On May 1st and 2nd, the Jerry Loyola Foundation held its eleventh annual “Battle for the Belt” fundraiser at Spring Hills Golf Course. The foundation’s mission is to provide financial assistance to families battling cancer and to support junior golf. It serves to honor the memory of Jerry Loyola, a skilled young golfer who lost his battle with cancer in 2009 at the age of 24. Wheeler Accountants LLP provides tax preparation services for the foundation and is recognized as a major sponsor.

Dennis Campbell represented the Wheeler Team once more this year, participating alongside fifty-seven other entrants; nineteen in the scratch division, thirteen in the senior scratch division (players 55 years of age or older) and twenty-five in the net division. Greg Auer was the winner of the scratch division, taking the belt with an eleven under par total of 131 and defeating the runner up by thirteen strokes! Steve Perez won the senior scratch division with a two day total of 159 strokes, and Roy Ramirez took the handicapped division with a net total of 137.

Going forward, the tournament directors seek to affiliate with the Northern California Golf Association, and plan for two events each year. The scramble tournament will take place in August and will be the major fund raiser, while the individual golf tournament for the coveted belts will take place each summer. Participating in these events is a great way to honor Jerry’s memory and support a meaningful cause.

Congratulations to all who participated!

Wheeler Accountants is thrilled to share that Alex Baron is this year’s first employee of the quarter!

One of our newest staff accountants, Alex joined the firm in June 2020 and quickly became a rising star. She sets a high bar for herself and her colleagues by achieving consistent results, providing quick turnarounds on tax returns and other projects, and providing excellent insights into our clients’ needs. Alex has played a crucial role this tax season helping the firm keep pace – her fierce work ethic and sharp attention to detail make her a welcome member of the Wheeler Team.

Congratulations to Alex!

The Paycheck Protection Program Extension Act of 2021 was signed into law on March 31, 2021, extending the deadline to apply for a loan by an extra 60 days, from March 31 to May 31, 2021. The law also gives the Small Business Administration (SBA) an additional 30 days after the May 31 deadline to review and process loan applications.

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On March 12, following the American Rescue Plan Act’s approval and signing, the IRS began sending out the third round of Economic Impact Payments. Most payments were sent out via direct deposit, but approximately 150,000 checks were mailed by the Treasury Department as well. Taxpayers who received EIP1 or EIP2 but didn’t receive a third payment (EIP3) via direct deposit will generally receive a check or, in some instances, a prepaid debit card (EIP Card).

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The federal income tax filing due date for individual taxpayers, including individuals who pay self-employment tax, has been extended to Monday, May 17, 2021, for the 2020 tax year. There is no need to file any forms to qualify for this automatic federal tax filing and payment relief.

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Signed into law on March 11, 2021, the American Rescue Plan Act (ARPA) contains several tax provisions affecting individuals and families. Let’s take a look:

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The Coronavirus, Aid, Relief, and Economic Security (CARES) Act made it easier to access savings in IRAs and workplace retirement plans for those affected by the coronavirus. This relief provided favorable tax treatment for certain withdrawals from retirement plans and IRAs, including expanded loan options.

Distributions: Certain distributions made from Jan. 1, 2020, through Dec. 30, 2020, from IRAs or workplace retirement plans to qualified individuals may be treated as coronavirus-related distributions. These distributions are not subject to the 10% additional tax on early distributions (including the 25 percent additional tax on certain SIMPLE IRA distributions).

Taxes on coronavirus-related distributions are includible in taxable income:

• Over a three-year period, one-third each year, or
• If elected, in the year you take the distribution.

Coronavirus-related distributions may be repaid to an IRA or workplace retirement plan within three years.

If you had an outstanding loan balance when you left employment, the plan sponsor usually offsets the loan balance against your benefit.

• For loan offsets in 2020, you have until the due date of your tax return (plus extensions) to repay that amount to another retirement plan or IRA.
• If you’re a qualified individual, you can treat the loan offset as a coronavirus-related distribution and have three years to repay to an IRA or include in income tax ratably over three years.

RMDs: An IRA owner or beneficiary who received an RMD in 2020 had the option of returning it to their account or other qualified plan to avoid paying taxes on that distribution. RMDs in 2020 that were not rolled over or repaid may be eligible to be treated as coronavirus-related distributions if the individual is a qualified individual. A 2020 RMD that otherwise qualifies as a coronavirus-related distribution may be repaid over a 3-year period or have the taxes due on the distribution spread over three years.

