What You Need To Know About Advanced Child Tax Credit Payments

What You Need To Know About Advanced Child Tax Credit Payments

Advanced Child Tax Credit Payments in 2021

Among the many changes that have happened within the IRS, the one change that is grabbing attention is the Advance Child Tax Credit Payment. This means that if you have eligible dependents you will receive advanced monthly payments of the increased Child Tax Credit that you would normally see on your year end tax return. This can result in some tax planning issues if you are not careful.

This is not another stimulus payment. This is the IRS sending you your refund earlier than normal. If you normally have a balance due after the child tax credit, this can result in a larger liability at year end if you do not prepare accordingly.

To opt out of the Advance Child Tax Credit Payment you can do so at https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021

Just click on the “Unenroll from Advance Payments.”

Be sure to talk with your tax advisor about how this affects your personal situation.

Where Is My Tax Refund?

Where Is My Tax Refund?

The IRS is swamped. As it struggles to manage processing issues due to the pandemic and last-minute changes from the latest tax credits approved by the Biden administration, there’s one painful consequence for many Americans: a potential delay in receiving their tax refund.

In 2020, the IRS closed its offices due to the pandemic. This created a backlog of unprocessed paper 2019 tax returns the IRS is still catching up on—and that’s not even counting the high-volume of 2020 tax returns being submitted.

The IRS says that several services are affected by these issues, including a slowdown of reviewing newly filed tax returns—even if they’re filed electronically. This in turn can delay the issuing of refunds.

Delays in receiving your tax refund can be frustrating but you can go online to the IRS website and check the status of your refund by going to: https://sa.www4.irs.gov/irfof/lang/en/irfofgetstatus.jsp

 

 

2021 Important Dates & Deadlines

2021 Important Dates & Deadlines

2021 Important Dates & Deadlines

In an effort to keep you up to date on all important deadlines, we have put together is a list of deadlines.

January 15, 2021- Quarterly estimated business tax payments for the period from September 1 to December 31, 2020.

January 31, 2021 – Payroll Prior Year Quarterly filings due, Forms W-2/W-3 are due.

February 1, 2021 – Forms 1099 deadline

February 28, 2021- Forms 1099-MISC that do not report NEC in box 7 and that are provided on paper must be submitted to contractors and the IRS.

JFS DEADLINE: February 19, 2021 – 2020 IRS tax returns for partnerships and S corporations are due unless an extension is requested.

  • IRS DEADLINE: March 15, 2021

JFS DEADLINE: March 24, 2021 – Tax day! April 15 is an important deadline for many types of tax filing. Individuals and C corporations using the calendar year for accounting purposes must submit their 2019 state and federal tax returns.

  • IRS DEADLINE: April 15, 2021

April 15, 2021- First Quarter Estimated Tax Payment Deadline

April 30, 2021 – First Quarter Payroll Tax reports due

JFS DEADLINE FOR CALCULATION: May 31, 2021 -Quarterly estimated business tax payments for the period from April 1 to May 31, 2021.

  • IRS DEADLINE June 15, 2021 – Payment Due

July 31, 2021 – Second Quarter Payroll Tax reports due

JFS DEADLINE FOR CALCULATION: August 31, 2021 – Quarterly estimated business tax payments for the period from June 1 to August 31, 2021. Partnerships and S corporations that requested an extension must submit their final 2020 returns by this date.

  • IRS DEADLINE September 15, 2021 – Payment Due

JFS DEADLINE: September 24, 2021 -Tax returns due for taxpayers that submitted an extension by April 15.

  • IRS DEADLINE October 15, 2021

October 31, 2021 – Third Quarter Payroll Tax reports due

JFS DEADLINE: December 5, 2021- Year-end Meetings must be scheduled by this date.

JFS DEADLINE: December 20, 2021- Requests for 1099, W2, W3, and all year-end filings must be made.

JFS DEADLINE: December 30, 2021- Quarterly estimated business tax payments for the period from Oct 1 to December 31, 2021.

  • IRS DEADLINE January 15, 2022-Payment Due
Overview of Pandemic Relief Bill

Overview of Pandemic Relief Bill

Overview of Pandemic Relief Bill

Below is a summary of the stimulus relief for businesses that is part of the Consolidated Appropriations Act, 2021 (H.R. 133) which was signed into law on 12/27/2020.

Paycheck Protection Program second draw

Congress has created a PPP second draw available to smaller businesses that can show their business has been impacted by the pandemic. The second draw offers a similar package to the PPP offered out of the Cares Act earlier in 2020. There have been some changes and limitations put in place for the second draw including:

  • Company size is smaller. The employee limits are reduced to 300.
  • Companies will have to show a 25% or more reduction in revenue for an individual quarter in 2020 compared to 2019. This requires comparing quarterly financials for each quarter of 2020 to each quarter in 2019.
  • Expansion and adjustment to the Employer Retention Credit

Calculation of loan: The loan calculation follows the same rules as it did under the Cares Act with the exception that you can choose to use payroll amounts from the calendar year 2019 or the 12 months immediately preceding the date of the loan application.

