Tag Archives: quarterly taxes

Tax Updates Mid April

Educator Expense Deduction to Increase

For the first time since it was enacted in 2002, the special educator expense deduction limit has increased from $250 per year to $300 per year. The increase begins in 2022, so out-of-pocket classroom expenses for the current year can be claimed in the deduction when filing 2022 federal income tax return next year. Those filing for 2021 are still subject to the $250 limit. Deductible expenses include books, supplies, other classroom materials, professional development courses, computer equipment and software, and COVID-19 protective items such as face masks, hand sanitizer, disposal gloves, tape, paint or chalk to guide social distancing, and other CDC recommended items.

Foreign Account Report Deadline Approaches

The IRS reminds citizens and other entities that the deadline for filing their annual Report of Foreign Bank and Financial Accounts (FBAR) is April 15. However, those who miss the deadline will receive an automatic extension until October 15, 2022. An FBAR is required for those who have: (1) Financial interest in, signature authority or other authority over one or more accounts, such as a bank account, brokerage account, mutual fund or other financial account in a foreign country, and (2) The aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year. Civil and criminal penalties may apply for those who fail to report accurately.

First Quarter Deadline Approaches

The IRS reminds taxpayers that Monday, April 18 is the deadline to make estimated tax payments. This applies to the self-employed, retirees, investors, businesses and corporations. Taxes are “pay as you go” and for those who aren’t subject to payroll withholding, estimated taxes are paid quarterly. There is assistance for figuring one’s estimated taxes, as well as streamlined methods for making payments online.

EIP Letters, Corrections

The IRS has completed mailing Letters 6475 to recipients of the third round of Economic Impact Payments (EIPs) and reminds filers to double-check records when filing their 2021 tax return. Most people received the full amount in advance, but for those who didn’t, the 2021 Recovery Rebate Credit may be claimed. If a mistake was made regarding this credit on a 2021 return which has already been filed, an amended return is not necessary. The IRS will make the correction and, if the filer agrees with the correction, no action on their part is required. There may be a delay in processing a return that requires correction. 

Tax Updates September 10

Interest Rates Remain The Same

The IRS has made the decision to keep the same interest rate for the fourth quarter of 2020. Each quarter, the IRS sets the interest rates charged or paid on over- and underpayment. For taxpayers (other than corporations), the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points. Other rates are as follows:

  • 3% for overpayments (2% in the case of a corporation)
  • 5% for the portion of a corporate overpayment exceeding $10,000
  • 3% percent for underpayments
  • 5% percent for large corporate underpayments

Final BEAT Regulations Issued

The Tax Cuts and Jobs Act (TCJA) added a new tax on large U.S. corporations that make deductible payments to related foreign parties, called the base erosion and anti-abuse tax (BEAT). The IRS has issued final regulations providing detailed guidance regarding how to compute certain BEAT calculations. They also contain rules permitting taxpayers to waive deductions for purposes of the BEAT, and additional guidance regarding partnerships and anti-abuse rules.

Temporary Digital Signatures Allowed

The IRS has released a list of tax forms on which they are allowing digital signatures. This is a temporary measure, in place until December 31, 2020, intended to help protect the health of taxpayers and tax professionals. These forms have to be printed and mailed, but the digital signatures will enable the forms to be filled and filed without contact between taxpayer and tax preparer, and in a timely manner. The IRS will continue to monitor this temporary option and determine if further measures are necessary.

Third Quarter Tax Payments Due September 15

The IRS reminds taxpayers that third quarter tax payments are due September 15. This applies to anyone not subject to payroll tax withholding like self-employed or gig workers, investors, recipients of alimony, retirees, and others. Taxes are “pay as you go,” and there are penalties for late payment or underpayment of taxes. Due dates for disaster victims have been delayed.