Life's Daily Dose Podcast

08/22/2021

Pirex Accounting Firm866.934.1608dgalang@pirexaccounting.comwww.pirexaccounting.com

01/23/2021

Our Clients are getting PPP Loan Applications Approved Now!!

Watch this video to learn how not to get denied on Bluevine PPP Loan. We have approvals for PPP Loans right now!!!

01/18/2021

I will give the exact steps on how to turn you new tax business into a very profitable one in as little as one month!

01/18/2021

This video will show how to still apply for the ppp loan without a bank statement and just starting a business in 2020.

01/17/2021

I WILL SHOW HOW TO GET YOUR APPLICATION APPROVED BY THE LENDER AND INTO THE SBA PORTAL NOW

01/10/2021

Marriot International, Blue Cross Blue Shield and Commerce Bancshares have all said they will no longer support GOP members involved in challenging Biden's win after the Capitol riots.

01/08/2021

Year-End Financial Checklist: 4 Money Moves You Should Prioritize Now
If you can’t wait for 2020 to be over, you’re certainly not alone. But don’t let the myriad terrible things about the year distract you from taking care of important end-of-year financial moves. We’ve all been guilty of falling short on the plans and promises we made for what we’d accomplish while locked down, but the good news is that when it comes to your financial checklist, there’s still time left to make sure that your money is working its hardest for you.
Not sure where to start? Here are four of the most important things you can do to make sure you’re in the strongest possible financial position as you head into 2021.

1. Have extra cash on hand? Use it to your benefit!

The economic news has reported that those who have been able to continue working in 2020 have actually increased their savings this year. There are lots of reasons for this: We’re not spending money on commuting, on lunches out, on dry cleaning and work clothing, or on vacations. If you’ve found yourself with an excess of cash, now’s the time to make it work for you by doing any or all of the following:

• Make sure that your emergency cash account is fully funded.

• Max out your retirement account. Whether you have a 401(k), a 403 (b) or an IRA, if you haven’t reached the 2020 limits then put some of your extra cash in there. There’s an especially big incentive for those who turned fifty this year — you can exceed the limit by $6,500 as a way to catch-up on contributions.

• Take advantage of your brokerage account to invest your excess money.

• If you want to convert a Roth IRA, use the cash to cover the tax.

• If you’re a homeowner, check to see whether you’ll benefit by refinancing your mortgage.

• If you carry high-cost debt or student loans, pay them down (or off)

• If you are self-employed or earn 1099-NEC income, you can put your extra cash into a SEP IRA or Solo 401(k) to lower your tax liability while simultaneously saving.

2. Take advantage of the open enrollment period to review your current selections

As 2021 approaches, employees find themselves in the period known as open enrollment, when they can make changes to their benefit elections and their health insurance coverage. As tempting as it is to simply leave things as they are, there’s a good chance that you can make adjustments that will put you in a better economic position. If you’re paying for coverage that you’re not using or not taking advantage of options that provide you with tax advantages, set aside some time to review while you still have a chance. Here are the things to pay closest attention to:

• Life Insurance Coverage – Many companies provide life insurance to their workers up to a certain amount of coverage for free, while others offer it as a box to check as though the rates being offered are competitive. The truth is that you may be paying too much, and it’s a good idea to check. It’s easy to get a quote on a private policy from the countless insurance companies that offer online quotes. Determine what coverage you need and for how long and then price it out. If you find a better deal, then drop the one from your employer, but not until after you’re sure that your new policy is in effect.

• Pre-tax benefits — Many companies offer pre-tax benefits like transportation vouchers or parking that were great while you were commuting, but not necessary for those who anticipate working from home for the long term. If you’re paying for any of those options, it’s probably a good idea to discontinue that benefit.

• Health insurance — It is never a good idea to just let your health insurance benefits stand without looking at how you are using them and whether that is likely to change. If you are in good health and not really using the coverage you might want to switch to a plan that offers greater savings, or if you’ve used it more frequently then you thought you would it might be time to switch out of the plan that you last chose to one with a lower deductible.

• Flexible spending accounts – These are valuable benefits because of the savings you can realize through pre-tax contributions, but only if you are making good use of it. You also want to check before the end of the year to see whether your plan allows any money left in your flexible spending account to be rolled over. If it can’t be, then you need to figure out how to spend it before the year is over, or else you’re just throwing money away.

• Check your retirement plan contribution levels while there is still time. Though the contribution limits for 2021 haven’t changed, the amount that you feel comfortable contributing may have.

