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My Price County 
Feb 09, 2021 at 03:57 AM
Davette Lynne Hrabak, CPA

In Part 2 of 2, Davette Lynne Hrabak, CPA provides helpful information regarding charitable contributions, health savings accounts, the Earned Income Credit, educational grants, and some quick tax facts. Read the final set of articles in this series.

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YOU MAY BE ABLE TO TAKE A DEDUCTION FOR CHARITABLE CONTRIBUTIONS EVEN IF YOU ARE UNABLE TO ITEMIZE

By: Davette Lynne Hrabak, CPA, CFE, CBM, ATA, ATP, ABA, ECS, CGMA

http://www.DavetteLynneHrabak.com

Most people are aware that charitable contributions are tax deductible if you are able to itemize and you meet the proper criteria for the deductions. But this year for your 2020 tax return there is a change. If you are not able to itemize, you still may be able to deduct your charitable contributions.

The above–the-line deduction is for certain cash donations that were made to public charities. Therefore, for this deduction, donations of personal property to a charitable organization would not count. The deduction is limited to $300 per taxpayer.

This deduction is only for people that do not itemize.

As with all itemizing, be sure to have and keep proper proof of your donation that you used for your deduction in your records.

Remember, if you have already filed but realize that you could have had a credit or deduction that you missed, it is not too late; you can always amend your return. If you need more information or believe you could qualify for them, I would be happy to give you a free quote on the preparation of your return.

When the right tax and financial advice is essential, talk to someone with an unmatched level of knowledge, experience and education. A CPA understands the business of taxes and finance and can provide trusted advice and services during the tax season and throughout the calendar year.

Feel free to call me at my office, (715-339-6638), located between the lion statues located at 164 South Lake Avenue, Phillips, WI 54555, for a free, no obligation quote.

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WHEN IN DOUBT, BRING IT IN AND BRING IT UP

By: Davette Lynne Hrabak, CPA, CFE, CBM, ATA, ATP, ABA, ECS, CGMA

http://www.DavetteLynneHrabak.com

There are so many credits and deductions available to taxpayers, many which individual or business taxpayers may not be aware of. Each person’s individual tax situation is unique. An individual that is lower income, or someone who has kids, a person who owns and runs a business or a rental, or someone who has a combination of factors on their returns each have unique needs and unique deductions and credits.

It is virtually impossible for an individual to know what all is deductible and what is not on their own. So when you bring your items into be prepared, do not hesitate to talk to your CPA. Mention any questions that you have, discuss what all has gone on in your year financially. Many times these conversations open a person up to finding out that they have more deductions and credits available to them than they thought. Remember, there is no such thing as a stupid question.

Sometimes these helpful conversations can even lead to planning for the future. For example, maybe you have an item that would have been deductible had you taken certain steps in documenting it. The discussion would lead to letting you know what you can do for the following year to make next year’s taxes more bearable.

If you think you have an item that could be deductible, bring it up and ask about it. The worst thing that could happen in bringing it up is that you find out it is not deductible. The best thing is that you find out it is deductible or it sparks additional questions that could lead to something else that may help you in your own individual tax situation.

Bring your prior year return in with you, that way it can be looked over. Having a thought-provoking discussion and the prior year return available can go far in making sure things have been done the way that they should have been, and, if an issue is found, the best possible course of action can be discussed.

In my practice, I have had new clients come in that did not realize the deductions and credits that they missed in prior years' returns, and many are surprised that some of them can still be claimed without amending a return (for example, a missed Homestead Credit in a prior year) or via amending a return, if needed, for some items that can only be corrected in that manner.

Feel free to call me at my office, (715-339-6638), located between the lion statues located at 164 South Lake Avenue, Phillips, WI 54555, for a free, no obligation quote.

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HSAs: HEALTH SAVINGS ACCOUNTS

By: Davette Lynne Hrabak, CPA, CFE, CBM, ATA, ATP, ABA, ECS, CGMA

http://www.DavetteLynneHrabak.com

You may have heard about Health Savings Accounts. They are a savings account that is set up and used exclusively for paying for qualified medical expenses for the account beneficiary and/or dependents and/ or spouse of the beneficiary.

They are a valuable tool to help assist in the costs of individual and family health care.

If you qualify for a Health Savings Account there are differences in limitations based on Self-only or Family coverage.

For 2020 some of the limitation cut-offs are as follows:

For Self-only Coverage:
Contribution (deduction) limit $3,550
Plan minimum deductible $1,400
Plan out-of-pocket limit $6,900

For Family Coverage:
Contribution (deduction) limit $7,100
Plan minimum deductible $2,800
Plan out-of-pocket limit $13,800

There is an annual contribution amount increase of $1,000 for anyone who is age 55 or older.

Feel free to call me at my office, (715-339-6638), located between the lion statues located at 164 South Lake Avenue, Phillips, WI 54555, for a free, no obligation quote.

