Showing posts from April, 2021

American Rescue Plan 2021: Paid Time Off For COVID-19 Vaccination

     We have stated before that the American Rescue Plan of 2021 ( ARP ) is expansive and it will take time to understand all the areas that it touches. It was recently announced that there are tax credits to help businesses provide paid time off for employees receiving COVID-19 vaccinations. This would be available to eligible employers with less than 500 employees.      That means if the employer offers a paid day off to get a vaccine, this tax credit will equal the amount of wages paid. There are also tax credits that reimburse the cost of providing sick and family leave related to COVID-19 . These credits are available for use from April 1 to September 30, 2021. There are similar credits available for those who are self-employed.

Always File on Time

     The May 17 tax deadline is almost here. If you know that you are going to owe the Internal Revenue Service ( IRS ), but are not able to pay the full amount, make sure that you file your complete Tax Return anyway. Why is that so important?      Those who owe taxes and do not file on time may be given a Failure-to-File penalty. This would be in addition to the interest and other penalties added to the amount that needs to be paid. Filing an extension is not an extension on paying taxes due, they must still be paid by May 17. If that is not possible, pay as much as you can by May 17. You can also work with your Qualified Tax Professional to set up a payment plan with the IRS right now. There is no need to wait for that.

A Trillion Dollars in Tax Evasion

            The Internal Revenue Service ( IRS ) recently estimated that there is a $1 trillion “tax gap”. That would be the difference between what it collects, and what people and businesses owe. They feel a big reason for this discrepancy is the explosion of cryptocurrency. Cryptocurrencies by their very nature are designed to be elusive and invisible to the outside world. IRS Criminal Investigations has made great strides into exposing how crime organizations use digital currencies on the dark web and significant arrests have been made. However, more Taxpayers are using these currencies and not accurately reporting them. The IRS taxes Cryptocurrencies as property. So anyone who uses them must pay taxes if they are sold for profit or used to purchase anything. One recent example would be a nonfungible token ( NFT ). A NFT is a collectible that is bought or sold in the cryptocurrency world and it has quickly become a billion dollar market. Some examples might be a digital card

The New Child Tax Credit Will Start in July

     As we have stated before, the American Rescue Plan ( ARP ) Act is expansive and touches many areas. One aspect is a temporary enhancement to the Child Tax Credit. Under ARP this credit would be increased to $3,000 per child from the ages of 6 – 17 and $3,600 for every child under the age of 6. After some initial hesitation about being able to implement this because of all the other new tax laws being enacted, the Internal Revenue Service ( IRS ) has confirmed that it will be able to provide this tax credit. It will start as payments from $250 - $300 per child starting in July and ending in December. The rest can be claimed on their Tax Return in 2022. How will they know who qualifies, and for how much?      The only way for a family to qualify for this credit is to file a 2020 Tax Return. If this is not done, the IRS will not have the needed information to deliver the credit. This is another reason to not wait unnecessarily to file a Tax Return this year. At this point, the exp

How You Can Pay Your Taxes

     The deadline to file your Federal income Tax Return has been pushed back to May 17, but that time will pass very quickly. There is also no extension on paying taxes that are due. Individuals can pay by May 17, but those who own businesses, or are independent contractors need to pay by April 15 . Paying taxes is mandatory, but you have a few options regarding how you pay them.      When E-Filing your Tax Return, you have the option to add your bank account information to allow for an electronic funds withdrawal ( EFT ). This is done without charge and is the easiest way to make payments to the Internal Revenue Service ( IRS ). IRS Direct Pay is a service that allows Taxpayers to use their Savings or Checking account for electronic payments. This is a service that the IRS does not invite people to join, it must be requested. If you receive an email about it asking for information, it is a scam. Payments can also be made using credit or debit cards online and through the officia

Over $1 Billion in Tax Refunds are Waiting to be Claimed!

          There is a 3 year window to claim a Tax Refund. For those who did not file a 2017 Tax Return, that window will soon be closing. The Internal Revenue Service ( IRS ) says that the last day to claim any of the $1.3 billion is May 17. After this, it will belong to the Treasury Department. It’s estimated that the median amount of the refunds is $865. For a state like California, there is the potential for over $120 million in refunds for that Tax Season. All that is needed is to file that 2017 Tax Return. There is no penalty for filing late, if you are receiving a refund. This can be the key to getting an Economic Impact Payment ( EIP ) if you did not get one last year and you qualify. However, that refund might be held back if you have not filed for 2018 or 2019. The refund may also be applied to any outstanding federal or state tax debts, unpaid child support, or student loans.           Those who have not filed their 2017 Tax Return may be missing out on claiming the Earne

How Will the IRS Process Unemployment Refunds?

When the American Rescue Plan ( ARP ) Act was enacted last month, it allowed for up to $10,200 of Unemployment income to be untaxed. However, for weeks prior, Taxpayer’s had been filing their Tax Returns and paying the full tax on all of their income, including Unemployment benefits. The Internal Revenue Service ( IRS ) stated that amended returns did not need to be filed at that time. Now they have presented the solution to this paradox. Starting this month, the IRS will automatically reexamine Tax Returns that were filed before the new rules went in place. They will determine the correct taxable amount and if there is an overpayment it will be refunded, or it will go toward any taxes owed. For most, there will be no need to file an amended return. The exception would be if the new taxable amount allowed you to qualify for a new tax credit or deduction. At that point an amended Tax Return must be filed. The new refunds are scheduled to be sent out in May. Make sure to speak with yo