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The Essential 2020 Income Tax Filing Checklist

Over the years, we’ve learned a lot about what the IRS looks for on your tax return. We put together the list below for our clients to help them avoid the pitfalls of missing or inaccurate information that can delay tax returns by 6 months or more. Especially during the continuing pandemic at the time of this posting, since the IRS is working with limited staffing, you’ll want to make sure the information you provide is accurate and complete. We encourage you to “check off” the items on the list before submitting your tax paperwork to ensure a smooth and efficient filing!

If you received a stimulus payment in 2020 and January 2021 your tax professional needs to know the amount of the payment you received. $________________ 
This payment is not taxable but the amount must be reconciled on your tax return.
If you collected unemployment benefits in 2020 you will receive a 1099-G form in the mail in by January 31, 2021We have included an image of the 1099-G form below for reference.
FRAUD ALERT for Massachusetts residents:  If you receive a 1099-G form and did not collect unemployment benefits please contact the Massachusetts Department of Unemployment Assistance (DUA) at 617-626-5647 immediately! Likewise, if you did receive unemployment benefits and do not receive a 1099-G form, again, you will need to call MA DUA at 617-626-5647.
If you made estimated tax payments in 2020 please provide your tax preparer copies of the cancelled checks. We have seen issues this past year with these checks not being cashed, and not being applied properly. If we have copies of the cancelled checks we can speak with IRS on your behalf to resolve any issues that may arise. 
4FORM 1095A (Health Connector for Massachusetts Residents)
If your health insurance is through the Massachusetts Health Connector please provide your 1095A. This form will be mailed to you by January 31, 2021. If your insurance is through the health connector, IRS will not process your tax return and delay your refund. Please see a copy of the 1095A form below for reference. You can also obtain your form online at welcome to health connector | health connector (mahealthconnector.org)
If you paid rent in the last calendar year please indicate the total rent you paid in 2020  $____________.
6NEW BABY IN 2020?
Congratulations! Please make sure to provide the baby’s date of birth and social security number. This information is necessary to determine if you qualify for an additional stimulus payment, as well as the normal credits for a child.
Tax preparers need to know if you have dependent college-age kids who are filing taxes and “claiming” themselves under their Social Security Number. This will trigger the IRS to disable your ability to e-file your own return, forcing you to file on paper and have your return delayed by as much as 6 months.
Have you changed addresses, phone numbers, e-mail addresses, or jobs since last year? Make sure your tax preparer has your up-to-date information!

Below is an example of Form 1099-G. Individuals who collected unemployment in the last year should receive this form in the mail by January 31, 2021, and must include it with their tax paperwork. Please note: This is for reference purposes only and cannot to be downloaded, reproduced, or used for filing.

Below is an example of Form 1095-A. Individuals who are insured through the MA Health connector should receive this form in the mail by January 31, 2021, and must include it with their tax paperwork. Please note: This is for reference purposes only and cannot to be downloaded, reproduced, or used for filing.

Stimulus Round 2: What You Need to Know

irs.gov 2

Some of you may have already received your money from the second stimulus package that recently passed but it is important to note that the amounts and calculations are different this time around. 

The Basics:

  • IRS began issuing payments via direct deposit on December 29, 2020.
  • Standard payment amounts are $600 for each qualifying U.S. citizen, resident alien, and dependent child under age 17, based on adjusted gross income (AGI) limits. (See chart below)
  • Payment amounts are reduced by $5 for every $100 above the determined income thresholds.
  • Confirmed direct deposit accounts will receive payments first, followed by mailed paper checks. 
  • Please note: The IRS has not set up a procedure to change your direct deposit information through their website at this time, so if your direct deposit information has changed in the last year, you will likely need to wait for a paper check. Attempting to change your direct deposit information through the IRS website at this time may jeopardize your electronic filing for tax year 2020. 

How much can you expect?

The graphic below shows the standard payments based on income limits.

Payments are reduced by $5 per $100 above the qualifying income thresholds, and will phase out completely at $87,000 AGI for individuals and $174,000 AGI for couples filing jointly.  

We found an article on the Forbes Advisor website that provides an excellent comprehensive overview of the second round stimulus package, including a payment calculator and notable changes from the original CARES Act that was passed last spring. You can read the entire article here.

The IRS website also issued a press release regarding details of the second round stimulus, which can be found on their website here.

2021 IRS Tax Changes: What’s New?

Just like taxes themselves, annual changes to the IRS tax code are a certainty. Luckily, the changes are mostly minor for 2021, but there are still a number of changes to provisions and limits that will affect millions of taxpayers.

