Posted on February 5, 2018 at 10:06 AM |
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WHAT’S
NEW IN THE TAX BILL? This is a very generalized summary of the new tax
bill. Every person’s circumstance, income, family size, etc. will
determine the savings (and hopefully not additional tax!) of the changes in the tax laws! LOWER TAX RATE BRACKETS-
This should make your take home paycheck slightly higher, since less taxes will
be taken out. The brackets will drop on average 2 to 3 % each, along with
changes in how much income is taxed at lower
brackets. The higher your income, the more you should save. New tax payroll tax
tables should be in place by mid February at your workplace, so your paycheck should go up slightly sometime in
February. DOUBLES THE STANDARD DEDUCTION-
Whereas now many folks list
out separately their mortgage interest and property taxes and church
contributions, the new law may make it easier to just take the standard amount the IRS allows. The deduction for single folks
increases from $ 6,350 to $ 12,000 and married folks increases from $ 12,700 to
$ 24,000. This means that your mortgage and charitable contributions may not
make as much difference as in the past, but you may not have to keep track of
all those things as you have in the past. REDUCES PERSONAL DEDUCTIONS
– Only a total of $ 10,000 in state and local taxes (your withholding from your
paycheck and your home property taxes) can be deducted, whereas now there is not a limit.
Charitable deductions stay the same as well as student loan interest and IRA
contributions. Mortgage
interest is limited to the first $ 750,000 of the loan, and interest on home equity loans will no longer be deductible
(although there may be an exception if the loans are used to fix up or improve
your residence). ELIMINATES
PERSONAL EXEMPTIONS – Folks with a lot of kids may lose
out, since in years past, you subtracted over $ 4,000 for each dependent. Now
there is no deduction. for you, your spouse or your kids. MEDICAL EXPENSES-
Now, expenses over 7.5% of your adjusted
income are a
possible deduction for you, instead of the 10% previously, if you have a lot of
unreimbursed medical bills, you might save a little. OBAMACARE TAX PENALTY FOR NO
MEDICAL INSURANCE – No penalty will be charged starting in 2018, even if
you have no medical insurance. CHILD TAX CREDIT-
Previously a parent received a $1,000
credit for each child if family income was less than $ 110,000. Now that credit
is $ 2,000, even if your
income is higher( up to $ 400,000). So,
for this change, if you have a lot of kids, you may do better! But please don’t go have kids just for this
change! BUSINESS DEDUCTION—Very
confusing, but if you own your own business,
like a sole proprietorship, Sub S corporation or partnership, a
special 20% deduction of the profit of the business could be deducted. However,
there are numerous limitations, regarding how much in W2 wages that
the business pays, and your overall personal income. So this may or may not be a big help, depending on your income and how
your business is structured. BOTTOM
LINE OF ALL THE ABOVE MOST people will save taxes. The more kids you have,
the more you should save. Those with small businesses should save. Those who
have very few itemized deductions now (mortgage, church donations, etc)
should save. Those with very high income (over $450,000 ) should save. It has
been projected that the average family of four in Georgia will save $ 4,000 and the
average individual with no children will save over $ 2,000 a year. BUT, it certainly NOT going to be a less complicated
return, so the good news is, you will still
need ME to do your return!!! |
IRS Notices
Posted on February 5, 2018 at 10:04 AM |
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IMPORTANT UPDATE ABOUT SCARY NOTICES FROM IRS We have
noticed a large increase in the number of notices from IRS and Ga Dept of Revenue that clients are receiving, telling you that you owe extra
money, or a penalty, or something is missing. Most of these are incorrect and are
due to IRS misposting or other incorrect processing by their technicians,
or documents you never received from banks or brokerages. When we
receive a notice, we try to handle as many as possible by mailing in
our responses to the IRS, rather than by calling. A typical phone call
requires an hour to reach the right department, and usually they require a written
explanation anyway. Unfortunately, this process could take over a month to
receive a response or before any corrections made to your account. So what should you do if you receive a notice? Fax or
email us a copy of the notice so we can see what is going on. It is
difficult to decipher what they need until we see their correspondence and some
letters have document id numbers we need when we respond. Our
offices will then prepare a response, whether by phone or mail as appropriate,
to rectify the problem. Please be patient as we clear the issue, as sometimes we must respond two to
three times to clear the same issue (and in the meantime, you keep getting
scary notices in the mail saying you are going to jail). Eventually, we will
clear it up ! And, so far, none of my clients have gone to jail (at least
for their income taxes)! |
Tax scam alert
Posted on February 5, 2018 at 10:03 AM |
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TAX SCAM
ALERTS: PHONE CALLS
TELLING YOU THAT THE IRS IS AFTER YOU, OR YOU OWE MONEY, OR THAT YOU WILL GET
ARRESTED IF YOU DON’T PAY A lot of folks have received phone
calls from numbers that sometimes show “ UNKNOWN” ,
“PRIVATE”, “WASHINGTON, DC” or just
unfamiliar phone numbers. Sometimes a recording states that you owe a sum of
money and that you need to call to make arrangements or you will be ARRESTED. Please know this is a total SCAM. Our
IRS is difficult at times, but they do not operate that way with
their collections and this is a total 100% fake call. Try not to
answer and for sure do not call their number back. They are very
intimidating but just randomly called you using
telemarketing tactics. IDENTITY
THEFT ISSUES If we file your return and then
receive a message stating that a prior return has been filed, it could mean
someone compromised your Social Security number, filed a fake return
before you did, and tried to fool the IRS into giving them fake
refunds. Eventually, we can clear it up, and although it usually does not
affect your overall credit (opening fake accounts, taking over your identity,
etc.) it may take 6 to 9 months to correct the filing so you can
receive your actual and proper refund. PLEASE DON’T BE TRICKED INTO GIVING
YOUR SOCIAL SECURITY NUMBER OR BANK ACCOUNT NUMBER TO
UNFAMILIAR PEOPLE OR COMPANIES. REMEMBER,
BE CAREFUL WHEN OPENING EMAILS THAT ASK FOR THAT INFORMATION AS MANY
EMAILS ARE “FAKE” BUT LOOK
LIKE THEY ORIGINATED FROM THE ACTUAL COMPANY |
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