hickory tax services

Tax News 401k plans for 2022

 

WASHINGTON — The Internal Revenue Service announced today that the amount individuals can contribute to their 401(k) plans in 2022 has increased to $20,500, up from $19,500 for 2021 and 2020. The IRS today also issued technical guidance regarding all of the
cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2022.
The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased to $20,500, up from $19,500.
The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs, and to claim the Saver’s Credit all increased for 2022.

Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or the taxpayer’s spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor the spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.) Here are the phase-out ranges for 2022:

• For single taxpayers covered by a workplace retirement plan, the phase-out range is increased to $68,000 to $78,000, up from $66,000 to $76,000.
• For married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is increased to $109,000 to $129,000, up from $105,000 to $125,000.
• For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the phase-out range is increased to $204,000 to $214,000, up from $198,000 to $208,000.
• For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

The income phase-out range for taxpayers making contributions to a Roth IRA is increased to $129,000 to $144,000 for singles and heads of household, up from $125,000 to $140,000.

For married couples filing jointly, the income phase-out range is increased to $204,000 to $214,000, up from $198,000 to $208,000. The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
The income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers is $68,000 for married couples filing jointly, up from $66,000; $51,000 for heads of household, up from $49,500; and $34,000 for singles and married individuals filing separately, up from $33,000.

The amount individuals can contribute to their SIMPLE retirement accounts is increased to $14,000, up from $13,500.

Key employee contribution limits that remain unchanged

The limit on annual contributions to an IRA remains unchanged at $6,000. The IRA catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.

The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $6,500. Therefore, participants in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan who are 50 and older can contribute up to $27,000, starting in 2022. The catch-up contribution limit for employees aged 50 and over who participate in SIMPLE plans remains unchanged at $3,000.
Details on these and other retirement-related cost-of-living adjustments for 2022 are in Notice 2021-61, available on IRS.gov.
This message was distributed from the mailing list IRS Newswire.

 

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PPP Loan Forgiveness Application Deadline

Inside This Issue:
PPP loan forgiveness applications are NOT due October 31, 2020
Fears of a late-October PPP surprise came to the SBA’s attention because the program’s loan forgiveness application forms (3508, 3508EZ, and 3508S) display an expiration date of “10/31/2020” in the upper-right corner. This prompted the SBA to release a new entry in its loan forgiveness frequently asked questions document answering the query, “Is October 31, 2020, the deadline for borrowers to apply for forgiveness?”
In its answer, found in Q&A No. 4 in the General Loan Forgiveness FAQs section, the SBA explains that borrowers may submit a loan forgiveness application any time before the maturity date of the loan, which is either two or five years from the loan’s origination, depending on the borrower’s agreement. But the SBA also reminds borrowers that loan payments are deferred only until 10 months after the last day of each borrower’s loan forgiveness covered period.
For example, the SBA wrote, a borrower with a covered period that ends Oct. 30, 2020, has until Aug. 30, 2021, to apply for forgiveness before loan repayment begins.
The SBA placed the expiration date in the upper-right corner of the PPP loan forgiveness application forms to comply with the Paperwork Reduction Act. The date represents the temporary expiration date for approved use of the forms, the SBA said, adding that once a new expiration date is approved, it will be posted on the forms.
If you need assistance gathering the data, filling out the forms,
call our office for help.
828-322-5813
Please note:
The best part of the Paycheck Protection Program is that 100% of the loan
CAN BE FORGIVEN if you meet certain criteria!
CPA Licensed in both
North Carolina #NC 12649
South Carolina #SC 6854

2020 New Rule Net Operating Loss Carryback

The CARES Act (“the Act”) was passed in late March 2020, in an effort to provide relief to the many businesses and individuals affected by the COVID -19 pandemic. Many of the new provisions include tax benefits for taxpayers, most of which have the effect of placing much-needed cash back into the hands of businesses and families in the form of deductions, refunds or tax credits.

Therefore, under the CARES Act, businesses and individuals with federal Net Operating Losses (“NOLs”) originating in years ending in 2018, 2019 or 2020 are permitted to carry back those losses for five years. This temporarily eliminates the tax law provision created under the Tax Cuts and Jobs Act (“TCJA”) of 2017, which eliminated carryback and limited the use of carryforward NOLs to 80% of taxable income.

Corporate taxpayers who are able to take advantage of the NOL carryback provision create additional liquidity for their companies, as the current corporate tax rate, which was lowered under the TCJA, is 21%. Prior to January 1, 2018, was 35%. Given this significant change, corporate taxpayers should carefully analyze the timing of NOL tax attribute utilization to maximize their potential benefit under the Act. This provision allows taxpayers in a loss situation to monetize their loss position and take advantage of a rate arbitrage.

