We are approaching that time of year again. It is important to bring the following information with you when you come into our office for the preparation of your 2021 taxes and get the maximum refund you are entitled to. We have several PDF's attached below for reference.
Remember that there are a number of life events that impact your tax liability. If you have experienced any of the following events during the year, you should contact us now.
Important Note IF YOU ARE SELF-EMPLOYED OR OWN A BUSINESS: Please be sure to be up-to-date with your business licenses and requirements.
For Example, but not limited to:
● Housekeeping ● Child Care/Home Care
● Contractor ●Gardener/Landscaper
● Painter ● Artist (Tattoo Parlor, BarberShop, Nail Salon, etc.)
For example, but not limited to: Please refer to the checklist attached to this letter to check mark what you need to bring at the time of your appointment.
PAY NOTHING TODAY!
Ask about a Refund Transfer to have your fees deducted from your refund.
Your refund will be recieved by Direct Deposit at the bank from the IRS or State!
You won't need to pay anything up front to have your taxes prepared!
You can choose how to recieve your Refund Transfer proceeds from several safe and secure options.
If you have any questions about the information provided please call us at (619) 429-1849
Now offering an easier way to transfer your information for the 2020 tax year! Just click on the button below to access the portal and follow the instructions. Just a reminder, this is only for the 2020 tax year.
Due to the current circumstances, we highly recommend booking an appointment to visit our office in person. Although walk-ins are still welcomed, wait times may take longer than usual.
You can book an appointment by calling our office number at 619-429-1849 or by email at email@example.com
Quick Appointment Rules
The IRS has created a special Advance Child Tax Credit Payments in 2021 page designed to provide the most up-to-date information about the credit and the advance payments. It's at IRS.gov/childtaxcredit2021.
The IRS encourages partners and community groups to share information and use available online tools and toolkits to help non-filers, low-income families and other underserved groups sign up. People can check their eligibility by using the Advance Child Tax Credit Eligibility Assistant.
The webpage features a set of frequently asked questions. It also provides direct links to the portal, as well as two other online tools – the Non-filer Sign up Tool and the Child Tax Credit Eligibility Assistant – and other useful resources.
Under the CARES Act, most people received financial stimulus payments of $ 1,200. Technically, this was an upfront payment of a special tax credit for 2020. You will reconcile your payment on your 2020 return. For most people, the refund will equal the allowed tax credit. Taxpayers whose credits exceed their refunds can claim the difference on their tax returns. If the payment you received is more than your credit, you do not have to repay the IRS.
Check Your Third Economic Impact Payment Status
Find the status of your third payment in Get My Payment.
The third payment is not claimed on your 2020 tax return or used to calculate the 2020 Recovery Rebate Credit. Check the Questions and Answers about the Third Economic Impact Payment for
The first two rounds of Economic Impact Payments were advance payments of the 2020 Recovery Rebate Credit. Most eligible people already received the payments and won't include this information on their 2020 tax return.
Unemployment compensation is taxable. However, the American Rescue Plan Act of 2021 allows an exclusion of unemployment compensation of up to $10,200 for individuals for taxable year 2020. In the case of married individuals filing a joint Form 1040 or 1040-SR, this exclusion is up to $10,200 per spouse. To qualify for this exclusion, your adjusted gross income (AGI) must be less than $150,000. This threshold applies to all filing statuses and it doesn't double to $300,000 if you are married and file a joint return. Any unemployment compensation in excess of $10,200 ($10,200 per spouse if married filing jointly) should still be included on the tax return as taxable income.
More than 1 million Taxpayer Personal Identification Numbers (ITINs) will expire by the end of 2021. The IRS continues to urge affected taxpayers to submit their renewal applications early to avoid delays in refunds next year.
Under the Protecting Americans from Tax Increases Act (PATH Act), ITINs that have not been used on a federal tax return at least once in the last three consecutive years and those issued before 2013 will expire.
Your ITIN may expire before you file a tax return in 2021. All ITINs not used on a federal tax return at least once in the last three years will expire on December 31, 2020. Additionally, all ITINs issued before 2013 with middle digits of 88 (Example: (9XX-88-XXXX) will expire at the end of the year. Those with middle digits 90, 91, 92, 94, 95, 96, 97, 98 or 99, that were assigned before 2013 and have not already been renewed, will also expire at the end of this year.
