MKG Tax Consultants News, View Points, Taxes & Finances

Beginning in 2018, unreimbursed employee expenses are no longer eligible for a tax deduction on your federal tax return

The vast majority of W-2 workers can’t deduct unreimbursed employee expenses in 2020. The Tax Cut and Jobs Act (TCJA) eliminated unreimbursed employee expense deductions for all but a handful of protected groups.

The TCJA restriction lasts until 2026, when miscellaneous itemized deductions are slated to return for all employees.

Unreimbursed employee expenses don’t apply to those who aren’t classified as employees. Therefore, independent contractors and other business owners can deduct ordinary and necessary business expenses.

You can continue to deduct unreimbursed employee expenses if you are part of one of the following groups:

Armed Forces reservists: Members of a reserve component of the military can keep deducting unreimbursed expenses.

Qualified performing artists: This definition is narrow. The performing artist — a musician or actor — needs to have at least two employers in a year, earn at least $200 per employer, and report $16,000 or less in adjusted gross income. Earnings made any other way cannot exceed 10% of the person’s total earnings.

Fee-basis state or local government officials: These cases are rare. Those employed by a state government and are paid by fees, at least in part, fall into this category. A salaried government official likely wouldn’t qualify.

Employees with impairment-related work expenses: Employees with physical or mental disabilities can deduct expenses they incur to be able to work. Expenses could include the cost of attendants and equipment necessary to do their jobs.

The unreimbursed business expenses exemption began with 2018 tax returns. This means employees can no longer offset their taxable income with employee business expenses.

What Were The Previous Rules About Unreimbursed Employee Business Expenses?

Prior to 2018, an employee could deduct unreimbursed job expenses to the extent these expenses, along with certain other miscellaneous expenses, were more than 2% of their Adjusted Gross Income (AGI). The employee would need to be eligible to itemize to deduct these expenses.

However, with tax reform, all miscellaneous “2%” expenses, including unreimbursed employee expenses are not allowed between 2018 and 2025. Expenses such as union dues, work-related business travel, or professional organization dues are no longer deductible, even if the employee can itemize deductions.

Self-employed taxpayers may continue to deduct ordinary and necessary business expenses against self-employment income on Schedule C or Schedule F.

IRS Audit Period Is 3 Years, 6 Years Or Forever: How To Cut Your Risk. But in some cases, even though you filed and thought everything was in order, the statute of limitations on the IRS ability to audit you never runs. The basic rule is that the IRS can audit for three years after you file, but there are many exceptions that give the IRS six years or longer. For example, the three years is doubled to six if you omitted more than 25% of your income. This 25% rule can apply to tax basis too.

Marshawn Govan, President and CFO of MKG Insurance Agency and MKG Tax Consultants, has unveiled a comprehensive banking app that rolls many services, from taxes to crypto, under one banner.

Published On March 10, 2022 - 11:35 AM

Written By Frank Lopez at The Fresno Business Journal

https://thebusinessjournal.com/fresno-entrepreneur-launches-one-stop-banking-app/

The tax season is upon us, and while every taxpayer encounters some confusion when filing, the uphill tax battle is even steeper for businesses.

A local tax and insurance consulting agency has launched an app to make the filing process for personal and business owners quicker and simpler.

MKG Insurance Agency and Tax Consultants, with two locations in Fresno, released its banking-as-a-service tax app for both the IOS and Android platform in February.

President and CFO Marshawn Govan said it was important to launch the mobile app during Black History Month to honor the contributions African-Americans have made throughout history — and to recognize the fight for racial justice going on to this day.

The app allows users to open bank accounts from their mobile phone, send and receive ACH (Automated Clearing House) payments, pay bills and manage cash flow securely online with an FDIC-insured business bank account.

The new app is a rebuild from an old version with an IBM license—meaning MKG didn’t own the source code for app. The new app was built specifically for MKG, meaning there is no limit for the license and no costs to renew it.

