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Starting in late January, IRS is sending out letters to recipients of the third Economic Impact Payment. The notes are intended to help determine if you are entitled to and should claim the recovery rebate credit on your 2021 tax return. Please make sure to include the letter with your 2021 organizer and tax documents.
The IRS Is Sending Out Letters About Stimulus Checks to Millions of Taxpayers This Month - NewsBreak Don't panic if a letter from the IRS unexpectedly shows up in your mailbox this month. Tons of Americans are getting them — and the message inside (probably) has nothing to do with an audit. Starting in late January, the IRS is sending out letters to recipients of the...
IRS EXTENDS FILING DEADLINE TO MAY 17
The Internal Revenue Service announced today that the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021.
The IRS will be providing formal guidance in the coming days.
The postponement applies to individual taxpayers, including individuals who pay self-employment tax.
Penalties, interest and additions to tax will begin to accrue on any remaining unpaid balances as of May 17, 2021.
The postponement does not apply to estimated tax payments that are due on April 15, 2021. These payments are still due on April 15.
The federal tax filing deadline postponement does not apply to state filing and payment deadlines.
Tax Day for individuals extended to May 17: Treasury, IRS extend filing and payment deadline | Internal Revenue Service IR-2021-59, March 17, 2021 — The Treasury Department and Internal Revenue Service announced today that the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021.
Below is a summary of the American Rescue Plan for Act 2021 (H.R. 1319) for individuals. The bill was signed into law on 3/11/2021.
Special information that may impact individuals who received unemployment in 2020:
For taxpayers who received unemployment in 2020 and have an Adjusted Gross Income of $150,000 or less, the first $10,200 of unemployment received is considered non-taxable. Adjusted Gross Income determination is made without including the unemployment received.
**Our firm will provide future guidance to our clients that may be impacted.**
**This is only in effect for 2020. This does not impact your unemployment benefits received in 2021.**
Individual tax provisions in 2021
Many of these tax provisions are for Tax Year 2021 only. Continuation of these items will require congress to extend these provisions.
2021 Recovery Rebates
As many individuals received Economic Impact Payments (stimulus checks) in 2020 and early 2021, another round of rebates will be distributed in the coming weeks. The eligible credit is $1,400 for single taxpayers and $2,800 for married filing joint filers. A credit of $1,400 is also available for eligible dependents. The income limits and phaseout for the recovery rebates will be determined by your 2020 tax return (if it has been filed), otherwise will default to income on your 2019 tax return.
There are a number of online calculators that can be used to determine the projected amount of the third stimulus check. If your 2020 return has been filed, you will need your Adjusted Gross Income amount, which can be found on line 11 of Form 1040. Otherwise, you will need your 2019 Adjusted Gross Income, which can be found on line 8b of Form 1040.
Here is a link to a calculator to calculate your recovery rebate: https://www.forbes.com/advisor/personal-finance/third-stimulus-check-calculator/
Child Tax Credit (currently in place for 2021 only)
The Child Tax Credit has been increased to $3,000 per child ($3,600 for certain children under 6). The child tax credit is now applicable to children under 18. The child tax credit in 2020 was $2,000 and applicable for children under 17.
Advance Payments of the Child Tax Credit
Along with changes increasing the Child Tax Credit, the Department of Treasury will also begin sending advance payments of the credit. This means you will get a monthly amount during the year instead of getting the full credit when doing your tax return.
**This means your traditional tax refund may be lower starting in 2021 or the amount you traditionally owe may be more than usual.**
**The IRS will send you a tax form reporting all advance payments you received. This form will be required to complete your return.**
**For children born during the tax year, you will not receive an Advance Payment in the first year, you will receive the credit with your tax return.**
Dependent Care Benefits (currently in place for 2021 only)
The Dependent Care Credit has multiple changes in place for 2021.
1. The calculation of the credit is now 50 percent of the eligible expenses.
a. The calculation traditionally has been 35 percent of eligible expenses.
2. The amount of eligible expenses is now $8,000 for one qualifying child or $16,000 for two or more qualifying children.
a. The amount of eligible expenses was $3,000 for one qualifying child or $6,000 for two or more qualifying children.
3. There is still an income phaseout for the credit. It was increased from starting to phase out at $15,000, to beginning to phase out at $125,000.
4. Starting in 2021, the credit is now a refundable credit. The credit traditionally was only allowed if the taxpayer had sufficient tax liability. Starting in 2021, the amount in excess of the tax liability will be included in the tax refund.