3. Revisit your current and previous 401(k) accounts
For many employees, 401(k) accounts with matching contributions have become an expected benefit, and once they’ve set them up, they tend to forget about them. But even though your 401(k) feels like an auto-pilot type of investment, you still need to monitor the amount that you’re contributing to make sure that you’re maximizing its benefit. It’s also important to take care of accounts you may have left behind when you left a previous job.
• It makes sense to contribute as much as you’re allowed to each year, but remember that the way your employer matches your contribution might mean that putting in too much early in the year could have you maxing out early. It may not seem to make a difference, but if your company matches each contribution it might make more sense to reduce your contribution to spread it out throughout the year so that your employer chips in more.

• If you’re maxing out your 401(k) early and still want tax and savings advantages, a Roth 401(k) option may be a smart addition.

• When you set up your 401(k), you selected an investment type that suited your needs – and those needs may have shifted. If your life and priorities have changed, take a look at the portfolio offerings your 401(k) administer offers to see if you need to switch to a different level of risk. Some options include target-date funds and brokerage windows.

• And speaking of life changes, it’s always a good idea to review your beneficiary designations. It is easy in the emotional rush of a divorce, a birth, a death or similar event to forget about these accounts.

• Finally, you need to look into the 401(k) or 403(b) accounts that you left behind when you left your last job or jobs. Though they are safe where they are, it’s usually a good idea to roll it over into an IRA or look into what your other options may be.
4. Rebalance and diversify to maximize your profits, risk and tax position
One of the most essential end-of-year economic tasks involves rebalancing, reallocation and diversification. It’s the best way to free yourself of items that are weighing you down and look for better opportunities. If you investigate each of the following aspects of your portfolio at the same time, you’ll put yourself in an optimal position from a tax perspective.
• Cut your losses through tax-loss harvesting.
When you have an investment that is consistently losing money and dragging your portfolio down, it’s time for tax-loss harvesting. Tax-loss harvesting describes taking losses to offset tax liability by selling off losing investments. Though the tax laws limit the use of losses to reduce income or capital gains to no more than $3,000, any losses over that amount can be carried over in future years until they’ve been exhausted.
• Bring your portfolio back into balance
Any action that impacts your goals for asset allocation — including tax-loss harvesting —will need to be carefully considered and may require additional investments to bring your portfolio back to the original investment balance that you created for yourself. This process is known as rebalancing, and it is essential to maintaining the level of risk with which you are comfortable. As your life changes, so too will your risk tolerance and priorities, and you may find different asset classes more or less appealing or more or less successful. This is why an annual review is so important and can be so powerful. It allows you to weigh your options, improve performance, and reestablish what your current and anticipated needs are.
• Sell employer stocks and other concentrated stock positions
As appealing as employer stocks may be, they can also lead to an overweighting in a particular position and an unreal sense of your individual wealth (for better or worse) depending upon the market’s impact in the company’s stock price. By using the end of the year to sell, you can quickly address any gains realized over two tax years.
• Be mindful of end-of-year distributions
Many managed mutual funds distribute dividends and capital gains at the end of the year, and these can be reportable for tax purposes unless you sell them before the ex-date.
Don’t try going it alone
While this list of end-of-year tasks can be helpful, it can also be overwhelming, especially if you aren’t confident in your own knowledge of tax strategies. By contacting an accountant or financial advisor you can alleviate your own anxiety and make sure that everything that needs to be addressed will be.

01/08/2021

Didn’t Get Your Economic Impact Payment?
You Can Claim It on Your 2020 Return.

Article Highlights:

• Economic Impact Payments
• High-Income Taxpayer Phaseout
• Using the 2018 and 2019 Returns
• Who Qualified for a Rebate?
• Deceased Individuals
• Tax Return Non-filers
• Reconciliation on the 2020 Return

One of the more tax-troubling issues this year has been the distribution of what Congress referred to as the recovery rebates. You may know these payments as the Economic Impact Payments (EIPs) or stimulus payments, names that the IRS took the liberty of creating. These payments were meant to provide financial assistance to individuals and families struggling during the initial outbreak of the COVID-19 pandemic.

Congress authorized the payment amounts in late March 2020, in the CARES Act, to be $1,200 for each filer ($2,400 if married and filing a joint return) and $500 per dependent child under age 17. Congress mandated that the IRS get these payments out as quickly as possible. However, the payments were phased out for higher-income taxpayers at a rate of 5% of the taxpayer’s adjusted gross income (AGI) in excess of a threshold, also based upon the taxpayer’s AGI.

