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2020 Social Security Benefits: Find out how your benefits have changed.

Estimated average Social Security retirement benefits starting January 2020
• All retired workers in 2019 $1,479/mo
• All retired workers in 2020 $1,503/mo

Did you know? You can increase your Social Security retirement benefits by 5-8% when you delay applying until you’re age 70.

• 1.6% cost of living adjustment for Social Security retirement benefits and SSI payments begins with the December 2019 benefits (payable in January 2020)

• The 2020 maximum Social Security retirement benefits a worker retiring at full retirement age is $3,011/mo.

Did you know…
• 87% of Baby Boomers are expecting Social Security to be a source of their retirement income.

• 1-3 people expect it to be their primary source of income.

• Social Security pays benefits to more than 67 million people including retirees, children and surviving spouses.
2020 Social Security and Medicare tax rates

If you work for someone else…
• your employer pays 7.65%
• you pay 7.65%

If you’re self-employed…
• you pay 15.3%

Note: The above tax rates are a combination of 6.2% Social Security and 1.45% for Medicare. There is also 0.9% Medicare wages surtax for those with wages above $200,000 single ($250,000 joint filers) that is not reflected in these figures.

Maximum amount you can pay in Social Security taxes
• 2019: $8,239.80
• 2020: $8,537.40

165+ million people work and pay Social Security taxes.
Maximum earnings amount Social Security will tax at 6.2%
• 2019: $132,900
• 2020: $137,700

How does Social Security work?
• When you work, you pay taxes into Social Security.
• The Social Security Administration used your tax money to pay benefits to people right now.
• Any unused money goes to the Social Security trust funds.
• Later on when you retire, you receive benefits.
Social Security payments explained
• SS Social Security retirement benefits are for people who have "paid into" the Social Security system through taxable income.
• SSD or SSDI Social Security Disability (SSD or SSDI) benefits are for people who have disabilities but have "paid into" the Social Security system through taxable income.
• SSI Supplemental Security Income (SSI) benefits are for adults and children who have disabilities, plus limited income and resources.

Here’s how to qualify for your retirement benefits
• When you work and pay Social Security taxes, you earn “credits” toward Social Security benefits. The number of credits you need to get retirement benefits depends on when you were born.
• If you were born in 1929 or later, you need 40 credits (10 years of work) to receive Social Security retirement benefits.
• The earnings needed for a credit in 2020 is $1,410.
• 4 credits maximum per year.

Did you know you can check your benefits status before you retire?
• You can check online by creating a “my Social Security” account on the SSA website. If you don’t have an account, you’ll be mailed a paper Social Security statement 3 months before your 61st birthday.
• It shows your year-by-year earnings, and estimates of retirement, survivors and disability benefits you and your family may be able to receive now and in the future.
• If it doesn’t show earnings from a state or local government employer, contact them. The work may not have been covered either by a Section 218 agreement or by federal law.
#SocialSecurity #CPA #Accountants Sources: SSA.gov, 17th Annual Retirement Survey, Transamerica Center for Retirement Studies®
... See MoreSee Less

2020 Social Security Benefits: Find out how your benefits have changed.

Estimated average Social Security retirement benefits starting January 2020
• All retired workers in 2019 $1,479/mo
• All retired workers in 2020 $1,503/mo

Did you know? You can increase your Social Security retirement benefits by 5-8% when you delay applying until you’re age 70.

• 1.6% cost of living adjustment for Social Security retirement benefits and SSI payments begins with the December 2019 benefits (payable in January 2020)

• The 2020 maximum Social Security retirement benefits a worker retiring at full retirement age is $3,011/mo.

Did you know…
• 87% of Baby Boomers are expecting Social Security to be a source of their retirement income. 

• 1-3 people expect it to be their primary source of income.

• Social Security pays benefits to more than 67 million people including retirees, children and surviving spouses.
2020 Social Security and Medicare tax rates

If you work for someone else…
• your employer pays 7.65%
• you pay 7.65%

If you’re self-employed…
• you pay 15.3%

Note: The above tax rates are a combination of 6.2% Social Security and 1.45% for Medicare. There is also 0.9% Medicare wages surtax for those with wages above $200,000 single ($250,000 joint filers) that is not reflected in these figures. 

