Tax Filing 2020 News You Need to Know!

.QUOTE (Compliments of NAEA) – “Tell me and I forget. Show me and I may remember. Involve me and I learn.” — Benjamin Franklin (1707 – 1790) Founding Father of the United States.

Important 2020 Filing Season Reminders

IR-2021-23, January 27, 2021. Following an unpredictable year with many changes and challenges, IRS shared important reminders for taxpayers who are about to file their 2020 federal tax returns. Following is a summary of reminders, read full announcement (IR-2021-23) for additional details.
Choose direct deposit — The safest, most accurate and fastest way to get a refund is to electronically file and choose direct deposit.

Earned Income Tax Credit — The Earned Income Tax Credit (EITC) can give qualifying workers with low-to-moderate income a substantial financial boost. IRS Tax Tip 2021-06, January 25, 2021. It not only reduces the amount of tax someone owes but may give them a refund even if they don’t owe any taxes or aren’t required to file a return. People must meet certain requirements and file a federal tax return in order to receive this credit.

Stimulus Money – Never mind the tax refund. Stimulus check money is why you should file early this year. Sure, you may get your federal tax refund quicker if you file as soon as the IRS started processing returns on Feb. 12. But this year, you have two more good reasons to start preparing now for tax season 2020. By setting up direct deposit with the IRS, you mostly likely will receive your third stimulus check sooner, especially if it happens during tax season. By filing as soon as you can, you’ll also be able to quickly recover any unpaid stimulus check money you’re owed. If you wonder if you’ll still get the stimulus money you’re missing if you file a tax extension, the answer isYes.” But you should know the only way you’ll get your missing stimulus money is by filing a Recovery Rebate Credit on your taxes — even if you’re not usually required to file taxes. So the longer you wait to file, the longer it’ll take to get your tax refund, which will include your missing stimulus payment.

Taxable unemployment compensation — Millions of Americans received unemployment compensation in 2020, many of them for the first time. In January 2021, unemployment benefit recipients should receive a Form 1099-G, Certain Government Payments PDF from the agency paying the benefits. This form will show the amount of unemployment compensation they received during 2020 in Box 1, and any federal income tax withheld in Box 4. Taxpayers report this information, along with their W-2 income, on their 2020 federal tax return. 

Interest is taxable income — Many individual taxpayers who received a refund on their 2019 tax returns may have also received interest from the IRS. If so, you will receive Form 1099-INT, Interest Income, with reportable amounts in boxes 1, 3, and 8 of at least $10 (or at least $600 of interest paid in the course of your trade or business). Interest is still reportable income even if you don’t receive a Form 1099-INT.

Home office deduction — The Tax Cuts and Jobs Act (TCJA) suspended the home office deduction for employees for tax years 2018 to 2025. You can only take the home office tax deduction if you work from home and you’re self-employed, an independent contractor or working in the gig economy.

The gig economy — Any “activity where people earn income providing on-demand work, services or goods,” such as ride-sharing and delivery services, running errands, and selling products online. That means if you earned money from Uber, Lyft, Postmates, Instacart, Etsy, or a similar company, you may be on the hook for federal income taxes. Taxpayers must report income earned in the gig economy on their tax return. IRS is clear about when you have to pay self-employment taxes on your side gig: Once you make $400.

Charitable donation deduction for people who don’t itemize — Individuals who take the standard deduction generally cannot claim a deduction for their charitable contributions. However, the CARES Act permits these individuals to claim a limited deduction on their 2020 federal income tax returns for cash contributions made to certain qualifying charitable organizations and still claim the standard deduction.

Disasters such as wildfires, flooding or hurricanes — Special tax law provisions may help taxpayers and businesses recover financially from the impact of a disaster, especially when the federal government declares their location to be a major disaster area.

TAX NEWS FOR EMPLOYERS

New Law Extends COVID Tax Credit for Employers Who Keep Workers on Payroll
IR-2021-21, January 26, 2021. IRS urges employers to take advantage of the newly extended employee retention credit, designed to make it easier for businesses that, despite challenges posed by COVID-19, choose to keep their employees on the payroll.