Most C Corporation filers will be able to apply for refunds by filing Form 1139 Corporation Application for Tentative Refund. Individual filers should use Form 1045, Application for Tentative Refund. (The IRS recently released specific filing instructions related to filing forms by fax as well).

What does Rink & Robinson, PLLC recommend?

Moreover to take advantage of these provisions, taxpayers should review their 2018 tax return filings to determine if they reflect a loss. If so, and the business or individual filer will likely be eligible to consider a carryback claim. In many cases, we also suggest reviewing 2019 projections or financials.

*If the projections anticipate a loss, 2019 tax return preparation should be accelerated so that the refund from a carryback might be claimed more timely.

While the NOL carryback rule is a taxpayer-friendly provision in the CARES Act (one of several), taxpayers must be careful when considering this opportunity. Some situations where NOL carrybacks may need special consideration include the following:

  • A carryback year in which a corporation was not classified as a corporation.
  • A carryback year where the corporation was a member of a consolidated group.
  • A carryback year in which a corporation acquired or was acquired by another corporation.
  • A carryback to years subject to the Transition tax pursuant to Section 965.

Additionally, carrying back an NOL may also create changes in financial statement disclosures.

 

PPP Loan Forgiveness Application

The Paycheck Protection Program (PPP) enables eligible entities to qualify for a loan of up to $10 million to keep their workers employed. The best part is the loan is subject to forgiveness if approved borrowers meet certain requirements as defined in SBA regarding the disbursement of the funds including expenditures for maintaining payroll and other permitted uses, such as mortgage interest, rent and utilities.

The regulations contain very specific spending and documentation requirements that are essential for achieving debt forgiveness under the program. Rink & Robinson, PLLC  encourages businesses to be proactive with their lenders and work quickly to apply and understand the requirements for loan forgiveness benefits.

How Rink & Robinson, PLLC helps maximize PPP loan forgiveness

  • We will assist both borrowers and lenders with the necessary verification for PPP loan forgiveness. Our advisors will work closely with borrowers to assist them to maximize their loan forgiveness benefits.
  • PPP Loan Funds Planning – R&R CPA’s assist you in the documentation of need relative to loan application, as well as the requirements for spending and proper allocation and timing of funds to maximize forgiveness.
  • Loan Forgiveness Forecasting and Tracking – We work closely with borrowers to monitor and provide the accountability to ensure spending is appropriate for receiving loan forgiveness.
  • Concluding Documentation – Your  CPA advisory team will assist you in assembling the required borrower documentation and assist you in completing any necessary compliance reporting for your lending institution.

Below is a copy of the Application. A link below is provide for you convenience.  Call us for help!

Printable PDF Form 3508ez

PPP Loan Forgiveness

PAYCHECK PROTECTION PROGRAM

Frequently Asked Questions (FAQs) on PPP Loan Forgiveness
The Small Business Administration (SBA), in consultation with the Department of the Treasury,
is providing this guidance to address borrower and lender questions concerning forgiveness of
Paycheck Protection Program (PPP) loans, as provided for under section 1106 of the Coronavirus
Aid, Relief, and Economic Security Act (CARES Act), as amended by the Paycheck Protection
Program Flexibility Act (Flexibility Act).

https://www.sba.gov/document/support-frequently-asked-questions-ppp-loan-forgiveness

We’ve Got You Covered

We’ve Got You Covered!

We have you covered during this pandemic!
COVID-19 protocol for protecting our staff and clients:
We want to make certain our clients and staff are protected to the best of our ability. We wear masks in our office and sanitize after each client meeting. We also sanitize throughout the day to ensure the safety and well being of everyone in our office.
  1. Upon arrival – our phone number is posted on the front door.
  2. Call the number 828-322-5813 and a staff member will come to your vehicle for curbside pickup or drop-off.
  3. If you request an in person meeting, then we will allow you to enter the building directly into our conference room…provided your answers meet the COVID-19 criteria: Have you traveled, been in contact with someone with the virus, have symptoms like fever, cough, loss of taste, etc.? If any of your answers are yes, you will be declined entry and kindly asked to reschedule.
Please note:
We have clients in all age categories. Some clients have underlying health conditions which warrant extra safety precautions. We want all of our customers to feel comfortable in our space. Please know we can not guarantee your protection against COVID-19, but we can do our best to follow the CDC guidelines.
Please be safe from
all of us at
Rink & Robinson, PLLC
Certified Public Accountant and Consultants

 

Depreciation Deductions for Owners of Passenger Vehicles

Rev. Proc. 2020-37

SECTION 1. PURPOSE

This revenue procedure provides: (1) tables of limitations on depreciation deductions for owners of passenger automobiles first placed in service by the taxpayer during calendar year 2020; and (2) a table of amounts that must be included in income by lessees of passenger automobiles first leased by the taxpayer during calendar year 2020. The tables detailing these depreciation limitations and lessee inclusion amounts reflect the automobile price inflation adjustments required by § 280F(d)(7). For purposes of this revenue procedure, the term “passenger automobiles” includes trucks and vans.