Maximum amount you can pay in Social Security taxes
• 2019: $8,239.80
• 2020: $8,537.40

165+ million people work and pay Social Security taxes.
Maximum earnings amount Social Security will tax at 6.2%
• 2019: $132,900
• 2020: $137,700

How does Social Security work?
• When you work, you pay taxes into Social Security.
• The Social Security Administration used your tax money to pay benefits to people right now.
• Any unused money goes to the Social Security trust funds.
• Later on when you retire, you receive benefits.
Social Security payments explained
• SS Social Security retirement benefits are for people who have paid into the Social Security system through taxable income.
• SSD or SSDI Social Security Disability (SSD or SSDI) benefits are for people who have disabilities but have paid into the Social Security system through taxable income.
• SSI Supplemental Security Income (SSI) benefits are for adults and children who have disabilities, plus limited income and resources. 

Here’s how to qualify for your retirement benefits
• When you work and pay Social Security taxes, you earn “credits” toward Social Security benefits. The number of credits you need to get retirement benefits depends on when you were born. 
• If you were born in 1929 or later, you need 40 credits (10 years of work) to receive Social Security retirement benefits.
• The earnings needed for a credit in 2020 is $1,410. 
• 4 credits maximum per year. 

Did you know you can check your benefits status before you retire?
• You can check online by creating a “my Social Security” account on the SSA website. If you don’t have an account, you’ll be mailed a paper Social Security statement 3 months before your 61st birthday.
• It shows your year-by-year earnings, and estimates of retirement, survivors and disability benefits you and your family may be able to receive now and in the future.
• If it doesn’t show earnings from a state or local government employer, contact them. The work may not have been covered either by a Section 218 agreement or by federal law.
#SocialSecurity #CPA #Accountants Sources: SSA.gov, 17th Annual Retirement Survey, Transamerica Center for Retirement Studies®

There's still time to reduce your potential tax obligation and save money this year (and next). Here are some ideas to consider:
• Estimate your 2019 and 2020 taxable income. With these estimates you can determine which year receives the greatest benefit from a reduction in income. By understanding what the tax rate will be for your next dollar earned, you can understand the tax benefit of reducing income this year AND next year.

• Fund tax-deferred retirement accounts. An easy way to reduce your taxable income is to fully fund retirement accounts that have tax-deferred status. The most common accounts are 401(k)s, 403(b)s and various IRAs (traditional, SEP and SIMPLE).

• Take your required minimum distributions (RMDs). If you are 70½ or older, you need to take required RMDs from your retirement accounts by Dec. 31. Don't forget to make all RMDs because the fines are hefty if you don't — 50 percent of the amount you should have withdrawn. Keep in mind, even if you don't have RMDs yet, removing a planned amount from your retirement accounts each year may be more tax efficient than waiting until you are required to do so.

• Manage your gains and losses. Rebalance your investment portfolio, and take any final investment gains and losses. When you have more losses than gains, up to $3,000 can be used to reduce your ordinary income. With careful planning, you can take advantage of this loss amount each year.

• Finalize your gift-giving strategy. Each year you may gift up to $15,000 without tax reporting consequences to as many individuals as you choose. Consider any gift-giving you wish to make up to the annual limit. This could include gifts of cash or property, and investments.

• Donate to charities. Consider making end-of-year donations to eligible charities. Donations of property in good or better condition and your charitable mileage are also deductible. Receiving proper documentation that acknowledges your contributions is important to ensure you obtain the full deduction. Have a plan by knowing your total deductions for the year to help you decide how much and when to donate. Pulling some donations planned for 2020 into 2019 may be a good strategy.

• Review your automated billing transactions. This is a good time to identify what automatic monthly expenses should be reviewed for reduction or elimination. You may also discover billing for services you thought were canceled. This specific review often catches errors that a simple account reconciliation may be missing.

• Organize records now. Start collecting and organizing your tax records to avoid the scramble come tax season.

