You can contribute up to $6,000 to your Traditional or ROTH IRA for 2019 and 2020. You can contribute an additional $1,000 if you are 50 to 70 for a Traditional IRA or 50 and older for a ROTH IRA. You must contribute by April 15th, 2020 for the 2019 contribution to be counted toward the 2019 tax year and by April 15th, 2021 for the 2020 contribution to be counted toward the 2020 tax year.
There are income limitations on making these contributions as follows:
Married filing jointly-If your modified adjusted gross income exceeds $193,000 (for 2019) or $196,000 (for 2020) you are not allowed to contribute to a ROTH IRA.
Single or Married filing separately- If your modified adjusted gross income exceeds $122,000 (for 2019) or $124,000 (for 2020) you are not allowed to contribute to a ROTH IRA.
There are additional limitations on allowed contributions and deductibility of the contributions. If you would like to consider making a contribution to your IRA (Traditional or ROTH) contact our office to discuss the possibilities specific to your situation. If you already work directly with a preparer in our firm, please email them directly for assistance. If you do not already have this contact you can contact the office and schedule a meeting.
Many people are under the impression that a credit card statement and/or a bank statement showing purchases made by credit or debit card would qualify as allowed evidence to support the viability of a deduction. However, this is not the case. You would be required to show the receipt for each item deducted on your tax return if your return is selected for audit.
Under the tax law change of 2018, entertainment expenses are no longer deductible. Business meals and travel are still allowed if you have adequate documentation. In order to deduct travel and meal expenses you need to document the following items:
Taxpayers have two options for deducting automobile expenses. You can deduct either the actual costs of operating your vehicle or you can take the standard mileage deduction. If you choose the standard mileage deduction method in year one, you must continue using that method throughout the life of that vehicle. Regardless of the deduction method you choose to employ, you are required to maintain a mileage log for each year of claimed business usage. If you elect to deduct the actual costs of the vehicle usage, you would also be required to produce receipts showing proof of deducted costs for fuel, insurance, tires, repairs, etc. The following items are required to be included in your mileage log:
Your mileage log can be a calendar, a notebook, or some other type of log book (office supply stores carry them).
If your return is ever selected for audit, the IRS and the Department of Revenue would require that you provide your auto mileage log records to substantiate the auto deduction that is taken on your return. Without the log, all auto related expenses will be disallowed.
Internal Revenue Code Section 183 (Activities Not Engaged in for Profit) limits deductions that can be claimed when an activity is not engaged in for profit. IRC 183 is sometimes referred to as the “hobby loss rule”. In general, taxpayers may deduct ordinary and necessary expenses for conducting a trade or business for profit.
An activity is presumed for profit if it makes a profit in at least three of the last five tax years, including the current year. If an activity is not for profit, losses from that activity may not be used to offset other income and if so determined, the IRS could change prior years’ returns disallowing prior losses.
The following factors, although not all inclusive, may help you to determine whether your activity is an activity engaged in for profit or a hobby:
You are required to file annual renewal of your business registration with the Secretary of State (applies to both Oregon and Washington) if you are registered as an LLC, C Corporation or S Corporation.