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Where Did Americans Move in 2020?

Which States Did America Flock to in 2020? States compete with each other in a variety of ways, including attracting (and retaining) residents. Sustained periods of inbound migration lead to (and reflect) greater economic output and growth. Prolonged periods of net outbound migration, however, can strain state coffers. This can contribute to revenue declines as economic activity and tax revenue follow individuals out of state. United Van Lines, the largest moving company in the United States, keeps track of its clients’ migration among the 48 contiguous states. It publishes that data each January, comparing the number of inbound moves to outbound moves for each state. Because those who use United Van Lines are individuals and companies, this data is only a subset of all moves. However, the National Movers Study still provides a targeted look at the types of interstate migration patterns we can expect to see in government-issued data once it becomes available. The 2020 National Movers Study shows Idaho, South Carolina, Oregon, South Dakota, and Arizona as the states with the highest proportion of inbound moves. New Jersey, New York, Illinois, Connecticut, and California saw the highest proportion of outbound migration. Inbound and outbound moves were nearly balanced in Colorado, Wisconsin, and Michigan. (Vermont also saw a high percentage of inbound moves but it was excluded from the survey’s rankings because the sample size was too small.) Reasons for the Moves In this study, United Van Lines tracks a few of the most common reasons that people pack up and move to a new state. While “state tax climate” is not a listed reason in this study, we can see glimpses of how taxes can affect decision-making. Taxes may have limited influence on whether someone takes a job, but they can influence where jobs are available. They can also influence where a person taking a position might locate. The latter is perhaps most visible in smaller states and states with metropolitan centers located near state borders. For example, tens of thousands of individuals work in greater Chicago but live in Indiana. Many interstate commutes are attributable to stark differences in tax landscapes, particularly property taxes. While it is difficult to measure the extent to which tax considerations factor into individuals’ moving decisions, there is no doubt that taxes are important in many individuals’ personal financial deliberations. With the rise of remote work, individuals are likely to be more mobile than ever. They are able to make decisions about where to live that are independent of where their employer is located. Another reason people moved was retirement. Top 10 States for Retirement-Motivated Moves, 2020 State Rank Delaware 1 Florida 2 South Carolina 3 Arizona 4 Wyoming 5 Idaho 6 New Mexico 7 Nevada 8 Maine 9 North Carolina 10 Note: Source: United Van Lines, 2020 National Movers Study It’s unsurprising that retirees gravitated toward states with good climates, but many of these top states also have tax climates that would be attractive to retirees. Nine out of these 10 states either […]

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4 Ways to Improve Your Company’s Sales

Most salespeople would tell you that there are few better feelings in life than closing a deal. This is because guiding a customer through the sales process and coming out the other side with dollars committed isn’t a matter of blind luck. It’s a craft — based on equal parts data mining, psychology, intuition and other skills. Many sales staffs were under unprecedented pressure last year. The COVID-19 pandemic triggered changes to the economy that made many buyers cut back on spending. Now that the economy is slowly recovering, sales opportunities may be improving. Here are four steps your salespeople can follow to improve the odds that those chances will come to fruition:  1. Qualify prospects. Time is an asset. Successful salespeople focus most or all their time on prospects who are most likely to buy. Viable prospects typically have certain things in common: A clear need for the products or services in question Sufficient knowledge of the products or services An identifiable decision-maker who can approve the sale Adequate financial standing A need to buy right away or soon. If any of these factors is missing, and certainly if several are, the salesperson will likely end up wasting his or her time trying to make a sale. 2. Ask the right questions. A salesperson must deeply understand a prospect’s motivation for needing your company’s products or services. To do so, inquiries are key. Salespeople who make great presentations but don’t ask effective questions tend to come up short. An old rule of thumb says: The most effective salespeople spend 80% of their time listening and 20% talking. Actual percentages may vary, but the point is that a substantial portion of a salesperson’s “talk time” should be spent asking intelligent, insightful questions that arise from pre-call research and specific points mentioned by the buyer. 3. Identify and overcome objections. A nightmare scenario for any salesperson is spending a huge amount of time on an opportunity, only to have an unknown issue come out of left field at closing and kill the entire deal. To guard against this, successful salespeople identify and address objections during their calls with prospects, thereby minimizing or eliminating unpleasant surprises at closing. They view objections as requests for information that, if handled correctly, will educate the prospect and strengthen the relationship. 4. Present a solution. The most eloquent sales presentation may be entertaining, but it will probably be unsuccessful if it doesn’t satisfy a buyer’s needs. Your product or service must fix a problem or help accomplish a goal. Without that, what motivation does a prospect have to spend money? Your salespeople must be not only careful researchers and charming conversationalists, but also problem-solvers. When you alleviate customers’ concerns and allow them to meet strategic objectives, you’ll increase the likelihood of making today’s sales and setting yourself up for tomorrow’s. 

