FBAR Deadline Now 10/31/2020 – An Honest Mistake :)

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!

You Ready?! Oct. 15th Tax Deadline Around the Corner!

October 15th is just around the corner and you might be part of that group scrambling to get your paperwork turned in to us to file your 2019 return.

We are more than ready to assist you but do not wait until the midnight hour! 🙂 You may prefer to upload your documents to our Secure File portal, email to documents@traveltax.com but you may also fax them to 877-872-8829. Click here to go to TravelTax website.

Click here for information regarding the deadline per the IRS

CA Worker Classification Laws Gone Bad

This article does a good job of showing how the CA laws and court decisions making it harder to work as a contractor are harming those the law was supposed to protect.

With the Gig economy gaining increased momentum during the COVID pandemic, many of these attempts to make everyone an employee are archaic and behind the times. Odd for such a “progressive” state like CA.

Wall Street Journal article about comedians (and others) losing work

The Payroll Tax Deferral – Just a Short-Term Loan

Recently, the President signed an Executive Order allowing deferral of Social Security taxes starting with pay periods on or after September 1, 2020 until the last pay period ending December 31, 2020. Prior to official IRS guidance that was released this week, the implementation of this Executive Order was vague.

The Order turns out to simply be a deferral, not an exemption like it was presented in the beginning. In other words, what you do not pay now you will have to pay in the first four months of 2021.

Basically, this is the plan- If you make less than 4K bi-weekly (104K a year), you can choose to defer  your Social Security Taxes that you would pay on your income the rest of the year to the first four months of next year (2021). Social Security taxes are 6.2% of your wages so if you make 1K each pay cycle, you can put off paying the $62.50 with each check until December 31 and then pay it back by April 30, 2021. After May 1, 2021, interest and penalties would begin to accrue.

Really just a small, short term, interest free loan.

Should you do it?

Generally, no. First, this puts some employers in a bind as they are now deputized as tax collectors should an employee elect to defer the tax and leave the company before the due date of the payback. Second, the amount is not significant. Even if you did make the maximum of 4K every two weeks, it would potentially be a $1500 liability going into 2021. It is a deferral lasting less than half a year and most people need the loans much longer. Lastly, with all the changes each week with COVID, few people can predict what life will be like on Aril 30.

Will it be forgiven? That is an unknown. Section 4 of the Order instructs the Treasury to “explore avenues, including legislation, to eliminate the obligation to pay the taxes deferred pursuant to the implementation of this memorandum.” This is a possibility so for some, it might be worth the gamble. See  https://www.whitehouse.gov/presidential-actions/memorandum-deferring-payroll-tax-obligations-light-ongoing-covid-19-disaster/

Reference: https://www.irs.gov/pub/irs-drop/n-20-65.pdf

Are COVID Assignments Exempt from Social Security Tax?

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.