IDA Tax Relief

 

Tax relief now available to victims of Hurricane Ida; Oct. 15 deadline, other dates extended to Jan. 3

Victims of Hurricane Ida that began on Aug. 26 now have until Jan. 3, 2022, to file various individual and business tax returns and make tax payments, the Internal Revenue Service announced today.

The IRS is offering this relief to any area designated by the Federal Emergency Management Agency (FEMA) as qualifying for individual or public assistance. Currently this includes the entire state of Louisiana, but taxpayers in Ida-impacted localities designated by FEMA in neighboring states will automatically receive the same filing and payment relief. The current list of eligible localities is always available on the disaster relief page on IRS.gov.

Tax P.O.A.

 

Request Power of Attorney (POA) Individual Client

Before You Start

You must have:

• A Centralized Authorization File (CAF) number, which the IRS assigns the first time you file a third-party authorization
• One of the following credentials and not be suspended or disbarred from practice before the IRS per Circular 230 Tax Professionals
  • Attorney
  • Certified Public Accountant
  • Enrolled Agent
  • Enrolled Actuary
  • Enrolled Retirement Plan Agent

How It Works

1. Prepare

To request POA online, have this ready:

• Client's Social Security number or Taxpayer Identification Number
• Tax matters and periods for which you are requesting authorization are limited to the following matters from the year 2000 forward:
  • Form 1040 Income Tax
  • Split Spousal Assessment or Form 8857 Innocent Spouse Relief
  • Shared Responsibility Payment
  • Shared Responsibility Payment - Split Spousal Assessment
  • Civil Penalty (limited to periods of March, June, September and December)

To request authorization for multiple representatives:

• Each representative must log in with their account
• Only 2 representatives may receive copies of a client’s IRS notices and communications
• The client must authorize all representatives on the same day

2. Complete the Request

It should take around 15 minutes to complete the request. You cannot save requests to continue later.

After you submit the request, you'll get confirmation that it's been sent to your client's online account.

If the information you entered for your client is not correct, they will not see the request in their online account.

3. Contact Your Client

Ask your client to log in to their account to review and electronically sign the authorization request at www.irs.gov/account.

For multiple representatives requesting authorization for the same tax matters and periods:

• Ask your client to authorize all representatives on the same day

4. Client Authorizes or Rejects and Contacts You

Your client logs in to their account at www.irs.gov/account to authorize or reject the request.

The authorization will be processed after your client approves and electronically signs. Allow up to 2 business days to process after your client signs.

Your client may print confirmation and give you a copy of the signed authorization.

The IRS won’t notify you if your client rejects the request or if the request failed to process.

Contact your client with any questions about the status of a request.

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Submitting with Tax Pro Account will revoke any prior authorization(s) on file with the IRS for the same tax matters and periods. If you don’t want a prior authorization to be revoked, use Form 2848

Tax Tip for Teachers

 Staten Island CPA, David C Egan

A tip for teachers: Some educator expenses may be tax deductible

 

The educator expense deduction allows eligible teachers and administrators to deduct part of the cost of technology, supplies and training from their taxes. They can only claim this deduction for expenses that were not reimbursed by their employer, a grant or other source.

 

Who is an eligible educator:

The taxpayer must be a kindergarten through grade 12 teacher, instructor, counselor, principal or aide. They must also work at least 900 hours a school year in a school that provides elementary or secondary education as determined under state law.

 

Things to know about this deduction:

Educators can deduct up to $250 of trade or business expenses that were not reimbursed. As teachers prepare for the school year, they should remember to keep receipts after making any purchase to support claiming this deduction.

 

The deduction is $500 if both taxpayers are eligible educators and file their return using the status married filing jointly. These taxpayers cannot deduct more than $250 each. Qualified expenses are amounts the taxpayer paid themselves during the tax year.

 

Here are some of the expenses an educator can deduct:

• Professional development course fees
• Books
• Supplies
• Computer equipment, including related software and services
• Other equipment and materials used in the classroom

IRS to Begin issuing unemployment compensation related refunds

 

IRS readies nearly 4 million refunds for unemployment compensation overpayments

The IRS announced today it will issue another round of refunds this week to nearly 4 million taxpayers who overpaid their taxes on unemployment compensation received last year.