• Develop your own list. Use these ideas as a jumping off point to create your own list of annual review items. It might also include reviewing college savings accounts, beneficiaries, insurance needs, wills, and going through an aging parent's financial accounts.

Questions about the most effective money-saving moves for your situation? Call today.

#savemoney #CPA #accountants #yearendplanning
... See MoreSee Less

Theres still time to reduce your potential tax obligation and save money this year (and next). Here are some ideas to consider:
• Estimate your 2019 and 2020 taxable income. With these estimates you can determine which year receives the greatest benefit from a reduction in income. By understanding what the tax rate will be for your next dollar earned, you can understand the tax benefit of reducing income this year AND next year.

• Fund tax-deferred retirement accounts. An easy way to reduce your taxable income is to fully fund retirement accounts that have tax-deferred status. The most common accounts are 401(k)s, 403(b)s and various IRAs (traditional, SEP and SIMPLE).

• Take your required minimum distributions (RMDs). If you are 70½ or older, you need to take required RMDs from your retirement accounts by Dec. 31. Dont forget to make all RMDs because the fines are hefty if you dont — 50 percent of the amount you should have withdrawn.  Keep in mind, even if you dont have RMDs yet, removing a planned amount from your retirement accounts each year may be more tax efficient than waiting until you are required to do so.

• Manage your gains and losses. Rebalance your investment portfolio, and take any final investment gains and losses. When you have more losses than gains, up to $3,000 can be used to reduce your ordinary income. With careful planning, you can take advantage of this loss amount each year.

• Finalize your gift-giving strategy. Each year you may gift up to $15,000 without tax reporting consequences to as many individuals as you choose. Consider any gift-giving you wish to make up to the annual limit. This could include gifts of cash or property, and investments.

• Donate to charities. Consider making end-of-year donations to eligible charities. Donations of property in good or better condition and your charitable mileage are also deductible. Receiving proper documentation that acknowledges your contributions is important to ensure you obtain the full deduction. Have a plan by knowing your total deductions for the year to help you decide how much and when to donate. Pulling some donations planned for 2020 into 2019 may be a good strategy.

• Review your automated billing transactions. This is a good time to identify what automatic monthly expenses should be reviewed for reduction or elimination. You may also discover billing for services you thought were canceled. This specific review often catches errors that a simple account reconciliation may be missing.

• Organize records now. Start collecting and organizing your tax records to avoid the scramble come tax season.

• Develop your own list. Use these ideas as a jumping off point to create your own list of annual review items. It might also include reviewing college savings accounts, beneficiaries, insurance needs, wills, and going through an aging parents financial accounts.

Questions about the most effective money-saving moves for your situation? Call today.

#SaveMoney #CPA #Accountants #YearEndPlanning
Happy Halloween!! #Accountant #Zombie #zombieaccountant #halloween #accounting #enrolledagents

Comment on Facebook

That looks about right!

5 Ways Payroll Services Boost a Business
Is a payroll provider right for you and your business? While it is an added expense, there are good reasons to add a partner to help with this service. Here are five things to consider:
1. Allows full attention on growing the business. If a portion of employees is focused on managing and processing payroll, business growth opportunity may be stifled. This is especially true if a key employee or owner is the one processing payroll. By outsourcing payroll responsibilities, the full workforce can concentrate on growing the business.
2. Improves accuracy and compliance. Most entrepreneurs didn’t go into business to tabulate hourly time cards, calculate tax withholdings, or stay current with the constantly changing government filing requirements. Thankfully there are those who specialize in monitoring labor regulations, compliance updates and the number-crunching that payroll requires. This will invariably improve the payroll accuracy a business needs.
3. Lowers audit risk and increases peace of mind. Federal taxes, state taxes, local taxes, Social Security, Medicare, unemployment taxes and overtime requirements are long (and growing). Payroll services reduce audit risk on the front end and provide audit assistance on the back end.
4. Enhances internal controls. Separation of duties is an important internal control for all businesses. This is tough to do in a small company. Businesses with one or two-person payroll departments are susceptible to fraud or embezzlement. Adding an outside payroll service can provide the checks and balances a company needs to stay protected.
5. Save money. One of the key methods of reducing business costs is adding efficiency. Outsourcing payroll increases efficiencies because payroll professionals need fewer hours to get the job done. These time improvements, coupled with potential savings in penalties and interest, can have a positive effect on net income.
When laying out and understanding all aspects of using a payroll service, it may be time to review your situation.
#Payroll #Business #Accounting #EnrolledAgent #CPA #Accountants
... See MoreSee Less

