Anthony Sykes & Company

             The Internal Revenue Service ( IRS ) provides resources to meet the needs of different groups of people. That is especially true of active members of the military, veterans, and their families. Certain benefits relate to the taxpayer’s military status. There are different rules that apply to those who are serving abroad, or in combat zones.           Depending on their situation, they may qualify for automatic deadline extensions, and the ability to claim certain moving expenses. Military members and veterans often have some of the most uniquely complex tax situations. The IRS recognizes that. If you fall into this category, take time now to be prepared before January arrives.

                 When being employed by a family member, things can get complicated. That is especially true when it comes to tax responsibilities. Often, it depends on the relationship and the type of business. For example, a spouse is considered an employee if the first spouse makes the management decisions. Then their income is subject to income tax withholding, Social Security, and Medicare taxes.           When children are employed by their parents in a Sole Proprietorship or partnership, the wages are always subject to income tax withholding. However, only after the children turn 18 does Medicare and Social Security come into play. This changes when the business is a corporation or an estate. At that point, all wages are subject to withholding, Medicare, and Social Security. It does not matter how old the child is. If you are planning on starting a business and employing family member...

          The Earned Income Tax Credit ( EITC ) is one of the largest tax credits. It has expanded for this year in a number of ways. For example, there is now no upper age limit for taxpayers to qualify for this credit. In addition, the EITC has expanded to include many who do not have children.           They must be at least 19 years old with income below certain limits. There are also provisions for those who are 18 and experiencing homelessness or who were in foster care. Overall, the amount of the credit has been raised and Economic Impact Payments or child tax credit payments do not count toward income when claiming this credit. Keep in mind that when claiming this credit, it will delay your tax refund by a few weeks by law as the Internal Revenue Service ( IRS ) checks to see if you truly qualify.

                 While most people do, there are some who do not normally file a tax return. There are good reasons to check and see if you should file this year. For example, to claim any tax credit like the Child Tax Credit or the Earned Income Tax Credit ( EITC ) a tax return must be filed. This will determine if the taxpayer qualifies.           Something that is still relatively new is the Recovery rebate credit. This is a result of the Economic Impact Payments. If you qualified but did not receive your third stimulus payment last year, it can be claimed as a credit. This can only happen if you file a tax return and provide your income for 2021. This credit can reduce any taxes that you might owe, or it will be included in your total refund.

           With each new year, the Internal Revenue Service ( IRS ) makes changes to the tax law, and 2022 will be no different. Now is the time to get informed about these adjustments.           Economic Impact Payments have been a part of our lives for 2 years. However, some may not have received all of their third payment. A taxpayer in this situation may be eligible for the recovery rebate credit . They would need to file a 2021 tax return to determine how much they could claim. It is also necessary to use the records you already have regarding your previous stimulus payments. Keeping good records is always important.           When it comes to Child Tax Credits , many families got monthly advance payments. If the total was less than they were eligible for, the balance can be claimed on their tax return. If there were no advance payments, the entire amount can ...

             Time seems to move faster and faster. With the end of the year approaching, now is the time to prepare for filing taxes in 2022. Before we know it, different tax forms will be released documenting activity for this year. How can we get ready for that now?           Something that has made this year different from others are the advance Child Tax Credit payments and the third Economic Impact Payment. For those who qualified for this income, all documents need to be saved. This will help determine if the Taxpayer is eligible for a credit, especially if they did not receive their full payment. Now is the time to make sure that any address or name changes have been reported to the Internal Revenue Service ( IRS ) to avoid needless delays. Planning now will make things easier during filing season.

            With filing season approaching very soon, it is important for every Taxpayer to know what their Filing Status is. The Internal Revenue Service ( IRS ) has five. They can have a strong impact on how much tax is owed, what the Standard Deduction is, or if a return is even needed. The marital status is determined by how things are as of December 31.           Those who choose Single must be unmarried, divorced, or legally separated. Married filing jointly allows for a joint tax return with a spouse. If one passes away, the one who is widowed can still file jointly for that year. Married filing separately allows for separate tax returns and may result in less tax owed. Head of household can be used by unmarried Taxpayers, but under certain conditions. For example, it must be proven that one paid more than half of the cost of keeping a home for themselves and another individual. Qualifying widow...

             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...

                 In our last few posts, we have taken the time to highlight all of the details found in the Taxpayer Bill of Rights . This is the guide for how the Internal Revenue Service ( IRS ) operates. The last point is The Right to a Fair and Just Tax System .           This certainly sounds like a very difficult thing to expect, especially with how things have been going the past few years. But the basic idea is that we can expect the tax system to consider facts and circumstances that affect the ability to pay, or provide information in a timely manner. We have seen this applied the past 2 years when the individual tax filing deadline was pushed back because of COVID-19 . It was not practical to expect people to provide their tax returns at the same time as normal.           If you meet certain conditions and cannot pay your tax debt, yo...

             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...

     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 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 .

