CPA

To Mask or Not To Mask

Todd Laytham

To mask or Not to mask – THAT is the question

This article from Jason Gay of the Wall Street Journal is entertaining as well as informative.  Are you a mask vigilante or flaunting your mask-lessness?

Either way – the article references 2 of my favorites: Michael Jordan & Darth Vader.  Just like the debates over who was the greatest basketball player or villain – hopefully the debates on masking stay cordial instead of tragic.

https://www.wsj.com/articles/thanks-for-masking-a-case-for-covering-up-11589807255?mod=followjasongay

https://www.clickondetroit.com/news/local/2020/05/09/2-men-arrested-after-allegedly-killing-flint-security-guard-who-told-woman-to-wear-mask/

Thanks for Masking! A Case for Covering Up

Players on FC Erzgebirge Aue’s bench wore masks during a May 16 match.

PHOTO: ROBERT MICHAEL/ZUMA PRESS

By: Jason Gay May 18, 2020 9:07 am ET

I want to talk about masks, because it feels like a hot topic right now, and there aren’t a lot of hot topics in sports at the moment. I mean, I love Michael Jordan as much as anybody, but I’m bored of all these strained debates about Michael Jordan. He was a great basketball player, likely the greatest who ever was. Do we really have to argue this? It’s like listening to people argue about pizza, or sunshine. Jordan’s great! The end.

Back to the masks. Here’s my take: if Yogi Berra had to spend all those years behind the plate wearing a mask, and the sublime hockey goalie Ken Dryden wore a mask, and Darth Vader did, too, I can handle wearing a mask when I’m going to be out in public around other people, and especially when I’m shopping inside a store. It isn’t my favorite thing, but I can do it.

Do you think Darth Vader threw a fit when he got to Costco and they told him to keep his mask on? No, he did not. Darth got his two-pound jar of cheese puffs and left.

I agree that wearing a mask is strange. It was weird to see those photos of soccer players in masks on the bench this weekend. It isn’t my ideal scenario, either. Look at that adorable little drawing of me that runs with this Journal column. You think I enjoy covering up that handsome mug with a mask?

(I have not looked like that drawing in at least 10 years.)

I get it. Wearing a mask is awkward. It can feel restraining. Uncomfortable. If you have glasses, your glasses fog up. I still have no idea if I am putting it on correctly. Half the time I think I’m wearing it inside out. I also have a bandanna, which instantly turns me into the world’s most pathetic stagecoach robber. If I tried to rob a stagecoach right now, all the people in the stagecoach would just laugh and tell the horses to clip-clop away.

But now I have options. At this point, you can pretty much buy a mask with anything on it. Do you want a Pink Floyd “Dark Side of the Moon” mask? Those exist. You want a Georgia Bulldogs mask? You have many options. You want a mask that has cute little illustrations of baby goats on it? It’s a real thing. My 5-year-old has a pink mask with magic unicorns on it, and she loves it!

MORE BY JASON GAY

That’s a lie! She hates it, and I have to chase her around like a baby goat to get her to wear it.

Yes: It was confusing when the government first asked us not to wear masks, that they should be reserved for health-care professionals, then turned around and said: OK, wear ‘em. I know there are differing studies about how much masks help, and it would be silly to think they’re some kind of infallible barrier, but they seem like a reasonable precaution as ordinary life begins to re-open.

At the very least, you’re not touching your face and nose, which apparently we all unknowingly do 400 billion times a day. A mask also feels like good citizenry, especially when we’ve been asking essential workers to wear them for months. I know there are cranks who call mask-wearing “virtue signaling,” because everything has to be cornily politicized these days, but come on. A mask isn’t a podcast tote bag. Don’t be a cynical lame-o! Some signaling is indeed virtuous!

“When we’re out in the public [wearing a mask], we’re signaling this is a pandemic, we’re aware this is happening, and I’m doing my part,” Harvard T.H. Chan School of Public Health assistant professor Joe Allen told the Journal’s Sumathi Reddy last month.

No one’s saying this is fun, but if it helps get the country and economy up and running, I’m game. Think of your neighbors. The people who work in stores—do you think those folks want to be the mask police? No. They just want to get home safe. Same with strangers standing in line or walking past you on the sidewalk. You might not be concerned about your health, but they might be.

I don’t know who said it first, but it’s a smart line: Wearing a mask isn’t about you. It’s about everyone else.

