La Petite Tax Dame

People experiencing homelessness can get Economic Impact Payments and other tax benefits Economic Impact Payments, also known as stimulus payments, are different from most other tax benefits. People can get the payments even if they have little or no income and even if they don’t usually file a tax return. This is true if they have a Social Security number and are not being supported by someone else who can claim them. For the current round of payments, people experiencing ho...Continue reading

Taxpayers should use the correct filing status for accuracy and to avoid surprises Taxpayers need to know their correct filing status and be familiar with each option. A taxpayer's filing status typically depends on whether they are single or married on Dec. 31, which determines their filing status for that entire year.... More than one filing status may apply in certain situations. If this is the case, taxpayers can usually choose the filing status that allows them to owe the least amount of tax. When preparing and filing a tax return, the filing status affects: If the taxpayer is required to file a federal tax return If they should file a return to receive a refund Their standard deduction amount If they can claim certain credits The amount of tax they should pay Here are the five filing statuses: Single. Normally, this status is for taxpayers who are unmarried, divorced or legally separated under a divorce or separate maintenance decree governed by state law. Married filing jointly. If a taxpayer is married, they can file a joint tax return with their spouse. When a spouse passes away, the widowed spouse can usually file a joint return for that year. Married filing separately. Married couples can choose to file separate tax returns. When doing so, it may result in less tax owed than filing a joint tax return. Head of household. Unmarried taxpayers may be able to file using this status, but special rules apply. For example, the taxpayer must have paid more than half the cost of keeping up a home for themselves and a qualifying person living in the home for half the year. Qualifying widow or widower with dependent child. This status may apply to a taxpayer if their spouse died during one of the previous two years and they have a dependent child. Other conditions also apply.

Just a reminder, IRS extended the 2020 tax deadline for individual filers to May 17th. Quarter 1 Estimated tax payments and 2020 corporate returns have not been extended. The due date is today, April 15th. You have until 11:59pm to file a timely tax return or request an extension.

The deadline for submitting timely filed calendar year Form 1120 Corporate tax returns or extensions and Form 1041 Estate and Trust returns or extensions is Thursday, April 15th, 2021. Returns and extensions will be considered timely filed if they are postmarked by April 15th or electronically filed by midnight on April 15th.

The filing deadline for C-Corporations has not been extended. Tax returns for C-Corps are due Thursday, April 15, 2021.

IRS Will Send Recovery Rebate Credit Letters to Some Taxpayers The IRS announced yesterday that they will begin sending letters to taxpayers who claimed the Recovery Rebate Credit (RRC) on their 2020 tax return, and may be getting a different amount than expected. When the IRS processes a 2020 tax return claiming the credit, the IRS determines the eligibility and amount of the taxpayer’s credit based on the 2020 tax return information and the amounts of any EIP previously is...sued. If a taxpayer is eligible to receive the RRC, it will be reduced by the amount of any EIPs already issued to them. If there’s a mistake with the credit amount on Line 30 of the 1040 or 1040-SR, the IRS will calculate the correct amount, make the correction and continue processing the return. If a correction is needed, there may be a slight delay in processing the return and the IRS will send the taxpayer a letter or notice explaining any change.

I am noticing a trend...business owners will set up a business structure and EIN but will fail to apply for a Commercial Activity License. ANY business operating in Philadelphia should apply for a CAL and when taxes are filed...those tax returns should include your Philadelphia business returns. There is no cost to apply for the Commercial Activity License. Here is the link https://eclipse.phila.gov/phillylmsprod/pub/lms/Login.aspx

IRS has refunds totaling $1.3 billion for people who have not filed a 2017 federal income tax return WASHINGTON Unclaimed income tax refunds worth more than $1.3 billion await an estimated 1.3 million taxpayers who did not file a 2017 Form 1040 federal income tax return, according to the Internal Revenue Service. The IRS wants to help taxpayers who are due refunds but haven’t filed their 2017 tax returns yet, said IRS Commissioner Chuck Rettig. Time is quickly running ou...Continue reading

No need to call or visit the IRS seeking your prior-year tax transcript, which is a record of your tax return. Get your tax transcript online, click here: www.irs.gov/transcript #IRS

IRS to recalculate taxes on unemployment benefits; refunds to start in May To help taxpayers, the Internal Revenue Service announced today that it will take steps to automatically refund money this spring and summer to people who filed their tax return reporting unemployment compensation before the recent changes made by the American Rescue Plan. The legislation, signed on March 11, allows taxpayers who earned less than $150,000 in modified adjusted gross income to exclude un...employment compensation up to $20,400 if married filing jointly and $10,200 for all other eligible taxpayers. The legislation excludes only 2020 unemployment benefits from taxes. Because the change occurred after some people filed their taxes, the IRS will take steps in the spring and summer to make the appropriate change to their return, which may result in a refund. The first refunds are expected to be made in May and will continue into the summer. For those taxpayers who already have filed and figured their tax based on the full amount of unemployment compensation, the IRS will determine the correct taxable amount of unemployment compensation and tax. Any resulting overpayment of tax will be either refunded or applied to other outstanding taxes owed. For those who have already filed, the IRS will do these recalculations in two phases, starting with those taxpayers eligible for the up to $10,200 exclusion. The IRS will then adjust returns for those married filing jointly taxpayers who are eligible for the up to $20,400 exclusion and others with more complex returns. There is no need for taxpayers to file an amended return unless the calculations make the taxpayer newly eligible for additional federal credits and deductions not already included on the original tax return. For example, the IRS can adjust returns for those taxpayers who claimed the Earned Income Tax Credit (EITC) and, because the exclusion changed the income level, may now be eligible for an increase in the EITC amount which may result in a larger refund. However, taxpayers would have to file an amended return if they did not originally claim the EITC or other credits but now are eligible because the exclusion changed their income. These taxpayers may want to review their state tax returns as well. The new IRS guidance also includes details for those eligible taxpayers who have not yet filed. The IRS has worked with the tax return preparation software industry to reflect these updates so people who choose to file electronically simply need to respond to the related questions when electronically preparing their tax returns. See New Exclusion of up to $10,200 of Unemployment Compensation for information and examples. For others, instructions and an updated worksheet about the exclusion were available in March and posted to IRS.gov/Form 1040. These instructions can assist taxpayers who have not yet filed to prepare returns correctly.

PPP Program Update: Good News! Congress has voted to extend the Paycheck Protection Program. The SBA will now accept PPP loan applications through May 31, 2021.

This is not the year to forget one of your W-2's, 1099's or forget that you received Stimulus 1 or 2. Tax returns are being routed to the IRS Errors department. Many may receive verification letters. This process can take as long as 10 weeks...due to the pandemic and shortage of IRS staff. Make sure you are inputting the correct information when filing or having your taxes prepared. #fundtheIRS