IRS explains extended payroll tax due dates
The IRS has issued guidance (Notice 2021-11) to address how employers who elected to defer certain employees’ payroll taxes can withhold and pay the deferred taxes throughout 2021 instead of just the first four months of the year.

The Taxpayer Certainty and Disaster Tax Relief Act of 2020, enacted December 27, 2020, made a number of changes to the employee retention tax credits previously made available under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), including modifying and extending the Employee Retention Credit (ERC), for six months through June 30, 2021. Several of the changes apply only to 2021, while others apply to both 2020 and 2021.

As a result of the new legislation, eligible employers can now claim a refundable tax credit against the employer share of Social Security tax equal to 70% of the qualified wages they pay to employees after December 31, 2020, through June 30, 2021. Qualified wages are limited to $10,000 per employee per calendar quarter in 2021. Thus, the maximum ERC amount available is $7,000 per employee per calendar quarter, for a total of $14,000 in 2021.

WHAT ELSE HAS CHANGED?

All Taxpayers Are Now Eligible for Identity Protection PINs
IRS Tax Tip 2021-07, January 26, 2021. IRS has expanded the Identity Protection PIN Opt-In Program to all taxpayers who can verify their identity. The Identity Protection PIN is a six-digit code known only to the taxpayer and to IRS. It helps prevent identity thieves from filing fraudulent tax returns using a taxpayers’ personally identifiable information.

Important Filing Season Dates
Friday, February 12. IRS begins 2021 tax season. Individual tax returns start being accepted, and processing begins.

Thursday, April 15 Due date for filing 2020 tax returns or requesting extension of time to file.

Thursday, April 15. Due date for paying 2020 tax owed to avoid owing interest and penalties.

Friday, October 15. Due date to file for those requesting an extension on their 2020 tax returns.

Treasury, IRS launch new tool to help non-filers register for Economic Impact Payments

Free File. It's Fast. It's Safe. It's Free.
If you don’t usually file a tax return, submit your information here
to get the Economic Impact Payment

IRS Updates — 04/10/20 3:01 PM

To help millions of people, the Treasury Department and the Internal Revenue Service today launched a new web tool allowing quick registration for Economic Impact Payments for those who don’t normally file a tax return.

The non-filer tool, developed in partnership between the IRS and the Free File Alliance, provides a free and easy option designed for people who don’t have a return filing obligation, including those with too little income to file. The feature is available only on IRS.gov, and users should look for Non-filers: Enter Payment Info Here to take them directly to the tool.

“People who don’t have a return filing obligation can use this tool to give us basic information so they can receive their Economic Impact Payments as soon as possible,” said IRS Commissioner Chuck Rettig. “The IRS and Free File Alliance have been working around the clock to deliver this new tool to help people.”

The IRS reminds taxpayers that Economic Impact Payments will be distributed automatically to most people starting next week. Eligible taxpayers who filed tax returns for 2019 or 2018 will receive the payments automatically. Automatic payments will also go in the near future to those receiving Social Security retirement or disability benefits and Railroad Retirement benefits.

How do I use the Non-Filers: Enter Payment Info tool?
For those who don’t normally file a tax return, the process is simple and only takes a few minutes to complete. First, visit IRS.gov, and look for “Non-Filers: Enter Payment Info Here.” Then provide basic information including Social Security number, name, address, and dependents. The IRS will use this information to confirm eligibility and calculate and send an Economic Impact Payment. Using the tool to get your payment will not result in any taxes being owed. Entering bank or financial account information will allow the IRS to deposit your payment directly in your account. Otherwise, your payment will be mailed to you.

Non-Filers: Enter Payment Info” is secure, and the information entered will be safe. The tool is based on Free File Fillable Forms, part of the Free File Alliance’s offerings of free products on IRS.gov.

Who should use the Non-Filers tool?
This new tool is designed for people who did not file a tax return for 2018 or 2019 and who don’t receive Social Security retirement or disability benefits or Railroad Retirement benefits. Others, who should consider the Non-Filers tool as an option, include:

Lower income: Among those who could use Non-Filers: Enter Payment Info tool are those who haven’t filed a 2018 or 2019 return because they are under the normal income limits for filing a tax return. This may include single filers who made under $12,200 and married couples making less than $24,400 in 2019.

