Kimberly Perry, CPA

Where's My Refund? - Did You Know? You can use the IRS 'Where's my Refund' (https://www.irs.gov/refunds) tool to check the status of your refund. The 'Where's my Refund' tool is updated once daily, usually overnight. Your status is generally available within 24 hours upon the IRS receiving your e-filed return. If you have filed a paper return, the IRS is currently experiencing processing delays for paper filed returns, but will process them in the order received.

IRS Gives Details on Tax Waiver for 2020 Unemployment Benefits Did You Know? The American Rescue Plan Act allows many Americans to exclude some or all of their 2020 unemployment insurance (UI) benefits from their taxable income. This exclusion is available to taxpayers with a modified adjusted gross income (MAGI) of less than $150,000 for 2020. The IRS recently explained how eligible taxpayers may claim the exclusion. Eligible single taxpayers may exclude up to $10,200 of U...I benefits that they received in 2020, which could significantly reduce their tax. Eligible married couples who file jointly may exclude up to $10,200 of UI benefits per spouse, for a total exclusion of up to $20,400. If you qualify for the exclusion and have not yet filed your 2020 tax return, you can claim the exclusion when you file. You will need to report the full amount of UI benefits you received in 2020, and then use the new Unemployment Compensation Exclusion Worksheet to figure the amount of your exclusion. A tax professional can help you prepare and file the necessary forms. In general, if you qualify for the UI benefits exclusion but already filed your 2020 tax return, you do NOT have to file an amended return. The IRS will automatically recalculate your taxable income, and issue a special refund if the exclusion lowers your tax. The special refund will be sent separately from any refund you already claimed on your return. The IRS expects to begin sending these special refunds in May, continuing into the summer. There is one case when filing an amended return may benefit a taxpayer, however. The income exclusion may make some taxpayers eligible for credits that they did not originally qualify for, such as the Earned Income Tax Credit (EITC). A tax advisor can help you determine whether the exclusion qualifies you for a new credit, and if so, help you file an amended return to claim it.

Quarterly Estimated Tax Payments - Reminder If you are making quarterly estimated tax payments to the IRS, the due date for the January 1 March 31 quarter of the year is April 15th, 2021. For payments made using IRS Direct Pay, you can make payments until 8PM EST, and for payments using a credit or debit card, payments can be made up to midnight on the due date.... If the due date for making an estimated tax payment falls on a Saturday, Sunday, or legal holiday, the payment will be considered on time if you make it on the next day that's not a Saturday, Sunday, or legal holiday.

IRS Allows Medical Expense Deduction for COVID PPE Did You Know? If you have bought personal protective equipment (PPE) during the pandemic, you may be able to deduct those expenses on your tax return. Alternatively, you may choose to reimburse yourself with funds from a tax-advantaged medical savings plan. Eligible PPE includes sterile gloves, face masks and shields, and hand sanitizer and sanitizing wipes, as long as these items were purchased primarily to prevent the spr...ead of coronavirus. The IRS recently confirmed that taxpayers who itemize deductions may deduct the cost of COVID-related PPE as a medical expense. For tax year 2020, you may generally only deduct medical expenses that exceed 7.5% of your adjusted gross income (AGI). For example, since 7.5% of $40,000 is $3,000, a couple with an AGI of $40,000 could not deduct their first $3,000 of medical expenses. However, if their unreimbursed medical expenses total $5,000, they can generally claim a $2,000 deduction ($5,000 $3,000) if they itemize. If you do not claim the tax deduction, you may instead use a qualified medical savings plan to reimburse yourself for eligible PPE costs. Qualified plans may include health flexible spending arrangements (FSAs), health savings accounts (HSAs) and Archer MSAs. Just remember that reimbursed medical expenses cannot be claimed as tax deductions. In other words, you may EITHER claim a tax deduction for your coronavirus PPE expenses OR use your qualified medical savings plan to reimburse yourself, but not both. A tax professional can help you determine which tax strategy works out better for you.

Common Tax Filing Errors Did You Know? (3/3) Every year, many taxpayers make mistakes on their returns that cause IRS processing delays. Some common errors can also result in paying too much or too little tax. A miscalculation in either direction can be costly, since the IRS may assess penalties for underpayment. The following mistakes often cause filers to pay the wrong amount of tax:... Incorrectly Figuring Credits or Deductions: Once you determine that you qualify for a tax deduction or credit, you must carefully compute the amount that you can claim. Many taxpayers fail to take into account income limitations (including the calculations that must be made if your income falls within a phase-out range) and other restrictions. Others claim less than they could, or miss out on deductions and credits entirely by not filing the required forms and schedules. The IRS notes that filing errors are common among taxpayers eligible for the earned income credit (EIC) and/or Child and Dependent Care Credit. Expired ITIN: Those who file their IRS returns using individual tax identification numbers (ITINs) must keep in mind that ITINs periodically expire. Although a return filed with an expired ITIN may be accepted, the IRS generally will not allow any of the exemptions or tax credits claimed. The taxpayer must renew their ITIN in order to obtain the full refund that they are owed. To avoid costly mistakes, the IRS recommends having a tax professional prepare or check your return and file it electronically. A tax pro might also help you claim deductions and credits that you would otherwise miss.

