Michael Gray, CPA's Tax and Business Insight

July 1, 2022

© 2022 by Michael C. Gray

ISSN 1539-395X

A monthly report to help you prepare for your financial future, keep more of what you earn by minimizing your taxes, and build an extraordinary business!

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Mike receiving the Silicon Valley, San Jose chapter, CalCPA Distinguished Achievement Award
From right to left, myself, Janet, Dawn and John (Dawn's husband), when I received the Silicon Valley, San Jose chapter, CalCPA Distinguished Achievement Award on June 15, 2022

Happy July 4!

It seems to me we have a lot to be grateful for on the 246th birthday of the United States of America. Our country and government aren't perfect. The mechanics are in place to make them better. It's up to We the People to take action and make it the best we can, especially by voting and writing to our representatives in Congress. Have a safe July 4!

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Family celebrations.

My daughter, Dawn and her husband, John Siemer, celebrate their wedding anniversary this month. Happy anniversary, Dawn and John! My son, James is celebrating his birthday this month. Happy birthday, James!

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Need help with getting your extended tax returns, amended returns, and elections done?

To make an appointment, contact Thi Nguyen, CPA at thi@atl-cpa.com.

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Standard mileage rates increase.

The IRS has announced the standard mileage rates for deducting business use of a vehicle are being increased effective July 1, 2022. The business use rate is increased from 58.5 per mile to 62.5 per mile. The rate for medical and moving costs is increased from 18 per mile to 22 per mile. Alternatively, the taxpayer may account for actual expenses. See your tax advisor.

Note the standard mileage rate for use of a vehicle for charity doesn't get adjusted. It's 14 per mile.

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IRS continues to be buried with paper-filed returns.

The National Taxpayer Advocate reports that, at the end of May, 2022, the agency had a backlog of 21.3 million unprocessed paper tax returns, an increase of 1.3 million over May, 2021. As a result, millions of taxpayers are experiencing delays in receiving their tax refunds. If possible, efile your income tax returns and payroll tax returns. When you paper file, prepare to wait a l--o--n--g time for your tax return to be processed. Be sure to use certified mail when you file to have a record that the IRS received your return. If possible, avoid overpaying your tax liabilities when you will be paper filing your returns.


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Missed code results in disallowed California passthrough entity credit.

According to the Franchise Tax Board, several taxpayers have had their passthrough entity tax credits disallowed on their 2021 California Personal Income Tax Returns because they didn't enter the code number 242 for the credit claimed. If the alternative minimum tax applies, the credit is claimed on Schedule P. If it doesn't apply, the credit is claimed on Form 540. The Franchise Tax Board is issuing a Notice of Tax Return Change when it disallows the credit. Tax return preparation software should handle the credit correctly. If yours wasn't, contact your tax return preparer or software provider.

(Spidell's Flash E-Mail: Passthrough Entity Elective Tax Credit Notices, Spidell Publishing, June 23, 2022.)

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No document? No deduction!

A taxpayer donated a collection of Native American jewelry and artifacts to a museum. She attached a deed she received from the museum and didn't attach a separate agreement referenced in the deed. The Tax Court said it was unclear whether additional terms, including the museum's statement that no goods or services were provided in exchange, were part of the donation, and disallowed the deduction for the charitable donation. Note the deed didn't include the required "No goods or services were provided" statement.

Please be especially careful when documenting noncash charitable contributions. Just missing a form or a required phrase can result in losing your tax deduction.

(Albrecht v. Commissioner, T.C. Memo. 2022-53.)

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No innocent spouse relief for payroll trust fund taxes.

A corporation failed to pay withheld federal payroll taxes withheld from employee paychecks to the IRS. A taxpayer was a co-officer of the corporation with her husband. The IRS said the taxpayer was responsible to pay the taxes as a responsible party. The taxpayer claimed she should be eligible for innocent spouse relief. The Tax Court held that, since the tax wasn't a joint tax liability relating to a joint income tax return, the taxpayer wasn't eligible for innocent spouse relief and she owes the taxes.