For instance, now that most people take the standard deduction, slight increases for inflation are welcome news. According to the IRS, here are the new amounts for 2021:

Filing StatusStandard Deduction for 2021 Tax YearChange from 2020
Married filing jointly$25,100+$300
Head of household$18,800+$150
Married filing separately$12,550+$150

Retirement Accounts

There are measurable tax benefits to putting money into retirement accounts, which is why IRS puts limits on just how much of that money you can deduct or contribute in any given year.

For the coming year, the actual allowable contribution amounts will stay the same, but there are changes in the income limit for some types of accounts. For example, both traditional and Roth IRAs have income thresholds , and allowable contributions and deductions gradually phase out as income increases and/or surpasses those limits. Again, the changes are minor for the coming year, but valuable to know. Here is the IRS chart outlining the income thresholds and phase-out limits:

Filing StatusRoth IRA Phase-Out RangeTraditional IRA Phase-Out Range if Worker Has Employer-Sponsored Retirement AccountTraditional IRA Phase-Out Range if Spouse Has Employer-Sponsored Retirement Account
Single$125,000 to $140,000$66,000 to $76,000N/A
Married filing jointly$198,000 to $208,000$105,000 to $125,000$198,000 to $208,000
Married filing separately$0 to $10,000$0 to $10,000$0 to $10,000

2021 Tax Brackets

Tax brackets are changing slightly for the coming year also. It can be hard to say precisely what bracket you’ll end up in until you have figured out your AGI (Adjusted Gross Income) for next year, but we have provided the IRS tables below for singles, married filing jointly, and married filing separately to give you an idea of the adjusted ranges.

Brackets for Singles

Bracket for SinglesTax is this amount +
this percentage
Of the amount over
$0 to $9,950$0 plus 10%$0
$9,950 to $40,525$995 plus 12%$9,950
$40,525 to $86,375$4,664 plus 22%$40,525
$86,375 to $164,925$14,751 plus 24%$86,375
$164,925 to $209,425$33,603 plus 32%$164,925
$209,425 to $523,600$47,843 plus 35%$209,425
Above $523,600$157,804.25 plus 37%$523,600

Brackets for Married Filing Jointly

Bracket for married
filing jointly
Tax is this amount +
this percentage
Of the amount over
$0 to $19,900$0 plus 10%$0
$19,900 to $81,050$1,990 plus 12%$19,900
$81,050 to $172,750$9,328 plus 22%$81,050
$172,750 to $329,850$29,502 plus 24%$172,750
$329,850 to $418,850$67,206 plus 32%$329,850
$418,850 to $628,300$95,686 plus 35%$418,850
Above $628,300$168,993.50 plus 37%$628,300

Brackets for Married Filing Separately

Bracket for married
filing separately
Tax is this amount +
this percentage
Of the amount over
$0 to $9,950$0 plus 10%$0
$9,950 to $40,525$995 plus 12%$9,950
$40,525 to $86,375$4,664 plus 22%$40,525
$86,375 to $164,925$14,751 plus 24%$86,375
$164,925 to $209,425$33,603 plus 32%$164,925
$209,425 to $314,150$47,843 plus 35%$209,425
Above $314,150$84,496.75 plus 37%$314,150

There are a number of other changes to various tax provisions for 2021 that may affect your situation. These include capital gains and estate taxes.

We have found a comprehensive overview of the 2021 changes on The Motley Fool website here. It’s definitely worth a look as you start thinking about tax planning for the New Year!

IRS Allowing Some Charitable Deductions for 2020 — Even If You Don’t Itemize

Feeling charitable this holiday season? According to a reminder issued just before Thanksgiving, it appears the IRS is, too. Lucky for a lot of generous people this year, one of the components of the CARES Act you may no be aware of is a provision that allows for an “above the line” cash deduction for some charitable contributions.

It’s not life-changing money, but for people who could use some incentive to support their favorite charity this year, the IRS is making an allowance for cash donations up to $300—even if you claim the standard deduction rather than itemizing. 

The standard rules apply, of course. For instance, it must be a legitimately recognized charitable organization, and you’ll need to to provide proof of your contribution if asked. So as long as you keep your receipts handy, your generosity during this particularly difficult year can be rewarded.

You can read the IRS press release and access additional resource links on their website here.

‘Tis the Season for Scamming

For everyone who has ever said “I would never fall for that,” there are numerous stories of people who lost money, time and credit ratings to cyber criminals. We all want to believe that the holiday season is a time that brings out the best in people. Thankfully, that’s true in most cases. Still, there are astonishing numbers of scammers who continue to find ways to trick people out of their hard-earned money, often without you knowing until it’s too late. And worse, the incidence of “ransomware” attacks—where foreign scammers literally kidnap sensitive information from companies online until they pay—are increasing.

That’s why it’s so important to pay attention to recommendations for keeping your information secure and not becoming an easy target for identity theft.