Veterans’ beneficiaries and Supplemental Security Income (SSI) recipients: The IRS continues to explore ways to see if Economic Impact Payments can be made automatically to SSI recipients and those who receive veterans disability compensation, pension or survivor benefits from the Department of Veterans Affairs and who did not file a tax return for the 2018 or 2019 tax years. People in these groups can either use Non-Filers: Enter Payment Info option now or wait as the IRS continues to review automatic payment options to simplify delivery for these groups.

Social Security, SSDI and Railroad Retirement beneficiaries with qualifying dependents: These groups will automatically receive $1,200 Economic Impact Payments. People in this group who have qualifying children under age 17 may use Non-Filers: Enter Payment Info to claim the $500 payment per child.
Students and others: If someone else claimed you on their tax return, you will not be eligible for the Economic Impact Payment or using the Non-Filer tool.

Coming next week: Automatic payments begin
Eligible taxpayers who filed tax returns for either 2019 or 2018, and chose direct deposit of their refund will automatically receive an Economic Impact Payment of up to $1,200 for individuals or $2,400 for married couples and $500 for each qualifying child. Individuals who receive Social Security retirement or disability benefits, SSDI or who receive Railroad Retirement benefits but did not file a return for 2019 or 2018 will automatically receive a payment in the near future.

Coming next week: Get My Payment shows Economic Impact Payment date, helps with direct deposit
To help everyone check on the status of their payments, the IRS is building a second new tool expected to be available for use by April 17. Get My Payment will provide people with the status of their payment, including the date their payment is scheduled to be deposited into their bank account or mailed to them.

An additional feature on Get My Payment will allow eligible people a chance to provide their bank account information so they can receive their payment more quickly rather than waiting for a paper check. This feature will be unavailable if the Economic Impact Payment has already been scheduled for delivery.

More Information on Economic Impact Payments
The IRS will post additional updates on IRS.gov/coronavirus on these and other issues.

Filing Deadline Extended to July 15


This morning, U.S. Treasury Secretary Steven Mnuchin announced via Twitter: “At @realDonaldTrump’s direction, we are moving Tax Day from April 15 to July 15. All taxpayers and businesses will have this additional time to file and make payments without interest or penalties.”

We expect the IRS will issue official guidance today or Monday, officially extending the deadline.

Is your tax professional licensed and receive continuing education for federal tax law and ethics ?

Tax return checkC Fitts Tax Solutions, LLC adjusts their office hours as needed during none peak tax season while its’ licensed tax practitioner(s) focus on bringing clients the latest federal tax law and ethics updates. We remain available year-round to help with your urgent tax matters so don’t hesitate to call (803)470-4938.

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The IRS Extends Deadline to Ensure People with Children Receive $500 Economic Impact Payments

Putting you in control

The IRS has extended its deadline to September 30, 2020, for people to provide information to the IRS using its Non-Filer Tool at www.irs.gov/coronavirus/non-filers-enter-payment-info-here.  People should do this if they:

  • receive Social Security retirement, survivors, or disability benefits, or Supplemental Security Income (SSI) payments;
  • did not file a 2019 or 2018 tax return;
  • have a qualifying child under age 17; and
  • did not already enter information in the IRS’ Non-Filer Tool for themselves and at least one child.

For more information, please visit https://www.ssa.gov/news/press/releases/.

File by July 15 tax deadline

It’s July? Already?
Wednesday, July 15th is still standing as the final day to file taxes without an extension. There had been rumors about another extension of the tax season, but that was put to rest on Tuesday when the Treasury Department said July 15 was final.
That means that on July 16th, penalties and interest will start to accrue on unpaid taxpayer balances. (The extension deadline of October 15th remains unchanged.) It isn’t too late to reach out to non-returning customers to file current and prior year returns.

$50 SOUTH CAROLINA REBATE

Earlier this year, South Carolina lawmakers determined $61 million of the tax dollars generated by the 2018 Mega Millions winner would be used to fund $50 tax rebate checks for qualifying taxpayers. A rebate check may be on its way to your mailbox!