SECTION 2. BACKGROUND

.01 For owners of passenger automobiles, § 280F(a) imposes dollar limitations on the depreciation deduction for the year the taxpayer places the passenger automobile in service and for each succeeding year. For passenger automobiles placed in service after 2018, § 280F(d)(7) requires the Internal Revenue Service to increase the amounts allowable as depreciation deductions by a price inflation adjustment amount that is determined using the automobile component of the Chained Consumer Price Index forall Urban Consumers published by the Department of Labor.

.02 Section 168(k)(1) provides that, in the case of qualified property, the depreciation deduction allowed under § 167(a) for the taxable year in which the property is placed in service includes an allowance equal to the applicable percentage of the property’s adjusted basis (hereinafter, referred to as “§ 168(k) additional first year depreciation deduction”). Pursuant to § 168(k)(6)(A), the applicable percentage is 100 percent for qualified property acquired and placed in service after September 27, 2017, and placed in service before January 1, 2023, and is phased down 20 percent each year for property placed in service through December 31, 2026. Pursuant to § 168(k)(8)(D)(i), no § 168(k) additional first year depreciation deduction is allowed or allowable for qualified property acquired by the taxpayer before September 28, 2017, and placed in service by the taxpayer after 2019. For qualified property acquired and placed in service after September 27, 2017, § 168(k)(2)(F)(i) increases the first-year depreciation allowed under § 280F(a)(1)(A)(i) by $8,000.

.03 Tables 1 and 2 of this revenue procedure provide depreciation limitations for passenger automobiles placed in service during calendar year 2020. Table 1 provides depreciation limitations for passenger automobiles acquired by the taxpayer after September 27, 2017, and placed in service by the taxpayer during calendar year 2020, for which the § 168(k) additional first year depreciation deduction applies. Table 2 provides depreciation limitations for passenger automobiles placed in service during calendar year 2020 for which no § 168(k) additional first year depreciation deduction applies. The § 168(k) additional first year depreciation deduction does not apply for 2020 if the taxpayer: (1) did not use the passenger automobile during 2020 more than

50 percent for business purposes; (2) elected out of the § 168(k) additional first year depreciation deduction pursuant to § 168(k)(7) for the class of property that includes passenger automobiles; (3) acquired the passenger automobile used and the acquisition of such property did not meet the acquisition requirements in

  • 168(k)(2)(E)(ii); or (4) acquired the passenger automobile before September 28, 2017, and placed it in service after 2019.

.04 Section 280F(c)(2) requires a reduction to the amount of deduction allowed to the lessee of a leased passenger automobile. Pursuant to § 280F(c)(3), the reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of passenger automobiles. Under § 1.280F-7(a) of the Income Tax Regulations, this reduction requires a lessee to include in gross income an amount determined by applying a formula to the amount obtained from a table. Table 3 applies to lessees of passenger automobiles. This table shows income inclusion amounts for a range of fair market values for each taxable year after the passenger automobile is first leased.

SECTION 3. SCOPE

.01 The limitations on depreciation deductions in section 4.01(2) of this revenue procedure apply to passenger automobiles, other than leased passenger automobiles, that are placed in service by the taxpayer in calendar year 2020, and continue to apply for each taxable year that the passenger automobile remains in service.

.02 The table in section 4.02 of this revenue procedure applies to leased passenger automobiles for which the lease term begins during calendar year 2020. Lessees of these passenger automobiles must use these tables to determine the inclusion amount for each taxable year during which the passenger automobile is leased. See Rev. Proc. 2015-19, 2015-8 I.R.B. 656, as amplified and modified by section 4.03 of Rev. Proc. 2016-23, 2016-16 I.R.B. 581, for passenger automobiles first leased during calendar year 2015, Rev. Proc. 2016-23 for passenger automobiles first leased during calendar year 2016, Rev. Proc. 2017-29, 2017-14 I.R.B. 1065, for passenger automobiles first leased during calendar year 2017, Rev. Proc. 2018-25, 2018-18 I.R.B. 543, for passenger automobiles first leased during calendar year 2018, and Rev. Proc. 2019-26, 2019-24 I.R.B. 1323, for passenger automobiles first leased during calendar year 2019. SECTION 4. APPLICATION

.01 Limitations on Depreciation Deductions for Certain Automobiles.