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Top Year-End Tax Tips

As we’re all aware, 2020 has been an extraordinarily complex year — that complexity is reflected in taxpayers’ tax situations, whether they’re businesses or individuals. While there is plenty of time before this year’s tax returns need to be filed, the constantly changing economic situation, the presidential election, and the host of COVID-19 legislative provisions mean that some tax moves will only be effective if they’re made before the end of the year. We’ve brought together some of our best year-end tax-planning coverage, ranging from reminders of classic strategies to deep dives into rules specific to COVID-19 tax relief. For each article, we’ve highlighted a strategy or two, but they all offer a host of potential tax savings — for those who act fast. For businesses and individuals: In early October, Top 10 Firm Grant Thornton put together a list, a mix of strategies for both companies and individual taxpayers, including: Making sure to use the above-the-line charitable deduction Accelerating AMT refunds Taking advantage of new bonus depreciation rules from the CARES Act New for the end of the year: In an interview, Wolters Kluwer’s Mark Luscombe dives into some of the most important new year-end planning issues, including: Employee tax credits and deferrals related to payroll taxes that expire at the end of 2020 Tax provisions that offer retroactive relief The implementing expiration of the expanded ability to make penalty-free withdrawals from retirement plans Expiring Relief:  With a number of COVID-19 related tax relief provisions, Laura Davison of Bloomberg News talks about how year-end planning has been turbocharged. Here are the provisions set to expire: The removal of the cap on individuals’ business loss deductions The one-time deduction for charitable gifts for taxpayers taking the standard deduction Planning around the election:  Tax planners knew that the November election could have a major impact on year-end planning. Particularly, if a Biden win brought in a whole new approach to tax legislation. Accounting Today columnist Mark Luscombe, of Wolters Kluwer, offered strategies for both possible outcomes in Georgia, including: With a Republic win, focusing more on tax-loss harvesting and less on Roth IRA conversions With a Democratic win, preparing for the possibility of higher capital gains and income tax rates Three-quarters of the way there:  In a column just before the election, Wolters Kluwer’s Mark Luscombe summarized the year-end planning developments thus far in the year including: The restoration of NOL carrybacks for up to five years A number of COVID related corrections and extensions to the Tax Cuts and Job Acts of 2017 COVID-19 sick leave and family leave, and employee retention provisions Acceleration and declaration: After a “year like no other” this early December list from AG FinTax’s Anil Grandhi included tips on lowering taxes by: Accelerating business purchases Adding children or spouses to the payroll Deferring or accelerating income From one year to another: Not everything can be wrapped up by the end of the year. Accounting Today’s senior tax editor, Roger Russell, covers the issues from 2020 that will […]

