Tax News, Updates, and Links

********** TY 2022 UPDATES **********

04/14/2022 - Get an automatic six more months to file; all taxpayers can request an extension via IRS website: The Internal Revenue Service reminds taxpayers if they're unable to file their tax return by this year's April 18 deadline, there's an easy, online option (Click here to learn more!) to get more time to complete their return.

Taxpayers who need more time to complete their return can request an automatic six-month extension to file. An extension allows for extra time to gather, prepare and file paperwork with the IRS; however, taxpayers should be aware that:

• An extension to file their return doesn't grant them an extension to pay their taxes,
• They should estimate and pay any owed taxes by their regular deadline to help avoid possible penalties and
• They must file their extension no later than the regular due date of their return (tor 2021TY the date is 04/18/22).

Get an extension when making a payment: Other fast, free and easy ways to get an extension include using IRS Direct Pay, the Electronic Federal Tax Payment System or by paying with a credit or debit card or digital wallet. There's no need to file a separate Form 4868 extension request when making an electronic payment and indicating it's for an extension. The IRS will automatically count it as an extension.

04/10/2022 - Third-round Economic Impact Payments: Questions and Answers about the Third-round Economic Impact Payment (Topic J) - Payment Issued but Lost, Stolen, Destroyed or Not Received.  Use the IRS website to place a request a replacement or trace on your EIP.

*********************************************** 2021 UPDATES ********************************************

12/06/2021 - 2021 Tax Planning:

We are making changes for the upcoming 2021 Tax Season to help you better understand your tax situation and as a result, you will be able to better plan for your future, be it retirement, buying a new home, getting married, or starting/growing your business.   

Therefore, we emphasize planning ahead and view ‘tax planning’ as more important than the idea of preparing your taxes. Tax planning strategies are made more important by the tax code’s complexity.  With proper planning, we can help you determine and, more importantly, minimize what you might owe in taxes.  Tax planning strategies help taxpayers avoid tax penalties, get the most from their tax deductions, keep their financial documents organized, and plan for the future.  Whereas doing no tax planning could increase tax bills unnecessarily. 

We will be updating/implementing new business processes so we can best serve the needs of all clients.  We will be sharing more details about these changes and what we need you, our clients, to do to help us help you!  Continue to check our website, and this ‘Tax News and Link’ page as we will be adding information and links you will want to  be aware of regarding these changes and upcoming IRS updates which could impact you as well as providing answers to questions you might be asking yourself  like:

1) What is needed to plan to get my taxes completed? 

2) What documents and information do I need to have my taxes completed?   
3) What information do I need to provide C & C Tax Service to prepare my taxes? 

11/03/2021 - Form 2848, Power of Attorney and Declaration of Representative:

We have received questions regarding the Form 2848 Power of Attorney and Declaration of Representative and when it may be used.  The Form 2848 is generally provided to you when we complete your return, is updated every two years and is for IRS tax matters only.  We are granted access to your IRS account to review and verify information such as stimulus payments, estimated tax payment(s), wage & income information, etc.

08/03/2021 - Economic Impact Payments Info and Tools:

• Economic Impact Payments are funds to help people during the coronavirus pandemic.  Details about the various payments can be found at the IRS website at https://www.irs.gov/coronavirus/economic-impact-payments
• You can also find additional information on the first and second Economic Impact Payments via the 'Economic Impact Payment Information Center' on the IRS website at https://www.irs.gov/coronavirus/economic-impact-payment-information-center
  
• You can check the status of your third payment in Get My Payment tool. 
  
  

07/30/2021 - An Overview of the 2021 Advance Child Tax Credit:  Payments started on  July 15, 2021:

• You don’t need to take any action now if you’ve filed a 2020 tax return. 
• For people not required to file a tax return and who didn’t file in 2019 or 2020, quickly register using the IRS Non-filer Sign-up Tool. You may qualify for the Child Tax Credit and Economic Impact Payments.
• Eligible families can receive advance payments of up to $300 per month for each child under age 6 and up to $250 per month for each child age 6 and above.
• Payments began July 15th, 2021 and will be sent monthly through December 15 without any further action required.
• The tax credit includes advance payments for 2021 only.
• You can benefit from the credit even if you don’t have earned income or don’t owe any income taxes. 
• Eligible taxpayers who don’t want to receive advance payment of the 2021 Child Tax Credit will have the opportunity to unenroll from receiving the payments.
• The American Rescue Plan Act Advance Child Tax Credit provisions include: The maximum Child Tax Credit increased to $3,600 for children under the age of 6 and to $3,000 per child for children between ages 6 and 17.  The credit includes children who turn age 17 in 2021. Taxpayers may receive part of their credit in 2021 before filing their 2021 tax return.
  

Payment Amounts & Dates Eligible Families will receive advance payments, either by direct deposit or check. Each payment will be up to $300 per month for each child under age 6 and up to $250 per month for each child ages 6 through 17. The IRS will issue advance CTC payments: July 15, Aug. 13, Sept. 15, Oct. 15, Nov. 15 and Dec. 15.