5 Ways Payroll Services Boost a Business
Is a payroll provider right for you and your business? While it is an added expense, there are good reasons to add a partner to help with this service. Here are five things to consider:
1. Allows full attention on growing the business. If a portion of employees is focused on managing and processing payroll, business growth opportunity may be stifled. This is especially true if a key employee or owner is the one processing payroll. By outsourcing payroll responsibilities, the full workforce can concentrate on growing the business. 
2. Improves accuracy and compliance. Most entrepreneurs didn’t go into business to tabulate hourly time cards, calculate tax withholdings, or stay current with the constantly changing government filing requirements. Thankfully there are those who specialize in monitoring labor regulations, compliance updates and the number-crunching that payroll requires. This will invariably improve the payroll accuracy a business needs.
3. Lowers audit risk and increases peace of mind. Federal taxes, state taxes, local taxes, Social Security, Medicare, unemployment taxes and overtime requirements are long (and growing). Payroll services reduce audit risk on the front end and provide audit assistance on the back end.
4. Enhances internal controls. Separation of duties is an important internal control for all businesses. This is tough to do in a small company. Businesses with one or two-person payroll departments are susceptible to fraud or embezzlement. Adding an outside payroll service can provide the checks and balances a company needs to stay protected.
5. Save money. One of the key methods of reducing business costs is adding efficiency. Outsourcing payroll increases efficiencies because payroll professionals need fewer hours to get the job done. These time improvements, coupled with potential savings in penalties and interest, can have a positive effect on net income.
When laying out and understanding all aspects of using a payroll service, it may be time to review your situation.
#Payroll #Business #Accounting #EnrolledAgent #CPA #Accountants

Comment on Facebook

Totally agree. I partner with a couple of payroll companies and always encourage my clients to use one!

Reminder: Time to Start the Financial Aid Process
If you have a child in college or entering college during the next school year, you need to read this. You can now fill out your required Free Application for Financial Student Aid (FAFSA) for the next school year.
FAFSA application timeframe
The Free Application for Federal Student Aid (FAFSA) process opened on Oct. 1.
The time to file is now
The earlier you file your application, the earlier you will receive aid packages from most participating schools. The application is used to receive grants, federal loans and work study awards. Here are some hints to ensure the application process works in your favor:
• Create your FSA ID. If you have not already done so, both the student and a parent will need to set up a Federal Student Aid (FSA) ID (username and password) within the FAFSA system. You cannot submit the FAFSA form without first doing this.
• File the FAFSA early! As soon as possible, fill out and submit your FAFSA. Filing early maximizes your chances of receiving aid. It also minimizes your chances of missing an unknown application deadline.
• Use your tax records. Because the year is not yet over, you can use last year's (2018) tax information when filling out the application. There are IRS tax return data retrieval tools within the online application to automate this process.
• Talk to your advisors. If you have a child ready to attend college, stay in touch with both your financial advisor and your school advisor. A financial advisor is used to help manage your assets to present a good financial picture starts before your student's junior year in high school. The school advisor is a great resource to help you find potential sources of money.
• Collect the right info. To fill out a FAFSA you will need the following:
o Social Security number
o Alien registration number (if not a U.S. citizen)
o Federal tax information
o Record of any nontaxable income (excluding retirement account balances)
o Balances of the following:
 Cash, savings and checking accounts
 Investment asset balances
 Other assets
 FSA ID
Filling out the form can be a daunting task for the uninitiated, but with proper preparation you can get your form done in quick order.
#FAFSA #financialaid #college #studentloans #highereducation #accounting #EnrolledAgent #CPA #accountants
... See MoreSee Less