Why Taxpayers Should Be Using Direct Deposit For Tax Refunds

Todd Laytham

With the filing season just around the corner, taxpayers should be aware of the benefits of using direct deposit for refunds. It’s easy, secure and the fastest way to get a tax refund.

Here are 10 quick facts about direct deposit.

  • It’s the best and fastest way for taxpayers to get their tax refund.
  • It’s free.
  • It’s secure.
  • Taxpayers can deposit their refund into not only one, but also two or three accounts.
  • Combining direct deposit with IRS e-file is the fastest way for taxpayers to receive their refund.
  • When using direct deposit, there’s no risk of having a paper check stolen or lost.
  • The IRS uses the same system to deposit tax refunds that Social Security and Veterans Affairs use to deposit benefits into millions of accounts.
  • It’s easy. Just follow the instructions in the tax software or on the tax form.
  • Taxpayers can use direct deposit even if they are filing by paper.
  • Direct deposit saves taxpayers money. It costs the IRS more than $1 for every paper refund check issued, but only a dime for each direct deposit made.

More information:
Direct Deposit
Direct Deposit Limits
Where’s My Refund

Share this tip on social media — #IRSTaxTip: Free IRS programs help many taxpayers prepare and file returns. https://go.usa.gov/xdPKT

Taxpayers Should Know The Difference Between Standard and Itemized Deductions

Todd Laytham

It’s a good idea for people to find out if they should file using the standard deduction or itemize their deductions. Deductions reduce the amount of taxable income when filing a federal income tax return. In other words, they can reduce the amount of tax someone owes.

Individuals should understand they have a choice of either taking a standard deduction or itemizing their deductions. Taxpayers can use the method that gives them the lower tax. Due to tax law changes in the last couple years, people who itemized in the past might not want to continue to do so, so it’s important for all taxpayers to look into which deduction to take.

Here are some details about the two methods to help people understand which they should use:

Standard deduction
The standard deduction amount adjusts every year and can vary by filing status. The standard deduction amount depends on the taxpayer’s filing status, whether they are 65 or older or blind, and whether another taxpayer can claim them as a dependent. Taxpayers who are age 65 or older on the last day of the year and don’t itemize deductions are entitled to a higher standard deduction.

Most filers who use Form 1040 or Form 1040-SR, U.S. Tax Return for Seniors, can find their standard deduction on the first page of the form.

Taxpayers who can’t use the standard deduction include:

  • A married individual filing as married filing separately whose spouse itemizes deductions.
  • An individual who files a tax return for a period of less than 12 months. This could be due to a change in their annual accounting period.
  • An individual who was a nonresident alien or a dual-status alien during the year. However, nonresident aliens who are married to a U.S. citizen or resident alien can take the standard deduction in certain situations.

Itemized deductions
Taxpayers may need to itemize deductions because they can’t use the standard deduction. They may also itemize deductions when this amount is greater than their standard deduction.

Taxpayers who itemize file Schedule A, Form 1040, Itemized Deductions or Form 1040-SR, U.S. Tax Return for Seniors.

A taxpayer may benefit by itemizing deductions for things that include:

  • State and local income or sales taxes
  • Real estate and personal property taxes
  • Mortgage interest
  • Mortgage insurance premiums
  • Personal casualty and theft losses from a federally declared disaster
  • Donations to a qualified charity
  • Unreimbursed medical and dental expenses that exceed 7.5% of adjusted gross income

Individual itemized deductions may be limited. Form 1040, Schedule A Instructions can help determine what limitations may apply.

More information:
Publication 501, Standard Deduction, and Filing Information
How Much Is My Standard Deduction?
Topic No. 551 Standard Deduction

Share this tip on social media — #IRSTaxTip: Taxpayers should know the difference between standard and itemized deductions. https://go.usa.gov/xdKBs.

Gathering Records Before Preparing Tax Return Makes Filing Go Smoother

Todd Laytham

As taxpayers are getting ready to file their taxes, one of the first things they’ll do is gather their records. To avoid refund delays, taxpayers should gather all year-end income documents before filing a 2019 tax return.

It’s important for folks to have all the needed documents on hand before starting to prepare their return. Doing so helps them file a complete and accurate tax return. Here are some things taxpayers need to have before they begin doing their taxes.

