TAX SEASON 2020 ADDITIONAL INFORMATION for OUR OFFICE:
Our offices are following St. Louis Region Health guidelines
for COVID-19 Business Recovery Initiative & Operation Protocols
- Our office is closed to walk-in clients, but curbside pick-up and drop-off is available, please email or call before arriving.
- Appointments are required and available for tax and business consulations, please email or call the office.
- This all helps in the removal of potential exposure and minimizes contact between all clients.
We are all in this together and we will get through it together.
Thank you for your continued support!
COVID-19 NEWS AND INFORMATION:
IRS Newsroom (latest update):
IRS ISSUES Q&A ON THE APRIL 15 EXTENSION:
Paycheck Protection Program
St. Louis Buisness Journal SMALL BUSINESS RESOURCE GUIDE
SBA DISASTER LOANS for Small Businesses:
ST. LOUIS GATEWAY RESILIENCE for Small Businesses:
FEDERAL STIMULUS PROGRAM:
QUESTIONS ABOUT ECONOMIC IMPACT PAYMENTS
MISSOURI DEPT OF REVENUE EXTENDS FILING AND PAYMENT DEADLINE:
MISSOURI DIVISION OF EMPLOYMENT SECURITY:
ILLINOIS DEPT OF REVENUE EXTENDS FILING AND PAYMENT DEADLINE:
WHERE’S MY REFUND?
WHERE'S MY AMENDED RETURN?
ORDER TAX TRANSCRIPTS
December 22, 2020 Second COVID Relief Package passed
Both houses of Congress voted to pass the latest COVID relief legislation and all indications are that the president will sign it into law. We know that more guidance will be provided as this rolls out, but here are the highlights as we know them:
PPP and small business support: New COVID-19 relief package provides much needed support for small businesses. Business expenses paid for with the proceeds of PPP loans are tax deductible, consistent with Congressional intent in the CARES Act. In addition, the loan forgiveness process is simplified for borrowers with PPP loans of $150,000 or less. Unspent funds totaling $138 billion will be reinvested in the PPP program.
Economic impact payments (EIP): The bill includes a second round of EIPs for qualifying Americans.
The IRS will use the data it already has in its system to begin making payments at the end of December through the first two weeks of January. If the IRS has your direct deposit information, you will receive a payment that way. If it does not, you will receive your payment as a check or debit card in the mail. If you are eligible but don’t receive your check for any reason, you can claim the payment when you file your 2020 taxes in the spring of 2021.
In regards to eligibility, any person who has a valid work-eligible Social Security number (SSN), is not considered as a dependent of someone else and whose adjusted gross income (AGI) does not exceed certain thresholds (see below) is eligible to receive the credit. This means workers, those receiving veterans' benefits, Social Security beneficiaries and others are all eligible.
- Spouses of military members are eligible without an SSN
- An adopted child can use an Adoption Tax Identification Number to be eligible
Under the CARES Act, joint returns of couples where only one member of the couple had an SSN were ineligible for a rebate. This latest round of relief changes that provision. These families will now be eligible to receive payments for the members of the family who have SSNs. This change is retroactive, meaning those who fall under this category who missed out on the first round of EIPs can claim that money when filing 2020 tax returns in the spring of 2021.
The full credit amount is $600 per individual, $1,200 per couple and $600 for children. It is available for individuals with AGI at or below $75,000 ($112,500 for heads of household), and couples with AGI at or below $150,000. If you have children, you will receive an additional $600 per child.
For those above this income level, your tax rebate amount will be reduced by $5 for each $100 your AGI exceeds the above thresholds.
- An individual without children will not receive any rebate if their AGI exceeds $87,000.
- A couple without children will not receive any rebate if their AGI exceeds $174,000.
- A family of four will not receive any rebate if their AGI exceeds $198,000.
The IRS will use the same methodology for calculating payments as it did for the first round of economic impact payments.
Unless obtained by fraud, rebate checks do not need to be repaid. If an individual experienced an income loss in 2020, or if they have an increase in family size, they may be able to claim an additional credit of the difference when the individual files their 2020 tax federal income tax return in spring of 2021.
If you are eligible and the IRS does not have your direct deposit information, you will receive your payment as a paper check or a debit card as long as the IRS has your address. If the IRS does not have updated contact information for you, you can claim the payment when you file a tax return in spring 2021.
Someone who is claimed as a dependent on another taxpayer’s tax return is not eligible to receive the $600 refund check themselves. Children 17 and older are not eligible for the $600 per child tax credit.
For those with taxable income, you will need to file a tax return for the 2020 tax year, which you can do during the coming filing season that is expected to begin in late January and end on April 15, 2021. Those with little or no taxable income are encouraged to use the IRS’ free file program.
Other than Social Security beneficiaries (retirement and disability), railroad retirees and those receiving veterans' benefits, individuals with no taxable income will be able to file a simple form provided by the IRS specifically for the purpose of receiving the rebate check.
Social Security retirement and disability beneficiaries, railroad retirees and those receiving veterans' benefits do not need to file to receive their rebate. The IRS has worked directly with the Social Security Administration, Railroad Retirement Board and the Veterans Administration to obtain information needed to send out the rebate checks the same way benefits are paid.