(1) Amount of the inflation adjustment. Under § 280F(d)(7)(B)(i), the automobile price inflation adjustment for any calendar year is the percentage (if any) by which the C-CPI-U automobile component for October of the preceding calendar year exceeds the automobile component of the CPI (as defined in § 1(f)(4)) for October of 2017, multiplied by the amount determined under § 1(f)(3)(B). The amount determined under § 1(f)(3)(B) is the amount obtained by dividing the new vehicle component of the C-CPI-U for calendar year 2016 by the new vehicle component of the CPI for calendar year 2016, where the C-CPI-U and the CPI for calendar year 2016 means the average of such amounts as of the close of the 12-month period ending on August 31, 2016. Section 280F(d)(7)(B)(ii) defines the term “C-CPI-U automobile component” as the automobile component of the Chained Consumer Price Index for All Urban Consumers as described in § 1(f)(6). The product of the October 2017 CPI new vehicle component (144.868) and the amount determined under § 1(f)(3)(B) (0.694370319) is 100.592.

The new vehicle component of the C-CPI-U released in November 2019 was 101.332 for October 2019. The October 2019 C-CPI-U new vehicle component exceeded the product of the October 2017 CPI new vehicle component and the amount determined under § 1(f)(3)(B) by 0.74 (101.332 – 100.592). The percentage by which the C-CPI-U new vehicle component for October 2019 exceeds the product of the new vehicle component of the CPI for October of 2017 and the amount determined under § 1(f)(3)(B) is 0.736 percent (0.74/100.592 x 100%), the automobile price inflation adjustment for 2020 for passenger automobiles. The dollar limitations in § 280F(a) are therefore multiplied by a factor of 0.00736, and the resulting increases, after rounding to the nearest $100, are added to the 2018 limitations to give the depreciation limitations applicable to passenger automobiles for calendar year 2020. This adjustment applies to all passenger automobiles that are first placed in service in calendar year 2020.

(2) Amount of the limitation. Tables 1 and 2 contain the dollar amount of the depreciation limitation for each taxable year for passenger automobiles a taxpayer places in service during calendar year 2020. Use Table 1 for a passenger automobile to which the § 168(k) additional first year depreciation deduction applies that is acquired by the taxpayer after September 27, 2017, and placed in service by the taxpayer during calendar year 2020; and Table 2 for a passenger automobile for which no § 168(k) additional first year depreciation deduction applies.

REV. PROC. 2020-37 TABLE 1

DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES ACQUIRED
AFTER SEPTEMBER 27, 2017, AND PLACED IN SERVICE DURING CALENDAR
YEAR 2020, FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION
DEDUCTION APPLIES

Tax YearAmount
1st Tax Year$18,100

 

2nd Tax Year$16,100
3rd Tax Year$9,700
Each Succeeding Year$5,760

 

REV. PROC. 2020-37 TABLE 2

DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES
PLACED IN SERVICE DURING CALENDAR YEAR 2020 FOR WHICH NO § 168(k)
ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES

Tax YearAmount
1st Tax Year$10,100
2nd Tax Year$16,100
3rd Tax Year$9,700
Each Succeeding Year$5,760

.02 Inclusions in Income of Lessees of Passenger Automobiles.

A taxpayer must follow the procedures in § 1.280F-7(a) for determining the income inclusion amounts for passenger automobiles first leased in calendar year 2020. In applying these procedures, lessees of passenger automobiles should use Table 3 of this revenue procedure.

$50,000$51,00001022
51,00052,0002691013
52,00053,000511172024
53,00054,000717243035
54,00055,0001022323946
55,00056,0001227414857
56,00057,0001532495868
57,00058,0001738566879
58,00059,0001944647790
59,00060,00022497287100

 

REV. PROC. 2020-37 TABLE 3

DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES

WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2020

Fair Market Value of
Passenger AutomobileOver                 Not Over
Tax Year During Lease
1st2nd3rd4th5th & later
60,00062,000265684102117
62,00064,000306899121139
64,00066,0003578116139161
66,00068,0004089131159183
68,00070,0004599148177205
70,00072,00050110163197227
72,00074,00055121179215249
74,00076,00060131195235271
76,00078,00064142211254293
78,00080,00069153227272315
80,00085,00078172254306353
85,00090,00090198295353408
90,00095,000102225334401463
95,000100,000114252373449518
100,000110,000133292433520600
110,000120,000157345513615710
120,000130,000181399592710820
130,000140,000206452671805931
140,000150,0002305067509011,040
150,000160,0002545598309961,150
160,000170,0002796129091,0911,260
170,000180,0003036669881,1861,370
180,000190,0003277201,0671,2811,480
190,000200,0003517731,1471,3771,589
200,000210,0003768261,2271,4711,700
210,000220,0004008801,3061,5661,810
220,000230,0004249341,3851,6611,920
230,000240,0004499871,4641,7572,029
240,000and over4731,0401,5441,8522,139