It’s such a beautiful day, we decided to close the office and head to Jack’s Restaurant for lunch on the patio!

IRS Extends Additional 2021 Filing Season Deadlines to May 17 Did You Know? Recently, the IRS moved the deadline for individuals to file 2020 federal income tax returns and pay any tax due from April 15 to May 17, 2021. The same automatic extension now applies to several other key tax deadlines, including: DEADLINE FOR 2020 IRA CONTRIBUTIONS: If you have not reached your contribution limit for tax year 2020, you may continue to make 2020 contributions to traditional or Roth... IRAs up until May 17. Taxpayers also have until May 17 to pay any tax due on 2020 IRA distributions, including the 10% penalty on non-exempt early withdrawals. DEADLINE TO CLAIM 2017 TAX REFUNDS: If you are owed a federal tax refund for 2017, you have until May 17, 2021 to file any returns or amended returns necessary to claim the refund. FILING DEADLINE FOR CERTAIN FOREIGN TRUSTS: Foreign estates and trusts that file Form 1040-NR have until May 17 to meet their federal tax filing and payment requirements. Again, all of these deadline changes are automatic. You do not need to take any action in order to receive the extensions. As of now, one critical deadline for many taxpayers has NOT changed. The due date for making an estimated tax payment for the first quarter of 2021 remains April 15. You may need to make estimated tax payments if you have significant income that is not subject to paycheck withholding, such as interest, dividend or self-employment income. A tax professional can help you determine if you owe estimated taxes.

Common Tax Filing Errors Did You Know? (2/3) Every year, many taxpayers make mistakes on their returns that cause IRS processing delays. Some common errors may also result in paying too much or too little tax. A miscalculation in either direction can be costly, since the IRS may assess penalties for underpayment. The following mistakes often cause filers to pay the wrong amount of tax:... Math Mistakes: Even mathematicians sometimes make errors in simple addition and subtraction, and some of the calculations required for 1040 schedules can be complicated. Thoroughly double-check every bit of math on your return. Incorrect Filing Status (Single, Married Filing Jointly, etc.): The IRS will not accept a return showing a filing status that you are not eligible to claim. If you qualify for more than one status (for example, filing jointly or separately if you are married), the option you choose may significantly change your tax. The difference can be especially great for single taxpayers who qualify to file as a head of household. Make sure that you have not chosen a filing designation that causes you to pay more tax than you owe. To avoid costly mistakes, the IRS recommends having a tax professional prepare or check your return and file it electronically. A tax pro might also help you claim deductions and credits that you would otherwise miss.

Common Tax Filing Errors Did You Know? (1/3) Every year, many taxpayers make mistakes on their returns that cause IRS processing delays. Some common errors may also result in paying too much or too little tax. A miscalculation in either direction can be costly, since the IRS may assess penalties for underpayment. The following mistakes may not change your tax, but they can cause processing problems. The IRS may even withhold your refund until the errors are corrected.... Missing or Inaccurate Social Security Number (SSN): Even when filing electronically, many people mistype their SSNs and do not catch the error. If the SSN on your return does not match the number on your Social Security card, the IRS may not be able to process your return. Misspelled Name: Take your time when filling in every blank on your return, even your name. A misspelling or illegible writing can prevent proper processing. Incorrect Bank Account or Routing Number: Getting your return filed electronically and requesting direct deposit is the fastest way to get your refund, IF you provide accurate information. An error in your banking info can cause big headaches. Missing Signature: Remember that in most cases, couples filing jointly must both sign their return. To avoid costly mistakes, the IRS recommends having a tax professional prepare or check your return and file it electronically. A tax pro might also help you claim deductions and credits that you would otherwise miss.