Most tax companies with mobile apps use third-party developers, leasing the software as a service.

“We are originators and developers of what we have in the market,” Govan said. “We can also branch out, white label it and offer that as a software service to other tax companies — to a bank looking to become a green product.”

The app also helps consumers start the process of buying a home.

Govan said the goal is to help underprivileged and underbanked families access credit to affordably finance auto loans, home improvements, home solar systems, down payments, investment and paying off debts.

While it is unique that a local tax and insurance agency has its own specifically developed app, MKG also offers crypto tax service.

Users will be able to buy, sell and exchange crypto currency. The company even launched its own crypto-token — Token MKG Enterprises Corp.

According to Govan, no other tax firm is offering a crypto token.

The app also features money-wiring services such as Cash app and Venmo.

Users that are business owners will be able to open a business banking account, send and receive money and make check deposits — much like other banking apps on the market.

Currently MKG is doing regulation crowdfunding, allowing retail investors that might not be accredited to invest smaller amounts. With smaller investment amounts, Govan said it gives them an opportunity to share in the company’s future growth without them having to invest a large part of their finances.

https://wefunder.com/mkgenterprisescorps

MKG is preparing to go public in 2022 to be listed on the OTC market. Govan said that investors have the opportunity to invest now before it grows.

Govan said there are a lot of barriers for Black people and other underserved communities regarding financial equity, and the FinTech industry is not one where Black people normally dominate.

This makes it difficult for many in communities of color to have access to capital for home loans or business loans.

“We want to show businesses in the Valley a path,” Govan said. “ We could become a Silicon Valley in Fresno, but it takes the right companies, the right mindset and having the resources, and getting the information out there for people.”

Skip the line, download our mobile app today and get started with your tax return from the Safety of your home.

Largest possible tax refund or lowest tax liability “money-back written guarantee” 

Professionally prepared by MKG Tax Consultants licensed tax preparers

Apple Store

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Google Play

https://play.google.com/store/apps/details?id=com.mkg.enterprises

Website: https://mkgtaxconsultants.com

Should you rent or buy a home? Prices are surging in both cases, which makes it complicated

Fresno Calif. has had a 23.1% rent increase over the last 12 months which is well above the state of California (11.6%) and U.S. (15.1%) rent increases. The average one-bedroom apartment now costs $1,150.

Buying vs Renting

There are limits to how much a landlord in California can increase rent. Every rental property that is not exempt from AB 1482 can only have an annual rent increase of 5% plus the annual Consumer Price Index (CPI) percentage change.

“People who were renting in anticipation of buying a home are still renting because the housing prices have gone up so much; the house they wanted to buy a year ago is 20% more than it was

KEY POINTS

• Home prices are rising faster than rents, which is shrinking the affordability gap between being a homeowner and a tenant.
• Single-family homes are less affordable than they have been in just over three quarters of the U.S. — the highest total in 13 years, according to a real estate data tracker.
• All real estate is local, however. Homeownership is more affordable than renting in suburban and rural areas, but it’s cheaper to rent in big cities. 
• Work with a good mortgage loan officer that put your best interest at heart
• Get Pre-approved before home shopping
• Find a good relator that knows the local market
• File two years of tax returns

Home prices are rising faster than rents, which is shrinking the affordability gap between being a homeowner and a tenant.

Median-priced, single-family homes are less affordable in just over three quarters of the nation — the highest total in 13 years, according to ATTOM, a real estate data tracker. That’s up from 39% at the end of 2020.

Rents are also up, especially for single-family homes, which have been in high demand during the pandemic. Single-family rents increased 10.9% in October 2021 compared to the year-earlier period, a sixth consecutive record high, according to CoreLogic. The fall is typically a slow season for housing.

So which is more affordable, owning or renting?

As a tax expert we recommend to use your tax refund as a down payment on a home

Four C's of Qualify for a Mortgage

Whether you are a first-time home buyer or are re-entering the housing market, qualifying for a mortgage can be intimidating. By learning what lenders look at when deciding whether to make a loan, you'll be more confident in navigating the mortgage application process.