**Example of how this impacts an individual. The credit now goes from a max of $1,050 for one qualifying child (35 percent of $3,000) or $2,100 for two or more qualifying children (35 percent of $6,000) to $4,000 for one qualifying child (50 percent of $8,000) and $8,000 (50 percent of $16,000).**
Employer Provided Dependent Care Benefits (currently in place for 2021 only)
Dependent care benefits offered through an employer (reducing taxable income) have been increased for 2021. The amount of dependent care benefits that can be excluded has been increased from $5,000 to $10,500 per family.
Earned Income Tax Credit Expanded (currently in place for 2021 only)
The Earned Income Tax Credit has been expanded to most individuals 19 and over instead of 25 and older and will no longer have a maximum age of 65.
The credit income limits and phaseout have also been increased. The credit has also been expanded to certain married filing separate filers.
Student Loan Forgiveness (for Tax Years 2021-2025 currently)
Certain student loan debt forgiven between in 2021 through 2025 can be excluded from gross income. Currently, the amount of student loan forgiveness is considered taxable income.
Our Tax System Explained in Beer. We hope you all have a great weekend!
2020 was a year like no other. Stay safe today as you ring in 2021. Our team wishes you all a healthy and Happy New Year!
We wish you all a Happy Thanksgiving! Our office will be closed on Thursday, November 26 and Friday, November 27. Enjoy your holiday and stay safe!🦃🍁
The IRS has made a major change to 2020 tax reporting. Payments made to nonemployees which were previously reported on Form 1099-MISC Box 7, must now be reported on Form 1099-NEC, Nonemployee Compensation. While the information reported on the new form has not changed, business owners should be proactive in preparing to meet this new requirement.
There’s A New Tax Form - With Some Changes - For Freelancers & Gig Workers Last year, the Internal Revenue Service introduced a draft version of a form that we haven’t seen since 1982: Form 1099-NEC, Nonemployee Compensation.
Our office will be closed on July 3, 2020 (Friday) in observance of Independence Day. Enjoy your weekend and celebrate safely!
NO VIRGINIA, THERE IS NO SANTA CLAUS!
Below is an opinion letter from the Virginia Secretary of Finance. Here are the key takeaways:
- Virginia income tax payments are due June 1st
- Interest on underpayments starts from May 1st (This
Governor Northam has submitted a budget amendment to House Bill 29 and House Bill 30 to waive interest on income tax payments originally due during the period from April 1, 2020 to June 1, 2020 if payment is made by June 1, 2020. If approved by the General Assembly at their April 22 reconvened session, this waiver of interest would apply to TY 2019 final payments and extension payments. Any addition to tax otherwise applicable to estimated payments for the first quarter of TY 2020 would also be waived, provided the payment is made by June 1, 2020.
- Penalties will be waived on final payments made by June
1, provided at least 90% of the tax is paid.
- If the required payment is not submitted by June 1, the
penalty waiver will not apply, and penalties will accrue
from the original payment due date (May 1st).
Letter to the Editor, April 12, 2020: Sorting out confusion of state tax deadline Sorting out confusion
Happy April 15th, everybody!
Taxman -- George Harrison and Eric Clapton (live) Live in Tokyo Japan, it's George Harrison and Eric Clapton. Two names that, said togather, echo greatness through out the world.
Coronavirus Tax Relief
The income tax filing deadline is moving from April 15, 2020 to July 15, 2020 and all taxpayers and businesses will have this additional time to file their tax returns and make payments without interest or penalties on account of the Coronavirus Disease 2019 (COVID-19) emergency. This relief also includes estimated tax payments for tax year 2020 that are due on April 15, 2020 and June 15, 2020. The IRS will automatically provide this relief to taxpayers. Taxpayers do not need to file any additional forms or call the IRS to qualify for this relief. Associated interest, additions to tax, and penalties for late payment will also be suspended until July 15, 2020. The IRS encourages taxpayers getting a refund to file as soon as possible. The fastest and best option for getting refunds is to use the IRS e-file program with direct deposit.
IRS Coronavirus Tax Relief Information
The IRS has established a Coronavirus Tax Relief web page focused on steps to help taxpayers, businesses and others affected by the Coronavirus. Updated information will be provided as it becomes available from the IRS.