NOTE: The above information was published by the IRS in the Department of the Treasury Internal Revenue Service Publication 5534 (6-2021) https://www.irs.gov/pub/irs-pdf/p5534b.pdf and https://www.irs.gov/pub/irs-pdf/p5534d.pdf

Which Online Tool Should You Use?  You can reference the following IRS publication (https://www.irs.gov/pub/irs-pdf/p5534e.pdf) to determine which tool to use based on your need (i.e., Check your eligibility, Register, View your payment history, Manage bank account info, Update mailing address, Report updates, and Unenroll).

06/30/2021 - Important changes to the child tax credit: 

Important changes were made to the child tax credit that will benefit many taxpayers. As part of the American Rescue Plan Act that was enacted in March 2021, the child tax credit amount has increased for certain taxpayers, is fully refundable (i.e., you can receive it even if you don’t owe the IRS), and may be partially received in monthly payments.  The age of qualifying children was also raised to 17 from 16, allowing some families to take advantage of the credit longer.

The IRS will pay half the credit in the form of advance monthly payments beginning July 15. Taxpayers will then claim the other half when they file their 2021 income tax return.

Though these tax changes are temporary and only apply to the 2021 tax year, they may present important cashflow and financial planning opportunities today. It is also important to note that the monthly advance of the child tax credit is a significant change. The credit is normally part of your income tax return and would reduce your tax liability. The choice to have the child tax credit advanced will affect your refund or amount due when you file your return.

Qualifications and how much to expect are based on several factors, including the age of your children and your income. The IRS.gov website has more detailed information on the specifics of the ‘Advance Child Tax Credit Payments in 2021’.  Additionally, to qualify for the child tax credit monthly payments, you (and your spouse if you file a joint tax return) must have:

·        Filed a 2019 or 2020 tax return and claimed the child tax credit or given the IRS your information using the non-filer tool

·        A main home in the U.S. for more than half the year or file a joint return with a spouse who has a main home in the U.S. for more than half the year

·        A qualifying child who is under age 18 at the end of 2021 and who has a valid Social Security number

·        Income less than certain limits

You can take full advantage of the credit if your income (i.e., your modified adjusted gross income) is less than $75,000 for single filers, $150,000 for married filing jointly filers and $112,500 for head of household filers. The credit begins to phase out above those thresholds.  Higher-income families (e.g., married filing jointly couples with $400,000 or less in income or other filers with $200,000 or less in income) will generally get the same credit as prior law (generally $2,000 per qualifying child) but may also choose to receive monthly payments. Taxpayers generally won’t need to do anything to receive any advance payments as the IRS will use the information it has on file to start issuing the payments.

IRS’s Child Tax Credit Update Portal - Use the IRS’s 'Child Tax Credit Update Portal to reflect any new information that might impact their child tax credit amount, such as filing status or number of children.  Parents may also use the online portal to elect out of the advance payments or check on the status of payments. The IRS also has a non-filer portal to use for certain situations.

Let us help you!  With any tax law change, it’s important to revisit your full financial roadmap. We can help you determine how much credit you may be entitled to and whether advance payments are appropriate. How you choose to receive the credit (partially advanced via monthly payments or solely on your next year’s return) could have many impacts to your financial plans. If you feel this applies to your Tax situation and want to set up a '2021 Tax Tune-Up' appointment please contact the office.

03/21/2021 - Tax Day was Extended to May 17th, 2021- What it means:

The Treasury Department and IRS announced the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021.   C&C Tax continues to process client tax documents in the order received.  If we have questions or it appears documents are missing or illegible we will reach out to you,  Once we have a 'complete' tax documents package we begin processing (i.e., logging, organizing, reviewing).   You will be notified once your Tax Return is complete. 

• We urge clients to be diligent and plan to complete their tax documents as soon as possible and submit their complete Tax Document Packages to us if they have not already done so.   
• Filing electronically with direct deposit (see page 6 of our Questionnaire) is the quickest way to get refunds, and it can help some taxpayers more quickly receive any remaining stimulus payments they may be entitled to.
• Individual taxpayers can also postpone federal income tax payments for the 2020 tax year due on April 15, 2021, to May 17, 2021, without penalties and interest, regardless of the amount owed. This postponement applies to individual taxpayers, including individuals who pay self-employment tax. Penalties, interest and additions to tax will begin to accrue on any remaining unpaid balances as of May 17, 2021. Individual taxpayers will automatically avoid interest and penalties on the taxes paid by May 17. 
• No forms need to be filed to qualify for this automatic federal tax filing and payment relief. 
• If you need additional time to file beyond the May 17 deadline, you can request a filing extension until Oct. 15 by filing Form 4868 through their tax professional, tax software or using the Free File link on IRS.gov. 
• Filing Form 4868 gives taxpayers until October 15 to file their 2020 tax return but does not grant an extension of time to pay taxes due. Taxpayers should pay their federal income tax due by May 17, 2021, to avoid interest and penalties.
• This relief does not apply to estimated tax payments that are due on April 15, 2021. These payments are still due on April 15. Taxes must be paid as taxpayers earn or receive income during the year, either through withholding or estimated tax payments. In general, estimated tax payments are made quarterly to the IRS. 
• For more information you can visit https://www.irs.gov/newsroom/tax-day-for-individuals-extended-to-may-17-treasury-irs-extend-filing-and-payment-deadline on IRS.gov.

