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What is the Estimated Tax Payment?

The IRS extended the tax filing deadline to May 17th, but they did not extend the estimated tax filing deadline.

What does this mean for our customers?

If your taxes are taken out of every paycheck and you receive a W-2, you do not have to make the quarterly estimated tax payments.

If you are an individual who expects to owe more than $1,000 in income taxes at your tax filing or a corporation which expects to owe more than $500 in income taxes, then you have to pay estimated taxes. For these tax filers, the IRS has not extended tax filings like they did in 2020.

For many of our customers, your tax filing deadline is May 17th, but if you fall into one of the estimated tax categories you still need to make that estimated tax payment on time.

2017 Returns Extended

US tax law gives taxpayers 3 years to file a return and receive a refund. After that, the money goes into the US Treasury and is no longer available to individuals.

We had posted on Facebook that this due date was still on April 15th. According to the IRS’s announcement, the tax extension is for the 2017 taxes as well. Also according to that announcement, there are over 16,000 taxpayers in South Carolina who have not yet filed their 2017 returns and are owed a total of over 15 million dollars.

If you need to file your 2017 tax return, please come see us! We can help you navigate the complexities of old documents and you might actually come out with more money than you owe.

 

Tax Updates March 26

Tax Filing Due Date Extended

The IRS and Treasury have announced that the tax filing due date for individuals for the 2020 tax year will be automatically extended to May 17, 2021, from April 15, 2020. Individual taxpayers do not need to file any forms or call the IRS to qualify for this automatic extension. This does NOT apply to estimated tax payments that are due on April 15, however, nor does it affect the due date of state tax returns. 

Economic Impact Payments Made

The IRS recently disbursed 90 million Economic Impact Payments via direct deposit, for a total of $242 billion. Those who used direct deposit information for a 2019 or 2020 tax refund, or used the Non-Filers tool last year for an earlier EIP saw deposits begin processing on Friday, March 12. Another $442 million went out as paper checks to another 150,000 people. This week another 37 million payments were processed with a total value of nearly $83 billion. Additional batches of payments will be sent in the coming weeks as direct deposits, mailed checks, or debit cards.

EIP Fraud Investigations Continue

The IRS’ Criminal Investigation Division remains committed to investigating COVID-19 fraud. The agency has investigated more than 350 tax and money laundering cases related to EIPs, Paycheck Protection Program (PPP), and Employee Retention Credit. The public is encouraged to share information regarding known or suspected fraud attempts through any of the Coronavirus Aid, Relief and Economic Security (CARES) Act programs here.

Protective Equipment Is Tax Deductible

The IRS has clarified that personal protective equipment whose primary purpose is preventing the spread of coronavirus, is a deductible medical expense. This includes masks, hand sanitizer, and sanitizing wipes. Such equipment is also eligible to be reimbursed under various health and medical savings arrangements. 

 

Tax Updates March 2, 2021

Selecting Tax Return Preparers

The IRS is reminding taxpayers to choose a tax return preparer with care. While the vast majority of paid preparers provide quality service, others commit fraud, identity theft, and other scams. Credentials to look for in a professional with whom you’re trusting your personal and financial information include:

  • Year-round availability – being able to contact your preparer after tax season can be helpful if questions about your return arise.
  • Professional credentials – does your preparer belong to a professional organization, attend continuing education classes, and remain up-to-date on tax law?
  • Legitimate pricing – avoid preparers who base their fees on a percentage of a client’s refund.
    More information can be found in the new Tax Time Guide.

Tax Relief For Texas Storm Victims

The IRS has announced that taxpayers in FEMA-designated disaster areas will have until June 15, 2021 to file tax returns and make tax payments. This includes the entire state of Texas and areas of other states where FEMA disaster declarations have been made. Among other things, this also means that taxpayers will have until June 15 to make 2020 IRA contributions. Taxpayers do not need to contact the IRS to get this benefit; if their address of record is located in the disaster area, they will be provided the relief.

EIPs Issued; Recovery Rebate Credit Available

All legally permitted first and second round of Economic Impact Payments (EIPs) have been issued, the IRS has announced. Individuals who didn’t receive EIPs or didn’t receive the full amounts may be eligible to claim the Recovery Rebate Credit. To claim the credit, individuals will need to know the amounts of any EIPs they received. This information can be found online.

Health FSA Flexibility Increased

Due to the pandemic and the COVID-related Taxpayer Certainty and Disaster Tax Relief Act of 2020, the IRS has provided greater flexibility to employee benefit plans offering health flexible spending arrangements (FSAs) or dependent care assistance programs. These plans now have additional discretion to adjust their programs. Potential adjustments include carrying over unused amounts, extending the permissible period for incurring claims, allowing certain mid-year changes, and more. The decisions to adjust these programs is at the discretion of the employer that sponsors the plan.