  • Social Security numbers of everyone listed on the tax return. Many taxpayers have these number memorized. Still, it’s a good idea to have them on hand to double check that the number on the tax return is correct. An SSN with one number wrong or two numbers switched will cause processing delays.
  • Bank account and routing numbers. People will need these for direct deposit refunds. Direct deposit is the fastest way for taxpayers to get their money and avoids a check getting lost, stolen or returned to IRS as undeliverable.
  • Forms W-2 from employers.
  • Forms 1099 from banks and other payers.
  • Any documents that show income, including income from virtual currency transactions. Taxpayers should keep records showing receipts, sales, exchanges or deposits of virtual currency and the fair market value of the virtual currency.
  • Forms 1095-A, Health Insurance Marketplace Statement. Taxpayers will need this form to reconcile advance payments or claim the premium tax credit.
  • The taxpayer’s adjusted gross income from their last year’s tax return. People using a software product for the first time will need their 2018 AGI to sign their tax return.  Those using the same tax software they used last year won’t need to enter their prior year information to electronically sign their 2019 tax return.

Forms usually start arriving by mail or are available online from employers and financial institutions in January. Taxpayers should review them carefully. If any information shown on the forms is inaccurate, the taxpayer should contact the payer ASAP for a correction. Share this tip on social media — #IRSTaxTip: Gathering records before preparing tax return makes filing go smoother. https://go.usa.gov/xdKB6

Tax Withholding and New 2020 W4

Todd Laytham

How will this effect my 2020 Refund

Many companies will be asking you to complete a new revised W4.  While we were confused about the complexity of the old form, we can be more confused with the simplicity of the new form. Especially when our federal withholding goes down.

The new form incorporates more of a strategy of filing status and dependents against income using the new TCJA (Tax Cut and Jobs Act) tax rules.  The TCJA eliminated a lot of Itemized Filing (Schedule A) for taxpayers by raising the standard deduction.

This change made the tax withholding calculation tables become more skewed for employees working part-time or more than 1 job.  This is because the tables are estimating the earnings for each payroll as the earnings for the entire year.  Generally, working a part-time or second job the hours works are not enough to trigger federal withholding.

Because of this, you should review your withholding early and use the IRS Tax Withholding Estimator to determine how much withholding you should have. There is even a new feature allowing you to even customize the refund amount you want to receive.

If you need help with your W4 or to have a tax planning and withholding review, please call or email my office.

IRS Launches Improved Tax Withholding Estimator

The IRS launched a new and improved Tax Withholding Estimator, designed to help workers target the refund they want by having the right amount of federal income tax taken out of their pay. The Tax Withholding Estimator incorporates the changes from the redesigned Form W-4, Employee’s Withholding Certificate, that employees can fill out and give to their employers this year.

You can find the updated Tax Withholding Estimator and the redesigned 2020 Form W-4 on IRS.gov.

IRS YouTube Videos:

IR-2020-09, January 14, 2020

WASHINGTON — The Internal Revenue Service has launched a new and improved Tax Withholding Estimator, designed to help workers target the refund they want by having the right amount of federal income tax taken out of their pay.

The Tax Withholding Estimator, now available on IRS.gov, incorporates the changes from the redesigned Form W-4, Employee’s Withholding Certificate, that employees can fill out and give to their employers this year.

The IRS urges everyone to see if they need to adjust their withholding by using the Tax Withholding Estimator to perform a Paycheck Checkup. If an adjustment is needed, the Tax Withholding Estimator gives specific recommendations on how to fill out their employer’s online Form W-4 or provides the PDF form with key parts filled out.

To help workers more effectively adjust their withholding, the improved Tax Withholding Estimator features a customized refund slider that allows users to choose the refund amount they prefer from a range of different refund amounts. The exact refund range shown is customized based on the tax information entered by that user.

Based on the refund amount selected, the Tax Withholding Estimator will give the worker specific recommendations on how to fill out their W-4. This new feature allows users who seek either larger refunds at the end of the year or more money on their paychecks throughout the year to have just the right amount withheld to meet their preference.

The new Tax Withholding Estimator also features several other enhancements, including one allowing anyone who expects to receive a bonus to indicate whether tax will be withheld. In addition, improvements added last summer continue to be available, including mobile-friendly design, handling of pension income, Social Security benefits and self-employment tax.

