Working with Jerry has literally taken a load off my back. He explains what you can and cannot do with clarity and makes “year end” a painless concept and not the nightmare we are all expecting to face. Jerry truly listens to our problems and concerns and customizes a product to our needs. He has put us “in control” of our business. You can’t go wrong when Jerry has your back!
Shirley & Jack S., Owner, Apex Grading

Will I Owe the IRS Tax on My Stimulus Payment?

Covid-19 stimulus check payment jerry jones self-storage CPA

Some worry the money will get reported as income on 2020 tax returns

The Internal Revenue Service (IRS) sent out more than 160 million stimulus payments since the CARES Act was signed into law on March 27. Now it’s sending out millions more checks in the second round of stimulus payments. As people start to spend their money, some wonder: Is my stimulus payment taxable?

The short answer: No. In the somewhat longer words of the IRS: “No, the payment is not income and taxpayers will not owe tax on it. The payment will not reduce a taxpayer's refund or increase the amount they owe when they file their 2020 or 2021 tax return next year. A payment also will not affect income for purposes of determining eligibility for federal government assistance or benefit programs."

Not your average tax credit

The stimulus payment — or economic impact payment, as the IRS calls it — is technically a tax credit for 2020. But this isn't widely understood. Some people assume that the IRS will add the amount to your income, generating a bigger tax bill, or reduce your future tax refund when you file your tax return next year. Neither is the case, but this bears some explaining.

In the tax world, a tax deduction is a good thing. It reduces your income, which reduces the amount of tax you owe. If you had $50,000 in income and had a $5,000 tax deduction, your deduction would reduce your taxable income by $5,000. If you were in the 12 percent tax bracket, you'd reduce your taxes owed by $600 (12 percent of $5,000).

A tax deduction is good, but a tax credit is very good. A tax credit reduces your tax bill dollar for dollar. If you owe $1,500 in federal income taxes and you get a $1,000 tax credit, your tax bill sinks to $500.

refundable tax credit is a thing of wonder. A garden-variety tax credit can reduce your tax bill to zero, but it can't turn a tax bill into a tax refund. Refundable tax credits can. For example, if you owed $1,000 in taxes but had a refundable tax credit of $1,200, you'd get a $200 tax refund check from Uncle Sam.

Because you're getting what amounts to a refundable tax credit now in the form of a stimulus payment, rather than waiting to get the money from the credit in 2021 when you actually file your 2020 tax return, you're in effect getting an advanced refundable tax credit.

Read More

Why You Need A Will (even if you think you don't)

Man signing his will

Be Prepared

The COVID-19 pandemic has created a tremendous amount of uncertainty about the future for millions of Americans. In fact, the increased level of anxiety triggered by the deadly, global health crisis has caused 25 percent of American parents with children under the age of 18 to realize that estate planning should be an immediate priority for them, according to a recent study by the insurance and wills website Fabric. But it's not just parents with young children who should have a will in place. Experts suggest that no matter your age or how good your health, it's best to draft a will earlier in life, rather than later. Here's why.

Wills Are Not Only for Those With Significant Assets

While you're young, you may not yet have accumulated substantial net worth. But that's no reason to ignore creating a will, says Karen Bussen, founder and CEO of Farewelling, an online platform designed to help people navigate funerals and end-of-life planning. "Even if you don't have a lot of assets, you can use a will to communicate instructions clearly to loved ones. An example would include guardianship for a pet, or what you'd like done with artwork you've created," says Bussen.

Read More

Final Regulations on the Meals and Entertainment Deduction

meals and entertainment deduction

The law known as the Tax Cuts and Jobs Act (TCJA), P.L 115-97, significantly changed Sec. 274 by eliminating the deduction for any expenses considered entertainment, amusement, or recreation. The amendments denied deductions for expenses for business entertainment and increased the scope of the deduction limitation for expenses related to food and beverages employers provided.