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2020 QUICK TAX FACTS

By: Davette Lynne Hrabak, CPA, CFE, CBM, ATA, ATP, ABA, ECS, CGMA

http://www.DavetteLynneHrabak.com

Each year the IRS releases and revises various rates, exemptions, and limits, some of which are listed below.

Standard mileage rates are available to taxpayers in certain situations. The current rates for the filing of your 2020 income tax return are as follows:

Business Standard Mileage Rate: 57.5 cents per mile
Medical Standard Mileage Rate: 17 cents per mile
Charitable Standard Mileage Rate: 14 cents per mile
Gift Tax Annual Exclusion: $15,000

Each person’s tax situation is unique. Sometimes the only deduction available is a standard rate and other times the taxpayer has an option to choose to use standard rates or actual amounts. The circumstances of which is most appropriate to use must be looked at on a case-by-case basis for each taxpayer; rarely are any two taxpayers situations identical.

Feel free to call me at my office, (715-339-6638), located between the lion statues located at 164 South Lake Avenue, Phillips, WI 54555, for a free, no obligation quote.

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THE 2020 TAX YEAR EARNED INCOME CREDIT: IN SOME CASESE, EVEN IF THERE ARE NO QUALIFYING CHILDREN

By: Davette Lynne Hrabak, CPA, CFE, CBM, ATA, ATP, ABA, ECS, CGMA

http://www.DavetteLynneHrabak.com

The Earned Income Tax Credit is a credit that is available to many taxpayers. It is based on a person’s income and the number of qualifying children that they have. However, many people do not realize that if a taxpayer’s income level falls within certain parameters, then a person whom does not have any qualifying children can qualify for the credit if all criteria are met.

The Earned Income Tax credit is a complicated credit that has many rules and adjustments to a taxpayer’s income but it is an often used credit and provides a refund to many people, even in cases where the taxpayer has not had any federal or state withholding taken out of their pay. It is part of a group of credits which are called refundable credits, which basically means that a taxpayer can get back more than what they had withheld from their paychecks.

The maximum Earned Income Credit amounts available to taxpayers is dependent on whether or not the taxpayer has children, and, if they have children, the number of children they have.

If a taxpayer has no children the maximum credit that they could qualify for is: $538.00.
If a taxpayer has one child the maximum credit that they could qualify for is: $3,584.
If a taxpayer has two children the maximum credit that they could qualify for is $5,920.
If a taxpayer has more than two children the maximum credit that they could qualify for is $6,660.

Wisconsin has a Wisconsin Earned Income Credit which provides additional amounts based on individual taxpayer facts and circumstances.

Feel free to call me at my office, (715-339-6638), located between the lion statues located at 164 South Lake Avenue, Phillips, WI 54555, for a free, no obligation quote.

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2020 STUDENT EDUCATIONAL GRANTS CAN BE TAXABLE

By: Davette Lynne Hrabak, CPA, CFE, CBM, ATA, ATP, ABA, ECS, CGMA

http://www.DavetteLynneHrabak.com

Many taxpayers are surprised to learn that some of the money that their children receive from scholarships and grants may be taxable.

It is true that there is a Scholarship and Fellowship Exclusion; however, this is only a partial exclusion based on how the funds are used and in order to qualify for that exclusion the person must be a degree candidate. The Degree Candidate must also be a primary or secondary school student, a college undergraduate or graduate student, or a part-time or full-time student at an accredited educational institution that provides a program that is acceptable for full credit towards a Bachelor’s or higher degree. The program that the school offers must be a program of training to prepare students for gainful employment in a recognized occupation.

If the person is not a degree candidate, all amounts received are generally taxable.

If the person is a degree candidate, then only amounts used on tuition fees, books, supplies, and equipment are tax-free. Any amounts spent on room & board and travel are taxable. This, at times, causes some confusion among many taxpayers and can result in some students inadvertently doing their tax returns incorrectly.

Scholarship and fellowships include items such as Pell Grants and other Title IV Grants that are need-based education grants.

There are, however, additional exceptions to this including if the scholarship or grant was provided by a tribe subject to the Tribal General Welfare Act.

Remember, if you have already filed but realize that you could have had a credit or deduction that you missed, it is not too late; you can always amend your return.

When the right tax and financial advice is essential, talk to someone with an unmatched level of knowledge, experience and education. A CPA understands the business of taxes and finance, and can provide trusted advice and services during the tax season and throughout the calendar year.

Feel free to call me at my office, (715-339-6638), located between the lion statues located at 164 South Lake Avenue, Phillips, WI 54555, for a free, no obligation quote.

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“When it comes to taxes, save the lion’s share; enter between the lions to get this special care.”

[Edited by My Price County on Mar 01, 2021 at 05:11 PM]




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