Most retirees must take required minimum distributions by Dec. 31

The Internal Revenue Service reminds retirement plan participants and individual retirement account owners that payments, called required minimum distributions, must usually be taken by Dec. 31.

Required minimum distributions (RMDs) generally are minimum amounts that retirement plan account owners must withdraw annually starting with the year they reach 72 or, if later, the year they retire. However, if the retirement plan account is an IRA or the account owner is a 5% owner of the business sponsoring the retirement plan, the RMDs must begin once the account holder is age 72, even if they’re still working. RMD amounts not timely withdrawn from accounts may be subject to penalties.

Individuals who reached 70 ½ in 2019, (70th birthday was June 30, 2019 or earlier) did not have an RMD due for 2020, but will have to take one by Dec. 31, 2021.

Individuals who reach 72 in 2021 (and their 70th birthday was July 1, 2019 or later) have their first RMD due by April 1, 2022.

The required distribution rules apply to:

  • Owners of traditional Individual Retirement Arrangements (IRAs)
  • Owners of traditional Simplified Employee Pension (SEP) IRAs
  • Owners of Savings Incentive Match Plans for Employees (SIMPLE) IRAs
  • Participants in various workplace retirement plans, including 401(k), Roth 401(k), 403(b) and 457(b) plans

Roth IRAs do not require distributions while the original owner is alive.

An IRA trustee, or plan administrator, must report the amount of the RMD to the IRA owner. An IRA owner, or trustee, must calculate the RMD separately for each IRA owned. However, they can choose to withdraw the total amount from one or more of the IRAs. In contrast, RMDs required from workplace retirement plans must be taken separately from each plan. Not taking a required distribution, or not withdrawing enough, could mean a 50% excise tax on the amount not distributed.

The RMD is based on the taxpayer’s life expectancy and their account balance. Often, a trustee will use Form 5498, IRA Contribution Information, to report the RMD to the recipient. For most taxpayers, life expectancy used to calculate the RMD is based on Uniform Lifetime Table III in Publication 590-B, Distributions from IRAs. Individuals can use online worksheets on IRS.gov to figure the RMD.

2020 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. A 2020 RMD that qualified 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 2020 withdrawal from an inherited IRA could not be repaid to the inherited IRA but may be spread over three years for income inclusion.

Courtesy of the Internal Revenue Service

IRS online tools and publications can help
Taxpayers can find frequently asked questions, forms and instructions and easy-to-use tools at IRS.gov.

Need tax assistance? Call our office at 816-524-4949 or visit our website to schedule a consultation.

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No Showing of Ineffective Counsel Over Transgender Identification

In an action for confinement as a sexually violent predator, appellant had the right to effective trial counsel, but challenging the judgment requires appellant to advance a theory to the Court of Appeals. The theory might be “the meaningful-hearing standard [,]” or the failure-and-prejudice standard, but appellant made no showing under either. Appellant “presents no evidence that her identification as a transgender woman would in fact make her less dangerous to reoffend” nor how “a reasonable attorney would [have shown that] identification as transgender would have rendered her any less dangerous to reoffend or would have reasonably affected the outcome of her trial.” Instructions specified the offenses on which the jury could find appellant a sexually violent predator and so did not mislead the jury.

In the Matter of the Care and Treatment of Jerry Davis, a/k/a Jerry M. Davis, Jr., a/k/a Jerry Miller Davis, Jr. vs. State of Missouri
(Overview Summary)
Missouri Court of Appeals, Western District – WD83673

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Bankruptcy Filings Continue to Fall Sharply

Personal and business bankruptcy filings fell 29.1 percent for the 12-month period ending Sept. 30, 2021. A steady decline in filings has continued since the coronavirus (COVID-19) crisis began.  

Business filings fell 27.9 percent, from 22,391 to 16,140 in the year ending Sept. 30, 2021. Non-business bankruptcy filings fell 29.1 percent, to 418,400 compared with 590,170 in the previous year.