Follow this link to learn if you qualify! >> sc-dor-logo

Women Rock! Support a Small Business Near You.

National Women’s Small Business Month – Exploring tips and resources for women entrepreneurs
Support a Small Business Near You!
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National Women’s Small Business Month - Twitter Chat

National Women’s Small Business Month Twitter Chat:

Exploring tips and resources for women entrepreneurs

WHEN:
Tuesday, October 29, 2019
3:00pm ET / 2:00pm CT / 12:00pm PTWHERE:
#WomenInBizChat on Twitter

If you’re looking to start or grow your woman-owned business, look no further. Follow along as we celebrate the end of National Women’s Small Business Month with a Twitter chat hosted by Small Business Majority, Women’s Business Development Center (WBDC), Community Reinvestment Fund, USA (CRF) and CDC Small Business Finance to discuss resources and opportunities available to women entrepreneurs and business owners.We are excited to be joined by small business experts, and we hope you’ll join us.

Sample social promo:
Join us, @smlbizmajority, @connect2cap, @WBDC and @cdc_loans for a Twitter chat in celebration of #NWSBM. Follow along on Oct. 29 at 3pm ET with the hashtag #WomenInBizChat to learn about the resources available to women entrepreneurs.

Download graphics here »

For more information contact:

Meghan Ott
Communications Assistant
mott@smallbusinessmajority.org

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Your Current Tax News Briefs

Here are some changes made by TCJA. IRS also made a few revisions to help protect taxpayers.

SALT Limit

State and local tax (SALT) deductions are now limited to $5,000 for a married person filing a separate return and $10,000 for all other filers. This limit applies to the 2018 to 2025 tax periods. Click to learn which taxpayers are impacted by the SALT limit.

Special Tax Breaks for U.S. Armed Forces

Key tax benefits are available to members of the military including combat pay, foreign earned income exclusion, filing deadline postponement, automatic extensions and earned income tax credit; just to start. Dependent care assistance programs available for military personnel, are also excludable and not included in the military member’s income. Click to get more benefits.

EIN Application Change

To provide greater security and improve transparency, IRS now requires an ITIN or SSN from individuals named as “responsible party” on Form S-4, Application for Employer Identification Number. This revision is effective May 13, 2019. Only government entities are exempt from the responsible party requirement, to include military and state national guards. Click to get the entire news release.

Penalty Relief Threshold Lowered to 80 Percent

IRS expands penalty waiver for taxpayers whose withholding and estimated tax payments fell short in 2018. The usual threshold is 90 percent to avoid a penalty. An 85 percent threshold was announced Jan 16. “Taxpayers who have already filed for tax year 2018 but qualify for this expanded relief may claim a refund by filing Form 843, Claim for Refund and Request for Abatement and include the statement “80% Waiver of estimated tax penalty” on Line 7. This form cannot be filed electronically.” Click to learn more.

Bad Weather Ahead Signpost Shows Dangerous Prediction Stock PhotoDisaster Relief

A taxpayer affected by disaster could be any individual whose principal residence is located in a disaster area; the spouse of an affected taxpayer; or any business or sole priorietor whose principal place of business is located in a disaster area. Also included is any individual, business or sole proprietor not located in a covered disaster area, but whose records necessary to meet an IRS deadline are located in the disaster area.

There are four (4) types of disaster relief:

• Administrative relief is the granting of additional time to file tax returns, pay taxes and perform other time sensitive tasks. You may also be able to get late filing and payment penalties waived or abated.

• Tax relief is claiming casualty losses on your tax return.

• For Safe harbor provisions see your tax professional.

• Election to claim disaster losses on a prior year tax return.

Taxpayers may elect to deduct a casualty loss that occurred in the current tax year on their preceding year tax return if the casualty loss occurred in a federally declared disaster area determined to warrant federal assistance.

The election to claim disaster losses on a preceding year tax return can be made up to six months after the due date of the taxpayer’s federal income tax return for the disaster year (without regard to any extension of time to file.) Effective for tax returns filed after October 13, 2016. Click to learn more about disaster relief.