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California Proposition 19

Scope – What is the purpose/ subject of this memo The purpose of this memo is to discuss California Proposition 19, which is also referred to as The Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act. This measure was approved by California voters in November 2020. This memo will provide an explanation of the new Proposition and compare it to the existing law. Additionally, the memo contains a list of topics to consider as a result of the passage of this new law.   Analysis – Existing Law (ARTICLE XIII A of the California Constitution) The existing law is under Proposition 13 which was passed in 1978. Under this law, the following was true: Property tax is limited to 1% of a home’s taxable value, based on when the home was purchased, and thereafter, the appraised value of the property when purchased, newly constructed, or a change in ownership occurs, subject to an annual inflation adjustment not to exceed 2%. For taxpayers 55 years or older or any severely and permanently disabled person residing in the property eligible for the homeowner’s exemption, they can transfer the base year value of that property to a replacement dwelling of equal or lesser value located in the same county, or another county that has adopted an ordinance allowing base years value transfers from other counties, as provided. Eligible taxpayers were able to utilize this one time. The purchase or transfer of the principal residence, and the first $1,000,000 of other real property, of a transferor in the case of a transfer between parents and their children, or between grandparents and their grandchildren if all the parents of those grandchildren are deceased, is not a “purchase” or “change in ownership” for purposes of determining the “full cash value” of the property for taxation. Additionally, there is a restriction on how much that taxable value can go up each year, even if a home’s market value increases much more.   Analysis – New Tax Law (Assembly Constitutional Amendment No. 11) Proposition 19 changes the existing law in the following ways: Homeowners who are 55 or older or who have lost a home in a natural disaster can now transfer their tax assessment from their previous home to a new more expensive home. This can be done up to three times, instead of the previous one-time allowance. The measure eliminates the exclusion for reassessment when a house transfers to a child or a grandchild. The child or grandchild must actually use the residence as their primary residence to avoid reassessment. Previously, there was no requirement for the inheritor to utilize the house as their primary residence. Topics to Consider Who does this help and how?   CA proposition 19 benefits homeowners who are 55 years old or older. When they move to a new and more expensive residence, they can blend the taxable value of their old house with the purchase price of a new, more expensive home, reducing […]

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Is a new COVID-19 bill coming? The house and the senate have been apparently working on another bill.

Here are the highlights from our perspective. On December 15, 2020, two bipartisan COVID-19 relief bills, the Bipartisan COVID-19 Emergency Relief Act of 2020 and the Bipartisan State and Local Support and Small Business Protection Act of 2020, were introduced that contain payroll-related provisions.   Background. Earlier in 2020, the federal government enacted legislation with COVID-19 relief provisions aimed at helping employers and workers. This included the Families First Coronavirus Relief Act (FFCRA) and the Coronavirus Aid, Relief and Economic Security (CARES) Act. Certain provisions in each bill provided aid for employers and workers such as the Paycheck Protection Program (PPP) and Pandemic Unemployment Assistance (PUA).   Negotiations for further COVID-19 relief legislation between the White House, Senate and Congress have stalled several times.   A new hope? However, the two bipartisan bills introduced in the Senate on December 15 may make it to the finish line before the end of the year based on the statements made by Senators who introduced the bills. According to Senator Joe Manchin (D-WV), who introduced “The Bipartisan COVID-19 Emergency Relief Act of 2020,” with other Senators: “We’re not going home for Christmas until this gets done.”   Senator Mitt Romney (R-UT) who, with other Senators, introduced “The Bipartisan State and Local Support and Small Business Protection Act of 2020,” noted: “This compromise represents the best path forward for Congress and the Administration to provide much-needed relief for the American people before the end of the year.” Senator Rob Portman (R-OH) added: “The Senate should not adjourn until we have passed a new COVID-19 package to provide the relief Americans need.” The Bipartisan COVID-19 Emergency Relief Act of 2020. A summary of The Bipartisan COVID-19 Emergency Relief Act of 2020 says it contains the following payroll-related provisions:   PPP and small business support.  This bill would provide $300 million to the Small Business Administration (SBA) to allow the hardest hit small businesses to receive a second forgivable PPP loan. Eligibility for these loans would be limited to businesses with 300 or fewer employees that have sustained a 30% revenue loss in any quarter in 2020.   Forgivable expenses would be expanded to include supplier costs and investments in facility modifications and personal protective equipment needed to operate safely. Also, business expenses paid for with the proceeds of PPP loans are specifically tax deductible, “consistent with Congressional intent in the CARES Act,” according to the summary.   In addition, the loan forgiveness process would be simplified for borrowers with PPP loans of $150,000 or less.   Unemployment assistance. The bill would also provide for a 16 week extension of all pandemic unemployment insurance programs, including PUA and pandemic emergency unemployment compensation (PEUC). The 16 weeks would run from the end of December 2020. It would also ensure beneficiaries of Railroad Retirement Board received the same benefits as other workers.   In addition, federal supplemental unemployment insurance benefits would be expanded by $300 per week for 16 weeks, from the end of December into April 2021. […]