Because the Code was unclear about the deductibility of food and beverages expenses when combined with entertainment expense, the IRS provided transitional guidance on the deductibility of business meals through Notice 2018-76 and later through proposed regulations under Sec. 274 issued in February 2020 (REG-100814-19). On Sept. 30, 2020, the IRS issued Regs. Secs. 1.274-11 and 1.274-12 (T.D. 9925) to address the changes made to the meals and entertainment deduction under the TCJA.

Business Meals

Regs. Sec. 1.274-11 disallows the deduction for certain entertainment, amusement, or recreation expenditures paid or incurred after Dec. 31, 2017. An objective test is used to determine whether an activity is entertainment and the taxpayer's trade or business is considered when applying this test. Under this provision, any expenditure that is considered entertainment or in connection with an entertainment activity, including a facility used in connection with an entertainment activity, is not deductible. Dues or fees to any social, athletic, or sporting club, or to any organization that has connections to facilities are nondeductible. In addition, no deductions are allowed for amounts paid for membership in any business, pleasure, recreation, or social club.

However, under Regs. Sec. 1.274-11, entertainment does not include expenditures for food and beverages, unless the food or beverages are provided at an entertainment activity. Food and beverages provided at an entertainment activity are considered an entertainment expense and not deductible unless the food or beverage cost is stated separately from the cost of the entertainment cost on bills, invoices, or receipts. If the food or beverages are not purchased separately from the entertainment, or there is no reasonable allocation of the cost of food or beverages on the invoice separate from the cost of entertainment, then the entire amount is nondeductible.

Read More

How the CARES Act Changes Deducting Charitable Contributions

CARES Act Tax Buttons - Tax Issues

Whether taxpayers are supporting natural disaster recovery, COVID-19 pandemic aid or another cause that’s personally meaningful to them, their charitable donations may be tax deductible. These deductions basically reduce the amount of their taxable income.

Here’s how the CARES Act changes deducting charitable contributions made in 2020:

Previously, charitable contributions could only be deducted if taxpayers itemized their deductions.

However, taxpayers who don’t itemize deductions may take a charitable deduction of up to $300 for cash contributions made in 2020 to qualifying organizations. For the purposes of this deduction, qualifying organizations are those that are religious, charitable, educational, scientific or literary in purpose. The law changed in this area due to the Coronavirus Aid, Relief, and Economic Security Act.

The CARES Act also suspends limits on charitable contributions and temporarily increases limits on contributions of food inventory. More information about these changes is available on

Read More

IRS Makes it Easier to Set Up Payment Agreements; Offers Other Relief to Taxpayers Struggling with Tax Debts

IRS Instalment Payment Arrangement

The Internal Revenue Service today announced a number of changes designed to help struggling taxpayers impacted by COVID-19 more easily settle their tax debts with the IRS.

The IRS assessed its collection activities to see how it could apply relief for taxpayers who owe but are struggling financially because of the pandemic, expanding taxpayer options for making payments and alternatives to resolve balances owed.

“The IRS understands that many taxpayers face challenges, and we’re working hard to help people facing issues paying their tax bills,” said IRS Commissioner Chuck Rettig. “Following up on our People First Initiative earlier this year, this next phase of our efforts will help with further taxpayer relief efforts.”

“We want people to know our IRS employees are committed to continue helping taxpayers wherever possible, including offering many options for those struggling to pay their tax bills,” said Darren Guillot, the IRS Small Business/Self-Employed Deputy Commissioner for Collection and Operations Support. Guillot discussed the new relief options in a new edition of IRS “A Closer Look.”

Taxpayers who owe always had options to seek help through payment plans and other tools from the IRS, but the new IRS Taxpayer Relief Initiative is expanding on those existing tools even more.

Read More

Taxpayers Who Need Last Year’s Tax Return Have Several Options


Help is available for taxpayers who need tax information for prior years, but who didn’t keep copies of their returns. There are options for helping taxpayers get the information they need.