       How has 2021 been for you so far? After going through 2020, you can probably handle anything. We all learned a lot, and the best thing to do is to put that knowledge into practice. Making sure that your Tax Withholding is correct will give you one less thing to worry about this year.      If your family situation has changed, it would be good to fill out a new Form W-4 and give it to your employer. This will help to make sure that the proper amount of taxes are withheld from your wages and avoid a tax surprise next year. While receiving Unemployment Benefits, you can choose to have taxes withheld from that income source as well. As your tax documents arrive this month, you will see where adjustments need to be made for this year. If you need guidance on the path to take for this year, reach out to your Qualified Tax Professional .

         There are over 48 million Americans with student loans, and the number increases every year. While the amount of student loan debt can be stressful, it often turns into a benefit when it comes time to file your taxes. Specifically, the amount of interest paid on the loan during the year.           This applies to any loan taken out for educational expenses, which might include tuition, books, or room and board. This might be a loan for yourself or a family member, but your name must be on the loan in order to claim the deduction. The loan provider will send out a form that clearly states the amount of interest paid during the year to make the deduction claim easier. However, when it comes to these types of situations, there are restrictions and limitations on the amount that can be deducted and who may qualify. Talk to your Qualified Tax Professional to determine if this savings is available to you.

      As senior citizens become more familiar and comfortable using technology, this group becomes a prime target for criminals. The Internal Revenue Service ( IRS ) strongly cautions seniors and those who care for them to be careful. Senior fraud has earned a place on the Dirty Dozen list for 2020 because this group is the most likely to be targeted for fraud.      This year phishing scams related to COVID-19 are being used to a great extent. There is an endless surge of emails, texts, fake websites, and social media messages all being used in an attempt to gain personal information. The tactics of these criminals change, but their basic goal remains the same. However, evidence shows that when there is someone who takes an active role in caring for the professional needs of an elderly friend or relative, the risk of fraud goes down. Let’s take time to watch out and care for each other especially during these challenging times. 

     As so many thoughts and concerns dominate our hearts and minds, let’s not forget that Tax Returns for the year 2019 must be filed in less than a month. There are many credits that can be claimed, which may provide some financial relief this year. For example, the Child and Dependent Care Tax Credit can help to offset major expenses.      According to the Internal Revenue Service ( IRS ), Taxpayers can claim a credit of up to 35% of their costs. To qualify, this care must have been provided for someone who is under the age of 13. If they are over 13 , this person must be a dependent who lived with the Taxpayer for over half of the year. To find out more details about this credit to see if you qualify, talk to your Qualified Tax Professional . The time to prepare to file your Tax Return is now. The deadline is fast approaching and it’s best to find out what credits you qualify for as soon as possible.

One of the most anticipated parts of the Coronavirus Aid, Relief, and Economic Security ( CARES ) Act is the Economic Impact Payment ( EIP ), otherwise known as the Stimulus Check. These payments have started earlier than expected, which everyone appreciates. However, this leads to the question of: When will I get my check? Millions have already received their payments, when is made simple when they use Direct Deposit. Everyone else may be waiting in a state of COVID-19 induced anxiety while playing the waiting game. The Internal Revenue Service ( IRS ) has provided a tool to help with this situation. The IRS launched a new website called Get My Payment to help Taxpayer understand when they might receive their EIP . It was overwhelmed with traffic and now it has been reported to be working efficiently. Many do not understand why the website will at times respond “Status Not Available”. It can be a number of reasons. 1 . Not everyone is eligible for a payment. 2 . There is s...

As the 2019 Novel Coronavirus ( COVID-19 ) spreads, people are doing one of two things. They are either changing their routines completely hoping that it does not directly affect them, or they are making slight modifications ready to get tested if they feel the onset of symptoms. The information and direction from sources like the Centers for Disease Control ( CDC ) is clear. People may wonder if getting a COVID-19 test would change their deductible medical expenses. Are these tests covered?          The Internal Revenue Service ( IRS ) has determined that High Deductible Health Plans ( HDHP ) can pay for COVID-19 testing and treatments. In a previous post, we discussed the details of Health Savings Accounts ( HSA ) and how they affect a person’s tax responsibilities. Simply put, these plans and accounts will cover the testing needed if you feel it necessary to go to the doctor. Do not let worries about taxes keep you from seeking medical help that you ...

         When it comes to choosing your filing status on a Tax Return, there are a few options, and most are easy to understand. “ Single ” does not need an explanation. “ Married, filing jointly ” applies if you were married as of December 31 of the tax year in question. “ Married, filing separately ” takes more work but can be done. “ Qualifying Widow(er), with Dependent Child ” will apply if the death has occurred within the past 2 years and the surviving spouse has not remarried. What makes the “ Head of Household ” designation different?           Head of Household would apply to those who are not legally married or are legally separated/divorced according to state law. The Head of Household status has created some confusion because different standards need to be met to be able to qualify. This status is entitled to a larger standard deduction and lower tax rates. To be claimed, the spouses must have li...