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Tax Cuts and Jobs Act – State and Local Taxes Update

Summary The Tax Cuts and Jobs Acts (TCJA) limited the individual tax deduction of state and local taxes (SALT) to $10,000 for married filing joint and $5,000 for married fling separate, or single. We feel this limitation was done to offset tax reductions done to spur the US economy. This limitation hurt and increased income taxes for taxpayers that are residents in states with high taxes. Taxpayers and states have been looking for a method of getting around this tax deduction limitation. Various ideas have failed, but the IRS recently issued IRS Notice 2020-75 which provides some hope. In the notice the IRS is explaining that if a state makes a flow through entity (an S Corporation or Partnership) liable for the income tax, rather than the shareholders or partners, and the entity pays it, then that state tax is not limited. Many states have been looking for a way to help their residence, and the IRS has explained a way, but why hasn’t more states implemented this change if they really want to help their residence? Currently only seven (7) states have made this change.   Scope The purpose of this memo is to discuss Notice 2020-75 issued by Internal Revenue Service (IRS) on November 9, 2020, which allows state and local income taxes imposed on and paid by partnerships or S Corporations in computing its non-separately stated taxable income or loss for the taxable year of payment and are not subject to SALT limitation.   Background Tax Cuts and Job Acts (TCJA) limits the individual deduction of SALT to $10,000 (or $5,000 for married filing separately) for tax years 2018-2025. Due to this limitation, the notice cited that certain jurisdictions have enacted or contemplating to enact tax laws that impose either a mandatory or elective entity-level income tax on partnerships and S Corporations that do business in the jurisdiction or have income derived from or connected with sources within the jurisdiction. The notice pointed out that “certain jurisdictions provide a corresponding offsetting, owner-level tax benefit, such as full or partial credit, deduction, or exclusion” for taxes deducted at the Pass-Through Entity (PTE) level and that Treasury and IRS are “aware of the uncertainty as to whether entity level-payments made under these laws to jurisdictions described in §164(b)(2) other than U.S. territories must be taken into account in applying the SALT deduction limitation at the owner level”.   The notice also announced the IRS’s intention to issue a proposed regulation to provide clarity to individual owners of partnerships and S Corporations in calculating their SALT deduction limitations and clarify the Specified Income Tax Payments which are deductible by partnerships and S Corporations in computing their non-separately stated income or loss. Discussion/Analysis Reporting of Deduction in the Partnership or S Corporation Tax Return Based on the notice, SALT does not need to be separately stated. Thus, it would be expected that the deduction will be reported under “Taxes and Licenses” on Form 1065 or 1120S and will flow-through to partners/shareholders […]

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How Technology Can Steer You Through the Fast Lane of the Post-Covid World

Now, given the rapid changes in an uncertain economy affected by the virus, knowing how to utilize and navigate technology in the post-COVID world will be even more crucial for entrepreneurs, college graduates, other job seekers, and upwardly mobile professionals, says Tim Mercer, ForbesBooks author of Bootstrapped Millionaire: Defying the Odds of Business. “Corporate America is undergoing a major transformation,” says Mercer, who also is founder of IBOX Global (IBOXG), which provides technology services to government agencies and Fortune 500 corporations. “Technology is at the center of this seachange. The virus will have a tremendous long-term impact on the workplace, and the influence of technology will loom larger as a result of the lessons we’ve learned during this unprecedented time. “Company structures are appearing more tailored to the entrepreneurial mind. The evolving trend is working from home, smaller workplaces, and niche-focused businesses. The work is moving faster, and whether a business owner or freelancer, you must be agile and nimble to compete. All these changes can be good, but only if you are ready.” The Key To Success In The Post-COVID World Mercer says the key to success in the post-COVID world is understanding these business-related benefits of technology: The internet is the great equalizer for knowledge and opportunity “The internet is the driving force behind the access to today’s opportunities,” Mercer says. “With the global economy, and technology connecting so many of us to it simultaneously, success has more to do with your ability to identify the right opportunities and your desire to go after them.” While the internet enables someone to gain knowledge quickly, Mercer says it’s also important to be vigilant in discerning the quality of online sources. Leveraging technology correctly helps businesses run efficiently You don’t need to earn a degree in information technology or become a computer whiz to leverage the benefits of technology, Mercer says. “What’s most important is that you know how to use technology to achieve your business goals,” he says. “For example, through the power of tools like QuickBooks, I was able to manage the financial aspect of several of my businesses without having to hire a full-time finance team. Leverage the strength of technology to carry more of your workload while increasing your profitability.” Tech certifications can be more powerful than four-year degrees Many college graduates aren’t working in fields related to their majors, and today’s employers are increasingly shifting toward skills-based hiring for technology jobs. “With the demand in tech, that means certification programs are on the uptick, often providing a quicker and more cost-effective way of getting hired than does a four-year college degree,” Mercer says. “A person’s overall earning powers in tech can more than double. Our general educational system often doesn’t meet the demands of today’s business environment. Typical college grads and most students lack the skills required for today’s tech positions.” Freelancing and independent consulting are on the rise Gigging – taking on multiple freelance jobs – is growing in popularity, largely due to the growth in digital platforms and social media. […]