The 12-month percentage drop nearly matched the previous quarterly filings report, when new bankruptcies filed in the 12 months ending June 30, 2021, were 32.2 percent lower than in June 2020.

Unemployment temporarily spiked in March 2020, when the COVID-19 emergency intensified. However, several factors may have impacted individuals’ decisions about whether to file for bankruptcy since the crisis began. For instance, increased government benefits and moratoriums on evictions and certain foreclosures may have eased financial pressures in many households.

If you’re considering bankruptcy, call us at 816-524-4949 or visit our website to schedule a consultation to discuss your options.

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U.S. Gave $3.7 Billion in Relief to Likely Ineligible Businesses, Auditor Finds

A rushed emergency aid program for small businesses affected by the pandemic improperly sent nearly $3.7 billion to recipients prohibited from receiving federal funds, according to a government audit. The Small Business Administration’s Economic Injury Disaster Loan program distributed more than $210 billion in loans and grants last year in a hurried attempt by the Trump administration to help companies keep up on their bills as the coronavirus led to shut downs.

The agency failed to do a legally required check of applicants’ identifying details against the Treasury Department’s Do Not Pay system. This system was set up in 2011 to reduce improper payments to people who are dead, convicted of tax fraud or barred from receiving federal contracts, among other red flags. The SBA’s inspector general, Hannibal Ware, found 117,135 applicants who got grants and 75,180 recipients who got loans showed matches in the system indicating a “high likelihood” that the payments were improper. Isabella Casillas Guzman, who became the agency’s administrator in March, has said that she heightened the SBA’s fraud controls over its COVID-19 relief programs. It was only in April of 2021 that the SBA began checking Do Not Pay records before sending out funds.

If you’re struggling financially and would like to know more about your options, call us at 816-524-4949 or visit our website to schedule a consultation.

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Credit-Card Applications Hit Pandemic High

Americans are applying for credit cards at a rate not seen since before the pandemic. Nearly 27% of U.S. consumers said in October that they had applied for a credit card in the past 12 months, which is a sharp increase from the record low of 16% recorded a year ago. Despite the new Omicron variant of the coronavirus and supply chain issues, the rebound in credit card applications suggests that Americans may just be on their way back to more normal times.

Struggling with credit card debt? Call us at 816-524-4949 or visit our website to schedule a consultation to discuss your options.

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No Benefits on Losing Second Job

Multiple sources establish 40 hours per week as full-time employment, which claimant had with her first job, so the loss of a second job was irrelevant to any provision for employment security benefits.

(Overview Summary)

Della Scheumbauer, Claimant/Appellant, vs. City of St. Louis, Employer/Respondent, and Division of Employment Security, Respondent.
Missouri Court of Appeals, Eastern District – ED109260

Out of work and struggling financially? Give us a call at 816-524-4949 or visit our website to schedule a consultation and determine your best option.

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IRS announces changes to retirement plans for 2022

Next year taxpayers can put an extra $1,000 into their 401(k) plans. The IRS recently announced that the 2022 contribution limit for 401(k) plans will increase to $20,500. The agency also announced cost‑of‑living adjustments that may affect pension plan and other retirement-related savings next year.

Highlights of changes for 2022

The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased to $20,500. Limits on contributions to traditional and Roth IRAs remains unchanged at $6,000.

Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If neither the taxpayer nor their spouse is covered by a retirement plan at work, their full contribution to a traditional IRA is deductible. If the taxpayer or their spouse was covered by a retirement plan at work, the deduction may be reduced or phased out until it is eliminated. The amount of the deduction depends on the taxpayer’s filing status and their income.