• Credit "620 higher FICO score"
• Collateral
• Compacity
• Cash-to-close

Standards may differ from lender to lender, but there are four core components — the four C's — that lender will evaluate in determining whether they will make a loan: capacity, capital, collateral and credit.

Lenders look at your income, employment history, savings and monthly debt payments, and other financial obligations to make sure you have the means to comfortably take on a mortgage.

One of the ways that lenders verify your income is by reviewing several years of your federal income tax returns and W2s, along with current pay stubs. They evaluate your income based on:

• The source and type of income (e.g., salaried, commission or self-employed)
• How long you've been receiving the income and whether it's been stable
• How long that income is expected to continue into the future

Lenders will also look at your recurring monthly debts or liabilities, such as:

• Car payments
• Student loans
• Credit card payments
• Personal loans
• Child support
• Alimony
• Other debts that you 're obligated to pay

Lenders consider your readily available money and savings plus investments, properties and other assets that you could access fairly quickly for cash.

Having money saved or in investments that you can easily convert to cash, known as cash reserves, proves that you can manage your finances and have funds, in addition to your income, to pay the mortgage. Cash reserves might include:

• Savings
• Money market funds
• Other investments that can be converted to cash, such as Individual Retirement Accounts (IRAs), Certificates of Deposit (CDs), stocks, bonds or 401(k) accounts

Along with cash reserves, other acceptable sources of capital might include:

• Gifts from family members
• Down payment or closing cost assistance programs
• Grants or matching funds programs
• Sweat equity

When you apply for a mortgage, the lender may need to verify the source of any large deposits in your bank account to ensure they're coming from an allowable source. That is, that you obtained the money legally and that it was not loaned to you.

Lenders may also look at the last two months of statements for your checking and savings accounts, money market accounts, or investment accounts to evaluate how much capital you have.

Lenders consider the value of the property and other possessions that you're pledging as security against the loan.

In the case of a mortgage, the collateral is the home you 're buying. If you don't pay your mortgage, the mortgage company could take possession of your home, known as foreclosure.

To determine the fair market value of the home you'd like to buy, during the homebuying process your lender will order an appraisal of the property that compares it to similar homes in the neighborhood.

Lenders check your credit score and history to assess your record of paying bills and other debts on time.

Many mortgages also have minimum credit score requirements. In addition, your credit score could dictate the interest rate that you get and how much of a down payment will be required. 

Even if you are a renter, or don't have plans to buy right now, it's a good idea to get smart about credit and know ways you can build and maintain strong credit health.

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Timeline of African Americans/Blacks in business in America

The 19th century was not the beginning of Black business in America, but this century would see these pursuits being organized along the lines of and under the newly reconstructed U.S. Government structure. The 1800s saw the creation of many businesses, including insurance companies, banks, and newspapers. The first Black insurance company, The African Insurance Company, was founded in Philadelphia, PA in 1810. The first Black newspaper, Freedom’s Journal, was founded in New York, NY in 1827. However, by the end of the century, many gains made after the enslavement ended were lost due to Jim Crow, Black Codes, segregation, and theft.

The 20th century began with the formation of the National Negro Business League (currently the National Business League). The year 1900 would usher in the “Golden Age of Black business”, named so by historian, Juliet E. K. Walker. This would last from approximately 1900 to 1930, most likely ending due to The Great Depression, 1929-1939, and race riots and massacres, including one of the best-known, the 1921 Tulsa Race Riot, which spanned from May 31 through June 1 that year and was the first time in history the United States bombed its own people.

