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welcome to dollars and cents hosted by sanjeev gupta cpa dollars and cents is the show about growing more of what you are making saving more of what you are growing and making more of what you are growing and saving in the most sensible and tax efficient manner possible feel free to call in to our studio number to be live on air with your questions call 408 912-5038 that's 408 912-5038 and here is your host of dollars and cents sanjeev gupta cpa good evening friends this is your own cpa sanji gupta cpa welcome to today's information packed dollars and cent show where we we are going to discuss a lot of important topics uh for the for the listeners for the benefit of listeners in our dollar topic segment we are going to cover things that we need to take care by january 31st four days from now january 21st is going to come so what things we have to take care what things have to be filed and mailed out we are going to talk about that in our dollar topic segment in our dollar update we have two important things which we want to discuss what are those uh we have first thing is uh we know the apple stock up is not going it was was lower this uh today but apple revenue topped 100 billion dollars for the first time on iphone sales first time in the quarter that's that's a great news for apple i always believe in apple stock because uh it has uh is not only based on uh software sales it's based on it has asset sales assets also strong it's a very strong company by the way and the second thing we know the stock market today tanked because the federal reserve for the chairman powell said they are not leaving the they're not increasing the interest rate and they're going to keep it for a year or two and the federal reserve blessed to continue making huge purchases of government bank bonds as the central bank tries to help the u.s economy whether this pandemic ongoing ongoing head we know that there is a lot of deficiencies in vaccine distribution about 44 million doses of of vaccine are distributed but only 24 million people are have those vaccines on their arms so this is this difference of 20 million doses not being not been given to people on their arms president biden has promised to buy more millions doses and promised that there will be an effort all-time effort by the government to make sure that most of the people got get vaccines and this pandemic comes to an end by end of this summer hopefully this will come back this will this will realize and this will help people to come out and start living their normal life how quickly that will happen well if we have to see we have to wait and watch and what happens and and take it from there any questions really taxation any question you're looking to get answer to from a cpa tax professional this is the time to connect with me i'm on air the phone number here at the studio is 408 912-5038-408-912-5038 any question relating for an income disclosure any income any question relating to uh uh ppp uh dollar bpp segments like uh first first phase and second second phase any question related to capital gains computation estimated tax payment any question which you have been doubling to you and looking to get an answer is your time to call us with a number 408 912-5038 my firm sanjikuta cpa has offices in fremont sunnyvale and president and we have a team of experienced cpas cas eas and experienced accounting professionals who are not only worst in on u.s tax rules and regulations but also with indian tax rules and regulations and have been very instrumental in providing excellent services to our client and satisfaction to our client in those areas myself not only a cpa but also an experienced charter accountant having practice in india for 10 plus years before coming to u.s and i've been dealing with all complex accidents which you can think about that is individual taxes business taxes trust taxes give tax returns all those complexities we have been dealt with studio number is open 408-912-5038 for your question in our dollar topic segment today we're going to discuss few things about what should be taken care of before january 31st comes so we have some callers here let me take this call good evening to sanyukta cpa hey good evening how are you i'm fine thank you for the call um yeah i had a question if somebody had a house sale um in 2020 and the proceeds from the house sale um what is the rules for uh taxing for the the cap for the gains from the house sale so we have to look at at this whether the house is a primary residence or a rental property or investment property or are like just a like a commercial property so what is this property is a primary or rental investment it was a primary residence and uh you know it was held for more than five years yes so if he is primary residence the rule says that if you are owning and using that home for two out of five years before you sell it five years start from the date you own it and five years end at the date when you when you sell it so far in that five year period if you own and use that house for two for two out of those five years your gain is excluded up to half a million dollars now if you have again exceeding half a million dollars then you're subject to a long-term capital gains federal and california if you're in california africa you have to pay california taxes the federal is about 15 to 20 tax on that gain in exceeding half a million dollars now 15 is up to if you're married falling joint agi if your age is up to 496 thousand dollars 15 you have to pay federal and if if your agi exceeded aj is a total income if your total income exceeds 496 000 then pilot taxes becomes 20 from 15 there's a 3.8 percent medicaid tax also there if your total income exceeded 250 000 uh that now agi again total income is includes the capital gains of more than half a million in that total income so your federal tax is 15 to 