Tax

Dear valued client,

As we prepare for tax season, we would like to thank you for your continued support. In preparation for 2020 tax season, we are sending this to our clients to outline the process. If you received an invite to Intuit Link, you may disregard or use the information for reference in gathering your tax documents. We apologize for any confusion that may have occurred in the process. As you may have noticed already, our firm information has updated. The important notes for tax season are as follows:

• Client Portal for uploading/downloading secure tax information (login will be attached to your email)
• You are welcome to begin sharing/uploading documents when ready
• Intuit Link was sent previously, which includes 2020 checklist items and organizer for reference – let us know if you have not received this or need assistance
• We are happy to schedule a tax season planning call to discuss any important details (see scheduling link on “contact us” page)

Again, thank you for your support! We look forward to connecting this season.

First things first, let’s acknowledge the end of a challenging year. For many of us, 2021 represents our hopes for new beginnings. As we reflect on the things that changed this past year, we can’t avoid some of our old habits or traditions. What are we referring to? Well, the new year often rings the bell for taxpayers to start gathering their details in preparation for filing season.

If you have been paying attention to our posts and outgoing communications, you may have seen a lot of the updates and changes in place (specific to 2020, the CARES act, etc.). One recent development/change in legislation revolved around PPP, another round of funding, and a lot of rules and items that will impact our filing season. Whatever your personal situation, we are here to help! For current clients, 2020 organizers will be on the way soon. For new clients, we will start taking tax meetings (via phone or zoom) mid-January. Let us know if you have questions or need assistance!

As a CPA, I have prepared many tax returns over the years. One of the most frustrating items (for me and for my clients) has always been health care. The cost, the access, the complications around it, and then the general inability to get full credit on your taxes. This brings us to the HSA (health savings account).

Most taxpayers find the new standard deductions to be difficult to surpass, meaning they simply don’t end up itemizing their deductions. Even before the new tax reform went into effect, the out of pocket medical deduction was limited to a percentage above and beyond your adjusted gross income (meaning a lot of your expenses didn’t even count). To avoid complicated explanations and adding fuel to the fire, I’ll get to the point. The HSA was a vehicle to take back the tax deduction.

So how does it work? Well, somewhat similar to a retirement account, it’s a pre-tax deferral vehicle. This means you fund your account (subject to limits, approx. $7000 for a family per year) and that money is fully deductible on your tax return (even if you don’t use it all for medical that year). Those funds can often be invested or gain interest over time as well. Or, you can simply use those funds for qualified medical or reimburse yourself for qualified medical expenses paid separately by you.

What are the important points? Well, not everyone qualifies for an HSA. You have to have a high deductible plan, and you will need to check with your insurance provider to make sure your plan is compatible. If you qualify, then it’s a good idea to look at this as an option if you expect to have any medical expenses. In my experience, it is one of the only ways to ensure you get credit for those expenses, and it’s so often overlooked. With the outrageous cost of healthcare, you should at least ensure you get credit on your taxes. And if you own a business, don’t overlook the HRA, which was recently upgraded as well.

-until next time