The standard deduction for married couples filing jointly for tax year 2021 rises to $25,100, up $300 from the prior year. For single taxpayers and married individuals filing separately, the standard deduction rises to $12,550 for 2021, up $150, and for heads of households, the standard deduction will be $18,800 for tax year 2021, up $150
Have you opened a new location, redesigned your shop, or added a new product or service? Don't keep it to yourself, let folks know. The renewed 1099-NEC form separates contractor compensation from other sections of the 1099-MISC and imposes a filing deadline of February 1, 2021.
The 1099-NEC is used strictly to report independent contractor payments of $ 600 or more in the course of your trade or business. You will still need to use the 1099-MISC for items like royalties, rent, and health care payments.
Who must file a 1099-NEC?
Any business that pays people for services other than employees will be affected by this change. The form will cover payments to workers as subcontractors.
Businesses should note that unlike the 1099-MISC, the 1099-NEC will not be included in the Combined Federal / State IRS 1099 Filing Program (CF / SF). According to the CF / SF, the IRS forwards data from several key forms to the appropriate states, but will not do so for the 1099-NEC.
This means that companies will need to find a way or a provider to file the form electronically in the appropriate states, in addition to submitting it to the IRS.
There are many changes in 2020 for retirement plans. Most of the changes come from the SECURE Act, which became law in late 2019. However, the CARES Act includes some provisions that affect retirement accounts as well.
If you have a baby or adopt a child you can take a distribution from your IRA and 401 (k) account of up to $ 5,000 without having to pay the 10% penalty for people under 59½ years of age.
If you inherit a retirement account, you must withdraw the money within 10 years of the death of the IRA owner or 401 (k) participant.
If you need to take a distribution from your retirement account in 2020 due to a coronavirus-related reason, you don't have to pay the 10% early withdrawal penalty.
A coronavirus-related distribution can also be included in income in equal installments over a three-year period, and you have three years to return the money to your retirement account and undo the tax consequences of the distribution.
If you are currently paying off a 401 (k) or IRA, your 2020 retirement plan loan payments are one year late.
The maximum 401 (k) contribution for 2020 is $ 19,500, but those born before 1971 can contribute up to $ 26,000.
This year's limit for contributions to SIMPLE IRAs is $ 13,500 ($ 16,000 for those born before 1971).
The 2020 contribution limit for traditional IRAs and Roth IRAs remains stable at $ 6,000, plus $ 1,000 as an additional contribution for people age 50 and over.
In an effort to encourage more charitable giving, the CARES Act allows you to deduct up to 100% of your adjusted gross income (AGI) on qualified charitable giving if you plan to itemize your deductions.
What if you are taking the standard deduction? Well, the CARES Act added a new deduction that will help you write off up to $ 300 of charitable contributions you made in cash.
To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is useful and appropriate for your trade or business.
You can deduct the following business expenses in 2021
Publicity and promotion
Interest and fees on the bank account
Home office expenses
What if you are taking the standard deduction? Well, the CARES Act added a new deduction that will help you write off up to $ 600 of charitable contributions you made in cash.
The CARES Act also tried to help struggling small business owners by offering loans from the Paycheck Protection Program (PPP). As long as these loans were used for certain business expenses (payroll, rent, or interest on mortgages and utilities), these loans were designed to be "forgiven."
But beware: the IRS says that the expenses you paid with money from those PPP loans cannot be deducted from your taxable income. Also, you must first obtain approval of your loan forgiveness application from the Small Business Administration before you are free of liability for the amount you borrowed.
Educational expenses: 529 and ESA plans
Any money you take out of a 529 plan or Education Savings Account (ESA) must be used for qualified educational expenses to be tax-free. But many schools canceled classes this year, which means your university could have reimbursed some or all of your 529 or ESA money. If that's the case, you have 60 days to return the money to the account or use it to cover other educational expenses. If you didn't, you may have to pay income taxes and a withdrawal penalty.
New for 2020, you can use 529 plans to pay for the costs of certain apprenticeship programs, including fees, books, and supplies. You can also use money from a 529 plan to pay off up to $ 10,000 in student loan debt (that's $ 10,000 in total, not annually) without paying penalties or taxes.
For more information on Adjustments, click here.