The American Rescue Plan Act of 2021, which became law in March, excluded up to $10,200 in 2020 unemployment compensation from taxable income calculations. The exclusion applied to individuals and married couples whose modified adjusted gross income was less than $150,000.

Refunds by direct deposit will begin July 14 and refunds by paper check will begin July 16. The IRS previously issued refunds related to unemployment compensation exclusion in May and June, and it will continue to issue refunds throughout the summer.

To ease the burden on taxpayers, the IRS has been reviewing the Forms 1040 and 1040SR that were filed prior to the law’s enactment to identify those people who are due an adjustment. For taxpayers who overpaid, the IRS will either refund the overpayment, apply it to other outstanding taxes or other federal or state debts owed.

For this round, the IRS identified approximately 4.6 million taxpayers who may be due an adjustment. Of that number, approximately 4 million taxpayers are expected to receive a refund. The refund average is $1,265, which means some will receive more and some will receive less.

Most taxpayers need not take any action and there is no need to call the IRS. However, if, as a result of the excluded unemployment compensation, taxpayers are now eligible for deductions or credits not claimed on the original return, they should file a Form 1040-X, Amended U.S. Individual Income Tax Return.

Taxpayers should file an amended return if they:

• did not submit a Schedule 8812 with the original return to claim the Additional Child Tax Credit and are now eligible for the credit after the unemployment compensation exclusion;
• did not submit a Schedule EIC with the original return to claim the Earned Income Tax Credit (with qualifying dependents) and are now eligible for the credit after the unemployment compensation exclusion;
• are now eligible for any other credits and/or deductions not mentioned below. Make sure to include any required forms or schedules.

Taxpayers do not need to file an amended return if they:

• already filed a tax return and did not claim the unemployment exclusion; the IRS will determine the correct taxable amount of unemployment compensation and tax;
• have an adjustment, because of the exclusion, that will result in an increase in any non-refundable or refundable credits reported on the original return;
• did not claim the following credits on their tax return but are now eligible when the unemployment exclusion is applied: Recovery Rebate Credit, Earned Income Credit with no qualifying dependents or the Advance Premium Tax Credit. The IRS will calculate the credit and include it in any overpayment;
• filed a married filing joint return, live in a community property state, and entered a smaller exclusion amount than entitled on Schedule 1, line 8.

Taxpayers will generally receive letters from the IRS within 30 days of the adjustment, informing them of what kind of adjustment was made (such as refund, payment of IRS debt payment or payment offset for other authorized debts) and the amount of the adjustment.

Advance Child Tax Credit - The American Rescue Plan

The American Rescue plan signed in March, 2021 requires the IRS to pay out ½ of enhanced Child Tax Credits (CTC) to eligible taxpayers beginning this month. If you have children or know of anyone who has children, here is how you can help:

What’s happening now

IRS web-sites. The IRS is establishing two web sites. One to help ensure you will get your Child Tax Credit if you are a non-filer and a second one to opt out of the monthly payments. Both can be accessed from the following IRS webpage;

https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021

The monthly payments are automatic. Beginning Mid-July you will begin receiving payments for ½ of your projected 2021 Child Tax Credit if:

• You filed a 2019 or 2020 tax return and claimed the credit. OR

• You gave information in 2020 to receive the Economic Impact Payment using the IRS non-filer tool. AND

• The IRS thinks you are eligible. AND

• You did not opt-out of the early payments.

*The Opt-out option

Not everyone should look forward to receiving payments each month for ½ of their Child Tax Credit. Here’s why;

You do not qualify for the credit. The IRS is using past tax returns to estimate who should get advance payments of this credit. They are going to often be wrong. If your 2021 income is too high, you may need to pay back the advance payments when you file your tax return.

You need the large credit. If you use this credit to balance out your year-end tax bill, you may find yourself owing money at the end of the year. If the early payments are gone, this could create a tax bill hardship.