Starting in 2020, income tax withholding is no longer based on an employee’s marital status and withholding allowances, tied to the value of the personal exemption. Instead, income tax withholding is generally based on the worker’s expected filing status and standard deduction for the year. In addition, workers can choose to have itemized deductions, the Child Tax Credit and other tax benefits reflected in their withholding for the year.

It is important for people with more than one job at a time (including families in which both spouses work) to adjust their withholding to avoid having too little withheld. Using the Tax Withholding Estimator is the most accurate way to do this. As in the past, employees can also choose to have an employer withhold an additional flat-dollar amount each pay period to cover, for example, income they receive from the gig economy, self-employment, or other sources that is not subject to withholding.

For more information about the updated Tax Withholding Estimator and the redesigned 2020 Form W-4, visit IRS.gov.

What To Do If You Get A 1099-C Form For Student Loans

Todd Laytham

The IRS has issues guidance on Educational Institutions that went bankrupt and that they should not issue 1099-C for Cancellation of Debt or Student Loan Forgiveness.

So what do you do if you get a 1099-C…be sure to get all the facts on why it was issues and refer to the information below.  It helps to talk openly with your tax advisor and make sure they have all the information correct to determine if you have to report this on your tax return or not.

Revenue Procedure 2020-11 provides relief to additional taxpayers who took out federal or private student loans to finance attendance at a nonprofit or for-profit school.  The IRS will not assert that taxpayers within the scope of the revenue procedure must recognize gross income as a result of the discharge of their student loans.  Additionally, the IRS will not assert that a creditor must file information returns and furnish payee statements for the discharge of any indebtedness within the scope of the revenue procedure.  To avoid confusion, the IRS strongly recommends that these creditors not furnish students nor the IRS with a Form 1099-C.

Revenue Procedure 2020-11 will be in IRB 2020-6, dated February 3, 2020.

Travel Expense Reimbursements

Todd Laytham

Changes To Using Per Diem Reimbursements To Employees For Expenses

This is important for the many employees in many industries where travel requiring Hotel, Meals & Incidental expenses to be paid for the benefit of the employer.  With the suspension of Miscellaneous itemized deductions for unreimbursed business expenses from 2018 – 2026, an employer and the employees should get to know the rules for proper reimbursement and documentation.

Per diem rates cover Hotel/Meals/Incidental Expense or only Meals/Incidental Expenses. There are also special rules for transportation industry workers and high-cost localities. 

Here is the excerpt on the new Revenue Procedure 2019-48:

Rev. Proc. 2019-48 provides the rules for using per diem rates, rather than actual expenses, to substantiate the amount of expenses for lodging, meals, and incidental expenses for travel away from home.  Use of a per diem substantiation method is not mandatory.  Taxpayers who use per diem rates to substantiate the amount of travel expenses under Rev. Proc. 2019-48 may use the federal per diem rates published annually by the General Services Administration.  Rev. Proc. 2019-48 allows certain taxpayers to use a special transportation industry rate or to use rates under a high-low substantiation method for certain high-cost localities.  The IRS announces these rates and the rate for the incidental expenses only deduction in an annual notice.  Rev. Proc. 2019-48 will be in IRB: 2019-51, dated December 16, 2019.

Please check with your employer or financial advisor on the applicability of how to properly report to avoid having any excess amounts charged to income & subject to taxes or not be deductible for the employer. With the new rules from the Tax Cuts and Jobs Act (TCJA) it is in the employee’s best interest to utilize an employer reimbursement plan effectively.

Why Do I Have to Fill It Out a Form W-9 When I Referee Soccer Games

Todd Laytham

Why Do I Have to Fill It Out a Form W-9 When I Referee Soccer Games?

A Helpful Guide & Explanation for Soccer Referees and Independent Contractors

As a soccer referee when you first start out working for any league, tournament, school or organization you will be asked to fill out a Form W-9. 

Why is this being requested and why you should complete this form when you work soccer games?

As a soccer referee you are being hired as an Independent Contractor instead of an Employee.  The attached links provide official definitions from the IRS.  When you are hired as an Independent Contractor you complete a Form W-9 and as an Employee you complete a Form W-4. Make sure that you complete a Form W-9 for every organization and game you work.  The reason for both forms are to address who withholds taxes and makes the payments to the IRS.

As an Independent Contractor you will calculate and make your own estimated tax payments.

