FLORIDA ESTATE PLANNING AND PROBATE LAW BLOG

The Florida Estate Planning and Probate Law Blog is focused on recent federal and state case law and planning ideas.

2019 INCREASE IN CHARITABLE GIVING

♠ Posted by Marc J. Soss in ,,,,,,
Americans gave nearly $450 billion to charity last year, which is one of the highest amounts ever recorded. This number comes as lawmakers have been looking for ways to expand tax breaks for donors amid the coronavirus pandemic. Charitable donations rose 2.4 percent in 2019 according to an annual survey by Giving USA. Individual giving accounted for about 69% of all donations, but the biggest jump came from the generosity of corporations. In 2019, businesses gave about $21 million, an increase of 11.4% from 2018. Also, giving by foundations reached a record high of $75.7 billion. "In March, lawmakers included a measure in the coronavirus economic rescue bill that allows individuals to write off as much as $300 in donations for 2020 even off they don't itemize their taxes."Typically, deductions for charitable donations are only afforded to those who itemize their tax returns or add up all of their individual tax breaks, which is only about 10% of taxpayers.
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2020 RHODE ISLAND SALES TAX ON COMPUTER SOFTWARE AND STREAMING ENTERTAINMENT SERVICES

♠ Posted by Marc J. Soss in ,,,,
On June 24, 2020, the Governor of Rhode Island signed into law S2650 Substitute A, which expands the state’s sales tax base to computer software and specified digital products (streaming entertainment services), including digital audio-visual works, digital audio works, and digital books. The law also clarifies the definition of the “end-user” of a digital product in order to comply with the Streamlined Sales & Use Tax Agreement. The act is immediately effective. The law is designed to avoid sanctions by a state compact working toward sales tax harmonization. The tax is only on sales to end-users and is imposed regardless of whether the right to use the specified digital products is on a permanent or less than permanent basis and whether the purchaser must make continued payments for such right.
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HOME OFFICE DEDUCTION UNDER COVID-19

♠ Posted by Marc J. Soss in ,,,,
The government ordered shut down resulting from the spread of Covid-19 has resulted in an increased number of employee’s working from home. Many of these employee’s have inquired whether they can deduct expenses for their newly created home offices. The general rule is that expenses that otherwise might be deductible are disallowed with respect to a “dwelling unit” used by a taxpayer as a residence. However, expenses are allowed for a home office if “a portion of the dwelling unit” is used regularly and exclusively: (i) as a taxpayer’s principal place for any trade or business; (ii) as a place where patients, clients, or customers regularly meet or deal with a taxpayer in the normal course of business; or (iii) in the case of a separate structure not attached to the residence, in connection with a taxpayers business. Expenses attributable to business use may also be deductible if the use of the home is used regularly though not exclusively (i) for storage of inventory, product samples in a taxpayer’s trade or business or (ii) to provide licensed daycare services. The requirement that there be an “exclusive use” of a portion of the dwelling unit is satisfied only if there is no use of that portion of the dwelling at any time during the year that is not a qualifying business use. Further, incidental or occasional use does not qualify and the burden is on the taxpayer to prove that a portion of the residence has been used on a regular basis for business purposes. However, the Tax Cuts and Jobs Act of 2017 suspended the deduction for miscellaneous itemized deductions that included unreimbursed employee business expenses for tax years 2018 thru 2025. Therefore, employee’s sent home by their employers to work during the pandemic cannot deduct any of their home office expense even if they otherwise would qualify.
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STAFFORD ACT TAX RELIEF

♠ Posted by Marc J. Soss in ,,,,
On February 13, 2020, President Trump invoked the Stafford Act, and opened the door to a range of possibilities in structuring “qualified disaster mitigation” payments to employees under IRC Section 139. These payments are advantageous to both employers and employees and not subject to income taxes or payroll taxes. Yet, an employer is still allowed to claim them as a deduction. Expense reimbursement that can be considered “reasonable and necessary” as a result of the “qualified disaster” cannot simply be income replacement, such as sick, vacation, etc. The expenses you are reimbursing need to be: (i) expenses that are not otherwise covered by insurance; and (ii) “reasonably related” to personal, family, medical or housing expenses related to the “qualified disaster.” There is no stated cap or limit on the amount you can issue as tax-free reimbursement. Further, the IRS has made clear that if the reimbursement amount is “reasonable,” you do not need to require documentation to substantiate the expense from your employees. Examples include: A company sent employees to work from home with a $250 stipend for the equipment they need and a $50/month allowance for internet and phone service; employer is paying for employees’ transportation costs so they can avoid public transit systems; company issues all employees on temporary layoff a $1,000 stipend as housing assistance during that time; and a company is reimbursing hourly employees for up to $100 per day in childcare costs.
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IRS Notice 2020-18 Extends Tax Filing Deadline in 2020

♠ Posted by Marc J. Soss in ,,,,
IRS Notice 2020-18 has postponed this year's tax filing deadline to July 15, 2020. It is important to note that it extends only income tax and self-employment filings and payments and does not extend the time to file or pay employment taxes, estate taxes, gift taxes, excise taxes, information returns or any other federal tax or user fee filings. Taxpayers have until July 15, 2020, to pay income taxes without incurring penalties or interest, with no limit as to the amount of tax that may be deferred (previous IRS guidance, Notice 2020-17 limited the amount of tax that could be deferred). These postponements do not require a taxpayer to file an extension. However, if taxpayers are unable to file by July 15 they should request an extension. The IRS is encouraging taxpayers who are due a refund to go ahead and file. Refunds should arrive within 21 days of filing according to IRS.gov. The extension to July 15, 2020, also applies to Federal estimated income tax payments applied to the 2020 tax year (including payments of tax on self-employment income) normally due on April 15, 2020. However, the Notice does not provide guidance as to the June 15, 2020, estimated tax payment date. The time to respond to IRS notices also has not been extended. Taxpayers should review all tax notices and comply with the deadlines specified in the notice. Failure to do so could waive important rights such as the right to a collection due process proceeding.
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