State tax returns:  The federal tax filing deadline postponement to May 17, 2021, only applies to individual federal income returns and tax (including tax on self-employment income) payments otherwise due April 15, 2021, not state tax payments or deposits or payments of any other type of federal tax.  We urge clients to to check with their state tax agencies for those details.

• Earlier this year, following the disaster declarations issued by the Federal Emergency Management Agency (FEMA), the IRS announced relief for victims of the February winter storms in Texas, Oklahoma and Louisiana. These states have until June 15, 2021, to file various individual and business tax returns and make tax payments.  For more information about this disaster relief: https://www.irs.gov/newsroom/victims-of-texas-winter-storms-get-deadline-extensions-and-other-tax-relief 

03/20/2021 - Check the status of your Income Tax Refund:

You can check on the status of your current year income tax refund by clinking the 'Check My Refund Statues' link on the IRS website at the following Link: https://www.irs.gov/refunds   . 

• You can check your Maryland Income Tax Refund at: https://www.marylandtaxes.gov/online-services/individuals.php
• Depending on the State you file Income Taxes for you can check the IRS website at: https://www.irs.gov/tax-professionals/government-sites

03/11/2021 - American Rescue Plan Act of 2021:

 Some of the key elements of the Act include:

• Extending expanded unemployment benefits with a $300 weekly supplement through Labor Day (September 6, 2021), preventing benefits from expiring on March 31, 2021.
• The act makes the first $10,200 in unemployment benefits for 2020 not taxable for households with incomes below $150,000, thus avoiding the risk of many workers incurring surprise federal tax liability.^[78]
• $1,400 direct payments to individuals (see Stimulus Payment III below).
• Tax provisions
• Grants to small businesses
• Education funding, funding for K-12, funding for colleges and universities
• Funding for housing
• The bill contains the following COVID-19 funding (including for COVID-19 vaccines, testing, and contact tracing) and other healthcare-related funding.
• Rescue package/bailout for approximately 185 multiemployer pension funds (usually pension plans set up by a union and industry) that are close to insolvency.
• Transportation provisions and additional $ for agriculture and USDA
• Cybersecurity funding as a response to the SolarWinds hack
• Changes to healthcare, temporary changes to ACA, and Medicaid and CHIP changes

03/11/2021 - Maryland Extends Time to File and Waives Interest and Penalty for Certain Filers:

The Comptroller of Maryland has granted a limited, temporary extension to file certain tax returns and abate certain interest/late payment penalties that may accrue.

To read more: https://content.govdelivery.com/attachments/MDCOMP/2021/03/11/file_attachments/1720579/TAX%20ALERT%202021%20EXTENSION%2003.11.2021_f.pdf

03/04/2021 - Stimulus Payment III: 

The Internal Revenue Service, on behalf of the Treasury Department, worked to quickly begin delivery of the third round of Economic Impact Payments authorized by Congress in the American Rescue Plan Act in March 2021. This 3rd stimulus payment, which differs in some ways from the first two stimulus payments in 2020, referred to as EIP1 and EIP2. You can read more at  https://www.irs.gov/newsroom/more-details-about-the-third-round-of-economic-impact-payments on IRS.gov. 

How much is the third Economic Impact Payment (EIP)?  Those eligible will automatically receive an Economic Impact Payment of up to $1,400 for individuals or $2,800 for married couples, plus $1,400 for each dependent. Unlike EIP1 and EIP2, families will get a payment for all their dependents claimed on a tax return, not just their qualifying children under 17. Normally, a taxpayer will qualify for the full amount if they have an adjusted gross income of up to $75,000 for singles and married persons filing a separate return, up to $112,500 for heads of household and up to $150,000 for married couples filing joint returns and surviving spouses. Payment amounts are reduced for filers with incomes above those levels.  Find out when and how the IRS sent your 3rd EIP using the IRS 'Get My Payment' application.

02/03/2021 - Stimulus Payment Confirmation: 

We have received questions regarding why we are requiring the 'Stimulus Payment Confirmation Form' is required to complete your 2020 Tax Return.  For those clients that did not receive one or both Economic Impact Payments may claim the Recovery Rebate Credit on their 2020 Tax return.  In order to accomplish this we need to confirm if or what amount you received.  You can find out more information on the IRS website at this Recovery Rebate Credit link.

01/04/21 - Coronavirus Stimulus Payment (EIP II):  

The IRS and the Treasury Department began issuing a second round of Economic Impact Payments, often referred to as stimulus payments, on January 4th, 2021.  Generally, U.S. citizens and resident aliens who are not eligible to be claimed as a dependent on someone else’s income tax return are eligible for this second payment. Eligible individuals will automatically receive an Economic Impact Payment of up to $600 for individuals or $1,200 for married couples and up to $600 for each qualifying child. Most people who have an adjusted gross income for 2019 of up to $75,000 for individuals and up to $150,000 for married couples filing joint returns and surviving spouses, will receive the full amount of the second payment. For filers with income above those amounts, the payment amount is reduced.