As an Independent Contractor you are legally considered a self-employed Small Business for income tax purposes.  This makes you exempt from employer withholding of Federal, Medicare, Social Security, State and Local taxes.  It does NOT mean you are exempt from any of those taxes…only that you must pay them yourself. 

The IRS requires Form W-9 and 1099-MISC to communicate transfer of REVENUE or PAYMENT to an Independent Contractor. 

Note that whether you receive a 1099-MISC or not you are responsible for reporting ALL payments for games and work on your Income Tax Return.

A Form W-9 is required annually.  The form is fairly simple and the IRS has an easy to use fillable PDF format that can be saved and printed when needed or scan a signature copy in for easy printing or emailing.

Line-by-line instructions for a soccer referee:

  1. Name on your tax return: Enter your full name (including middle name) or the name of your separate business entity if you created an LLC or Corporation
  2. Business name: Leave BLANK (in cases of rare exceptions for specific LLC or Corporations would this be filled out)
  3. Federal Tax Classification Box: Check the top left box [Individual/Sole Proprietor or single-member LLC] unless you know specifically it is something different
  4. Exemptions: Leave BLANK
  5. Street Address:
  6. City, State, Zip:
  7. List Account Number(s): Leave BLANK

Part I:  Taxpayer Identification Number (TIN): Enter your Social Security Number in the boxes unless you have applied for and received an Employer Identification Number, then enter that.  Do NOT enter both numbers – it is one or the other.

Part II: Certification:  Please read carefully the first 3 statements before signing and submitting the form.  Make sure your Social Security Number is correct.  Make sure you have not received notice of backup withholding. You are a U.S. citizen or other person as defined in the instructions.

As you certify to become a new referee through the United States Soccer Federation or recertify your existing badge, be prepared to accept game assignments with a properly completed IRS Form W-9. 

If you are interested in becoming a soccer referee in KS click here and in MO click here.


Cost of Employer Provided Healthcare Coverage

Cost of Employer Provided Healthcare Coverage

Todd Laytham

Healthcare Insurance premiums for family coverage through employers also does not consider the Individual Out-of-Pocket costs for Deductible, Co-Insurance, Co-pays, Non-covered Services, Drug costs and Non-covered services…such as Dental, Vision, Chiropractic and more.  

What can you do about this – first line of defense to protect you from skyrocketing healthcare costs is to not get sick or injured. 

If that is not possible for you, then be a better healthcare consumer like you are when you are a consumer for anything else: cars, electronics, etc.  Most people would not buy a new car without some research, reviews, test driving, price comparison and more…If you are going to have a medical procedure done (non-emergency) I think we have to start getting (OR asking and demanding) price transparency for the facility, surgeon & anesthesia along with any additional services (imaging, drugs, hospitalization, physical therapy) that might be needed before or after the procedure.

There is no easy answer or political solution to this issue of rising healthcare costs.

Medical fees (actual negotiated contract rates with providers/businesses to bill the patient instead of the “billable rate”) vary widely and generally are higher the larger the healthcare company (examples is the 2013 Ankle MRI study Washington DC $400-2,000 for the same service. https://www.washingtonpost.com/news/wonk/wp/2013/03/13/how-much-does-an-mri-cost-in-d-c-anywhere-from-400-to-1861/

In large systems there are incentives in compensation to refer only within the healthcare system which generally charge higher prices…note that physicians are not solely to blame as they have no idea what the costs are for any service they refer to…they are just needing the results of the labs/imaging/etc from the referral.

So ultimately if we are ever going to see the cost of healthcare go down I believe we need more price transparency.

https://www.wsj.com/articles/cost-of-employer-provided-health-coverage-passes-20-000-a-year-11569429000

Questions About Payments

Todd Laytham

Questions about tax payments and penalties come up all year long. Taxpayers can find most answers to these questions on IRS.gov. They can head over to the Let Us Help You page, which features links that take users to information and resources on a wide range of topics related to penalties and payments.

Payments

Payment options

  • This page lays out the different way taxpayers can pay what they owe, from having the payment taken directly from their bank account to using a credit card.

Payment plan

  • Taxpayers who cannot pay what they owe in full have options, which are explained on this page.

View your balance and payment history

  • Individual taxpayers can use this tool to check their account and see things like their payoff amount.

https://go.usa.gov/xV85m