20 plus medicaid tax of three point eight percent if your total income exit uh uh 250 thousand dollars plus california taxes of six percent start from six percent and goes up to thirteen point three percent depending upon your income levels income level exceeding one million plus so roughly you're looking around uh 25 to 30 tax on that income that exceeded half a million dollars now can what can you do to avoid those taxes you can look into qualified opportunity funds quof you have a time of six months to invest in those in those funds so you can google online and find out about those strategies qrf or you can look at some kind of donor advice funds there's certain studies where you can look into uh like complex studies like crts other things which which which we which i have to explain on another time but definitely you can look into that but but that the taxes are about roughly around 25 to 35 on that gain that exceed half a million dollars okay got it so only on the gain of about half a million and then is there any rule like if you reinvested to buy another house can you avoid the tax 1031 exchange is related only and only to the investment or rental properties not related to primary residence sales okay got it okay thank you very much well thank you that's a very important question and good question listeners if you have any questions you can call us today number 408 912-5038 we have another caller on the line good evening sanju the cpa hello sanjeev how are you i'm fine thank you for the call one one quick question uh i have is regarding the reporting of the income from house property in india if you are a residence here and you know you are a permanent resident and you are in u.s and then you have a property in india which you have purchased in your put on rent so in the in the past if you have forgot you know not intentionally you know due to some reasons if you forget to report that income minimal income whatever you had it was not going to be taxable in india because it was so minimal but from the u.s standpoint should we report that my my belief is yes but i think in the past i have not so what is the ideal way to get that uh reported or if even if we need to report it you know that's very good that's a very good question and we have been talking about on this for a long time but again uh just answering to a question about not reporting the foreign rental income on your tax returns so there are two things you have to look into number one uh if the rental income is substantial means anything more than twenty five thousand dollars in a rental income over the year uh on a yearly basis is substantial then we have to look at certain other aspects like amnesty programs other things but if the rental income is not substantial it's material like to report it even for a dollar that is less than 25 000 then you can report you can go back and amend your return for last two years or three years because uh sexual limitation allows for three years amendment going back you can amend those last three years amendment make make the return comply with those requirements of reporting that rental income and getting the rental expenses getting the depreciation up to date on that on that property so it's important it can do go back and amend those three years now if you have the the second aspect is if you have assets like foreign assets like bank accounts and other things where the rental income is going there and you're investing that money in another you know any like putting that money in a cd or investing that money into mutual funds or investing in another assets and that is growing also then this is different aspect then we have to look at the amnesty programs like streamlined domestic official procedure and make sure that you comply with those requirement if you don't if you don't have those things then you can go ahead and amend those the last three years returns and become compliant with uh with the starting from those three years now you cannot just um you cannot just forget to you cannot just start doing it for the current year because if you're doing for current year the chances are the iris can come back and say what happened to priorities and then you will be in a bigger soup so it's better to do it properly and in the proper manner is to go ahead and amend the those returns those years return which are open and and getting get in the line with compliance okay so just a fourth quick follow-up question sanjeevji when you go and amend so ideally you're saying that uh before you file currently a text return go back and amend the barrier once if you want to or you should ideally if it's less than 25k so when i when i do that start that process will that say file one amendment will that trigger the irs question at that you know what is going on or they'll say you know what let's let's see as a whole they will wait for it you know just want to use yes will it trigger something immediately no no so it can figure it can guide us can can always come back and say what happened to those years which was which which you're not filed in that case you can say i can go ahead and file those cs written as long as you can open that return and if you get a notice you can file those years return as well as of today as of now you cannot file the prior year you cannot go back beyond three years because those here are closed as per the statute limitations okay so they know it so you are still in compliance form thank you for the call that's very great question thank you so listen if you have any questions is it time to call the studio number student line is open 408 912 5038 if you're looking to get an answer to a question on capital gains stock sales people have been doing a lot of stock trading i've been looking at definition of data there's a lot of calls coming for day trading whether i'm day trader and all those things if you're looking for getting answer to that