The credit is not taxable, consistent with other refundable tax credits.
The rebate is considered a tax refund and is not counted towards eligibility for federal programs for both income and asset test purposes. The rebate checks are not subject to the majority of offsets, including student debt and state debts. The only administrative offset that will be enforced applies to those who are subject to a child support garnishment court order.
A family with a child born in 2020 is eligible for the $600 per child rebate amount (assuming all other requirements are satisfied). The IRS will calculate the payment based on the most recent tax data in its system. If a child was born since the family’s last filing, the family will not automatically receive the $600 rebate amount for the child born in 2020. To receive the credit the family can claim the $600 credit on their 2020 tax return filing made in spring 2021.
If you believe you are eligible for an economic impact payment but did not receive a round one or round two payment, you will have the opportunity to claim the payment on your 2020 tax return. This year’s tax forms will provide a place for individuals to claim the payments. If you don’t normally file taxes and are eligible for a payment, make sure to file a return this spring to claim the payments.
The IRS has not announced the exact date the coming filing season will begin, but it typically begins near the end of January. If you need to update your information by filing your tax return, keep an eye out for an IRS announcement about the start of the filing season.
Individuals can claim the payment by filing a simple tax return when the tax filing season opens in late January 2021.
Unemployment assistance: For those who are unemployed, the pandemic unemployment insurance program will be extended by 16 weeks. Supplemental federal unemployment benefits of $300 per week will continue into April 2021 instead of ending in December.
Rental assistance: The current CDC eviction moratorium will be extended until Jan. 31, 2021.
Student loans: Extension of student loan forbearance provisions created in CARES and extended by executive order, from the current expiration date of Jan. 31, 2021 through April 1, 2021.
May 11, 2020 ... Economic Stimulus Payments
Act by Wednesday, May 13 for direct deposit
Why my payment is different than anticipated
May 6, 2020 ... Stimulus Checks for the deceased must be returned
A52. You should return the payment as described below.
If the payment was a paper check:
- Write "Void" in the endorsement section on the back of the check.
- Mail the voided Treasury check immediately to the appropriate IRS location listed below.
- Don't staple, bend, or paper clip the check.
- Include a note stating the reason for returning the check.
- Kansas City Internal Revenue Service
333 W Pershing Rd.
Kansas City, MO 64108
- Philadelphia Internal Revenue Service
2970 Market St.
Philadelphia, PA 19104
April 15, 2020 ... Missouri Unemployment for Self-Employed
Missouri Encourages Self-Employed, Gig Workers to Apply for Unemployment;
Expects to Begin Processing Claims as Early as the Week of April 19, 2020
April 2, 2020 ... Economic Stimulus Payments
What we know and next steps
Seniors do not need to file a short return
Earlier this week, the IRS released IR-2020-61, which includes a statement that “some seniors and others who typically do not file returns will need to submit a simple tax return to receive the stimulus payment.” Knowing that this directly conflicts with wording in the CARES Act, NATP contacted IRS Commissioner Rettig and key members of the House Ways and Means Committee to request clarification.
As of last night, the U.S. Department of the Treasury and the IRS announced that Social Security beneficiaries who are not typically required to file tax returns will not need to file an abbreviated tax return to receive the economic impact payment. Instead, payments will be automatically deposited into their bank accounts. The IRS will use information from the Form SSA-1099 and Form RRB-1099, and recipients will receive these payments as a direct deposit or by paper check, just as they would normally receive their benefits.
Please note, since the IRS would not have information regarding any dependents for these people unless they filed a tax return, each person would receive $1,200 per person, without the additional amount for any dependents.
First stimulus payments expected to go out week of April 13
According to our sources on the Hill, the Treasury Department and IRS officials have told the House Ways and Means Committee that the initial wave of payments will go out the week of April 13. The payments will automatically deposited into the same bank account reflected on the 2019 or 2018 return filed. In the coming weeks, the Treasury plans to develop a web-based portal that will allow individuals who have not recently submitted banking information to the IRS to do so, enabling them to receive payments immediately as opposed to waiting for a check to arrive in the mail.
Taxpayers in the first wave have direct deposit information on file with the IRS from their 2018 or 2019 tax returns. Paper checks would start going out in May to people who don't have direct deposit information on file with the IRS. About 5 million checks will be sent weekly, and it could take up to 20 weeks to distribute all of them. People with the lowest incomes will get their checks first.
We’ve heard that the IRS anticipates creating a “Where’s my Economic Impact Payment?” tracker, similar to the “Where’s my refund?” system.
Payments are available throughout 2020
If someone who normally doesn’t file a tax return contacts you, let them know the IRS urges anyone with a tax filing obligation who has not yet filed a tax return for 2018 or 2019 to file as soon as they can to receive an economic impact payment. Taxpayers should include direct deposit banking information on the return.
The IRS plans on releasing the “simple tax return” in the upcoming weeks. That form is expected to ask filers for their names, Social Security numbers, information on dependents and deposit information.
For those concerned about visiting a tax professional or local community organization in person to get help with a tax return, these economic impact payments will be available through Dec. 31, 2020.
