Improperly Forgiven PPP Loans are Taxable
The IRS has released guidance addressing improper forgiveness of Paycheck Protection Program (PPP) loans. When a PPP loan is forgiven based upon misrepresentations or omissions, the taxpayer is not eligible to exclude the forgiven loan proceeds from taxable income. Taxpayers who inappropriately received PPP loan forgiveness are encouraged to file amended returns and come into compliance.
September 30 Deadline for COVID Penalty Relief
The IRS reminds struggling individuals and businesses affected by the pandemic that they may qualify for late-filing penalty relief if they file their 2019 and 2020 returns by September 30, 2022. This aims to help not only taxpayers but to allow the IRS to focus resources on processing backlogged tax returns in an effort to return to normal operations for the 2023 filing season. The relief applies to the failure-to-file penalty, usually assessed at a rate of 5% per month, up to 25% of the unpaid tax, when a return is filed late.
Victim Relief Abounds
- Victims of storms and flooding that began on September 15 in parts of Alaska now have until February 15, 2023, to file various individual and business tax returns and make tax payments. This applies to those in FEMA-designated areas, currently the Regional Education Attendance Areas of Bering Strait, Kashunamiut, Lower Kuskokwim and Lower Yukon.
- Hurricane Fiona victims in all 78 Puerto Rican municipalities also have until February 15, 2023, to file various returns and make payments.
- Farmers and ranchers in applicable regions forced to sell livestock because of drought conditions have more time to replace their livestock and defer tax on any gains from the forced sales. This includes parts of 44 states, and generally applies to gains realized on the sales of draft, dairy, or breeding livestock. Sales of other livestock held for slaughter or sport, or poultry, are not eligible. More information is available in Notice 2022-43.
- Look for much of Florida to be offered relief shortly. Updated localities are always available on the disaster relief page of IRS.gov.
- Employers using payroll service providers should ensure their provider has a fiduciary bond in place to protect the employer against a possible default. Using the Electronic Federal Tax Payment System (EFTPS) to make federal tax deposits and business tax payments makes it easy and convenient to pay the government even when disaster displaces employees and businesses. Any business can create an EFTPS account.
Reconstructing records after a disaster may be required for tax or insurance purposes or getting federal assistance. For more information, visit National Preparedness Month.
Here are your updates from the IRS this week.
Second Quarter Interest Rates Increase
For the first time in more than three years, interest rates are being increased. For the quarter beginning April 1, 2022, the rates will be:
- 4% for overpayments (3% for corporations)
- 1.5% for the portion of a corporate overpayment exceeding $10,000
- 4% for underpayments
- 6% for large corporate underpayments
Rates are determined for each category based on the federal short-term rate, and adjusted (or not) on a quarterly basis.
Checking Refund Status
The IRS wants those expecting refunds to know that the fastest and easiest way to check on their refund status is by using the “Where’s my Refund” tool on IRS.gov. The mobile app, IRS2Go is also an efficient option. Filing electronically and using direct deposit is the fastest way to file and receive a refund, often within 21 days, though some situations may require more time. These situations include claiming the Earned Income Tax Credit or Additional Child Tax Credit, returns that need additional review or have errors, or those affected by identity theft or fraud. The IRS urges recipients to ignore refund myths; refunds cannot be expedited by ordering a tax transcript, calling the IRS, or calling their tax preparer.
Resource Page Launched
The IRS has launched a special new page to provide the most updated details and information affecting the 2022 tax filing season. The “special tax season alerts” page will address critical tax law changes related to the pandemic, as well as provide quick information regarding filing returns. Information affecting those whose previous year returns are backlogged and awaiting processing will also be provided.
Want to Improve the IRS?
The IRS is seeking “civic minded volunteers” to serve on the Taxpayer Advisory Panel (TAP). The TAP submits dozens of recommendations to the IRS each year; 193 were made in 2021 alone. Many recent suggestions have already been implemented. Applicants must be US citizens current with federal tax obligations who are able commit to the expected volunteer hours. They must also pass a background check and not be registered lobbyists or Treasury or IRS employees. Applications are due April 8.
As we end our tax advance in March, we are transitioning to the last half of the tax season. Many of our customers in the last part of the tax season are bringing complicated returns, high tax bills, and other special scenarios.
If this is you, Melynda Rushing and Danielle Hoyles are ready to help you navigate even the most complex situation. The following are several ways that our team can help you navigate the stress of taxes, no matter your situation.
Local Tax Knowledge
Locally owned and operated, we have been serving in Rock Hill since the early 90s. We keep abreast of both the IRS’s rules and South Carolina’s rules.
We can help you think through the information you need to fill out your taxes and to get them done right.
Tax Preparers You Can Trust
Melynda and Danielle are both certified through the IRS’s Annual Filing Season Program. When you are looking for a tax preparer to help you with your taxes, this is one of the qualifications that the IRS recommends.
Many of our customers return to us year after year for help with their taxes. And as a local business, we are here to follow up with you throughout the year.
A+ Accreditation with The Better Business Bureau
Since 2006, we have been accredited with the Better Business Bureau. This accreditation shows that we are here to serve you no matter your tax need.
As you look at filing your tax returns, consider trusting your complicated tax needs with Little Giant Tax Services.
Special Charitable Tax Deduction
The IRS and nonprofit groups remind taxpayers that there is a special tax provision that allows more people to deduct donations to qualifying charities on their 2021 tax return. Under the temporary law, taxpayers don’t need to itemize deductions to take advantage of this pandemic-related rule; individuals can deduct up to $300 in donations and married couples filing jointly can deduct up to $600. The contributions must be made by December 31, 2021.
Disaster Tax Relief
Taxpayers in Kentucky affected by the recent storms, tornados, and floods have until May 16, 2022 to file various individual and business tax returns, and make tax payments. This is also the due date for 2021 IRA contributions, and quarterly payroll and excise tax returns. The same relief is being provided to storm victims in Illinois and Tennessee, and relief previously offered to those affected by Hurricane Ida have had their deadlines extended from January 3, 2022, to February 15. Detailed information is available on the Disaster Assistance and Emergency Relief page, and updates for specific disasters can be found here.
Deferred Social Security Tax Payments Due Soon
The IRS reminds employers and the self-employed that chose to defer paying part of their 2020 Social Security tax payment that their payment is due January 3, 2022. Most employers and individuals received a reminder billing notice, but the payment is due whether a billing notice was received or not. The deferral was part of COVID relief in 2020; half the deferred amount is due now, and the other half on January 3, 2023.
Hold Onto Advance Child Tax Credit Letters
The IRS will be issuing informational letters to recipients of the Advance Child Tax Credit starting in December, as well as letters to recipients of the third round of Economic Impact Payments in late January. These have important information that will make preparing tax returns easier and more accurate. The IRS urges taxpayers to use electronic filing to avoid delays.
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.