Taxpayers should generally keep copies of their tax returns and any documentation for at least three years after they file. If taxpayers didn’t keep these records, here are some things they can do:

Ask software provider or tax preparer
Those who need a copy of their tax return should check with their software provider or tax preparer first. Prior-year tax returns are available from the IRS for a fee.

Read More

7 IRS Tax Lessons From John McAfee’s Tax Evasion Indictment

IRS Tax Lessons

Colorful tech figure and sometimes taunter of the IRS John David McAfee has been indicted for federal income tax evasion. Given his profile, particularly such antics as proclaiming that he isn’t filing tax returns but the IRS can come find him, it may not seem a surprise that McAfee is in some serious hot water. He has long been completely out of the antivirus company that bears his name, but he has still been in the news in numerous controversial ways over the last decade. Everyone has to file tax returns of course, even McAfee, and failing to file can be criminal. The indictment dates from June 15, 2020, but it was just unsealed following McAfee’s arrest in Spain where he is awaiting extradition to the U.S. This is an indictment, so the charges have yet to be proven. But it may be hard for McAfee to explain himself after he once colorfully admitted to not paying taxes in a video posted on Twitter. According to the indictment, McAfee earned millions from promoting cryptocurrencies, consulting, speaking, and selling the rights to his life story. From 2014 to 2018, the feds allege that McAfee failed to file tax returns despite receiving considerable income. How could he not file returns or report income?

The indictment alleges that McAfee directed that payments due him should instead go into bank accounts and cryptocurrency exchange accounts in the names of nominees. Hiding things, after all, doesn’t change the tax impact, and can actually make matters worse. The indictment also claims that he tried to evade the IRS by putting other names on real estate, a yacht and more. These are only allegations, but if he is convicted, McAfee faces a maximum sentence of five years in prison on each count of tax evasion, and a maximum sentence of one year in prison on each count of willful failure to file a tax return. He can also expect to pay taxes, big penalties, and interest. McAfee is presumed innocent unless and until he is proven guilty beyond a reasonable doubt, but as McAfee and his legal team mount a defense, here are some key lessons:

Report your income, and always file. You must file a tax return each year with the IRS if your income is over the requisite level. Don’t forget, and don’t be late either, even if you can’t pay what you owe. File anyway, and you can work out payments later. The statute of limitations on audit—usually three years and sometimes six years—can’t even begin to run until you file your return. So file, and remember, the U.S. taxes all income wherever you earn it.

Read More

Here’s What Taxpayers Need to Know About Their Right to Finality

TABOR Tax payer bill of rights

Taxpayers interacting with the IRS have the right to finality. This is especially for taxpayers who are being audited. This is one of ten basic rights —collectively known as the Taxpayer Bill of Rights.

Read More

IRS Reminds Taxpayers of the Home Office Deduction Rules

Small Business Owner

The Internal Revenue Service wants individuals to consider taking the home office deduction if they qualify. The benefit may allow taxpayers working from home to deduct certain expenses on their tax return.

The home office deduction is available to qualifying self-employed taxpayers, independent contractors and those working in the gig economy. However, the Tax Cuts and Jobs Act suspended the business use of home deduction from 2018 through 2025 for employees. Employees who receive a paycheck or a W-2 exclusively from an employer are not eligible for the deduction, even if they are currently working from home.

Read More

Earning Side Income: Is it a Hobby or a Business?

Hobby or business woodworker

Whether it’s something they’ve been doing for years or something they just started to make extra money, taxpayers must report income earned from hobbies in 2020 on next year’s tax return.

What the difference between a hobby and a business? A business operates to make a profit. People engage in a hobby for sport or recreation, not to make a profit.

Read More

Click to Continue to Your Personal Portal

Member of AICPA, Member of CA Society of CPA's, Member of NV Society of CPA's and Member of Certified Fraud Examiners Association

A Professional Corporation
4600 Kietzke Ln, Suite E-148
Reno, NV 89502
Jerry Jones, CPA
The "Tax Planning" CPA
fax 775.348.9518