Tax Updates January 29

We are very busy with the tax season, but life continues. Here are the most recent updates from the IRS’s website.

Deferred Social Security Taxes Coming Due

Employers were given the option last year of deferring employees’ Social Security tax withholdings from September through the end of 2020. Those who elected to do so were originally obligated to begin withholding the deferred tax to be paid back over the first four months of 2021. However, as part of the Consolidated Appropriations Act, 2021, signed into law December 27, employers now have the entire year, from January 1, 2021 until December 31, 2021, to withhold and pay the deferred tax. Penalties, interest and additions to tax will now start to apply on January 1, 2022, for any unpaid balances.

COVID Employee Retention Tax Credit Extended

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, modifying and extending the Employee Retention Credit (ERC) fr six months, through June 30, 2021. Eligible employers can now claim a refundable tax credit against the employer share of Social Security tax equal to 70% of wages paid to employees in the first half of 2021.

Qualified wages are limited to $10,000 per employee per calendar quarter, making a maximum ERC of $7,000 per employee per quarter.

Filing Season – Agency Preparing

The IRS has announced that the tax filing season will begin Friday, February 12. After the December 27 changes to tax law, including a second round of Economic Impact Payments (EIPs), further programming was required. Proper programming is critical to ensure refunds are not delayed, and that eligible people will receive any remaining EIP monies as a credit when they file their 2020 return. The IRS urges individuals and tax professionals to file electronically for the speediest processing. Note: Free File is open and returns can be filed. Software companies and Free File partners will begin transmitting returns to the IRS beginning February 12.

Beware Unemployment Fraud

The IRS is warning taxpayers who receive Forms 1099-G for unemployment benefits they did NOT actually get, to contact their state agency for a corrected form.

Unemployment benefits are taxable income, but receiving a 1099-G in error suggests identity theft. Scammers took advantage of the pandemic by filing fraudulent claims using stolen personal information from individuals who had not filed claims. See Identity Theft Central for more information about identity theft and steps to be taken if one believes they’ve been a victim of fraud in this way.

Update on the Stimulus Payments

Worried about your stimulus payment?
The IRS announced that they are resending stimulus funds to accounts that were closed after the last stimulus.
This announcement means that if you received your tax return via a bank account that has been closed, you should receive a check in the mail or a deposit soon although it might not be till the first week of February. You can check your stimulus status at the Get My Payment tool.
Receiving your stimulus through this resending process will still be faster than waiting until the IRS starts issuing tax returns in mid to late February.
For customers who need access to funds earlier than the end of January, we recommend our tax advance through Republic Bank. Bring your W-2 and other tax documents in to file your taxes and you can receive a direct deposit from Republic Bank using your refund as collateral.
Little Giant Tax Service has offered the Early Advance product for years and many of our customers have used it to help navigate tough situations. Whether you wait for the stimulus or get a tax advance now, Little Giant Tax Service is here to help you get your taxes done right!

Announcement Regarding Stimulus Payments

Announcement!

Because Republic Bank has closed out their 2020 accounts in preparation for the 2021 tax season, they cannot process direct deposit stimulus payments. The payments will be sent back to the IRS for processing.

Taxpayers who used Republic Bank products to receive a tax refund  or the economic stimulus refund will be receiving a prepaid card or check in the mail at the address used on their 2019 tax return.

Republic Bank can be reached to determine if your Economic Impact Payment was routed through one of their bank products via 866-581-1040. If your Economic Impact Payment was routed through Republic Bank, you can expect the IRS refund to come as a prepaid card or check in the mail soon. According to the IRS, electronic payments started going out on Tuesday night, December 29, and paper checks will start being mailed on Wednesday, December 30.

If you registered for the original EIP payment online at the IRS, EIP-2 should automatically go to the same account. Also, the IRS intends to have final payments out by mid-January. Finally, if you have not received an economic stimulus payment but you are eligible for one, you can claim it when you file your 2020 taxes.

We hope that you stay healthy, and we are here to serve you,

Your Little Giant Tax Team

Mid December Tax Updates

Security Awareness Week Wraps Up

The National Tax Security Awareness Week has finished its focused campaign to help tax professionals and taxpayers protect themselves from security risks. Issues for the week included basic steps that should be taken to avoid scams and identity theft schemes taking advantage of holiday shopping, the approaching tax season and coronavirus concerns; the multi-factor authentication that will be available on all 2021 online tax preparation products; the expanded Identity Protection PIN Opt-In Program for all taxpayers who can properly verify their identities; security advice for businesses; and more security advice for tax professionals.

