Hello all. Happy Summer. I hope everyone is enjoying the Season and what appears to be at least some relief from the long and trying ordeal that began to impact our lives early last year. While it does appear the turbulence has settled, COVID, the IRS and Washington D.C. continue to impact our personal and business lives, and we do still have to pay attention.
Some important issues at the forefront currently are:
- Refunds due for 2020 tax returns.
- Advance Child Tax Credit Payments that the IRS has begun direct depositing into taxpayer bank accounts.
- Expanded health insurance options.
- Refunds for taxes paid on 2020 unemployment income.
- PPP #1 Forgiveness.
- The Employee Retention Credit that many small businesses are realizing could generate even more government funds into their business bank accounts.
Refunds due for 2020 tax returns
Many taxpayers are still waiting for their 2020 tax refunds. The IRS has a link on their website at IRS.GOV to check the status, but generally little if any information is available there. Calling the IRS is of little help as well – if the IRS can even be reached by phone. We can obtain a power of attorney form 2848 so that we can call the IRS on your behalf, but that has generally not helped to generate any further information. The situation really has required waiting for much longer than usual, continuing to monitor the status online, and, possibly at some point initiating communication with the IRS by phone if access to information from taxpayer service agents eventually expands.
Advance Child Tax Credit Payments
The Advance Child Tax Credit presents a bit of complexity for taxpayers. While receiving funds from the IRS can be pleasant, the concern in this particular situation is that taxpayers are effectively receiving portions of refunds they normally expect at tax filing time. Effectively, funds taxpayers receive as part of the Advance Child Tax Credit payments will essentially reduce their refunds or increase their balances due at tax filing time. To add to these concerns, some taxpayers could receive Advance Child Tax Credit Payments that they may not ultimately qualify for, in which case those advance payments will be due to be paid back at tax filing time. Taxpayers should strongly consider logging into the IRS.GOV site to opt out of the advance payments, or, at the very least, reserving the funds for tax filing time in case they are needed then.
Expanded health insurance options
As the Access Health website https://www.accesshealthct.com/ indicates, more than 90% of individuals can receive some type of financial help, low-cost or free coverage for their health insurance. The 2021 American Rescue Plan Act made more financial help available through Access Health CT for residents at virtually every income level. Many existing Access Health customers will see savings for their current plan and some individuals may be eligible for the first time. Enter some basic information about your household at the Access Health website in order to understand your options.
Refunds for taxes paid on 2020 unemployment income
Taxpayers who filed tax returns prior to the change in 2020 unemployment income taxation may be due refunds from the IRS and the state. The IRS indicated effected taxpayers should take no action and refunds will be generated to them automatically. If you paid taxes on 2020 unemployment income, you should confirm that you received the appropriate refund from the IRS. If you are also due a refund from the state related to this issue, CT has indicated you must file an amended tax return and has posted the associated instructions on their website https://portal.ct.gov/-/media/DRS/Publications/TSSB/TSSB-2021-2.pdf. Please let us know if you need our assistance with this.
PPP #1 Forgiveness
Most businesses that received PPP funds during the first round of loans in early to mid-2020 must file their forgiveness applications at this point in order to obtain forgiveness of those PPP funds. If you have not already received full forgiveness of the first round of PPP funds, please let us know right away so that we can work with you to complete that process.
Employee Retention Credit
Finally, as businesses conclude their utilization of PPP funds and begin the process of applying for forgiveness, they should also turn their attention to the Employee Retention Credit (ERC) and determine if they may qualify for additional government assistance related to the COVID crisis. In summary, if businesses experienced certain levels of revenue reduction in 2020 and/or 2021 and/or they were directly affected by government orders/edicts, the ERC may apply to them. Between 2020 and 2021, businesses could qualify for credits associated with wages paid to their employees. As you proceed with work on PPP forgiveness, be sure to work closely with us to not only assure you obtain complete forgiveness of PPP loans, but also that you consider the potential applicability of ERC for your business in 2020 and 2021.
Please let us know if you have any questions on these important topics or on any other tax, business or planning issues that you may be working on.
Thank you as always. We hope you enjoy a very safe and happy Summer Season!
Massucci & Associates