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5 WAYS TO GIVE BACK ON A BUDGET: GIVING SEASON FOR BUSINESSES

1. Collaborate with a Charity There are several different ways giving businesses can collaborate with charities. Perhaps the most public way is to donate a portion of sales to a charitable organization. Also, you can prompt buyers to round up to the nearest dollar or make a larger donation at checkout. This puts your partnership with the organization square in front of your customers. This spreads awareness around not only a cause important to the business but sharing the mission of the specific organization. 2. Reward Referrals with Donations Incorporating donations into a referral program is a great way to encourage engagement among current customers. This is in addition to giving back and boosting sales. For example, small business owners can set up a referral program to support local schools. Customers can pick a local school to receive a donation or new school supplies with every successful referral. 3. Take a Day off to Volunteer Together There is evidence to support that volunteering lowers stress and helps us live longer. However, finding time to volunteer is difficult no matter how motivated we are. 4. Food and Clothing Drive An alternative to taking time away from work, that also engages employees, is organizing a food and clothing drive. A good way to bring in more goods is to set up a friendly competition, breaking staff up into multiple teams. A prize for the winning team is letting them pick a charitable organization that the business will make a donation to. 5. Pro-Bono Work Finally, business owners and their employees can give back to communities by offering their services to local organizations. For example, a small event planning firm can organize a silent auction, or a boutique ad agency can create an advertisement for a local charity. There are a multitude of ways to apply business skills to make an impact.

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Security Warning for COVID Related Scams

The Security Summit, a coalition of the IRS, state tax agencies, and the private sector tax industry, is warning taxpayers about a new text scam that tricks people into disclosing bank account information under the guise of receiving the $1,200 Economic Impact Payment (EIP). The text message states: “You have received a direct deposit of $1,200 from COVID-19 TREAS FUND. Further action is required to accept this payment into your account. Continue here to accept this payment” This is followed by a link to a fake phishing web address. The IRS reminds taxpayers that it will never send texts asking for bank account information. Those targeted by the scam should take a screen shot of the text message and email it to phishing@irs.gov with the (1) date, time, and time zone that they received the message; (2) the number that appeared on their caller ID; and (3) the number that received the text message. News Release IR 2020-249. If you receive any notice like this, please contact us to discuss if we can be of assistance.  

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Fantasy Sports Entry Fee Constitutes a Wagering Transaction

    In a recent Chief Counsel Advice (CCA), the IRS concluded that the entry fee to participate in a Daily Fantasy Sports (DFS) contest constitutes an amount paid for a wagering transaction under IRC Sec. 165(d). The IRS noted that DFS transactions meet the definition of wager , as interpreted by the Tax Court and state courts, because (1) there is an uncertain event (such as the live performance of individual players), (2) winnings if the event resolves in the participant’s favor, and (3) consideration is lost if the event does not resolve in the participant’s favor. According to the IRS, DFS transactions are similar to poker and other wagers in which a player’s skill is a component of the game, but does not dictate the outcome. CCA 202042015. Copyright © 2020 Thomson Reuters/PPC. All rights reserved.

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