January 2020
More on the New Tax Laws and How They Affect You
Back in December, we shared an update about the new tax laws. Here are some additional provisions that have been extended through the end of 2020 as part of the "Taxpayer Certainty and Disaster Tax Relief Act" passed by Congress late last year:

Tuition deductions: An above-the-line deduction for qualified tuition expenses may be claimed in lieu of a higher education credit, such as the American Opportunity Tax Credit (AOTC). However, the deduction is limited to either $4,000 or $2,000, based on your modified adjusted gross income (MAGI) for the year, before it is completely phased out. Depending on your situation, a credit may still be preferable on your 2019 return. Note: The maximum $2,500 AOTC is also phased out at higher MAGI levels.

Medical deductions: Under the Tax Cuts and Jobs Act (TCJA), the medical deduction floor of 10% of adjusted gross income (AGI) was lowered to 7.5% of AGI, but only for the 2017 and 2018 tax years. The new law retroactively restores the 7.5%-of-AGI floor for 2019 and continues it for 2020.
Mortgage debt forgiveness: Under a special provision, forgiveness of a mortgage debt is excluded from tax, up to a maximum of $2 million. This tax break is only available for debt forgiveness on a mortgage for your principal residence.

Mortgage insurance premiums: If you pay mortgage insurance, you can deduct the cost of the premiums, subject to a phase-out beginning at $100,000 of AGI. The phase-out is complete at $110,000 of AGI. Unlike mortgage debt forgiveness, this tax break is available for a principal residence and one other home (e.g., a vacation home).

Family and medical leaves: The TCJA authorized a tax credit to employers offering paid family and medical leave to employees. This credit, which initially was created to last only through 2019, ranges from 12.5% of eligible wages to 25%, depending on the amount of wages paid. It takes into account a maximum leave of 12 weeks per tax year.

Finally, in addition to the extenders, the new legislation enacted at the end of 2019 provides tax relief in federal disaster areas, eliminates certain taxes required under the Affordable Care Act (ACA) and repeals a tax obstacle for tax-exempt organizations that offer parking privileges to employees, among other provisions. The appropriation package also includes a significant retirement planning law.

As always, we look forward to being your resource for information regarding this and other changes to the tax law. Please feel free to reach out by phone ( 630-653-1616 ) or email .
Tax Rewards Available for Charitable Volunteers
Do you help out your favorite charity by doing more than making donations? Although you cannot deduct the value of your volunteer services, you are entitled to a charitable deduction for your out-of-pocket expenses if you itemize. Of course, the other usual rules for charitable deductions, including the record-keeping requirements, still apply. Here is just a partial list of deductions that may be claimed by charitable volunteers.

Travel expenses: Generally, you can deduct travel expenses incurred away from home while performing services for a charitable organization as long as there is no significant element of personal pleasure, recreation or vacation in the travel. This includes the following:
  • Air, rail and bus transportation
  • Expenses for your vehicle
  • Taxi fares and other transportation costs
  • Meals and lodging

Because these travel expenses are not business-related, they are not subject to the same limits as business expenses. For instance, you can normally deduct only 50% of the cost of qualified business meals. If you use your own vehicle for driving on behalf of a charity, you may deduct your expenses based on detailed records or choose to use the IRS-approved flat rate. The current flat rate, which is set statutorily, is 14 cents per mile, the same as it has been for many years.
Entertainment: If you host a fundraising event your home, all of your non-reimbursed expenses are deductible. As with travel expenses, the usual 50% limit on meal costs does not apply to these charitable events.

Telephone expenses: Specific charges for landline calls, cellphone calls and faxes incurred for charitable purposes are deductible. In addition, you may deduct the cost of installing a separate line used strictly for charity-related calls.

Conventions: When you attend a convention as a charity’s designated representative, you may deduct non-reimbursed travel expenses. This includes reasonable costs of meals and lodging at the convention.

Uniforms: The initial cost and maintenance of a uniform that is not “suitable for everyday wear” is deductible if it is used for performing charitable services (e.g., Boy Scout or Girl Scout uniforms for troop leaders).

Exchange students: If you house a foreign exchange student, you may deduct up to $50 per month of expenses for each month the child attends high school. The student must reside in your home under a written agreement with a qualified charity and cannot be related to you.

Remember that detailed record-keeping is critical. Be prepared to prove your expenses in case the IRS ever challenges your deduction.
Our People Make a Difference
This month we welcomed Liseth Pozo to the MMA team as an intern. A senior in the accountancy program at Northern Illinois University, Liseth met us at one of our campus recruiting events and we are lucky to have her on board as we gear up for "busy season."

Liseth was a transfer student from Harper College where she graduated with an associate's degree in 2018. Now that she's an NIU Huskie, she also is a member of Ascend and ALPFA, both on-campus affinity groups for developing accounting and business professionals. She is fluent in Spanish and looks forward to using her ease with language and culture as a contribution to the firm and to our clients.

"Everyone here is so willing to help," Liseth said about her first weeks at MMA. "I want people to know me as someone who also is willing to help, someone people can depend on." Her first day was at the MMA January retreat and she's already making a contribution to the team.

When she isn't working or going to school, Liseth enjoys all things cultural--travel, language and cuisine. She has been as far away as Japan and she said she enjoys learning how other people work, eat and live.
Just So You Know...
Fast Refund--If your company overpaid its estimated taxes in 2019, you don't have to wait until the usual March 15th due date to file for a refund. The IRS allows a corporation to collect a fast refund—within 45 days of filing the request—if the over-payment is at least 10% of the estimated tax liability and amounts to $500 or more. If this applies to you and your business, please consult us for more details.

Ready, Set, Go—The start of another year signals that tax return filing season is here. You can make things go smoother by assembling the necessary information in a logical fashion. This includes all the records needed to maximize the tax benefits on
your 2019 return. Ideally, you should schedule a meeting early in the season to get this task off your to-do list.

NOTE: Clients should have received their tax organizers by now. If you haven't received yours, please email or call us and we'll get one in the mail to you right away. The organizer is also available via your client portal--please call the office if you prefer to complete the organizer online.
With the holidays behind us, and gray skies and winter setting in here in the Midwest, it's easy to feel a little blue. Here are a few tips staff accountant Zaid Siddiqui shared at our January retreat from the Journal of Accountancy to handle stress and the post-holiday blahs: Walk an hour a day (even if it's snowing!). Bring healthy snacks to work. Get a good night's sleep. And when you can, take a 10-minute break and practice some mindfulness. With tax season in full swing, you can be sure we'll be following these tips ourselves in the coming weeks. Please let us know how we can be of service.
Ron Austin, CPA
Brian Eisenmenger, CPA
Brian Hagene, CPA
Brett Mathieson, CPA
John Straus, CPA