In the first decade of the 21st century, Black businesses experienced the largest growth, adding 0.8 million businesses. The creation of the 2010 Dodd-Frank Wall Street Reform Protection Act to assist Black-owned businesses procure more federal contracts. This Act also established the Office of Minority and Women Inclusion (OMWI) which among other duties, develops standards for equal employment opportunity and the racial, ethnic, and gender diversity of the workforce. The years 2020-2021 saw racial unrest coupled with a pandemic, spurring a rebuilding of Black/African American business and economic bases.

Honoring Black History Month

https://mkgtaxconsultants.com/honoring-black-history-month/

$50 CASHBACK REWARD for downloading our Banking-As-A-Service Tax-Filing App

(SECURD) Setting Every Community up for Refund Deposit

OFFER IS VALID ONE PER CUSTOMER, tax returns must be electronically filed with MKG Tax Consultants and be eligible for an ERD electronic refund deposit.

SECURD Advance loans are available in 15 States APR depends on your resident state.

California 35.99% APR

Arkansas

Colorado 12% APR

Connecticut 12% APR

District of Columbia 6% APR

Florida 18% APR

Massachusetts 12% APR

New Jersey 16% APR

Oklahoma 10% APR

Oregon 12% APR

South Carolina 12% APR

Texas 10% APR

 Virginia 12% APR

Wisconsin 18% APR

Wyoming 10% APR

SECURD Advance loans is an optional fixed-term loan offered by Cash Advance Short Term Repayment Option Lender. The SECURD Advance loans principal loan amount, applicable interest and any fees will be deducted from federal and state tax refund proceeds. SECURD Advance is not an actual federal or state tax refund. Applying for a SECURD Advance does not guarantee approval. Qualifications and restrictions apply and all applicants may not be eligible for SECURD Advance.

 SECURD Advance loans is an optional fixed-term loan offered by Cash Advance Short Term Repayment Option Lender. The SECURD Advance loans principal loan amount, applicable interest and any fees will be deducted from federal and state tax refund proceeds. SECURD Advance is not an actual federal or state tax refund. Applying for a SECURD Advance does not guarantee approval. Qualifications and restrictions apply and all applicants may not be eligible for SECURD Advance.

SECURD Advance loans  principal amounts offered are $500, 25%, 50% or 75% of the expected net tax refund amount, up to $10,000 SECURD Advance loans have an APR of 35.99% based on a 30-day term. All SECURD Advance loans have an origination fee. Refund Transfer fees may also apply.

Download our mobile app today.

https://mkgtaxconsultants.com

MKG Tax Consultants 

4021 N Fresno Street Suite 107

Fresno, CA 93726

Call us today 1-866-675-3933

The American Rescue Plan Act made changes to the Child Tax Credit for 2021 that will significantly affect many taxpayers when they file their 2021 tax returns. As a result of this legislation, many taxpayers with minor children can anticipate receiving monthly payments representing 1/12 of the anticipated credit on the 2021 tax return starting in July 2021. Any advance credit received by the taxpayer will ultimately be reconciled on their 2021 tax return. Set forth below are answers to some of the common questions that tax professionals and taxpayers have about the 2021 Child Tax Credit.

What is the age requirement for the Child Tax Credit?

The maximum age requirement has been raised for 2021 to be a child under age 18. This will, for the first time, make a 17-year-old an eligible dependent for the Child Tax Credit, including any advance payments of the credit.

What are the dollar amounts of the Child Tax Credit in 2021?

The credit has been increased to $3,600 for children under age 6 and $3,000 for children aged 6 to 17.

What are the eligibility requirements for claiming the 2021 Child Tax Credit?

The child must be a U.S. citizen or resident with a valid social security number. 

Child Tax Credit Taxpayer Assistance 

https://mkgtaxconsultants.com/child-tax-credit-taxpayer-assistance/

Additional Information:

IRS: 2021 Child Tax Credit and Advance Child Tax Credit Payments - Topic A General Information

IRS: 2021 Child Tax Credit and Advance Child Tax Credit Payments - Topic B - Eligibility

Calculation of the 2021 Child Tax Credit

IRS: 2021 Child Tax Credit and Advance Child Tax Credit Payments - Topic D - Calculation of Advance Child Tax Credit Payments

IRS: Overview of Tax Provisions in American Rescue Plan

The child and dependent care credit allows taxpayers to directly reduce their taxes by the amount spent on expenses related to child or dependent care, such as day care, babysitters or related transportation. Thanks to a one-time expansion in the American Rescue Plan Act, parents who paid for child care in 2021 are eligible to receive up to 50% of their expenses back as a tax break or refund.

