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Once again we find ourselves in fire season with a beast of a fire threatening homes.  We hope all of our clients in an affected area are safe.  Here is a great list of important documents to gather when evacuation is necessary.
Given the new CDC guidance that all persons, regardless of vaccination status, should wear masks indoors if in an area of substantial cases (which Butte County currently is) we have reinstated our mask policy in our office.  We kindly ask that all persons please wear a mask when entering our lobby. Also, that only one person/family be in our lobby at a time to minimize exposure. Thank you for your cooperation.

Golden State Stimulus

California provides the Golden State Stimulus to families and individuals who qualify.  For most Californians who qualify, you do not need to do anything to receive the stimulus payment other than file your 2020 tax return.  If you do not normally file a return because your income does not exceed the filing threshold (perhaps you only get social security), then you will need to file a 2020 tax return to receive this stimulus.  There are two different stimulus payments.  You may qualify for on or both of them.  Visit the FTB website for more information.

Advanced Child Tax Credit

Last month we suggested that taxpayers who did not need the advanced child tax credit opt out of the payments.  Many of you did this and still received a payment.  The IRS clarified that both spouses must opt out of the payments online even if they file a joint tax return.  Otherwise the spouse that did not opt out will receive half of the joint payment they were to receive with their spouse.  You can check the status of your payment on the IRS portal.

We have found that opting out is not an easy task for some taxpayers.  If you find yourself giving up and decide getting the payments are easier please keep the following things in mind: be sure to keep track of your payments received, be aware there is a chance your 2021 refund will be reduced, and that you may owe more tax than normal or owe tax when you normally don't.

Social Security Statements

The Social Security Administration (SSA) says that 10% of the W-2's it receives each year are mismatched.  Meaning employees are possibly not getting credit for their wages and withholdings.  The SSA recommends checking your social security statement annually to make sure you are getting the proper credit.  Your Social Security Statement is available to view online at anytime by opening a my Social Security account.  Your statement has personalized information, such as your earnings history and future benefits estimates.  You can create an account on the SSA website

Be sure you use a secure password for the Social Security website as there is sensitive information that hackers would love to get their hands on.  A good password should be at least eight characters long (or longer!) and have a combination of uppercase and lowercase letters, numbers and symbols that are hard to guess. Don’t use dictionary words with proper capitalization because they’re easy to guess (like Password123#).  Using a password manager can help with this.

Is crowdfunding taxable income?

Fundraising through social media sites such as Facebook and GoFundMe have become popular ways to help people with huge medical bills or college funds.  Beware, the IRS is starting to get involved in these activities.  A Connecticut high school teacher used Facebook to raise over $41,000 to help his community impacted by COVID-19.  Due to the amount and volume of transactions, he was issued a 1099-K from the credit card processor.  This resulted in the teacher receiving a tax bill for $16,000.  While he was doing charitable work, he did not set up a charitable organization.  The IRS states that the facts and circumstances of each case must be examined when determining whether money raised in a crowdfunding campaign will be treated as taxable income.  It appears that most campaigns are going to be treated as nontaxable gifts, as long as the donors receive nothing in return for their donation.  Additionally, donations to most crowdfunding campaigns are not deductible as charitable donations since there is no IRS approved charitable organization receiving the donation.

Copyright © 2021 Merrell, Irwin & Associates, All rights reserved.

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