There is no qualifying income requirement, but there is a phase-out for payments
There is no qualifying income requirement. Individuals with $0 of income are eligible for the payment provided they are not the dependent of another taxpayer and have a work-eligible SSN. Eligible taxpayers who filed tax returns for either 2019 or 2018 will automatically receive an economic impact payment of up to $1,200 for individuals or $2,400 for married couples and up to $500 for each qualifying child.
Tax filers with adjusted gross income up to $75,000 for individuals and up to $150,000 for married couples filing joint returns will receive the full payment. For filers with income above those amounts, the payment amount is reduced by $5 for each $100 above the $75,000/$150,000 thresholds. Single filers with income exceeding $99,000 and $198,000 for joint filers with no children are not eligible.
Taxpayers with a lower 2020 AGI will receive a credit
The payment is actually an advance on a tax credit claimed on the 2020 tax return. If a taxpayer’s income is lower in 2020 than in 2019, any additional credit for which they are eligible will be refunded or will reduce the tax liability when the 2020 tax return is filed. As it stands, if your 2020 income is higher than the thresholds and you received the payment, you will not need to pay back any part of the payment.
Taxpayers who owe back taxes will still receive the payment
While the IRS has not officially provided guidance on this, the Senate Finance Committee stated that the bill turns off nearly all administrative offsets that ordinarily may reduce tax refunds for individuals who have past tax debts, or who are behind on other payments to federal or state governments, including student loan payments. The only administrative offset that will be enforced applies to those who have past due child support obligations that the states have reported to the Treasury Department.
March 27, 2020 ... more questions? more answers!
CARES Act – Stimulus Checks
NATP working with IRS on addressing common questions
The Senate unanimously passed the Coronavirus Aid, Relief, and Economic Security Act (CARES). The House is expected to pass this legislation tomorrow morning and the president to sign it into law shortly after. Included in the legislation are 2020 recovery rebates for individuals.
According to the Senate Committee on Finance summary:
All U.S. residents with adjusted gross income up to $75,000 ($150,000 married), who are not a dependent of another taxpayer and have a work eligible Social Security number are eligible for the full $1,200 ($2,400 married) rebate. In addition, they are eligible for an additional $500 per child. This is true even for those who have no income, as well as those whose income comes entirely from non-taxable, means-tested benefit programs, such as SSI benefits.
For the majority of Americans, no action on their part will be required to receive a rebate check as the IRS will use a taxpayer’s 2019 tax return if filed, or alternatively, their 2018 return. This includes many low-income individuals who file a tax return in order to take advantage of the refundable earned income tax credit and child tax credit. The rebate amount is reduced by $5 for each $100 that a taxpayer’s income exceeds the phaseout threshold. The amount is completely phased out for single filers with incomes exceeding $99,000, $146,500 for head of household filers with one child, and $198,000 for joint filers with no children.
We understand this payment will result in many questions from clients and the public. The IRS are aware that, when this law passes, there will be a lot of unanswered questions the IRS will need to address.
CARES Act – Other Tax Provisions
Additional relief available for taxpayers
As previously mentioned, the CARES Act has not been signed by the president yet, but we expect the bill to quickly move through the House with no changes. Additional relief provided in the Act includes:
- Special rules for use of retirement funds (waives the 10% early withdrawal penalty for distributions up to $100,000)
- Temporary waiver of required minimum distribution rules
- Allowance of partial above-the-line deduction for up to $300 of charitable contributions in 2020
- Modification of limitations on charitable contributions during 2020
- Employee retention credit for employers subject to closure due to COVID-19
- Delay of payment of employer payroll taxes
- Modifications for net operating losses
- Modification of limitation on losses for taxpayers other than corporations
- Modification of credit for prior year minimum tax liability of corporations
The Senate Committee on Finance released a section-by-section summary for each of these provisions.
Additional Extension Filing Deadline Guidance
IRS provides Q&A page
The IRS posted its Filing and Payment Deadline Questions and Answers page. These Q&As address the federal filing and payment extension to July 15, and include additional information on the extension to Oct. 15, first quarter estimated tax payments, IRAs and HSAs.
Some of the questions we’ve been hearing a lot include:
- Contributions to IRAs and HSAs have been extended to July 15.
- Second quarter 2020 estimated income tax payments are still due on June 15. First quarter 2020 estimated income tax payments are postponed from April 15 to July 15.
- The relief does not change the estimated tax requirements or estimated tax penalty for 2019.
IRS Operations During COVID-19 Outbreak
Limited services available
To protect employees, the IRS is curtailing some operations during this period; however, it will continue to accept tax returns and issue refunds. Many IRS offices in areas hardest hit by COVID-19 are closed or have reduced operations on mission-critical items.
While able to receive mail, the IRS will be responding to paper correspondence only to a very limited degree during this period. Taxpayers who mail correspondence to the IRS during this period should expect to wait longer than usual for a response. Even after normal operations resume, it will take the IRS time to work through any correspondence backlog.
WE WILL PROVIDE MORE UPDATES AS THEY BECOME AVAILABLE.