The expanded child care tax credit maxes out at $8,000 for one dependent and $16,000 for two or more. The catch? You'll need all your receipts and other monetary proof to make sure you can claim the tax break when you file your income tax return. 

The child and dependent care credit is a tax break designed to let parents claim expenses from child care. For example, if you paid for a day care provider while you were working, that expense can be claimed as a credit when you file your taxes this year.

How is the child care credit different for 2021 taxes? In previous years, the maximum amount you could claim was $3,000 for one child or $6,000 for two or more. For 2021 expenses, you can claim up to $8,000 for one child or dependent and up to $16,000 for multiple children. The one-time expansion of the child care credit for 2021 also increases the maximum return rate for child care expenses from 35% to 50%.

What does that mean? In brief, for the 2021 tax year, you could get up to $4,000 back for one child and $8,000 back for care of two or more.

Before the American Rescue Plan, the child and dependent care credit was nonrefundable, meaning it could reduce your tax bill to zero but you would not receive a refund on anything extra. Now, the credit is fully refundable, meaning that you will receive money for it even if you don't owe taxes.

Learn more about 2022 Tax Changes

https://mkgtaxconsultants.com/2022-tax-changes/

The Jan. 24 tax-filing start date for 2022 is 19 days earlier than 2021's start date of Feb. 12.

At the same time, the IRS warns that the upcoming filing season could be frustrating for taxpayers and tax preparers alike due to pandemic-related delays, a backlog of unprocessed returns from 2021, and years of budget cuts that have made the agency's job more difficult.

• Taxpayers can begin filing 2021 tax returns Monday, Jan. 24, 2022, 21 days earlier than last year.
• The IRS has warned there could be delays in issuing refunds in 2022 due to issues related to the pandemic, budget cuts, and unprocessed returns from 2021.
• The tax agency cautions taxpayers to file as early as possible after Jan. 24 and to make sure they have their paperwork in order.
• The IRS suggests taxpayers look for help online and use phone lines only if necessary.
• The agency says if you file electronically, choose direct deposit, and, assuming there are no issues with your return, you should get your refund within 21 days.

To avoid processing delays and speed refunds, the IRS urges people to follow these steps.

• Gather your 2021 tax records including Social Security number, Individual Taxpayer Identification Number, Adoption Taxpayer Identification Number, and this year's Identity Protection Personal Identification Number for calendar year 2022.
• Check IRS.gov for the latest tax information, including the latest on how to reconcile advance payments of the Child Tax Credit or claim a Recovery Rebate Credit for missing stimulus payments.
• Make sure you report correct amounts for any Economic Impact Payments or advance Child Tax Credits received in 2021.
• If you need help, use online resources such as MKG Tax Consultants registered return tax preparer Tax Filing Mobile App instead of calling. Calling the IRS should be a last resort.
• Even if you are not normally required to file a tax return, you need to do so in order to claim a Recovery Rebate Credit, to receive a tax credit from 2021 stimulus payments, or to reconcile advance Child Tax Credit payments.
• File electronically and request direct deposit.

If you request an extension to file by April 18 (or 19), you have until Monday, October 17, 2022, to submit your 2021 tax return. You must pay your estimated taxes, however, by the regular tax filing deadline of April 18 (or 19)

Even though you can file your tax return as soon as Jan. 24, 2022, by law the IRS cannot issue a refund involving the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) before mid-February. The purpose of the law is to prevent fraudulent refunds from being issued.

