Anthony Sykes & Company

             There are many things that go through the minds of individuals and families during a disaster. One of the greatest concerns is how they can provide for their needs. This is especially true if they have been displaced or have lost a source of income. That is the situation of many in LA County right now. One source of relief that some may not think of is an Individual Retirement Account ( IRA ). Usually when taking an early distribution or withdrawal it would be limited and taxed. When it comes to a disaster situation, some of these things can be waived. This would only apply to those taxpayers who qualify. A person could qualify if they are displaced from their home, if their home is significantly damaged, or if they have temporary or permanent income loss. This could allow them to avoid the tax now and give them three years to pay back what is withdrawn. Check with your qualified tax professional to see if this is an option for you....

          Some are surprised to find out that their Social Security benefits can be taxed. This would apply to survivor, disability benefits, or monthly retirement income. Supplemental Security Income ( SSI ) cannot be taxed. The final outcome depends on the individual’s total income and filing status.           For example, someone who files as “Single” would have a lower threshold to meet for tax responsibility, than those who are “Married, Filing Jointly”. The greater the combined amount of Social Security and other income, the more their benefits will be taxed. It is easier than ever to create different streams of income, and this can change your tax situation. If you have a pension, a job in the gig economy (rideshare driver, food on demand delivery), or are active with cryptocurrency, to the Internal Revenue Service ( IRS ) this is all income. If you are not sure if you need to pay taxes on your benefits,...

         For about 15 million Taxpayers, the process of filing their taxes might get a little easier next year. A new tax form has been designed for those 65 and older, it is the Form 1040-SR . This form stands out from others because it uses large print, making it easier to read, and it has charts on the form itself, giving immediate answers to refund questions.           This new form should be ready for use in 2020. There are specific lines that can be used to list income from Social Security, IRS’s, pensions and other areas that are of interest to seniors. A Taxpayer must be at least 65 before January 1, 2020 to qualify to use this form. 

        When looking into options to provide health coverage for employees, Health Reimbursement Arrangements ( HRA ) are often chosen by different businesses. This is a popular option for firms to give to their retired employees, as it gives a predictability ( maximum number ) for their yearly health costs. However, there are limitations on what they can cover. Some are put in place by the company, others by the Internal Revenue Service ( IRS ). HRA ’s are an attractive option because funding them is tax deductible for the company, but they are not the only option available.           A Flexible Spending Account ( FSA ) can be created. The employee will decide how much goes into this account, using some of their pre-tax salary to fund it. Typically, if there is any unused money at the end of the year, it cannot be rolled over to the next. A Health Savings Account ( HSA ) is paired with a high-deductible health plan ...

Thanks to an IRS announcement, retirement accounts will be able to grow at a much faster rate in 2019. For the first time since 2013, the limit on annual contributions will go up on traditional and Roth IRA’s by $500 each. This is being done to reflect changes in inflation, but it will have big consequences for 2019.           These adjustments can lead to a Taxpayer adding up to $19,000 a year to their Government Thrift Savings plan. When it comes to IRA’s this change creates the ability to save an extra $1,000 every year. This can potentially lead to a lot of extra money gaining interest, all tax free. Now is as good a time as any to start retirement savings and take advantage of this opportunity, which will only benefit you in the end.

      When the IRS makes a change, they try to tell Taxpayers about it, so the adjustment is made easier. The Tax Cuts and Jobs Act is a huge change, and they have been slowly letting all of us know about how things will look moving forward. January 1 is just around the corner! Most of us would think Tax Reform applies to those still in the workforce. It certainly does, but it will have a great impact on those who have retired and are living off their pension, Social Security, or an annuity.        Simply put, they need to make sure they are withholding enough tax from their retirement income. If not, these older Taxpayers will be in for a shock. Sending in estimated payments, 4 times each year, is recommended to make sure everything stays balanced. Each source of income has unique rules to follow, so it is strongly encouraged for those in this situation to seek the help of a Qualified Tax Professional. They can help navigate this n...