A Short Overview of the Stimulus Payments

Stimulus Checks will be issued soon, and our office has received several calls concerning the when, how and why. Here is what you need to know:

• The stimulus payment is a 2020 credit that will be reconciled on the tax return filed in 2021 for the 2020 tax year
• It is a maximum of $1200 for singles, $2400 for married taxpayers and then $500 for each child
• The payment phases out for Singles earning more than 75K, Married earning more than 150K and those filing Head of Household earning more than $112,500
• The payments are being sent in advance based on the return filed for 2019
• If the 2019 return has not been filed, it will be based on the 2018 return
• If neither the 2018 nor the 2019 return has been filed, you will want to file soon
• If you do not get all the stimulus, you may receive it when you file the 2020 tax year return in 2021
• Currently, the IRS is requiring all individuals to file a return to receive the stimulus, yet the law that was passed does not require that. The IRS has announced a special return for those that do not regularly file. Details are forthcoming
• If you have provided a direct deposit account on your 2018 or 2019 return, the payment will go to that account.
• The IRS will provide a database and web site that will allow you to change the account identification number if necessary.
• The IRS has provided a web page with FAQs: https://www.irs.gov/newsroom/economic-impact-payments-what-you-need-to-know

There is considerable confusion over these rules and an unnecessary rush to file 2019 returns when the 2018 return is sufficient. If you have not filed in 2019 and show more than the allowed income on the 2018 return, that would be a reason to file sooner provided the 2019 return income is eligible for the payment. If both returns show disqualifying income, you still have another chance when you file for 2020.

Standard Mileage Rates for 2020

The 2020 standard mileage rate for transportation or travel expenses is now 57.5¢ for all miles of business use.

The 2020 standard mileage rate is 17¢ per mile for use of an auto for medical care.

The standard mileage rate is 14¢ per mile for use of an auto for charity.

Keep in mind for 2019 to 2025, a taxpayer can no longer deduct employment expenses unless they are in the military, or performing artists or states that allow it. Self-employed individuals and businesses can still deduct their mileage expenses.

It took 8 years, but the IRS finally updated the Per Diem Rules!

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Wondering when the Per Diem Revenue Procedure was ever going to be updated? Well the IRS just updated it! Click the following link to go to new IRS Revenue Procedure 2019-48 which addresses per diems.  This replaces IRS Revenue Procedure 2011-47.

Thought the Healthcare Insurance Mandate was done? If you are a resident of California, this is for you….

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Click here for information about California Individual Health Care Mandate: https://www.ftb.ca.gov/about-ftb/newsroom/news-articles/health-care-mandate.html

When Taxes are Lower – Refunds are Lower

A good recent article

U.S. Treasury’s Mnuchin says tax refunds are flat from last year

By Susan Thomas and Jason Lange

WASHINGTON (Reuters) – Tax refunds to Americans so far in 2019 are flat compared to the same period last year, U.S. Treasury Secretary Steven Mnuchin said on Thursday.

Mnuchin, who was speaking at a hearing in the U.S. House of Representatives on Trump’s 2020 budget proposal, did not provide specifics on the dollar value of refunds made this year.

“Tax refunds are flat on last year”, he said.

Previously released Treasury data has showed the government has refunded $142.4 billion to taxpayers this year through March 1, down 3.5 percent from a year earlier. The average refund made, at $3,068, was 0.7 percent higher than a year earlier.

A soft trend for tax refunds could present a messaging challenge for the Trump administration, which has been touting a tax cut enacted last as a major boost to household finances.

While tax rates have fallen for most households, for some Americans their annual rebate is a palpable interaction with the tax code.

Mnuchin said refunds should actually fall when tax obligations fall. Many Americans pay more taxes than they owe over the course of the year. If they were able to estimate exactly what they owe and instructed employers to withhold just that, they would not get a refund at the end of the tax year.

“The fact that refunds are the same means in essence that people did not adjust their holding enough to take advantage of the tax act”, Mnuchin said, referring to the tax law enacted last year. “Because taxes are down refunds should be down.”

New Senate Bill Proposes Retroactive Tax Breaks

This week a new bill in the Senate was introduced entitled  Tax Extender and Disaster Relief Act of 2019 which has one Republican and one Democrat as sponsors.

If passed, a number of tax breaks that expired in 2017 would be extended which would case a flurry of amended returns.

Among the breaks: mortgage insurance premiums, home energy credits, principal residence indebtedness and more

To follow the bill use this link: Tax Extender Bill Congress.gov

To see the summary of the bill: Summary of Extenders Bill

Will this pass? Even though this is a bipartisan Senate bill, the House may be too busy with their partisan drama to pay attention 🙂

Tax Reform and Travel Nurses

Many taxpayers are in for a big surprise when they file their returns this year. At the end of 2017, Congress passed one of the most dramatic reforms of the tax code since the 1980s. Which took effect in the 2018 tax year. Many travel nurses have not kept up with the changes or assume the changes will start in 2019. Learn more.