Download MKG Tax Consultants covid free Tax Filing Loan Originator Mobile App and Get Your Max Tax Refund

https://mkgtaxconsultants.com

To help taxpayers reconcile and receive all of the Child Tax Credits to which they are entitled, the IRS will send Letter 6419, 2021 advance CTC, starting late December 2021 and continuing into January. The letter will include the total amount of advance Child Tax Credit payments taxpayers received in 2021 and the number of qualifying children used to calculate the advance payments. People should keep this and any other IRS letters about advance Child Tax Credit payments with their tax records.

Families who received advance payments will need to file a 2021 tax return and compare the advance Child Tax Credit payments they received in 2021 with the amount of the Child Tax Credit they can properly claim on their 2021 tax return.

The letter contains important information that can make preparing their tax returns easier. People who received the advance CTC payments can also check the amount of their payments by using the CTC Update Portal available on IRS.gov.

Eligible families who did not receive any advance Child Tax Credit payments can claim the full amount of the Child Tax Credit on their 2021 federal tax return, filed in 2022. This includes families who don’t normally need to file a tax return.

MKG Tax Consultants

https://mkgtaxconsultants.com/child-tax-credit-letter-6419-2021/

If you receive $600 or more payments in total for goods and services through a third-party payment network, such as Venmo, Cash App, or Zelle, these payments will now be reported to the IRS.

The new rule results from the American Rescue Plan signed into law in March 2021 and will mainly impact business owners using third-party payment network providers. The IRS is cracking down on payments received through apps, such as Cash App, Zelle or Paypal to ensure those using the third-party payment networks are paying their fair share of taxes.

Previously, the IRS only required third-party payment networks to report payments that met both of the following reporting requirements:

• Gross payments that exceed $20,000, AND
• More than 200 transactions within the current year.

Beginning Jan. 1, 2022, third-party payment networks will be required to send users Form 1099-K for transactions made by mail or electronically. This means you don’t have to worry just yet: The new tax reporting requirement will impact your 2022 tax return filed in 2023.

Here’s how the new tax reporting will work.

Starting Jan. 1, 2022, You will receive Form 1099-K from third-party network providers for income received through electronic forms of payments by Jan. 31 of the following year.

In the near future, companies like PayPal, Zelle or Cash App may request additional information from you to properly report your transactions on your Form 1099-K. You may be asked to provide your Employer Identification Number (EIN), Individual Tax Identification Number (ITIN) or Social Security Number (SSN) if this information is not on file.

Your Form 1099-K will include payments from credit cards and online payments. You are required to report any income listed on your Form 1099-K from your taxable transactions on your income tax return.

For Venmo, Cash App and other users, this may sound like a new tax—but it’s merely a tax reporting change to the existing tax law.

Form 1099-K is a tax form sent to users that may include both taxable and nontaxable income sources. A taxable source of income is included in your income, such as wages, rents, tips, and retirement income. Whereas a nontaxable source is excluded from your income and you will not need to report on your tax return.

Some examples of nontaxable income are:

• Money received from a friend as a reimbursement
• Money received from a roommate to pay their share of the rent
• Money received from a loved one as a gift

Also, if you receive money from selling a personal item at a loss, you are not required to report the amount on your tax return. For example, if you purchased a dress for $100 and sold it for $50, the amount is not taxable.

But while the new law does not create a new tax, you must keep good records of any taxable income received.

Since your Form 1099-K may include both taxable and nontaxable income, keeping good records is essential. You want to select a recordkeeping system that clearly reflects your income.

You should maintain records such as bank statements, receipts, invoices and other financial documents to reflect taxable income. You can consider saving your records either in electronic form or manually.

If you are a business owner, it is a good idea to set up a third-party network platform, such as Cash App, Zelle, or Venmo, separately for both your business and personal transactions. This way, you can easily track business transactions.

Also, keeping good records can be beneficial to prove both taxable and nontaxable income sources if the IRS audits your tax return.