question or looking for real estate law because yesterday is going up this year this time it's really fantastic going up or if you're looking for a foreign income like we have the scholar asking for foreign income uh definitely just a time to call the story number is 408-912-5038 let's go to our uh the topic of the of the show which is about the year of january 31st filing for the business owners the employer must file the copies of w-2 this is known as w3 forms which by january 31st is very important to give to the employees this w-2 the employees when they receive this w-2 form please and please make sure that you are looking at those w-2 form open that envelope look at the form see those items on the form is correct or not don't just bring that envelope to your cpa and then open it in the envelope and the cpa comes back and say oh man i see that withholding of taxes is very low or the state is not withholding is not done properly or the or the medic or medical uh your contributor medical hsa plan is not reflected or the retirement plan box is not checked or is checked but you've not contributed so w2 is a very very important form that one should look into and more important during this covert scenario when you're working from home and your employer might be located in different state and that's create a lot of problems because your w2 will say different state withholding while you're working in a different while you're deciding a different state you have gone back to your family because of covet and now you have an issue with with that with the state of sending you notices so it's important this time please open the envelope look at the w2 form look tick mark all the information that you see on w2 and make sure that that whatever information is provided on w2 is correct if you report anything wrong please notify the employer so that they can notify their payroll companies and get the correct w to form for you so that you can file the written like file written correctly i've seen a lot of people they go to the cpa and cpa says oh i see this problem i see that problem and the employee says oh man i paid so much taxes i don't know why this happened and all this thing backtracking this taking the and then it goes to the employer they have to collect w2s and all those things happens so avoid all those problems make sure that w-2 is correct and employer make sure that you're issuing that w-2 in the right manner after getting confirmation from the employee that their w2's information is correct with the correct social security number and remember if the resource security number is wrong or tax id numbers mentioned different tax id numbers should not be mentioned in w-2 but some information not right it might also impact your economic impact payment eip payments uh which is very big because last year 2020 you received uh one per eip economic payment we call it stimulus payment of twelve hundred dollars uh if your medical joint is twenty four hundred dollars plus you're going to receive uh the the kovid relief tax bill that government bill that was passed on december 28th and it had twelve hundred dollars that is equal to thirty six hundred dollars if those information is not right so make sure you lose that benefit as well important thing about january 31st is the 1099 and miscellaneous and nec which got this is known as non-employee compensation new form that has come up if you're you're a business owner you're making a payment to a contractor who is a sole proprietor a partnership or a llc and you provide and you're paying them what is six hundred dollars in a year you should not be issuing them 10 19 miscellaneous because that box on 1099 miscellaneous which is known as box number seven non-employee compensation has been taken out from the 1099 miscellaneous and put on a new form which is called which is called as 1099 and ec so so so if you're paying them more than more than six hundred dollars you have to issue that 1099 and ec not 10 and 10 miscellaneous and that 1099 technical nec is going to be e-filed with the irs but they're not going to share that information with the california franchise tax board make sure that you mail out a copy of the form 1099 and ec to the state as well don't assume that the state will have those forms which is and they can penalize you because they will come to know from the tax written that you file with the federal that you're missing this 1099 ec compensation so and you know that ftp makes money not from the taxes but also from the penalties and interest very very high amounts so not don't make them richer by not doing proper things so technical nsc is the form that you have to use and intended missions is the form that you need to still there but you need to issue 1099c if you are paying rent to to the landlord if you're making making payments to an attorney okay this this here is full of maybe lawsuit and everything subpoenas and depositions and you're adding attorneys for rental agreements for other things and you'll be making payments to them definitely issue a 1099 the miscellaneous to attendees so uh still those those things are royalties payment if you're making any royalties payment 109.99 if your issue if you're if you're getting if you if you're paying interest and that then interest is also important so dividends all those things are important forms that needs to be done by january 31st it's important date remember that important date of january 31st last time i did talk about proposition 19 i know i have to talk about that this time but i i took this topic today because i think that january 31st is going it's very coming very very very near to this deadline i don't want listeners who are business owners and employees to miss that important information which we are discussing right now proper proposition 19 is definitely a very important thing i will definitely take this topic next week but this is this is