A withdrawal from an inherited IRA to a qualified individual may also be a coronavirus-related distribution. Income from the withdrawal may be spread over three years for income inclusion; however, the withdrawal may not be repaid to the inherited IRA.

The one rollover per 12-month period limitation and the restriction on rollovers to inherited IRAs did not apply to repayments made by August 31, 2020. The RMD suspension did not apply to qualified defined benefit plans.

The CARES Act included special rules for plan loans made to qualified individuals. Plans could suspend loan repayments for up to one year. However, typically, repayments resumed in January 2021 effectively give up to six years (instead of five) to repay a typical plan loan.

As always, don’t hesitate to call the office with any questions:

San Jose: (408) 252-1800

Watsonville: (831) 726-8500

The gig economy is also referred to as the on-demand, sharing, or access economy. People involved in the gig economy earn income as a freelancer, independent worker or employee. Typically, an online platform is used to connect people with potential or actual customers to provide goods or services. Examples include renting out a home or spare bedroom and providing meal delivery services or rides.

During the pandemic, many people joined the ranks of the gig economy to help make ends meet. Whether you are part of the gig economy because it’s a primary source of income or want to make extra money with a side business, all taxpayers need to understand that they must report gig economy income on their tax return.

Here’s what you should know about the gig economy and your taxes:

1. Money earned through this work is usually taxable.

2. There are tax implications for both the company providing the platform and the individual performing the services.

3. This income is usually taxable even if:

• The taxpayer providing the service doesn’t receive an information return, like a Form 1099-NEC, Form 1099-MISC, Form 1099-K, or Form W-2.
• The activity is only part-time or side work.
• The taxpayer is paid in cash.

4. People working in the gig economy are generally required to pay:

• Income taxes.
• Federal Insurance Contribution Act or Self-employment Contribution Act tax.
• Additional Medicare taxes.

5. Independent contractors may be able to deduct business expenses. These taxpayers should double-check the rules around deducting expenses related to the use of things like their car or house. They should remember to keep records of their business expenses.

6. Special rules usually apply to rental property also used as a residence during the tax year. Taxpayers should remember that rental income is generally fully taxable.

7. Workers who do not have taxes withheld from their pay have two ways to pay their taxes in advance. Here are these two options:

• Gig economy workers who have another job where their employer withholds taxes from their paycheck can fill out and submit a new Form W-4. The employee does this to request that the other employer withholds additional taxes from their paycheck. This additional withholding can help cover the taxes owed from their gig economy work.
• The gig economy worker can make quarterly estimated tax payments. They do this to pay their taxes and any self-employment taxes owed throughout the year.

For more information on the gig economy, please call the office:

San Jose: (408) 252-1800

Watsonville: (831) 726-8500

A new form is available for self-employed individuals to claim sick and family leave tax credits under the Families First Coronavirus Response Act (FFCRA). The FFCRA, passed in March 2020, allows eligible self-employed individuals who, due to COVID-19, are unable to work or telework for reasons relating to their own health or to care for a family member to claim refundable tax credits to offset their federal income tax.

Self-employed individuals who are eligible for the credits determine their qualified sick and family leave equivalent tax credits by using a new IRS form, Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals. The tax credits are equal to either their qualified sick leave or family leave equivalent amount, depending on circumstances.

For leave taken between April 1, 2020, and December 31, 2020, taxpayers can claim the credit on 2020 tax returns (on Form 1040). They can also claim the credit next year when filing their 2021 tax return (Form 1040) for leave taken between January 1, 2021, and March 31, 2021.

Filing Form 7202

Eligible self-employed individuals are those who:

• Conduct a trade or business that qualifies as self-employment income, and
• Are eligible to receive qualified sick or family leave wages under the Emergency Paid Sick Leave Act or Emergency Family and Medical Leave Expansion Act as if the taxpayer was an employee.

As always, taxpayers must maintain appropriate documentation establishing their eligibility for the credits as an eligible self-employed individual. Please don’t hesitate to call if you need assistance calculating the credit, determining if you are eligible, or have any other tax questions.

San Jose: (408) 252-1800

Watsonville: (831) 726-8500

Congratulations to Nick and his family!