Reminder: Time to Start the Financial Aid Process
If you have a child in college or entering college during the next school year, you need to read this. You can now fill out your required Free Application for Financial Student Aid (FAFSA) for the next school year.
FAFSA application timeframe
The Free Application for Federal Student Aid (FAFSA) process opened on Oct. 1.
The time to file is now
The earlier you file your application, the earlier you will receive aid packages from most participating schools. The application is used to receive grants, federal loans and work study awards. Here are some hints to ensure the application process works in your favor:
• Create your FSA ID. If you have not already done so, both the student and a parent will need to set up a Federal Student Aid (FSA) ID (username and password) within the FAFSA system. You cannot submit the FAFSA form without first doing this.
• File the FAFSA early! As soon as possible, fill out and submit your FAFSA. Filing early maximizes your chances of receiving aid. It also minimizes your chances of missing an unknown application deadline.
• Use your tax records. Because the year is not yet over, you can use last years (2018) tax information when filling out the application. There are IRS tax return data retrieval tools within the online application to automate this process.
• Talk to your advisors. If you have a child ready to attend college, stay in touch with both your financial advisor and your school advisor. A financial advisor is used to help manage your assets to present a good financial picture starts before your students junior year in high school. The school advisor is a great resource to help you find potential sources of money.
• Collect the right info. To fill out a FAFSA you will need the following:
o Social Security number
o Alien registration number (if not a U.S. citizen)
o Federal tax information
o Record of any nontaxable income (excluding retirement account balances)
o Balances of the following:
 Cash, savings and checking accounts
 Investment asset balances
 Other assets
 FSA ID
Filling out the form can be a daunting task for the uninitiated, but with proper preparation you can get your form done in quick order.
#FAFSA #FinancialAid #College #StudentLoans #HigherEducation #Accounting #EnrolledAgent #CPA #Accountants

Amazon and eBay Sales Tax ALERT!
If you or your business sells product on Amazon using the Fulfillment by Amazon (FBA) service, you are well into the multi-state sales tax mess ... even if you are not aware of it. You may be asking yourself:
• Do I now need to register my business with every state and collect tax on their behalf?
• Do I really have physical nexus? What about economic nexus? What is nexus?
Background
The old sales tax standard required you to collect and remit sales tax only in states that you have a physical presence (also known as physical nexus). The recent South Dakota vs. Wayfair, Inc. decision by the Supreme Court then legitimized the concept of economic nexus. This means your business could be required to collect and remit sales tax based on where you ship a product and not whether you ever set foot in a particular state (economic nexus).
The bigger mess
States were quick to jump on the bandwagon and actively identify Amazon, Ebay and Walmart sellers to demand sales tax for website sales. Some states, like California, got even more aggressive and decided that FBA sellers actually have physical presence because Amazon may put your product in a warehouse in their state. They got seller lists from Amazon and sent out threatening letters to small sellers demanding back sales tax, even though businesses have no way to retroactively collect the tax because the customers are Amazon customers.
Marketplace facilitator to the rescue?
To help address this mess and alleviate the need for small businesses to collect and remit sales tax forms to 50 states, many states acknowledged the problem and have passed what is called Marketplace Facilitator laws.
In short, it’s on the facilitator, NOT you. States with these laws require Amazon, Ebay and similar companies that facilitate sales for resellers to collect and remit sales tax on reseller Amazon activity. There are more than 30 states that have adapted these laws.
You DO NOT need to register your business to collect sales tax in states that have Market Facilitator legislation unless you are otherwise required to do so.
What you need to know
• Know the states. Know which states have Marketplace Facilitator laws. If you don’t, you could unwittingly register your business with a state when you do not have to do so.
• Some states deploy deceptive tactics. For example, California passed a Marketplace Facilitator law effective October 2019. Despite this law, the California Department of Tax and Fee Administration (CDTFA) is actively soliciting (threatening?) small businesses who sell on Amazon to register and remit sales taxes for a time period prior to this date without disclosing the new law. To make matters worse, their sales tax registration form could make you personally liable for business-related sales tax and disclose your confidential supplier list. It may also be filled with other legal entrapments.
• Know the minimums. Even states without Marketplace Facilitator laws typically have minimum thresholds before they require you to collect and remit sales tax. Every state is different, but the typical limit is 200 transactions or $20,000 in sales.
• Check out streamline states. Collecting and remitting sales tax is a daunting task for any small business. Using a third party sales tax administrator is very expensive. There is some help, albeit still complicated, for registering with 23 states that are part of a streamline sales tax agreement.