IRS Has Begun Sending Stimulus Payments to Eligible Americans Did You Know? The IRS started sending out a third round of Economic Impact Payments (EIP3s, also called stimulus payments) shortly after the American Rescue Plan became law on March 11. The vast majority of eligible Americans will receive their payments automatically, usually by direct deposit. If a person entitled to an EIP3 has not provided current banking information to the IRS, their payment will be sent by m...ail as a check or prepaid debit card. In general, EIP3s are larger than previous EIPs sent in 2020 and 2021. The standard payment amount is $1,400 per person, plus $1,400 for each dependent. For example, an eligible married couple with two dependent children will receive 4 X $1,400 = $5,600. People qualify to receive EIP3s if they are U.S. citizens or resident non-citizens, have valid Social Security Numbers (SSNs), cannot be claimed as someone else's dependent, and have adjusted gross income (AGIs) below the limit. For single tax filers, the AGI limit to receive the full EIP3 amount is $75,000. Single taxpayers with AGIs of $80,000 or above will not receive an EIP3, while those with incomes between $75,000 and $80,000 (the "phase-out" range) will receive reduced payments. Joint tax filers qualify for the full EIP3 amount if their AGI is $150,000 or less, with the phase-out range going from $150,000 to $160,000. For Head of Household (HoH) tax filers, the AGI limit for a full EIP3 is $112,500, with the phase-out range ending at $120,000. As with Single individuals, HoH and joint filers with AGIs above the phase-out range will not receive EIP3s. You can use the IRS Get My Payment portal (link below) to check on the status of your EIP3. This tool can often provide the precise date when your payment will be deposited or mailed. Because payments are calculated and sent automatically, contacting the IRS will not speed up the process. Beware of scammers who claim that they can get your stimulus payment faster. IRS Get My Payment portal: https://www.irs.gov/coronavirus/get-my-payment

IRS Extends Filing and Payment Deadlines Due in April Did You Know? In response to the pandemic, the IRS has extended both the 2021 federal income tax filing and payment deadlines for individual taxpayers. Here are the important details: - The filing deadline for 2020 federal individual income tax returns has been automatically moved from April 15, 2021 to May 17, 2021.... - The payment deadline for individual taxpayers to pay their 2020 tax due has also been automatically extended from April 15, 2021 to May 17, 2021. This extension also applies to those who pay self-employment tax. - The same extension does not apply to estimated tax payments with the due date of April 15, 2021. (For most payers of estimated taxes, this is their first-quarter payment for 2021). Taxpayers do not need to file any additional forms or call the IRS to qualify for this automatic federal tax filing and payment relief. Individual taxpayers who need additional time to file beyond the May 17 deadline can request a filing extension to October 15, but this does not include an extension to pay.

Changing Life Circumstances Can Affect Your Taxes Did You Know? When a momentous life event like a marriage or the birth of a child occurs, taxes are probably the furthest thing from your mind. However, once the excitement of the moment settles down, it is important to perform a quick tax checkup to avoid an unpleasant IRS surprise. Here is a checklist of some of the most common life changes that may affect your taxes: Change of Name: ... Your name on your tax return must match the name on file for you with the Social Security Administration (SSA). Therefore, if your name changes due to marriage, divorce, or for any other reason, it is important to request a new Social Security card, which can be done at ssa.gov. Change of Filing Status: Married couples may choose to file either jointly or separately, and this choice can affect both tax rates and eligibility for certain deductions and credits. If your marital status changes during the year, or you and your spouse decide to change your filing method, it is a good idea to use the IRS Withholding Estimator tool (link below) to determine whether a change in your paycheck withholding amount is needed. Change of Address: From time to time, the IRS may need to contact you about your return, refund, stimulus payments, or other matters. If you move during the year, inform the IRS by filing Form 8822, Change of Address, to ensure that you do not miss any important communications. Change in Number or Ages of Dependents: If your family grows this year due to a birth or adoption, you may be eligible for additional tax deductions and credits. Conversely, your eligibility for certain credits might change as your children grow older. Some of the tax implications of these and other life changes can get complicated. A professional tax advisor can help you evaluate these impacts, and if necessary, take action to stay on track with your tax payments and qualify for the deductions or credits available to you. IRS Withholding Estimator: https://www.irs.gov/individuals/tax-withholding-estimator

Missing or Incorrect W-2s or 1099s Did You Know? When the time comes to get your taxes filed, it can be frustrating to discover that you have not received the documents you need to complete your return. This problem occurs most often with Form W-2 (Wage and Tax Statement for employees) or the various versions of Form 1099 (for earnings as an independent contractor, pension or IRA distributions, etc.). According to the IRS, if you have not received an anticipated W-2 or 109...9, you should first contact the employer or payer to request the missing document. The same applies if a form you received contains incorrect information. Taxpayers who cannot obtain these documents for some reason must still file their returns on time and provide accurate information. In some cases, you may need to account for a missing W-2 or 1099R (for distributions from pensions, annuities, IRAs, etc.) by including Form 4852 with your return. A tax professional can help you determine if you must file this form, and what information to include on it. If you have received an incorrect Form 1099-G for unemployment compensation from your state employment office, contact the agency immediately. An incorrect form may indicate that a scammer collected unemployment benefits using your Social Security Number (SSN). Your state may issue additional warnings about scams related to 2020 unemployment benefits. Read these notices carefully to keep yourself safe.