(Chavis v. Commissioner, 158 T.C. No 8 2022.)

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Child or grandchild has a part-time or summer job? Consider making a gift to their Roth IRA account.

A Roth IRA grows tax-free. The maximum contribution is the lesser of $6,000 or the earnings of the child or grandchild. The contribution for 2022 must be made by April 17, 2023. A contribution by someone other than the child or grandchild is a taxable gift, qualifying for the $16,000 annual exclusion. Be sure to communicate within the family to avoid more than $6,000 being contributed to an individual's Roth IRA account.

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Do you sell services or software to CPAs?

Maybe I can help with writing promotional material and marketing ideas. Call me, Michael Gray, at 408-918-3161 or email mgray@taxtrimmers.com.

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Do you love Disney?

I have created a Facebook group, called Disney Magic, for members to share Disney photos, experiences and tips. I am also posting developments for Disney films, television shows, and amusement parks there. If you are on Facebook, you can use this URL to join: https://www.facebook.com/groups/2006739209578437/, or search "Groups" on Facebook. You have to use the "join" button to join the group. This is a private group, and I will approve your membership.

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Attention Accountants! Speed up processing your 2020 business closings!

Do you still have 2020 business income tax returns on extension that need to be done? Check out this trial balance software, EZ Trial Balance, that's super-easy to set up and use. There is a desktop version and an online version. The online version includes consolidations and ratio analysis for analytical review. http://www.eztrialbalance.com

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Attention business owners with remote workers or remote customers!

Are you concerned about protecting your conversations and communications from hackers? Now there is a secure collaboration application including (unlimited) team member assignments, video conferencing (no Zoom bombing!), text messaging, voice messaging, PDF capture, electronic signature and large file transfer. Remote computer access feature is almost complete. Communications take place in a secure envelope. Cloud application so no installation is required on your computer network. Meets IRS security standards. http://www.securelycollaborate.com

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Check my blog for coronavirus-related tax developments.

We have been sending most of my blog posts relating to coronavirus-related tax developments to you. You can find them at www.michaelgraycpa.com.

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Please share your good experiences with Michael Gray, CPA.

As you know, more and more people are going to the internet to find information about service providers. We hope you will share some good words about experiences that you have had with our firm<. Some of the sites where you can share your experiences include yelp.com and siliconvalley.citysearch.com.

We use Angie's List to assess whether we're doing a good job keeping valued customers like you happy. Please visit AngiesList.com/Review/4258970 in order to grade our quality of work and customer service.

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Financial Insider Weekly past episodes

After eight years of production, I have discontinued producing new interviews for Financial Insider Weekly. Doing the show has been a rewarding experience and I consider back episodes to be my legacy of financial literacy education to our community. Back episodes available at https://www.youtube.com/user/financialinsiderweek.

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Michael Gray regrets he can no longer personally answer email questions. He will answer selected questions in this newsletter.

For your questions about dependent exemptions, see IRS Publication 501 at www.irs.gov.

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Visit our new article!

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Follow me on Social Media!

Want to see new episodes of Financial Insider Weekly as soon as they're posted on Youtube? Want to see Michael Gray's blog posts as soon as they're live? We post them (and more) on social media!

If you enjoy Twitter, please follow me at www.twitter.com/michaelgraycpa. I would especially appreciate retweets of our messages announcing episodes of Financial Insider Weekly.

I'm also on Facebook, LinkedIn, and Google+.

you can also follow me on other social media sites, Facebook, LinkedIn, and Google+.

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Check out my blog.

I have also started a blog at www.michaelgraycpa.com. Check it out!

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Michael Gray, CPA
2482 Wooding Ct.
San Jose, CA 95128
(408) 918-3162
FAX: (408) 938-0610
Hours: 8am - 5pm PDT Monday - Friday

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