January 28, 2020

January Newsletter

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Here are your Articles for January 24, 2020.

Information Regarding the AB5 – CA Employment Status Memorandum

Credit to: Derek Hess, CPA and Raquel Guluarte

On January 1, 2020, California Assembly Bill No. 5, (AB 5) goes into effect and may impact workers treated as employees or as independent contractors under the California law.

New Law – The California Supreme Court adopted “the ABC test” in Dynamex v. Superior Court. Under the ABC test, a worker is considered an employee and not an independent contractor, unless the worker meets the following three requirements:

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2020 Payroll Wage and Tax Alert

Credit to: Anna Zemlyak

There has been some updates and changes to payroll wage and tax.

For the most part, employment payroll taxes must be remitted to the IRS and EDD on either the semi-weekly or monthly basis. In addition, some companies may be required to submit the payments electronically to the IRS. These rules change in each individual case every January 1. For EDD, as of January 1, 2018 all quarterly forms and payments MUST be submitted electronically. Each employer must comply with the depository rules to avoid penalties. Please contact our office if you have any questions or refer to the IRS and EDD Employer’s Tax Guides for further guidance.

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Tax Reform and Beyond: Tax Law Changes for the 2020 Tax Filing Season
As you know, the Tax Cuts and Jobs Act (TCJA) was signed into law in 2017. Most of the measures were effective beginning in tax year 2018, and many individual measures contain a sunset date at the end of 2025. Here’s a summary of the TCJA provisions, along with other tax changes that are effective beginning in tax year 2019.

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What Will You Pay for Medicare in 2020?
Medical premiums, deductibles, and coinsurance amounts change annually. Here’s a look at some of the costs that will apply in 2020 if you’re enrolled in Original Medicare Part A and Part B.

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IRS issues standard mileage rates for 2020
The Internal Revenue Service today issued the 2020 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2020, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 57.5 cents per mile driven for business use, down one half of a cent from the rate for 2019,
  • 17 cents per mile driven for medical or moving purposes, down three cents from the rate for 2019, and
  • 14 cents per mile driven in service of charitable organizations.

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IRA to charity
If you have reached age 70½ and are evaluating charitable giving options, you may consider making a charitable donation directly from your IRA.

Contributions made directly from your IRA to a charity reduce the taxable portion of your IRA distributions and count toward your annual required minimum distribution (RMD). For example, if your RMD is $10,000 and you give $2,000 to a charity directly from your IRA, then you are only required to take an additional distribution for the year of $8,000. In this example, only the $8,000 that you received is taxable to you.

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Important Tax Figures for 2020
Every year, the dollar amounts allowed for various federal tax benefits are subject to change based on inflation adjustments and legislation. Here are some important tax figures for 2020, compared with 2019, including the estate tax exemption, Social Security wage base, qualified retirement plan and IRA contribution limits, driving deductions, allowable business write-off amounts and more.

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Stretch IRAs Lose Potency under the SECURE Act
The Setting Every Community Up for Retirement Enhancement (SECURE) Act aims to help Americans save more for retirement. But an unfavorable change included in the new law involves stricter rules for postdeath required minimum distributions for nonspouse IRA beneficiaries. This provision will sharply curtail the effectiveness of so-called “stretch IRAs” for those beneficiaries and damage some carefully constructed estate plans.

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Does Your Employee Benefits Program Provide Meaningful Protection?
Working families are more reliant than ever on employer-provided benefits to see them through a financial crisis. Are your workplace benefits sufficient to provide your workers with meaningful protection in case of a medical or other disaster befalling a breadwinner? Keep reading to get an idea of where your benefit plans stand in relation to the needs of those left behind.

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Owning a Home Has Tax Advantages But There Are Limits

American homeowners expect some tax-saving payback from Uncle Sam for all the interest paid, not to mention the other costs of ownership. However, some people overestimate the tax benefits of owning a home and are disappointed when tax time comes. Here’s a realistic look at the tax breaks you can expect from home ownership, and what limitations may apply.

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