If you have had your tax appointment with us but for some reason have not sent back you e-file authorization signature pages, please do so because the IRS e-file system will shut down November 21st to prepare for upcoming tax season!
Click the following link for more information: November 21st is E-Filing Deadline for 2020!
While wildfires and hurricanes were making October interesting, the FBAR deadlines for those affected was extended to October 31, 2020.
However, when the notice was issued, the writer failed to mention that it was only intended for those affected. Sooooo – the deadline was changed for everyone 🙂
What is an FBAR? A US resident or someone treated as a resident for tax purposes who has an interest or signature authority in any foreign accounts (like bank, securities, retirement and others), must file an FBAR when the aggregate value of the foreign accounts exceeds $10,000 at any time during the calendar year.
If this is you and you haven’t filed, give us a shout!
We have received a number of messages asking if those working temporarily in COVID disaster areas are exempt from Social Security taxes and Medicare taxes (please see image below).
It’s also found here: Tax Withholding for Government Workers
This does not apply to COVID related assignments for two reasons. 1) The page on the IRS website applies to GOVERNMENT workers – working with a staffing agency is not a government employer and 2) these exemption applies to NATURAL disasters, not biomedical disasters.
Congress would have to pass a bill allowing this and right now, they cannot agree which is why you see more executive orders from the President.
Life has changed dramatically with COVID, especially life as a traveler, healthcare or otherwise! We’ve had several calls recently from travelers asking: “Due to COVID, travel contracts are scarce, and I’ve been offered a permanent job. If I take a permanent job outside of my tax home, how will this affect my tax home?”
Taking a permanent job shifts the tax home to that new location unless you have more income from another location. The reality is that you have got to work, and travel contracts are scarce or being canceled, so what do you do? You can take the permanent job for however long you need to; however, your tax home will shift.
If you are planning to go back to traveling after all this blows over, and want to use your previous tax home, then you will mostly likely need to reestablish it. How do you reestablish that tax home? By earning significant income in the area that is fully taxed. You might ask, what is “significant income”? Well, considering that the traveling life is divided into 3-month intervals and one could work 4 assignments a year. A starting point is 2-3 months of income in that new location.
We’ve had this question multiple times in the last 2 weeks. Here is the scenario:
“My pay package includes a housing stipend because I am finding housing on my own. However, hotels are offering free stays for front-line workers, that is not provided by my company or the hospitals. At the hotel I do pay for parking. What will happen to the housing stipend if I accept the free stay at the hotel, considering I have to duplicate expenses?”
The answer is that you will need to duplicate expenses for lodging since the lodging is being provided by a third party. The solution is to pay SOMETHING to the hotel, maybe a tip to the housekeeping staff or for other amenities that they offer that you will use in the room. Parking does not count as lodging expenses, unless you are a hippie! : ) Under the rules there needs to be SOME expense to trigger the exclusion of the per diems.
This is for all those individuals and corporations with representatives that are not permanently living in the US but are working in the US temporarily or snowbirding.
A number of filing situations are triggered once an individual has spent more than 183 days in the US. Not every person is affected by this but some have delicate situations that are dependent on spending less than 183 days in the US (for example, FBAR filings, creating a Permanent Establishment etc.).
This week the IRS released guidance for situations where COVID prevents an individual from returning to their home country. Simply put, an individual will be able to exempt up to 60 days of presence in the US beginning at any date between February 1st and April 1st.
Here is the link to the announcement COVID and Days of Presence in the US
Ahhhhhh- felt so good to say that!
Our phone and email inbox are being flooded by panicking herds with reactions ranging from surprise to serious accusations of negligence!
MY REFUND WAS LOWER THAN YOU QUOTED!!!!
SOMEONE DEPOSITED $$$ INTO MY ACCOUNT!!!
MY REFUND WAS MORE THAN YOU QUOTED!!!
my humble response…..
STOP BINGE WATCHING, GET YOUR PHONE OUT OF YOUR FACE AND PAY ATTENTION!!!! DON’T ANY OF YOU READ THE NEWS ???!!! IT’S YOUR STIMULUS CHECK!!!!!
Thank you 🙂
The stimulus payments are rolling out and they will be based on either the 2019 return or the 2018 return and if you don’t receive it you will file in 2021 to claim it
The IRS created a web page for those that 1) don’t regularly file or 2) need to update their bank account information, address or both.
Here is the link:Â Update Your Info with IRS
Several travelers are accepting short term assignments in areas affected by the COVID pandemic. These assignments pay significantly more than regular traveler contracts and are often for a shorter duration than 13 weeks.
What about the taxes?
This is covered in other posts on our blog, but there are three things to note:
1) What is withheld from your paycheck for taxes is not the actual tax – it is an estimate of the taxes owed on the income you earned during the pay cycle.
2) The tax withholding will be higher in percentage terms since the calculation of the withholding ASSUMES you will earn the same amount each paycheck for the remainder of the year
3) The reality is that you will not earn this much with each check all year.
This leaves you two choices: You can either change your withholding short term or just let the withholding run the normal rate. If the later, any tax payments that are more than needed will be refunded when you file your return the following year.
Here is an illustration:
Jane normally earns 50K a year but has an opportunity to earn 7500 a week for 4 weeks on a crisis contract. She will earn 30K during the 4-week assignment, but 80K for the entire year (50+30). The tax withholding on the crisis contract will ASSUME she makes 7500 a week or 390K a year. 390K vs 80K is a big difference but it shows you why the withholding is so high.
What should your withholding be if you want to adjust it? Everyone’s situation is different so this will not work for everyone. Whatever you decide, DO NOT FILE EXEMPT. The one approach you can use is as follows using Jane as an example:
The 20K is a buffer should your expectations change and if you linger longer, you will want to adjust your W4 again.
This takes care of the Federal withholding. Every state is different, but if they use the old formulas that ask for EXEMPTIONS, claim Single and 5 or Married and 5.
And finally, after you are done with the crisis contract, CHANGE the withholding back to where it was before you started. AND, be safe!
Photo by Burst on Pexels.com
Below are links to two helpful articles regarding the stimulus
This one is a calculator to determine how much you will get. You will need your most recently filed return (2018 or 2019) to determine the income
The second is a concise overview of the program. Note that the payment is an ADVANCE of a 2020 tax credit so there will be a form to file next year to reconcile amounts already received if you did not get the full amount. Guidance is coming soon so stay tuned:
