703-625-3455

lhopkins@thehopkinsgroup.com

Author: Julie Pinches

Mileage Tracking

Posted on by Julie Pinches

Recent court cases have focused on the taxpayer’s maintenance of contemporaneous records for the deductibility of business mileage and expenses.  This has led the IRS to tighten up on the requirements for record-keeping.  In order to preserve your deduction of business mileage and other costs, please consider using an app as this is an easy way to satisfy these requirements. Our clients are giving us rave reviews about MileIQ. Let us know what you use!

READ:  6 Best Mileage Tracker Apps for Small Business

Retirement Accounts

Posted on by Julie Pinches

Changes made by the 2019 SECURE Act to required minimum distributions (RMDs) may affect your retirement accounts. If you turn 70½ after 2019, you can now wait until age 72 to start taking mandated annual withdrawals from your retirement accounts. Updated life expectancy tables proposed by the IRS for 2021 would change how you calculate those amounts. Also, children who draw on a deceased parent’s retirement account now have 10 years to withdraw, effective for distributions starting in 2020.  If you inherited an IRA from an account holder who passed away prior to January 1, 2020, you can continue the current distribution schedule.

The new law also impacts Sec 529 accounts.  Tax-free distributions now include up to $10,000 for repayment of qualified student loans, and expenses for certain apprenticeship programs.  This change was made retroactive to distributions after December 31, 2018.

529 Plans

Posted on by Julie Pinches

Now is the time to make a 529 plan contribution before year-end for your child or grandchild!

  • Earnings on assets in a 529 plan are tax-deferred and if the distributions are qualified withdrawals for higher education expenses, they are federally tax free plus tax free in your home state in most cases. Qualified distributions: tuition, room & board, and other related expenses.
  • 529 benefits can now be used to pay for tuition of up to $10,000/yr at elementary and secondary public, private or parochial schools. Tax deduction is possible in over 30 states, including VA, MD and D.C.
  • Plan contributions are gifts from the taxpayer to the 529 beneficiary. The annual gift limit is $15,000/beneficiary ($30,000 if married). You are able to contribute an amount equal to five years of gifts in just one year (up to $75,000, $150,000 for a married couple) with zero gift tax liability.

QBI Deduction

Posted on by Julie Pinches

The 20% Sec. 199A qualified business income (QBI) deduction is designed to provide some tax relief to owners of pass-through entities. There are several limitations, most notably on high-income owners. These owners may be subject to a limitation on the QBI deduction based on the entity’s Form W-2 wages paid to employees and its unadjusted basis immediately after acquisition (UBIA) of qualified property. The QBI deduction may also be subject to limitation if the taxpayer’s trade or business is a specified service trade or business (SSTB).

Guaranteed payments are treated similarly to wages. Therefore, partnerships and limited liability companies should review their operating agreements to ensure that the owners are maximizing the QBI.

Rental Real Estate

Posted on by Julie Pinches

The IRS issued Rev. Proc. 2019-38 to provide a safe harbor under which a real estate enterprise will be treated as a trade or business for purposes of Sec. 199A, and will qualify for the deduction. The taxpayer must maintain records, including time reports or logs. If you have rental property and you meet the requirements, a signed certification must be attached to your tax return.

The requirements are:

  1. To maintain separate books and records to reflect income and expenses for each rental and
  2. To spend at least 250 hours/year performing services with respect to the rental.

Qualified activities: advertising to rent, negotiating leases, verifying information in the tenant applications, collecting rents, maintaining the property, managing the real estate, purchasing items for the property, supervising employees or independent contractors

Non-qualified activities: arranging financing, procuring property, studying and reviewing financial statements or reports on operations, planning, managing or constructing long-term capital improvements, time spent traveling back and forth to the property

College Tax Deductions

Posted on by Julie Pinches

Certain qualified education expenses paid during the year can be deducted. A maximum annual credit of $2,500 is available per eligible student for tuition, fees and other necessary costs. To receive the tax benefit you must have paid for qualified education expenses for a college student (yourself, a dependent or a spouse). To claim the credit your modified adjusted gross income (MAGI) must be $80,000 or less ($160,000 or less for married filing jointly). You receive a reduced amount of the credit if your MAGI is over $80,000 but less than $90,000 (over $160,000 but less than $180,000 for married filing jointly). You don’t qualify for the deduction if your MAGI is over $90,000 ($180,000 for joint filers) or if you and your spouse are filing separate taxes.  If your MAGI is over the threshold, it is possible for your student to claim the credit if proper planning is done.

Making Payments

Posted on by Julie Pinches

We recommend clients make all tax payments on the IRS and state websites if possible. This will prevent mail and check fraud. Did you know that checks can be washed and then made payable to others? Avoid these problems by making payments online.  Please be sure to save a copy of the payment confirmation!

IRS – Pay online   •  VA – Pay online   •  MD – Pay online   •  DC – Pay online

© 2025 All Rights Reserved. Website by Threshold Media