Sales tax collection in multiple states is not for the faint of heart. Streamline Sales Tax and Bill Track 50 are a few of the popular sites that can help.
#SalesTax #EconomicNexus #Accounting #EnrolledAgent #CPA #Accountants
... See MoreSee Less

Amazon and eBay Sales Tax ALERT!
If you or your business sells product on Amazon using the Fulfillment by Amazon (FBA) service, you are well into the multi-state sales tax mess ... even if you are not aware of it. You may be asking yourself:
• Do I now need to register my business with every state and collect tax on their behalf?
• Do I really have physical nexus? What about economic nexus? What is nexus?
Background
The old sales tax standard required you to collect and remit sales tax only in states that you have a physical presence (also known as physical nexus). The recent South Dakota vs. Wayfair, Inc. decision by the Supreme Court then legitimized the concept of economic nexus. This means your business could be required to collect and remit sales tax based on where you ship a product and not whether you ever set foot in a particular state (economic nexus).
The bigger mess
States were quick to jump on the bandwagon and actively identify Amazon, Ebay and Walmart sellers to demand sales tax for website sales. Some states, like California, got even more aggressive and decided that FBA sellers actually have physical presence because Amazon may put your product in a warehouse in their state. They got seller lists from Amazon and sent out threatening letters to small sellers demanding back sales tax, even though businesses have no way to retroactively collect the tax because the customers are Amazon customers.
Marketplace facilitator to the rescue?
To help address this mess and alleviate the need for small businesses to collect and remit sales tax forms to 50 states, many states acknowledged the problem and have passed what is called Marketplace Facilitator laws.
In short, it’s on the facilitator, NOT you. States with these laws require Amazon, Ebay and similar companies that facilitate sales for resellers to collect and remit sales tax on reseller Amazon activity. There are more than 30 states that have adapted these laws.
You DO NOT need to register your business to collect sales tax in states that have Market Facilitator legislation unless you are otherwise required to do so.
What you need to know 
• Know the states. Know which states have Marketplace Facilitator laws. If you don’t, you could unwittingly register your business with a state when you do not have to do so.
• Some states deploy deceptive tactics. For example, California passed a Marketplace Facilitator law effective October 2019. Despite this law, the California Department of Tax and Fee Administration (CDTFA) is actively soliciting (threatening?) small businesses who sell on Amazon to register and remit sales taxes for a time period prior to this date without disclosing the new law. To make matters worse, their sales tax registration form could make you personally liable for business-related sales tax and disclose your confidential supplier list. It may also be filled with other legal entrapments.
• Know the minimums. Even states without Marketplace Facilitator laws typically have minimum thresholds before they require you to collect and remit sales tax. Every state is different, but the typical limit is 200 transactions or $20,000 in sales.
• Check out streamline states. Collecting and remitting sales tax is a daunting task for any small business. Using a third party sales tax administrator is very expensive. There is some help, albeit still complicated, for registering with 23 states that are part of a streamline sales tax agreement.

Sales tax collection in multiple states is not for the faint of heart. Streamline Sales Tax  and Bill Track 50 are a few of the popular sites that can help.
#SalesTax #EconomicNexus #Accounting #EnrolledAgent #CPA #Accountants

newsletterStay Informed & Up-To-Date

Each month, we will give you tips and useful information to help you protect your finances, begin planning on ways to save for your future, or how to begin preparing your taxes. Our goal is to help you get the information you need for a financially savvy today and tomorrow. So sign up for our monthly client newsletter today to stay up-to-date with news from our office and to receive special offers from our team.

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