Anthony Sykes & Company

             After filing your tax return, you may have found that there is an error. Do you need to file an amended tax return? The Internal Revenue Service ( IRS ) provides some guidance on that. The original tax return must be processed before an amended one should be submitted.           The IRS is already overwhelmed with documents that it needs to process, and does not want anything unnecessary. They are making automatic adjustments for those who were reported all unemployment income before changes were made by the American Rescue Plan ( ARP ). It can take a few weeks before the refund is processed. Basic math errors can be corrected and are not reasons for an amended return.              However, there are definite situations when filing an amended return is needed. If income is entered incorrectly, deductions are taken incorrectly, or eligible tax credi...

             A known part of the American Rescue Plan ( ARP ) Act, which was enacted in March 2021, is that there would be an Advance Child Tax Credit. These are advance payments of what would be expected to be claimed on the 2021 tax return. However, things can become complicated when there is shared custody of the children.           How does the Internal Revenue Service ( IRS ) decide who gets these advance payments? The information is based off of the 2020 or 2019 tax returns. So the parent that claimed them in the most recent year will be the one who gets the tax credit. If they alternate years claiming the tax and the one who will claim it is not getting the payments, they should remove themselves from this program. This will allow the other parent to claim the credit in their 2021 tax return. The other parent may need to repay the IRS if they received advance payments. If changes need to be ma...

             The American Rescue Plan ( ARP ) Act of 2021 is expansive and has the potential to touch every aspect of the lives of Taxpayers, as we have mentioned in previous posts. This is something to keep in mind for those who have not filed, have filed an extension, or who may see the need to file an amended Tax Return. For example, the Earned Income Tax Credit ( EITC ) has changed, not just for this year, but for years to come.           As a reflection of the times, there is an increase in the amount of investment income allowed while still qualifying for the EITC . The new amount is $10,000 starting this year. Married, but separated spouses who do not file jointly may attempt to qualify for this credit. They need to be legally separated and not live in the same home. However some changes only apply to this year, like being able to receive half of this credit in advance . For those who have the...

          The tax deadline has passed, but we are still learning more about how the American Rescue Plan ( APR ) is impacting a variety of tax situations. This is something to keep in mind for those who have not filed, have filed an extension, or may see the need to file an amended Tax Return.           For example, the Child and Dependent Care credit has increased greatly for 2021. This credit would apply to children 13 and younger, or a child of any age or spouse that is unable to care for themselves and lives with the Taxpayer for over half the year. The allowable amount of related expenses that can be claimed has more than doubled. However, these increases are only available for 2021. They are also fully refundable, which means that an eligible person can receive this credit even if they do not owe any federal income tax. Check with your Qualified Tax Professional to see if this may apply to you.

     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.

     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...

     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 o...

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...

          One feature of the recently passed 2021 American Rescue Plan ( ARP ) is the ability to have up to $10,200 of Unemployment Income from 2020 be exempted from tax. This is certainly something that many Taxpayer’s would want to make use of. However, this was enacted after Tax Season had begun. Tax returns were already being filed and tax refunds issued without this credit being applied. The Internal Revenue Service ( IRS ) was very clear in saying that they did not want amended returns to be filed.           It has now become clear why they did not want this to happen. The IRS will automatically issue refunds for the tax paid on the Unemployment Income, if you qualify. They are also updating their software and sending out new worksheets for those who have not filed. This is might be one of the reasons why the tax filing deadline for individuals has moved to May 17 . As we have stated in a previous post , ...

          The 2021 American Rescue Plan ( ARP ) Act created a third round of Economic Impact Payments ( EIP ). An earlier post had discussed the changed eligibility requirements. Within the first 5 days of enactment, the Internal Revenue Service ( IRS ) has made 90 million payments. This was made possible by the use of Direct Deposit, and this will be the primary method of payment. In time, more checks and debit cards will be mailed.           These payments are made automatically, and since we are in the third round, no action is required by most Taxpayers. Please remember that this payment is coming from the Treasury Department and the IRS . There is a new scam that has come to light where someone contacts a Taxpayer claiming to be from the Federal Trade Commission ( FTC ). That person will claim that a fee or tax needs to be collected to receive the EIP , or they may want some personal information from you. ...

          Just like last year, the Tax Deadline for 2021 will be pushed back. This year it will now fall on Monday, May 17 . There have been calls for this action for some time. The reasons the Internal Revenue Service ( IRS ) took this action are many, but here are a few.           The Tax Season this year started two weeks later than normal. This was to accommodate law changes that were passed in December 2020 and make sure that IRS computers were updated. The newly enacted 2021 American Rescue Plan Act also makes some significant changes to existing tax law, including allowing a certain amount of unemployment benefits from 2020 to be untaxed. With this recent news, some may take additional time to file, but the IRS does not want anyone to file an amended Tax Return at this time. If you look at this time last year, there have been about 18% fewer Tax Returns filed . It’s clear that people needed more time....

          Many parts of the 2021 American Rescue Plan ( ARP ) Act touch almost every aspect of our lives. A previous post discussed the third round of Economic Impact Payments. This is something that many have talked about and are looking forward to. One aspect that many are not talking about is a new tax exclusion for unemployment benefits.           With the enactment of ARP , it may be possible to exclude $10,200 of unemployment income. This means that Federal income tax would not have to be paid on that amount. State taxes would still apply. There are also overall income requirements that determine eligibility. To find out if you qualify, please talk to your Qualified Tax Professional .

         The 2021 American Rescue Plan ( ARP ) Act and its $1.9 trillion budget has been discussed since it was passed and enacted last week. One of the most talked about parts has been the third round of Economic Impact Payments ( EIP ) that it allows for many who received the previous two. The Internal Revenue Service ( IRS ) immediately went to work on sending out the payments, which for many would amount to $1,400. However, the criteria for who qualifies is now different.           Individuals making over $75,000 will receive smaller payments, and those who make over $80,000 will have no payment at all. This is based off of their 2019 or 2020 Tax Return. This means that some who were a part of the last two payments may not qualify for this one. Unlike the last two payments, dependents under 17 will be included. Those with Direct Deposit may already have the payment. If you got a debit card before, a new one wi...

          The $1.9 trillion American Rescue Plan ( ARP ) has many parts to it. The ARP was enacted on March 11, 2021 and some aspects have already gone into action. With something this large, it is difficult to truly understand what it will do unless you look at its different components.           That is what we will do. Over the next few posts, we will discuss how the ARP changes things. It was designed to essentially touch some aspect of our lives, from COVID vaccines to unemployment payments, and increases to different tax credits. Some have been talked about at length, others are less well known and the effects may only be seen in the near future. Our next post will discuss how the Internal Revenue Service ( IRS ) will be impacted by the ARP .