Daycare Providers Income and Expenses Employer Identification Number (EIN) Even if you operate your daycare business as a sole proprietor or have no employees, you should obtain an EIN. Instead of your Social Security Number, use your EIN on Form W-10, Dependent Care Provider’s Identification and Certification.  Use your EIN for your business bank account. Download Business Bank Account Have a bank account that you use exclusively for depositing daycare income and paying daycare expenses. Keep track of deposits from your personal funds and of reimbursements you make to your ..read more

Qualified Charitable Distribution (QCD) In general, distributions from a traditional IRA are taxable in the year received. However, a qualified charitable distribution (QCD) is generally a nontaxable distribution made directly by the trustee of your traditional IRA (other than a SEP or SIMPLE IRA) to an eligible charitable organization. If all of the qualifications are met, a QCD is nontaxable and you cannot claim a charitable contribution deduction for it. Taking a QCD can help lower taxable income. Download Qualifications and Rules Certain qualifications must be met: You must be ..read more

Reverse Mortgages If you are unwilling or unable to sell your home, and need additional income during retirement, you may benefit from a reverse mortgage. Payments received on a reverse mortgage are not taxable to you. Tax-free income. A reverse mortgage can be used to generate tax-free income. You can convert the equity built up inside your home into cash without having to sell the home. See Example #1, later. Eliminate mortgage payments. A reverse mortgage can be used to pay off an existing mortgage, thereby reducing expenses. See Example #2, later. This may benefit a person who is consi ..read more

Qualified Business Income Deduction (QBID) For tax years 2018 through 2025, you may be able to deduct up to 20% of qualified business income (QBI) from each of your qualified trades or businesses, including those operated through a sole proprietorship, or a pass-through entity, such as a partnership, LLC, or S corporation. In general, income from rental real property held for investment purposes and reported on Schedule E (Form 1040) is not eligible for the QBID. However, you may be eligible for the QBID if you are operating the activity as a real estate business. There is uncertainty for ..read more

Why We Appreciate Referrals We acquire many of our customers through referrals from satisfied clients. Beyond the benefit of being able to expand our business, there are other reasons why we appreciate referrals. When a client thinks enough of us to recommend our services to a family member, friend, or co-worker, we attain a higher quality clientele than those we acquire from more random marketing efforts. A personal recommendation can help jump start the business relationship, resulting in a more efficient, effective tax engagement. Please consider sharing this brochure with any individua ..read more

Tax Patterns for State Returns Resident Returns States that have an individual income tax follow one of four basic patterns for calculating tax liability on income tax returns for residents. 1) Federal AGI.The first, and most common, pattern is for the state return to begin with federal AGI and then modify federal income by state-specific additions and subtractions. State returns within the federal AGI category may allow: A deduction for standard or itemized deductions, A deduction for personal exemptions, and/or A credit for personal exemptions. Download 2) Federal taxable incom ..read more

How Social Security Benefits Are Calculated Social Security retirement benefits are based on the following: Lifetime earnings. Age at time of retirement. Lifetime Earnings Higher lifetime earnings result in higher benefits. The highest 35 years are used to calculate average monthly earnings. Each year is indexed for inflation to approximate what earnings for that year would be in today’s dollars. Earnings for each year are also capped by the Social Security maximum earnings subject to Social Security tax for that year. After calculating the average indexed monthly earnings, a formula i ..read more

Pandemic Relief The following is a brief summary of key tax provisions included in the Consolidated Appropriations Act, 2021, signed into law on December 27, 2020. Charitable Contributions The CARES Act permits taxpayers who claim the standard deduction a deduction of up to $300 for qualified charitable contributions made during 2020. The new law extended this provision for 2021 with a maximum deduction of $300 ($600 for Married Filing Jointly). The increased charitable contribution deduction limit of 100% (from 60%) is extended through 2021. Download Tax Provisions Made Permane ..read more

Small Business Health Care Tax Credit Do You Qualify? The three steps (next column) assist small employers (business or tax-exempt) that provide qualified health insurance coverage to employees determine if they may qualify for the Small Business Health Care Tax Credit. In general, health insurance must be purchased through a Small Business Health Options Program (SHOP) marketplace. Download Employees The Small Business Health Care Tax Credit is reduced if the employer had more than 10 full time equivalent employees (FTEs) for the tax year. If the employer had more than 25 FTEs for ..read more

Standard Deduction The standard deduction reduces taxable income. It is a benefit that eliminates the need for many taxpayers to itemize actual deductions, such as medical expenses, taxes, interest, and charitable contributions, on Schedule A (Form 1040). The standard deduction is increased by an additional amount for taxpayers who are 65 or older, or are blind. Download 2021 Standard Deduction The basic standard deduction for 2021 is: Single or MFS $12,550 MFJ or QW $25,100 HOH $18,800 Age 65 and/or blind. The additional amounts for age 65 or older a ..read more