Disla & Associates Inc

Potentially Taxable Events Did You Know? In addition to traditional income sources like employee wages and business profits, there are a number of other activities and transactions that the IRS classifies as potentially taxable. It is important to consider all of these taxable events for your tax return. The most commonly overlooked taxable events include:... - Investment income, including receiving stock dividends or cashing in bonds - Converting a traditional IRA to a Roth IRA - Forgiveness (discharge) of a loan or other debt, including student loans - Sale of assets such as vehicles, musical instruments, or a home at a gain (that is, for more than you paid to purchase the assets) - Sale or exchange of cryptocurrency (like Bitcoin), or making purchases with cryptocurrency - Withdrawing funds from a retirement plan (or from the cash value of a life insurance policy if you withdraw more than you have paid in premiums) - Gifts and inheritances A tax professional can advise you about which events in your life may have tax implications, and how to properly report those events. For example, in some cases, you may only need to declare the event to the IRS if the amount of money involved exceeds a minimum threshold, known as an exclusion.

Other Dependent Tax Credit Did You Know? If you have a dependent who does not meet the criteria for the Child Tax Credit (CTC), you may still qualify for a $500 credit called the Other Dependent Credit. Examples of qualifying dependents include children of age 17 or 18 (or up to age 23 if they are full-time students), and adult relatives who are unable to support themselves due to a disability. Your claimed dependents must be US citizens, resident aliens, or nationals, and ...must have a taxpayer ID number (SSN or ITIN). Children must not have been claimed for the CTC by you or anyone else, must rely on you for at least half of their financial support, and generally must live with you for over half the year. Claimed adult dependents (called qualifying relatives by the IRS) must have a gross income of less than $4,300 for 2020, and must either be your true relative or live with you full time. The term true relative covers a broad range of relationships, including in-laws and stepchildren. A qualified tax advisor can help you determine your eligibility for the Other Dependent Credit. If you have more than one qualifying dependent, you may be able to take the credit for each of them.

IRS Warns of Unemployment Benefits Scam and Gives Instructions for Those Affected Many Americans applied for unemployment benefits in 2020 due to job loss or reduced hours resulting from the COVID-19 (coronavirus) pandemic. Unfortunately, scammers also took advantage of the high number of unemployment applications to fraudulently collect benefits. In the most common scam, an identity thief applied for and received unemployment benefits using someone else's social security num...ber (SSN). Generally, the person whose identity was stolen did not know that a bogus application was filed in their name. Now, many of these scam victims have received a Form 1099-G from their state governments, incorrectly stating that they received unemployment benefits payments during 2020. In reality, the payments went to the scammer. If you receive an inaccurate 1099-G, you will not be responsible for paying taxes on any incorrectly reported benefits. The IRS advises you to take the following steps: - Contact the state agency that issued the 1099-G and explain that you did not receive the benefits shown on the form. Request that a revised, correct 1099-G be sent to you. - If the state agency cannot provide a corrected 1099-G in a timely manner, you may file your tax return and report only income that you actually received, regardless of what the inaccurate 1009-G shows. Note that requesting a revised 1099-G is a critical action to take, as it will help prevent complications caused by an incorrect IRS tax or penalty assessment. Even if the corrected form does not reach you before you file your return, the revised information will eventually reach the IRS and your tax bill should be adjusted accordingly.

IRS Projects Delivery Schedule for 2020 Tax Refunds & Tracking With the processing of 2020 federal tax returns now underway, the IRS has issued information about the likely timetable for refunds to be issued. Here are some key points to keep in mind: - The IRS began processing returns on February 12, 2021.... - The fastest way to receive your refund is to have your return filed electronically and request the refund by direct deposit to your bank account. - The IRS expects about 90% of taxpayers who file electronically with direct deposit to receive their refunds within 21 days, provided there are no problems with their returns. - Many taxpayers who file promptly and qualify for the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) will receive their refunds in early March. - Those who file paper returns and/or request their refunds by check may experience longer wait times for their refunds. - Refunds will also be delayed if the IRS must request additional information from taxpayers due to issues with their returns. Typically, as soon as 24 hours after your federal return is e-filed, you may track the status of your refund by using the IRS Where's My Refund portal, at http://irs.gov/refunds. In many cases, the portal can provide a personalized refund delivery date.

IRS Expands Allowed Items for 2020 Educator Expense Deduction Did You Know? Qualifying educators may claim a tax deduction of up to $250 for unreimbursed classroom expenses, even if they do not itemize deductions. If both members of a couple filing jointly work as educators, they may each deduct up to $250, for a maximum possible deduction of $500. Ordinarily, allowed expenses are limited to standard classroom supplies such as paper, writing utensils, computers, rulers and... art supplies. For 2020, however, eligible educators may also include in their deduction certain expenses incurred due to the COVID-19 pandemic. Examples include the cost of personal protective equipment, sanitizer and cleaning agents purchased after March 12, 2020 to prevent the spread of coronavirus. Note, however, that the per-educator deduction limit remains at $250. Eligible educators generally include K-12 teachers, counselors, principals and aides who worked for at least 900 hours at an elementary and/or secondary school in 2020. The allowed deduction may be reduced for a variety of reasons, including taking tax-free withdrawals from a Coverdell education savings account. A tax professional can help you determine whether you qualify for the Educator Expense Deduction, and the allowed amount of your deduction if so.