Filing Status AGI
Unmarried Taxpayers (and Married
Filing Separately)
$75,000
Head of Household $112,500
Married Taxpayers Filing Joint $150,000

In addition, the recovery rebates are actually a refundable tax credit on the 2020 tax returns, so to meet the Congressional mandate, the IRS issued the rebates in advance based upon each family’s makeup and income on their 2019 tax return. However, because a significant portion of the population had yet to file their 2019 return, especially because the April 15 due date for the 2019 return had been extended to July 15, 2020, the IRS then turned to the information on the 2018 returns on which to base the rebates.
Example: Phil and Karla are married with one dependent. They are always slow in getting their returns filed, so the IRS based their rebate on their 2018 tax return. The AGI was $162,000, making them subject to the rebate phaseout. From the table above, their phaseout threshold is $150,000. Their phaseout is $600 (($162,000 − $150,000) x 5%). Without the phaseout, they would have been entitled to an EIP of $2,900. Because of the phaseout, their payment was $2,300 ($2,900 − $600).
Complicating the IRS’s ability to quickly issue the EIPs was the fact that the higher standard deduction included with the 2018 tax reform meant that a significant portion of the population did not even have to file a 2018 (or 2019) tax return. So, the IRS then used data from the Social Security and Veterans Administrations to determine non-filers who were entitled to a payment.
Another issue was that, unlike during the 2008 financial crisis, when stimulus payments were allowed to those who had passed away, the IRS took a hard stand with the pandemic EIPs and required that those payments be returned, which complicated issues for surviving spouses when the check was payable jointly.
Many individuals were entitled to EIPs who were not receiving Social Security, Railroad Retirement, or Veterans benefits and were not required to file a return. They were required to go to the IRS’s website and register in order to get a payment. The IRS initially did not issue EIPs to inmates (the CARES Act was silent as to whether or not these individuals qualified), but a federal court later overruled the IRS.
As you can see, what Congress envisioned would be a simple credit on the 2020 return quickly became complicated as a result of the mandate to issue payments in advance of the 2020 return being filed. Many individuals are still waiting for their rebates or are entitled to more than they received.
If you are among those eligible for a rebate who haven’t received a payment, or the amount you received is less than what you are allowed, take heart. Since it is really a credit on the 2020 tax return, you can claim your missing or additional rebate amount when you file your 2020 return. But this means that if you wouldn’t normally have to file a return, you will need to do so in order to get your recovery rebate credit.
However, here is yet another potential problem: when you claim the rebate credit on your 2020 return, it will be based upon your 2020 AGI and family makeup, which may or may not be to your benefit. Here are some situations that you may encountered:
Example – You had a dependent child in 2019 who had since become emancipated in 2020. If you received an EIP in 2020, it would have included the dependent’s rebate amount. However, if it is based on the 2020 return, it will not. On the bright side, your dependent will be eligible for a $1,200 rebate in their 2020 return if it is not phased out. More good news: you aren’t required to repay the dependent portion of the EIP you received.
Example – You are divorced and claimed your 10-year-old son as a dependent on your 2019 return, and based on your 2019 return, you received a $1,700 EIP ($1,200 for yourself and $500 for your son). Your ex-spouse will claim your son as a dependent on your ex-spouse’s 2020 return. Your ex-spouse will claim the dependent portion of the recovery rebate credit on their 2020 return. You will not be required to pay back the $500 dependent portion of the EIP that you received.
Example #2 – The IRS used your 2018 AGI to figure your rebate, and because it was over the threshold, it was partially phased out, and the payment you received was $800 instead of $1,200. Your 2020 AGI is below the phaseout threshold, so you will be able to receive the $400 as a credit on your 2020 tax return.
Example #3 – The opposite of example #2: when you file your 2020 return, the amount of the rebate you receive will be larger than what you are entitled to on your 2020 return. You will not have to pay back the difference.
These are only examples of the many situations that a change in filing status, dependents, and/or AGI can create with regard to the recovery rebate credit when filing your 2020 tax return. One good thing is that Congress wrote the law so that if the EIP you received was larger than the recovery rebate credit you are entitled to on your 2020 return, you will not have to pay back any of the difference. On the other hand, if your EIP was less than what’s allowed on your 2020 return, you can claim the difference as a credit on the 2020 return.
Be sure to keep the confirmation that the IRS sent you showing the amount of your advance rebate (the EIP); we’ll need it when preparing your 2020 return.
This office will automatically take care of reconciling the advance rebate with the amount determined on your 2020 return. Please call if you have other questions.