Balcerzak Financial Services

2021 - here we come!! 2020 was a year full of change and uncertainty. In the midst of all that, I am happy to say that Alan and I continue to go through a very smooth transition of his existing CPA business over to myself and my business (Balcerzak Financial Services). I am hopeful that you have found the transition as seamless as we had anticipated. As we near year end, I want to share some recent developments that we hope you will find helpful. We also mailed these out but wanted to use the email addresses we have on file to assure the broadest distribution of this information. Not all of these updates will apply to each of you but we are ready to discuss any of them in more detail if you think they are applicable. We greatly appreciate your business, especially during a year like 2020! From all of us at Balcerzak Financial Services, we wish you and those that are dear to you an enjoyable, safe and healthy holiday!! Transition Update

New e-mail’s!! – we have transitioned to a new email service. Please note the new emails for the team and update your contact information accordingly (phone numbers stay the same). o Ed – ed@balcerzakfinancial.com o Maria – maria@balcerzakfinancial.com o Rosina – rosina@balcerzakfinancial.com o Alan – alan@balcerzakfinancial.com New website!! -  Although many of you did not use Alan’s prior website, we have launched a new website that we hope will cater to the needs of both existing and potential new clients. Please check it out and keep an eye open for regular updates, a monthly blog and other helpful resources. Also, we’d love it if you refer friends, family and colleagues that may benefit from our services – please send them to this site to learn more about us! Go to Website

Personal Tax Updates - Unemployment benefits – Unfortunately, more people had to take advantage of these this year. Just a reminder that these benefits, including the added $600 or $300 supplement that was available for a period of time, are fully taxable. - Medical Expenses – In addition to the threshold remaining at 7.5% of your adjusted gross income, over the counter drugs and purchases are now allowed as qualified medical expenses to help you exceed the 7.5% limit. - Mortgage related changes - If you received mortgage forgiveness this year, it may be excluded from income in certain circumstances. In addition, if you are paying mortgage insurance, it may now be deductible as an itemized deduction for qualified loans. - Education related changes - In 2020, you will still be able to take an above the line deduction for up to $4,000 in qualified tuition and fee expenses. In addition, you can use any left over 529 education plan monies to pay off up to $10,000 of student loans. - Charitable Contributions - You are allowed an above the line deduction of up to $300 for cash donations to qualified charities. Also, there is no longer a 60% limit on the amount of monetary deduction you can make - you can donate and deduct up to 100% of your income.  - 401k/Profit Sharing – Several changes in this area. First, the 10% early distribution penalty is waived on up to $100,000 of retirement withdrawals for coronavirus related reasons. Second, required minimum distributions for 2020 are suspended and the related 50% penalty for not taking a distribution are also waived. Third, you are able to loan up to $100k from your 401k (compared to prior limit of $50k). - Stimulus checks - The IRS urges any eligible self-supporting college student who does not need to file a tax return to register by Nov. 21 to receive an Economic Impact Payment (i.e., stimulus check) before the end of the year. The IRS is reminding people who do not normally file a tax return they may be able to register for an Economic Impact Payment with a quick visit to the non-filers tool on IRS.gov.

Business Tax Updates - Pandemic Support and PPP – Unfortunately, politics and the continuing election have prevented clear decisions on PPP and the related forgiveness program. At this juncture, it is very unlikely many PPP loan recipients will receive formal forgiveness before year-end. However, although PPP gets most of the attention, business owners may be able to take advantage of two other pandemic related relief programs o Paid Sick Leave and Expanded Family Leave – if you had employees that were not able to work due to the pandemic (i.e., they got the virus or had to care for children that had schools/daycares closed) AND you still paid them while they did not work, you may be eligible to take advantage of employer payroll tax credits to offset a portion of the payroll cost you incurred. o Employee Retention Credits – If your business had greater than 50% reduction in sales in a given quarter (compared to the same quarter in 2019), AND you did not take advantage of PPP, you may be eligible for employer payroll tax credits to partially offset the cost of payroll for employees you kept on your payroll. - 401k/Profit Sharing – If you start a profit-sharing plan or 401k for your business in 2020, there is a new credit available to defer the administration/set-up costs. - Net operating losses – For business that has net operations losses in prior years, prior legislation had eliminated any carry back and only allowed 80% carry forward. You are now able to carry back to 2018/2019 as well as carry forward 100% to future years.  - Charitable Contributions - If you are a business owner, you can donate and deduct up to 25% of the taxable income (compared to 10% previously).

General Updates Election impact on future taxes – I was hoping that if we waited to send this letter out in mid-November, we would have some certainty on the 2020 elections. Well… not exactly. However, as a general rule, we are advising clients to accelerate income into 2020 and defer expenses into 2021 as we feel there is a greater likelihood most clients will see some sort of tax increase in the future years.

Balcerzak Financial Services, LLC | (303)753-0844| ed@balcerzakfinancial.com www.balcerzakfinancial.com