TaxMama’s TaxQuips February 2021 Tax News

Income Taxes

Income Taxes

Wow, an entire month has just flashed by. We’ve been buried in work at our office – how about yours?

 

 

 

 

 

 

 

 

Dear Family,

The 2020 tax return filing brings lots of questions, a certain amount of uncertainty, and for many Americans, a surprise balance due. (You didn’t realize your unemployment benefits were taxable?) Drop by the TaxMama® Forum to see the questions people are asking.  http://iTaxMama.com/AskQuestion

The IRS is pumping out their daily Tax Tips (did you know they’ve been doing this for a few years?) https://www.irs.gov/newsroom/irs-tax-tips

Your tax preparation software (or your tax pro’s) is still in the process of being updated, a little more each day. Yes – so is the IRS’. And many IRS forms are still in the draft stage, not quite ready for prime-time. I guess that’s what happens when Congress passes a massive 5,593 page law, signed on December 27, 2021. Everyone is scrambling to update everything! (One of the reasons I’ve been so busy – is redoing all the seminars and materials I had finished by December 15th –  and now I have to re-do everything all over again!)

Are we getting another massive law that will affect your 2020 tax returns?
I surely hope not. Most of what I am seeing in the current Biden Rescue package doesn’t involve changes to the 2020 tax return.  The tax return changes appear to relate to the 2021 tax return – see the Tax Foundation summary in case you want reassurance.
https://taxfoundation.org/biden-stimulus-american-rescue-plan/

Some great news for people who received the Paycheck Protection Loans  (PPP) and the early (up to $10,000) EIDL grants and certain other grants. You can get these loans fully forgiven (you don’t have to pay them back). And you are now permitted to deduct the expenses you paid with those funds. But wait! Your state may not have complied with one or both of these provisions. They might – but their legislators have not yet had time to meet to pass these conformity laws. So, if you’re affected, put your tax return on extension. I expect most states to comply. (Even in CA, someone has already put forward a Bill to conform to the federal laws.)

Incidentally, another round of funds IS available for those businesses whose gross receipts have dropped by 25% or more last year.
https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program/second-draw-ppp-loans

NOTE: This forgiveness does not apply to the EIDL loans. Those are real loans that must be paid back. Read your contracts.

Some good news for people whose spouse doesn’t have a Social Security Number. You may file a joint return this year with that spouse and still get your share of the stimulus benefits.

Some bad news for people who got the stimulus funds. YOU need to know how much you received. The IRS log-in system only tells you the date the payment was issued to you, but not how much. I have asked the IRS for a look-up tool (since last summer). I was just told last week that they have received so many complaints about this from all over the country, that they are now working on it. Expect to see it – long after you file your tax return – perhaps before April 15th. (She said in disgust.)
https://www.irs.gov/coronavirus/economic-impact-payments

The IRS has opened up the Identity Protection PIN (IP PIN) for everyone (both spouses), not just people whose identity was stolen. The good thing is – no one can file a tax return using your Social Security number but you. The bad part is – you will need to get that IP PIN updated every year and won’t be able to file without it.
https://www.irs.gov/newsroom/all-taxpayers-are-now-eligible-for-identity-protection-pins

There’s a lot more going on. For complete updates – please drop by Lambers for this updated course – COVID19 World and The December 2020 Consolidated Appropriations Act
https://www.lambers.com/shop/tax-update-in-the-covid19-world-and-in-the-december-2020-consolidated-appropriations-act/

Speaking of which, an awful lot of people are going to need the help of their tax professionals to reach the IRS this year. The IRS phone lines are basically useless. Only Enrolled Agents, CPAs and attorneys who understand how to reach the IRS through certain special channels are going to get through. If you are not already licensed, this IS the year to become an Enrolled Agent (faster than either of the other two options).

Join me our annual webinar (a discount is included for those who attend):
Everything You Wanted to Know About the Enrolled Agent Exam for 2021-2022.

Sign up for one of these dates.

Wednesday February 17 – 10:00 am Pacific
http://iTaxMama.com/Everything_EA_February

March 18 – 4:00 pm Pacific
http://iTaxMama.com/Everything_EA_March

We might have another session in April – to be determined.

 

Meanwhile, I will be posting various updates and webinars that I am teaching, on this Events page – https://irsexams.school/events-and-webinars/

And remember, you can find answers to all kinds of questions about taxes and business issues, and EA Education, free. Where? Where else? At http://iTaxMama.com/AskQuestion

To make comments please drop into the TaxQuips Forum.

 

 

Leave a Reply