Traditional IRA income phase-out ranges for 2022 are:

  • $68,000 to $78,000 – Single taxpayers covered by a workplace retirement plan
  • $109,000 to $129,000 – Married couples filing jointly. This applies when the spouse making the IRA contribution is covered by a workplace retirement plan.
  • $204,000 to $214,000 – A taxpayer not covered by a workplace retirement plan married to someone who’s covered.
  • $0 to $10,000 – Married filing a separate return. This applies to taxpayers covered by a workplace retirement plan

Roth IRA contributions income phase-out ranges for 2022 are:

  • $129,000 to $144,000 – Single taxpayers and heads of household
  • $204,000 to $214,000 – Married, filing jointly
  • $0 to $10,000 – Married, filing separately
Courtesy of the Internal Revenue Service

Saver’s Credit income phase-out ranges for 2022 are:

  • $41,000 to $68,000 – Married, filing jointly.
  • $30,750 to $51,000 – Head of household.
  • $20,500 to $34,000 – Singles and married individuals filing separately.

The amount individuals can contribute to SIMPLE retirement accounts also increases to $14,000 in 2022.

Need tax assistance? Call us at 816-524-4949 or visit our website to schedule a consultation.

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Business Records Were Not Hearsay

Hearsay is an out-of-court statement offered for the truth of the matter stated. On charges of stealing, the State offered rental records to show how property manager stole money, so the records were not hearsay. And, even if they were, the State provided the foundation for admissibility of business records as required by statute: the sponsoring witness was familiar with the records, and records bore indicia of reliability as described by statute. Statutes provide that property manager’s course of conduct, stealing rents, constituted a single act so no plain error occurred when instructions did not treat the case as a multiple acts case.

State of Missouri vs. Candy M. Phillips
Missouri Court of Appeals, Western District – WD83458

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Service by Publication Sufficient

“Insofar as such a proceeding affects status only, the action [for dissolution of marriage] is in rem or quasi-in-rem and requires only that the res be before the court upon proper notice” to the parties. Notice to a party by publication is sufficient only when that party voluntarily appears, which appellant did by motion to dismiss, which challenges service by publication but not personal jurisdiction. And what appellant really sought was more time to make an appearance.


Susan Ball vs. Robert K. Ball, II
(Overview Summary)
Missouri Court of Appeals, Western District – WD83640

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Here’s how businesses can deduct startup costs from their federal taxes

When starting a business, owners should treat all eligible costs incurred before beginning to operate the business as capital expenditures that are part of their basis in the business. Generally, the business can recover costs for assets through depreciation deductions.

For costs paid or incurred after September 8, 2008, the business can deduct a limited amount of start-up and organizational costs. They can recover the costs they cannot deduct currently over a 180-month period. This recovery period starts with the month the business begins to operate active trade or as a business.

Business start-up costs

Start-up costs are amounts the business paid or incurred for creating an active trade or business, or investigating the creation or acquisition of an active trade or business. Start-up costs include amounts paid or incurred in connection with an existing activity engaged in for profit, and to produce income in anticipation of the activity becoming an active trade or business.

Qualifying costs

A start-up cost is recoverable if it meets both of the following requirements:

  • It’s a cost a business could deduct if they paid or incurred it to operate an existing active trade or business, in the same field as the one the business entered into.
  • It’s a cost a business pays or incurs before the day their active trade or business begins.

Start-up costs include amounts paid for the following:

  • An analysis or survey of potential markets, products, labor supply, transportation facilities, etc.
  • Advertisements for the opening of the business.
  • Salaries and wages for employees who are being trained and their instructors.
  • Travel and other necessary costs for securing prospective distributors, suppliers, or customers.
  • Salaries and fees for executives and consultants, or for similar professional services.

Nonqualifying costs
Start-up costs don’t include deductible interest, taxes, or research and experimental costs.

Purchasing an active trade or business
Recoverable start-up costs for purchasing an active trade or business include only investigative costs incurred during a general search for or preliminary investigation of the business. These are costs that help in deciding whether to purchase a business. Costs incurred to purchase a specific business are capital expenses that can’t be amortized.

Courtesy of the Internal Revenue Service

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