SECTION 5. EFFECTIVE DATE

This revenue procedure applies to passenger automobiles that a taxpayer first places in service or first leases during calendar year 2020.

tax services hickory nc

2020 Tax Filing Season

Here you’ll find items of current interest — new programs, recent guidance or timely reminders.

2020 Tax Filing Season

The Treasury Department and the Internal Revenue Service are providing special tax filing and payment relief to individuals and businesses in response to the COVID-19 Outbreak. The filing deadline for tax returns has been extended from April 15 to July 15, 2020. The IRS urges taxpayers who are owed a refund to file as quickly as possible. For those who can’t file by the July 15, 2020 deadline, the IRS reminds individual taxpayers that everyone is eligible to request an extension to file their return.

The 2019 income tax filing and payment deadlines for all taxpayers who file and pay their Federal income taxes on April 15, 2020, are automatically extended until July 15, 2020. This relief applies to all individual returns, trusts, and corporations. This relief is automatic, taxpayers do not need to file any additional forms or call the IRS to qualify.

This relief also includes estimated tax payments for tax year 2020 that are due on April 15, 2020.

Penalties and interest will begin to accrue on any remaining unpaid balances as of July 16, 2020. You will automatically avoid interest and penalties on the taxes paid by July 15.

Recent tax law changes have extended or changed many expiring tax law provisions, including:
Treatment of mortgage insurance premiums as qualified residence interest
Reduction in medical expense deduction floor
Deduction of qualified tuition and related expenses
Energy efficient homes credit
Employer credit for paid family and medical leave
Work opportunity credit
Special rule for determining earned income
Repeal of maximum age for traditional IRA contributions
Increase in age for required beginning date for mandatory distributions
Expansion of section 529 plans
For a complete list of affected tax law provisions see the Joint Committee on Taxation List of Expiring Tax Provisions 2020.

Breaking News from the US Treasury

News Release from Washington, DC

June 8, 2020

Modifications to the PPP Loan Forgiveness Program

Upcoming Procedures
SBA, in consultation with Treasury, will promptly issue rules and guidance, a modified borrower application form, and a modified loan forgiveness application implementing these legislative amendments to the PPP. These modifications will implement the following important changes:
Extend the covered period for loan forgiveness from eight weeks after the date of loan disbursement to 24 weeks after the date of loan disbursement, providing substantially greater flexibility for borrowers to qualify for loan forgiveness. Borrowers who have already received PPP loans retain the option to use an eight-week covered period.
Lower the requirements that 75 percent of a borrower’s loan proceeds must be used for payroll costs and that 75 percent of the loan forgiveness amount must have been spent on payroll costs during the 24-week loan forgiveness covered period to 60 percent for each of these requirements. If a borrower uses less than 60 percent of the loan amount for payroll costs during the forgiveness covered period, the borrower will continue to be eligible for partial loan forgiveness, subject to at least 60 percent of the loan forgiveness amount having been used for payroll costs.
Provide a safe harbor from reductions in loan forgiveness based on reductions in full-time equivalent employees for borrowers that are unable to return to the same level of business activity the business was operating at before February 15, 2020, due to compliance with requirements or guidance issued between March 1, 2020 and December 31, 2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to worker or customer safety requirements related to COVID–19.
Provide a safe harbor from reductions in loan forgiveness based on reductions in full-time equivalent employees, to provide protections for borrowers that are both unable to rehire individuals who were employees of the borrower on February 15, 2020, and unable to hire similarly qualified employees for unfilled positions by December 31, 2020.
Increase to five years the maturity of PPP loans that are approved by SBA (based on the date SBA assigns a loan number) on or after June 5, 2020.
Extend the deferral period for borrower payments of principal, interest, and fees on PPP loans to the date that SBA remits the borrower’s loan forgiveness amount to the lender (or, if the borrower does not apply for loan forgiveness, 10 months after the end of the borrower’s loan forgiveness covered period).
In addition, the new rules will confirm that June 30, 2020, remains the last date on which a PPP loan application can be approved.
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