important that for all the business owners you have to make sure that by january 31st issued a w-2 properly uh issued a 1099 ec 100 missingness what about the sales tax the fourth quarter 2020 is due on april 30 on on january 31st by the way do you know that this california department of tax and fee administration cdtfa has provided uh because of the california government's provided if a time they have extended this filing till april 30th fourth quarter has been extended april 30th don't have to make any payment by by by january you don't have to file it's automatic filing and the filing date is april 30th 2021 fourth quarter and first quarter 2021 they have extended till august 2nd 2021 so it's a very good thing remember this in your mind talk to your accountant make sure they understand this because it gives you cash flow which you can use it for time for going over this crisis of over 19 which is really giving which is really giving a lot of problems right now and you can see those caddy numbers on that on the tv whenever i open the tv screen i see those numbers oh man this numbers are going crazy and it gives me a heartburn and saying well really so we all have to make sure that we are taking all the precaution we are taking we are very close to the deadline we are very obvious i will not say deadline i will say line we are very close to that line we just have to cross over it and it will take some time maybe three more months maybe four months four more months but we will be there we'll be there only thing is you have to take the exhibit like proper precautions and do it properly so this uh so january 31st is a big day for a lot of things w2s 1099s sales tax what about payroll tax returns quarter four payroll tax returns and then definitely there's a time for business owners to report that of payroll tax returns it's important that they do take care of it we are coming to very close of very few minutes are remaining on the show this is a time for all the listeners who have a question burning question and they want to want to get this question answered the time to connect with us and the cpa on air the studio station number this is 408 912-5038-408-912-5038 and we can take this uh um any question that you're asking so anything else like by january 31st also important thing we have to consider is closing the books of the corporation you need to close the books if you are a corporation llc's and partnership so that you can report proper books proper things for the upcoming tax filing time of march 15. now what about our webinar which is happening on january 30th this is a good this is a webinar on ppp loans update second ppp loan forgiveness for first load and second loan not to be missed people are asking question one after the other how should i qualify for second ppp loan with reduction in gross receipt what are ways and means to do that whether i should apply forgiveness whether i should not apply forgiveness how should we take this forward what are the ways and means to get it so we are doing this on january 30th this saturday time is 10 to 12 registration is on open as a website send you cpa.comgivcpa.com and register there is a good it's a great webinar going to be with all the information that you need to get the maximum amount of your loans and get the forgiveness for that money we have a caller here let me take this call put in this sanji gupta cpa hey hi um so i have a question uh so like you know so we already received our w2s and um a few of the tax consultants they are filing our taxes and they have given a tax estimation for standard and the other one is they are telling a standard and there is one more uh i'm not sure what is that name but uh based upon the residential rental property they have shared in pdf document okay and they are telling we will be filing based upon those scenarios and uh we are getting more than what we expect than the standard deductions so is it feasible for us to go ahead and file in that accident yeah you can go ahead i'm not very clear about the question but anyway if your ticket if you're saying that they have taken out taxes uh based upon some document like a sale or something uh with planning so if they file with standard with planning uh the amount a refund what we are getting is 4673 and the standard shows something around like 2800 bucks so you're getting more refund you're saying you should you they're giving that's okay whatever information they're provided you can go ahead and report those things but if you want more information as we are coming very close to the end of the show you can call me after the show and the phone number is six 510-825-7563 okay thank you for the call really appreciate that we are coming close to that show but next time next week i promise i will take the proposition 19 and i hope everyone is keeping staying at home safe this is a horrocks horrific week with with winds howling and constant rains and floods and everything in the bay area just keep keep keep keep yourself safe in your home and thank you for listening and we'll meet you next week next wednesday 6 30 same time thank you thank you for tuning in today to dollars and cents hosted by sanjeev gupta cpa tune in next wednesday and every wednesday at 6 30 p.m if you have any questions about the program or its related topics you can get in touch directly with sanjeev gupta cpa by calling 510-825-7563 that's 510-825-7563 or visit sanjeevcpa.com if your business has made a lot of profit and you are looking for ways to substantially reduce your tax liabilities by taking the full benefits available under tcga and the cares act then set up a consultation appointment before the 2020 tax year runs out call sanjeev gupta cpa today at 510-825-7563 that's 510-825-7563 visit sanjeevcpa.com keep bollywood's best music in your pocket all day every day download the volume 92.3 app for your iphone or android and take us with you you