As part of the 5th Annual National Tax Security Awareness Week, the IRS has issued new warnings, noting that a combination of factors have presented more opportunities than usual for scammers to gain access to your personal information this year. For instance, more people working from home, increased online shopping, and the backlog of unemployment claims.Whether you are using a desktop computer, a laptop, or your smartphone(!) there are a number of basic steps we can all take to help protect ourselves from identity theft and cyber scams.

The list below from the IRS outlines a number of things you should do:

  • Don’t forget to use security software for computers and mobile phones – and keep it updated.
  • Make sure purchased anti-virus software has a feature to stop malware, and there is a firewall that can prevent intrusions.
  • Phishing scams – like imposter emails, calls and texts – are the No. 1 way thieves steal personal data. Don’t open links or attachments on suspicious emails. This year, fraud scams related to COVID-19 and the Economic Impact Payment are common.
  • Use strong and unique passwords for online accounts. Use a phrase or series of words that can be easily remembered or use a password manager.
  • Use multi-factor authentication whenever possible. Many email providers and social media sites offer this feature. It helps prevents thieves from easily hacking accounts.
  • Shop at sites where the web address begins with “https” – the “s” is for secure communications over the computer network. Also, look for the “padlock” icon in the browser window.
  • Don’t shop on unsecured public Wi-Fi in places like a mall. Remember, thieves can eavesdrop.
  • At home, secure home Wi-Fis with a password. With more homes connected to the web, secured systems become more important, from wireless printers, wireless door locks to wireless thermometers. These can be access points for identity thieves.
  • Back up files on computers and mobile phones. A cloud service or an external hard drive can be used to copy information from computers or phones – providing an important place to recover financial or tax data.
  • Working from home? Consider creating a virtual private network (VPN) to securely connect to your workplace.

You can find additional information and resource links on the IRS website here.

Paying for Medicare through Social Security?

Here’s what You Need to Know for 2021

The Centers for Medicare & Medicaid Services (CMS) posted a “Fact Sheet” in November detailing the changes we can expect in the New Year. As anticipated, Medicare premiums are going up next year. Unfortunately if you pay Part B premiums through Social Security and experienced a significant drop in income this year, you might be surprised by an increase in 2021. This is because the calculations for 2021 are actually based on your income from last year (2019) rather than your 2020 income.

In general, most people’s income tends to increase from one year to the next. COVID-19 reversed that trend for millions of people this year, and for those collecting Social Security, it may work against you in 2021. 

For example: 

  • Mary is single.
  • She made $103K in 2019, but only $62K in 2020.
  • The first-tier threshold for a single filer to see an increase in 2021 is $88,000.
  • Even though Mary was well below the threshold in 2020, her premiums will go up in 2021 because she was above it in 2019.

The chart below shows how to calculate the upcoming premium increases for Part B taxpayers.

Beneficiaries who file individual tax returns with income:Beneficiaries who file joint tax returns with income:Income-related monthly adjustment amountTotal monthly premium amount
Less than or equal to $88,000Less than or equal to $176,000$0.00$148.50
Greater than $88,000 and less than or equal to $111,000Greater than $176,000 and less than or equal to $222,00059.40207.90
Greater than $111,000 and less than or equal to $138,000Greater than $222,000 and less than or equal to $276,000148.50297.00
Greater than  $138,000 and less than or equal to $165,000Greater than $276,000 and less than or equal to $330,000237.60386.10
Greater than $165,000 and less than $500,000Greater than $330,000 and less than $750,000326.70475.20
Greater than or equal to $500,000Greater than or equal to $750,000356.40504.90

According to CMS, the income-related monthly adjustments will affect roughly 7% of taxpayers with Medicare Part B. And while 7% may not sound like a lot, it is still a significant number of people,amny of whom are still trying to recover from this year’s loss of income.

If you are interested in learning more, you can access the CMS Fact Sheet on their official site here.

Top 3 Reasons to Consider Refinancing Now

  1. Mortgage rates are near all-time lows.
  2. Any rate lower than what you are currently paying can save significant interest over time. 
  3. Refinancing can lower your monthly payment and/or reduce the years left on the loan as well!

We are always looking for ways to help you save money and plan for a comfortable retirement, and depending on the terms of your current mortgage, taking advantage of historically low interest rates can be a great way to reduce your long-term debt. 

Whenever interest rates are low, there is an opportunity for homeowners to save money which can add up to tens or even hundreds of thousands of dollars over the life of your loan. Getting the information you need to decide is easy these days. Typically, all you’ll need to do is send a copy of your current mortgage statement via text or e-mail, and you’ll get back a number of different terms and rates to consider.

If you are interested in finding out the refinancing options that are available to you, I’d like to recommend Rob Matthews at PrimeRate Mortgage. I have known Rob for more than 20 years, and he has consulted for and handled mortgage loans for many mutual clients. Even if you currently have a good rate, it might be worth your time to contact Rob to see if you could save some money by refinancing.