For example:

With two kids you might be eligible for a $6,000 credit, with $3,000 paid to you in advance. When you file your tax return in April 2022, your unclaimed credit on the return will be $3,000 (you already received $3,000). Last year your tax return credit was $4,000. If you saved some of the advance payment, you will not have a problem. If it is spent, you now have $1,000 less of a credit to offset your other income on the return and may have to come up with some cash to pay your tax bill.

Your circumstances change. If your tax life changes, advance payments of the credit will complicate things. For example, if you are in the midst of a separation or divorce, the advanced payments could become a big conflict.

Action to take NOW!

*Look for notices. The IRS is sending out notices in the mail to those they think should receive the Advance Child Tax Credit payments. If you have not received one, the IRS may not think you should receive payments. So follow-up to ensure you are on their radar by reviewing your most recent tax returns (2019 and 2020). But don’t fret, if you are owed the credit you will receive it when you file your tax 2021 tax return.

*Opt-out. The Opt-Out portal is new and recently set up by the IRS. So if you do not want the early Child Tax Credit payments go to this site immediately and opt-out of the payments. No one is sure how efficient this will be, so you need to stay on top of this.

*Keep track of payments. You will need to know how much you receive in advanced payments when you file your tax return next year. Do not assume the IRS is going to accurately keep track of this for you.

*Forecast the impact. Moving from $2,000 to as much as $3,600 per child is a big change in most families’ tax bill. Know what the change does to yours and look to adjust withholdings to account for this change.

*It is fully refundable. Finally, remember the Child Tax Credit is now a fully refundable credit. So if you know of anyone that does not pay income tax and has children, tell them. The new Child Tax Credit may be helpful to them.

For more information or to schedule an appointment, please call our office at 718-227-6035 ext. 301. or visit us at www.gosucpa.com

#statenislandcpa

2021 Tax Season to begin on February 12, 2021

 

2021 tax filing season set to begin February 12

The IRS will begin accepting and processing 2020 tax year returns on Friday, Feb.12, 2021.

Please contact our office to prepare your 2020 tax return.  We can accept your tax documents either virtually or in person.  We also offer curb-side document drop off and pick up.  Call our office to schedule an appointment or drop off your tax documents at your convenience.  718-227-6035 for details. www.gosucpa.com

People who are ready to file can begin filing their tax returns as soon as they have all of their 2020 tax documents. Our office is accepting tax documents and will prepare completed tax returns now and hold them until the IRS begins processing returns on Friday, Feb.12. The quickest way for taxpayers to get a tax refund is by filing electronically and choosing direct deposit for their refund.

Most earned income tax credit or advanced child tax credit related refunds should be available in taxpayer bank accounts or on debit cards by the first week of March, if they choose direct deposit and there are no other issues with their tax return.

By law, the IRS cannot issue refunds before mid-February for tax returns that claim the earned income tax credit or ACTC. The IRS must hold the entire refund — even the portion not associated with EITC or ACTC. This helps ensure taxpayers receive the refund they deserve and gives the agency more time to detect and prevent errors and fraud.

To make filing easier, taxpayers should:

• File electronically and use direct deposit for the quickest refunds.
• Check IRS.gov for the latest tax information. There is no need to call the IRS.

Those who may have been eligible for stimulus payments should carefully review their eligibility for the recovery rebate credit. Most people received Economic Impact Payments automatically and those who received the maximum amount don’t need to include any information about their payments when they file.

They received the full amounts of both Economic Impact Payments if:

• Their first Economic Impact Payment was $1,200 for individuals; $2,400 married filing jointly for 2020, plus $500 for each qualifying child born in 2020.
• Their second Economic Impact Payment was $600 for individuals; $1,200 married filing jointly for 2020, plus $600 for each qualifying child born in 2020.

People who didn't receive the payments or only received partial payments may be eligible to claim the recovery rebate credit when they file their 2020 tax return, even if they are normally not required to file a tax return. Our tax preparation software will help taxpayers figure the amount.