Deductibility of expenses forgiven under the PPP and PPP second draw

Under original guidance from the Department of Treasury, the expenses paid with funds from the PPP loans were not deductible. The passing of this new bill has clarified that the treatment of the forgiveness will be as tax-exempt income. The forgiveness amount will not add-back the forgiveness as income or result in any reduction in expenses paid.

PPP simplified forgiveness application

A simplified application (one-page) will be released for loans of $150,000 or less in the coming weeks. Currently, applications exist for loans of $50,000 or less only. We will provide more details when the Department of Treasury releases the new application.

Tax deduction for 100 percent of business meals starting January 1, 2021

Currently, a business may take a tax deduction of 50% of business meals. Starting on January 1, 2021 and ending on December 31, 2022, all meals from restaurants will be 100% tax deductible.

Second round of stimulus checks/direct deposits

  • Stimulus payments should start being processed in the coming week(s).
  • $600 for everyone ($1200 per couple)
  • $600 for children age 17 and under.
  • There are several online calculators that can be used to determine the projected amount of the second stimulus check. You will need your 2019 Adjusted Gross Income, which can be found on line 8b of form 1040.
  • Here is a calculator from Forbes: https://www.forbes.com/advisor/personal-finance/second-stimulus-check-calculator-payments/

Enhanced unemployment benefits

Individuals on unemployment can receive an extra $300 per week for up to 11 weeks starting on December 26, 2020. The $300 is not retroactive and is good through March 14, 2021.

Updates to Mandatory Sick Pay Starting January 1, 2021  

 

Colorado Department of Labor and Employment (CDLE) issued a ruling in November 2020 that stated the Public Emergency Portion of Colorado’s Healthy Families & Workplace act would not kick in unless there was a public emergency declared on, or after January 1, 2020.  

On December 23, 2020, the CDLE issued emergency rules stating that a declaration of a “Public health emergency” related to COVID-19 had triggered the requirements to provide 80 hours of paid leave for COVID-19 needs that employees may use as of January 1, 2021. Part-Time employees may accrue fewer hours.   

This ruling is different from the 80-hour COVID leave in 2020 which was based on federal paid leave law and was in effect through the end of 2020.  This new ruling means that all Full-Time employees will immediately accrue 80 hours of public emergency leave (relating to COVID-19) on January 1, 2021. In addition to the 80 hours, employees will also start accruing one hour of sick leave for every 30 hours worked.  

 

All We Want for Christmas…

All We Want for Christmas…

All We Want for Christmas…

Dear Santa IRS,

All of us accountants have been very good this year! We adapted to all the changes, filed every form, and didn’t even complain about all the unopened letters, unanswered phone calls, and mysterious Stimulus checks. We are sure we are on the nice list this year!  Just to make things easier for you, we have created a list of everything we want for Christmas Tax Season this year.

 

  1.  A Smiley Face System on all IRS letters

Everyone uses emojis now, why can’t the IRS get on board? This simple system would cut down on the 5 stages of grief experienced by our clients (and even accountants) when they get a letter. The Smiley Face would work like this:

Each letter would have a face on the envelope indicating the severity of the letter.

😃 “Refund!”

😊 “Nothing bad, just letting you know something is up”

😐 “We need to talk”

🤬 “Call your accountant now!”

 

  1.  Get rid of your fax machine!

Honestly, this one is a gift for you more than it is for us. If you haven’t noticed, not even people’s grandmothers use fax machines. There are plenty of other ways to receive a letter, like an email or text even! We know it’s hard to get rid of antiques, but it is time.

 

  1. Add a Too Long Didn’t Read To all your notices and updates

The IRS has somehow mastered creating letters that evoke a feeling of being extremely overwhelmed at the same time as being bored to death.  Half of an accountant’s job is to read the notices our clients don’t read because they have too much anxiety around it or don’t understand it because it is written in 1830’s Victorian English.

We know that these IRS notices aren’t meant to be as engaging as an issue of Cosmo. We aren’t asking for Notices titled “10 Ways to Drive your Auditor Crazy (Number 5 Will Shock You!)”, but it would be nice if you could add a little summary at the top for those not fluent in “Taxiense”.  Remember: if it can’t be made into a tweet, most people won’t read it.

 

  1.  Get with the times

Now we aren’t asking you to get on TikTok – although watching your Appeals department explain why someone’s request is being denied while doing the Renegade would be highly entertaining- it would be nice to be able to have clients sign things remotely.

Even without a pandemic, it’s like scheduling a rocket launch to get clients to come into sign.

“Why can’t I just sign remotely?”

We don’t know, Sally! We wish you could too.

  1.  Never change the tax deadline again

Seriously.

Don’t worry, we will keep being very good until the end of the year and even leave a 10 Key and black coffee out for you. We can’t wait to unwrap all our gifts this year!

 

Eagerly Waiting,

Accountants

 

 

 

 

 This post was made in collaboration with Xtreme Movement