Rob Matthews
[email protected]
(617) 719-3607
Loan Officer  LO21644 | PrimeRate Mortgage LLC  MB2873

Portal Files To Be Removed on December 7, 2020

  1. As a reminder, in the interest of data privacy and security, we will be removing all files from the portal on Monday, December 7, 2020. As with any personal information, you should maintain and store your financial and tax records in a secure and accessible location, whether digitally, in hard copy, or both. If you wish to retrieve any of the information that is currently in your folder(s) on the client portal, you will need to download it to your home computer before Monday, December 7th. 
  2. As we mentioned in our previous newsletter,  the company that hosts our client portal made some software updates that affected our login link. We corrected the link on our website, but if you try to login through a bookmark that was created before the update you will land on the following site error message:

The resource cannot be found.

Description: HTTP 404. The resource you are looking for (or one of its dependencies) could have been removed, had its name changed, or is temporarily unavailable.  Please review the following URL and make sure that it is spelled correctly.

Requested URL: /portal/login.aspx

To correct this you just need to delete any information that appears after “.com” in the website address and re-save the bookmark. For example:  


Or, you access the login page through the link below and save a new bookmark. 


Thank you for helping us get ready for tax season!

Don’t Want to Owe? Adjust Your Withholding

W-4 2

This reminder is for everyone—especially joint filers who ended up owing money in recent years—to make sure your withholding choices don’t leave you with another big tax bill in years to come. Strange as it may sound, for working couples filing jointly who make more than $150,000 year, it might make sense to change one (or both!) of your W-4s to Single status with 0 dependents. The basis is simple: The more money that is withheld in taxes throughout the year, the more likely you are to get a refund, rather than owe, when it’s time to file. 

If you’re like most people, you filled out a W-4 form when you started working. It was part of the paperwork, like your I-9 and health insurance forms, and you haven’t thought about it since. In fact, it’s not unusual to think that making changes to your W-4 is only possible—or necessary—in two circumstances:

  1. When you are newly hired or are changing jobs; or
  2. When you have a life event, such as the birth or adoption of a child, a divorce, or the death of a spouse.

But the truth is that you can make changes to your W-4 at any time. And there is often good reason to do so. For instance:

  • You and your spouse’s combined incomes put you over an income threshold that affects your tax burden.
  • You have a second or part-time job, but your W-4 withholdings don’t take this into account.
  • You are making more money and your tax bracket has changed.
  • Changes to tax laws unexpectedly put you in a higher tax category. 

This last one is what many of our clients experienced as a result of the Tax Cuts and Jobs Act that was passed in 2017. And that is why we suggest checking that your withholding makes sense for your current situation. 

Though it’s too early to speculate on what changes we are likely to see at the beginning of the new year, we’re still encouraging everyone who has owed money the last two years to consider contacting your employer to change your W-4 allowances and/or status before your first paycheck of 2021.

Identity Thieves Target MA Unemployment Again: How Do They Get Away With It?

We reported in a previous newsletter about criminals taking advantage of an overwhelmed system to file fraudulent unemployment claims. And the thieves are literally banking on you not paying attention.

The issue was identified as a nationwide problem back in May. Governor Baker addressed the state’s response at that time in light of the thousands of cases that were reported in the Commonwealth. That seemed to stem the tide for a time, but more recent news reports have noted an uptick in these cases that seems to coincide with the rise in legitimate jobless claims. The latest scams are using e-mails that require you to respond or click through to a form to provide personal information. Data breaches can also be a source for criminals to mine for personal information.

How do they do it? Here’s a step by step breakdown:

  1. Once an identity thief gets your personal information—maybe through a data breach or sophisticated phishing e-mail—they simply file an unemployment claim in your name.
  2. You then receive a legitimate notification from the Department of Unemployment Assistance informing you that “your” claim has been approved. 
  3. Unless you open that letter and report it as fraud, the money that is approved can be issued via a Massachusetts Unemployment Insurance Debit Card to anyone claiming to be you.  
  4. In late January you receive a W-2 showing that you received thousands of dollars in unemployment benefits that you are expected to report as income.
  5. You’ll need to start the process of proving you never received that money and unraveling what other damage may have been done.

As with most scams of this type, the likelihood that you’ll be a victim is small, but as legitimate jobless claims are on the rise again, so too, are the opportunities for thieves to take taxpayer money and ruin your credit. 

So how can you avoid being a victim?

  • Open your mail! If it looks like a duck…you know the rest.
  • Never reply to or click links in an unsolicited e-mail, or one from an unknown sender. 
  • Report suspicious communication to the state, the IRS, or both.

​It’s true that criminals will continue to look for new ways to trick people out of their money, so we all need to continue to be vigilant in our efforts to stop them.