Taxpayers should remember that stimulus payments they received are not taxable, and don’t reduce the amount of their refund.

Important filing season dates

Friday, Feb. 12. IRS begins 2021 tax season. Individual tax returns start being accepted, and processing begins.
Thursday, April 15. Due date for filing 2020 tax returns or requesting extension of time to file.
Thursday, April 15. Due date for paying 2020 tax owed to avoid owing interest and penalties.
Friday, Oct. 15. Due date to file for those requesting an extension on their 2020 tax returns.

Bookkeeping requirements for Tax Compliance and Other Business Needs

 

Do I need a Bookkeeper? What does a Bookkeeper do?

Bookkeepers are responsible for recording and maintaining a business’ financial transactions, such as purchases, expenses, sales revenue, deposits, credit card transactions, invoices, and payments. The bookkeeper will record financial data into general ledgers, which are used to produce the balance sheet and income statement. The bookkeeper is generally responsible for overseeing the first six steps of the Accounting Cycle, while the last two are typically taken care of by an Certified Public Accountant (CPA).

Bookkeepers lay the groundwork for accountants to analyze and prepare the financial statements. Bookkeepers use software, such as Quickbooks or Sage,  to assist with the recording of transactions and generally use built-in data processing tools to help in the preparation of the general ledger.

If you require assistance with your bookkeeping, our office can supplement your existing team.  For example, your team may want to control the bank deposits, payroll, and bill payment.  We can handle what accounting items are left.  Call today for a free consultation. 718-227-6035 ext. 301, info@gosucpa.com, or visit us at Staten Island CPA

E-Commerce CPA - Provides expert information regarding E-Commerce businesses

 E- Commerce advice from a Staten island, NY CPA

E Commerce  is defined as "commercial transactions conducted electronically on the internet."

There are four traditional types of ecommerce, including B2C (Business-to-Consumer), B2B (Business-to-Business), C2B (Consumer-to-Business) and C2C (Consumer-to-Consumer). There's also B2G (Business-to-Government), but it is often lumped in with B2B.

There are many platforms, and these are ever changing and expanding. Some include:

Ebay

Etsy

Amazon

Zuilly

Businesses also often sell direct thru their own website or platform.

Where you sell or what you sell can be equally important to your business model. Finding your target audience is as important as finding the right product or service to sell.

Concerns you may have for your e-commerce business:

Physical nexus vs Economic Nexus

Sales tax

Income Tax

State Tax

Inventory

Costs Accounting

Our Staten Island, NY office of Certified Public Accountants (CPA) is only a phone call away.

We can assist you with bookkeeping, tax preparation, business plans, and advice for business development. We work with clients at your place of business, our office, or remotely.

Goldenthal & Suss Consulting PC

David C Egan, CPA

4218 Amboy Rd

Staten Island, NY 10308

718-227-6035

www.gosucpa.com

Update from the IRS

 Eligible Paycheck Protection Program expenses now deductible

WASHINGTON – The Treasury Department and the Internal Revenue Service issued guidance today allowing deductions for the payments of eligible expenses when such payments would result (or be expected to result) in the forgiveness of a loan (covered loan) under the Paycheck Protection Program (PPP).

Today’s guidance, Revenue Ruling 2021-02, reflects changes to law contained in the COVID-related Tax Relief Act of 2020, enacted as part of the Consolidated Appropriations Act, 2021 (Act), Public Law 116-260, which was signed into law on Dec. 27, 2020.

The COVID-related Tax Relief Act of 2020 amended the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to say that no deduction is denied, no tax attribute is reduced, and no basis increase is denied by reason of the exclusion from gross income of the forgiveness of an eligible recipient’s covered loan. This change applies for taxable years ending after March 27, 2020.

Revenue Ruling 2021-02 obsoletes Notice 2020-32 and Revenue Ruling 2020-27. This obsoleted guidance disallowed deductions for the payment of eligible expenses when the payments resulted (or could be expected to result) in forgiveness of a covered loan.

For more information about this, the COVID-related Tax Relief Act of 2020, and other tax changes, visit IRS.gov