Coronavirus Tax Relief and State Filing and Payment Deadlines
Relief due to the Coronavirus Disease 2019 (COVID-19) emergency only applies to federal income tax payments otherwise due April 15, 2020, not state tax payments or deposits or payments of any other type of federal tax. State filing and payment deadlines vary and are not always the same as the federal filing deadline. Several states have announced their own relief due to the Coronavirus Disease 2019 (COVID-19) emergency and we encourage tax professionals to check with their state tax agencies for those details. The latest information is available at State Tax Agencies. https://www.taxadmin.org/covid-19-filing-extensions
Coronavirus Tax Relief and Economic Impact Payments | Internal Revenue Service We are offering help for taxpayers, businesses, tax-exempt organizations and others – including health plans – affected by coronavirus (COVID-19).
Please visit our website to stay updated on all areas of tax filings and business processes affected by COVID-19. New information is added as the situation develops.
COVID-19 Updates | David N. Hainsworth, CPA, PC David N. Hainsworth, CPA, PC, offers accounting and tax services to businesses and Individuals near the Fairfax, VA area.
VIRGINIA TAX FILING AND PAYMENT DEADLINES (DIFFERENT THAN FEDERAL)
Even though 2019 Federal tax filing and payment date is now July 15, 2020, Virginia income tax filing deadline remains the same, May 1, 2020.
Virginia payments are due June 1, 2020. Late payment penalties will not be charged if payments are made by June 1, 2020. However payments made AFTER May 1st will be charged interest.
As you see, Virginia tax returns (or extensions) must still be filed by May 1st. Extended deadline to July 15th only applies to federal returns. Please submit your tax data to us as soon as possible so your returns will be filed on time.
We are currently experiencing tremendous amounts of changes in our society and lives, including tax related areas. We will continue sharing updates on our website and page as the situation develops. Please do not hesitate to contact us with any questions, we are here for you during this highly unusual time.
Please also follow Virginia tax updates here:
Coronavirus Updates | Virginia Tax Virginia Tax is committed to keeping you informed as the coronavirus/ COVID-19 crisis continues to evolve. We’re continuing to process returns and issue refunds as usual. We will update this page as the situation develops. Relief for Taxpayers Affected by Ongoing Coronavirus Pandemic Governor Nort...
Tax update: Treasury Department and IRS defer tax payment deadline 90 days
The Treasury Department and the IRS have announced special payment relief in response to the COVID-19 pandemic. This information is contained in Notice 2020-17. Key details are as follows:
• The income tax payment deadline for individual returns is automatically extended until July 15, 2020 for up to $1 million of 2019 tax due.
• Payment relief applies to all individual returns—including self-employed individuals and all entities other than C Corporations (e.g., trusts or estates).
• For C Corporations, the income tax payment deadline is also automatically extended until July 15, 2020 for up to $10 million of 2019 tax due.
• Tax payment relief also includes estimated tax payments for 2020 that are normally due April 15.
• Postponement of tax payments applies to federal returns only.
• While payments can be deferred, the filing deadline has NOT been extended. Taxpayers are expected to file returns by April 15, 2020, or file an extension.
• The IRS encourages Americans who can file their taxes before April 15, 2020 to do so in order to take advantage of any refund due to them.
Our firm continues to monitor announcements from the IRS regarding additional changes to filing and payment due dates and will keep you informed.
If you have questions, be sure to reach out to us. Our entire team is here to support and guide you!
On Tuesday Treasury Secretary announced that taxpayers can delay paying their income taxes for up to 90 days. Please note, you must still submit your tax return or file for an extension by April 15th. Additional time only applies to taxes owed.
The postponement on payments applies to federal returns (and some states). Virginia has not followed the federal guidance yet.
We will advise you of changes when they occur. Stay tuned.
Treasury secretary announces 90-day delay in tax payment deadline Treasury Secretary Steven Mnuchin announced that individuals and businesses can delay their tax payments for 90 days due to the coronavirus pandemic.
David N. Hainsworth, CPA, PC wholeheartedly supports and deeply appreciates our friend, General Jack Keane, and his receiving the Presidential Medal of Freedom. His years of service are appreciated by many. Thank you for everything you have done for our country!
President Donald J. Trump on Tuesday presented the Presidential Medal of Freedom to retired four-star Army Gen. Jack Keane at the White House, praising Keane as a "courageous warrior" and a "fierce patriot." https://fxn.ws/2xulxLJ
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