Interest Rates To Remain The Same

The IRS has announced that interest rates for under- and overpayments will remain the
same for the calendar quarter beginning January 1, 2021. The rates will continue at three (3) percent for overpayments (two (2) percent in the case of a corporation); one-half (0.5) percent for the portion of a corporate overpayment exceeding $10,000; three (3) percent for underpayments; and
five (5) percent for large corporate underpayments.

Wage Statements Due February 1, 2021

The IRS reminds employers that Forms W-2 and other wage statements must be filed with the Social Security Administration no later than February 1, 2021, to avoid penalties and reduce fraud. Normally, such statements are due January 31, but since that date falls on a Sunday, the deadline has been pushed to the next business day. Copies to employees are also due by then, as well as Forms 1099-MISC and 1099-NEC.

Final QTF Regulations Issued

The IRS and Treasury have issued final regulations on the deduction for qualified transportation fringe (QTF) and commuting expenses following changes made by the Tax Cuts and Jobs Act (TCJA). These final regulations address expenses related to QTFs, including providing guidance on determining the amount of QTF parking expenses that is nondeductible, and the disallowance of the deduction for expenses of transportation between an employee’s home and workplace.

Tax Updates November 14

Beware of Text Scam

The IRS and Security Summit partners have alerted taxpayers that neither the IRS nor local agencies will ever text taxpayers asking for bank account information so that an economic impact payment may be made to them. Scam texts may read, “you have received a direct deposit of $1,200 from COVID-19 TREAS FUND. Further action is required to accept this payment into your account. Continue here to accept this payment…” A link to a fake phishing web address is included, and can result in identity theft. If you’ve received such a text, the IRS asks that you contact them and share the details. As a reminder the IRS does not send unsolicited texts or emails, nor do they call people with threats of jail or lawsuits.

Some College Students May Still Qualify For EIP

The IRS is reminding non-filers to register for an economic impact payment (EIP) if they haven’t received one yet. This includes self-supporting college students who have little to no income – but are not listed as dependents on anyone else’s return. Those who do not file a tax return will only receive an EIP if they use the Non-Filers Tool to register. The tool is designed for married couples making less than $24,400 or individuals making less than $12,200. The deadline for such registrations is November 21, 2020. 

Terminating 403(b) Guidance Issued

The IRS and Treasury have issued guidance for employers and employees with terminating 403(b) plans that fund benefits through 403(b)(7) custodial accounts. Changes in the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) are reflected in the guidance. Revenue Ruling 2020-23 provides the details and Notice 2020-80 requests comments regarding the application of annuity and spousal rights provisions included in the guidance.

Taxpayer Relief For IRS Debtors

The IRS has announced changes aimed at helping taxpayers who owe the IRS and are affected by the Covid-19 crisis. The relief includes payment plans and installment agreements, as well as temporary collections delay, offers in compromise, and penalties relief. 

Are You Prepared for Unemployment Taxes?

In the craziness that is 2020, Pandemic Unemployment Assistance has helped many people survive when their places of employment had to shut down. Employees often do not think about the fact that unemployment payments are taxable income.

The South Carolina Department of Revenue recently wrote a reminder to help tax payers plan ahead for taxes. You may request that taxes are withheld from your unemployment payments, you may pay on a quarterly cycle, or pay the entire bill due at tax time next year.

Each of these methods has its own advantages and disadvantages. Withholding taxes from your unemployment can cause a reduction in weekly cash flow that you cannot afford while looking for new work. Quarterly taxes will give you regular cash flow and avoid a large lump sum at the end of the year. But, they can result in different payments if you are tracking expenses and tax deductions on the year or if you plan to offset your tax bill with tax credits at the end of the year. Finally, you can pay your entire tax bill during next year’s tax season. With good tax help, this will result in the most accurate tax cost but will also mean that you can be liable for a large lump sum payment when you file your taxes.

No matter your chosen method of managing your taxes, you need to talk to a professional about your tax bill from this year. It is going to be different than any year previously. We are available Mon-Wed, call ahead to arrange a covid-safe appointment with our staff during office hours.

 

North Carolina Tax Deadline Fast Approaches!

North Carolina parents who want to receive the $335 covid relief check for families need to file their taxes by October 15.

If you have not done your taxes, lived in North Carolina for all of 2019, and have at least one dependent under the age of 17, then contact us on the form below to see if we can help you get your taxes in before the deadline.

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