Monthly Archives

February 2021

Possible Pandemic Tax Surprises

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The ongoing coronavirus pandemic has caused a lot of disruption in people’s lives. Some have lost jobs, others have started side jobs, and coronavirus relief has changed the tax laws for everyone. With this in mind, we wanted to share some possible surprises that might be waiting for you on your 2020 tax return. Take a look at the list below so that you’ll be prepared if one of them affects your own situation.

  • Taxes on unemployment income. If you received unemployment benefits in 2020, you’ll need to report them on your tax return as taxable income. Check to see if either federal or state taxes were withheld from any unemployment payments you received. If taxes were not withheld, you may owe taxes when you file your tax return.
  • Taxes from side jobs. Thousands of Americans have taken up side jobs during the pandemic, just to make ends meet. If you were one of them, keep in mind that payments received for performing these jobs may not have had taxes withheld. If this is the case, you’ll need to pay your taxes directly to the IRS on April 15.
  • Unusual profit-and-loss. If you run a business that was affected by the pandemic, you may find that your estimated tax payments were either overpaid or underpaid compared to normal. Now that 2020 is in the books, run a quick projection to make sure you aren’t surprised by an unexpected tax bill when you file your tax return.
  • Underpayment penalty. If you did not withhold taxes from your paycheck, or if your estimated tax payments weren’t enough, you could be subject to an underpayment penalty. While it’s too late to avoid a penalty on your 2020 tax return, you can take action now to avoid this problem in the future. Either plan to make high enough estimated tax payments each quarter in 2021 or have the appropriate amount withheld from your 2021 paychecks so that you aren’t hit with the same penalty next year.
  • Claim missing stimulus payments. Finally, some good news for once! If any of your stimulus payments were for less than what you should have received, you can get money for the difference as a tax credit when you file your 2020 tax return.

If you have any questions about whether you might be affected by any of these items, plese contact our office so that we can review your situation.

Updated PPP Loan Forgiveness Applications Released

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The Small Business Administration (SBA), and the Treasury Department have published updated Paycheck Protection Program (PPP) loan forgiveness guidance and forms, including a one-page form that borrowers who received no more than $150,000 can use to apply for forgiveness.

The newly released form, called the PPP Loan Forgiveness Application Form 3508S, can be used by PPP loan recipients who received no more than $150,000. When filling out the form, the applicant will need to provide information about the loan amount, the disbursement date, employee totals, the amount of the loan spent on payroll, the amount of the loan that the applicant is requesting be forgiven, and other information related to the PPP loan. Applicants are not required to to submit any supporting documentation with the application, but they are required to maintain documentation that could be requested during review of the loan.

The SBA and Treasury Department also released Forms 3508 and 3508EZ, for PPP loan recipients who do not qualify to use Form 3508S. When submitting Forms 3508 and 3508EZ, loan recipients must also provide payroll and non-payroll documentation.

If you or your business received a PPP loan and need help navigating the forgiveness process, please contact our office. We would be happy to guide you.

Tax Filing Season to Begin February 12

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The IRS has announced that it will begin accepting and processing 2020 tax returns on Friday, Febrary 12, 2021. This is later than the usual January starting date. The IRS says that the delay is due to extra time that was needed to program and test its computer systems after the the passage of the Consolodated Appropriations Act, 2021 in late December 2020.

The IRS also stated that it anticipates that it will begin issuing refunds to taxpayers who claim the earned income tax credit or additional child tax credit in the first week of March if they file electronically with direct deposit and there are no issues with their tax returns.

If you haven’t yet scheduled an appointment to prepare your tax return, we encourage you to contact our office today. Scheduling your appointment early will ensure that we can prepare your taxes in a timely manner, and that you receive any refund you might be due as quickly as possible.