Mauricio Midence Tax Preparation & Financial Services

Claiming the Recovery Rebate Credit Did You Know? With the May 17 deadline to file 2020 federal tax returns rapidly approaching, many eligible Americans who don't file may risk losing out on a crucial tax credit. The Recovery Rebate Credit is offered to all taxpayers who file their 2020 returns and were underpaid when the IRS distributed 2020 Economic Impact Payments (EIPs, also called stimulus payments). For a variety of reasons, some taxpayers may not have received the EI...Ps that they qualified for in 2020. Others received EIPs, but in smaller amounts than they deserved. Often, this problem occurred because the IRS had outdated information about the person's income or family size. For example, if a child was born or adopted into your family in 2020, the IRS likely did not have this information when calculating EIP amounts. The first round of stimulus payments, called EIP1, included payments of up to $1,200 per individual and $500 per qualifying child. The IRS began sending these payments in spring 2020 and continued sending them throughout the year. The second round (EIP2) included payments of up to $600 per individual and $600 per qualifying child. Most recipients got their EIP2s in January 2021. If the IRS underpaid you during either 2020 EIP round, the Recovery Rebate Credit enables you to receive the balance that you are owed as an IRS refund. However, you can only claim the credit by filing a 2020 tax return, even if you owe no tax and are not usually required to file. A tax professional can help you prepare and file your return electronically so you receive your payment as quickly as possible. You will need to know the amounts of any EIPs you received, which you can get from IRS Notice 1444 (1444-A or 1444-B), or by setting up an online IRS account (link below). Create an online IRS account: https://www.irs.gov/payments/view-your-tax-account.

Refund Amounts - Did You Know? If your refund amount is different than stated on the filed tax return, part or all of your refund may have been used to pay off (offset) past-due federal tax, student loans, state income tax or other past-due debts. You'll receive a notice from the IRS if such an offset occurs that will show the original tax refund amount, the offset amount, as well as the name, address and telephone number of the agency receiving the payment.... If you haven't received your refund yet, you may be able to check the status using the IRS' "Where's my Refund?" tool: https://www.irs.gov/refunds.

Unclaimed 2017 IRS Refunds Deadline Did You Know? The IRS has issued a reminder that time is running out to claim your 2017 tax refund if you did not file a 2017 federal return. The deadline to file a 2017 IRS return and claim your refund is May 17, 2021 After that date, unclaimed 2017 federal tax refunds will become the property of the U.S. Treasury. If you have not yet filed your 2017 return, file today to claim your refund before it's too late.

COVID-Related Emergency Student Aid Not Taxable Did You Know? During 2020, many higher education institutions and other agencies provided emergency financial aid grants to students affected by the coronavirus pandemic. The grants helped students with costs resulting from disruptions of school operations, including expenses for housing, food, remote learning course supplies, and health and child care. These emergency grants are NOT taxable income. Students who received them ...should not include the funds in their gross income on their 2020 federal tax returns. This tax exemption applies to all emergency financial aid grants that students received in 2020 from federal and state agencies, higher education institutions and other scholarship-granting organizations, including Native American tribal authorities and agencies. These grants also do not affect a student's eligibility for the American Opportunity Tax Credit (AOTC), Lifetime Learning Credit (LLC) or education expense tax deduction. If you are a student and paid qualified tuition and school fees in 2020, you may be able to claim a credit or deduction even if you used an emergency grant to pay these expenses. Qualified students do not have to reduce their credit or deduction amount by the amount of their emergency grants. A tax pro can help you determine whether financial aid you received in 2020 qualifies for this tax exemption, and whether you are eligible to claim an education credit or deduction.

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.

Tax season is officially over. Time to start planning For 2020

Lifetime Learning Credit Did You Know? The IRS Lifetime Learning Credit (LLC) can offer substantial tax savings for students or their parents, especially for students who have previously completed four years of higher education. If you paid tuition and school fees in 2020 for yourself, your spouse or a dependent, you may be able to claim an LLC of up to $2,000 on your 2020 tax return. Generally, you may only claim the credit for one member of your household per year. Studen...ts currently taking post-secondary education classes at eligible higher learning institutions may qualify for this credit by meeting BOTH of the following criteria: - They are or were enrolled in higher (post-secondary) education classes for at least one 2020 academic period. An academic period can be a semester, quarter, trimester, summer session, or any other coursework session defined by the school. - The student is taking these higher education classes in pursuit of a degree or other recognized certification, or to acquire or improve job skills. In addition, the taxpayer claiming the credit (usually the student or the student's parent or guardian) must meet the program's income restrictions. Taxpayers with a modified adjusted gross income (MAGI) of $58,000 or less ($116,000 or less for joint filers) generally qualify to claim the full credit. Taxpayers with a MAGI between $58,000 and $68,000 ($116,000 and $136,000 for joint filers) may receive a reduced credit; those with higher incomes cannot claim the LLC. Although the LLC may only be claimed once per tax return, there is no limit to how many times students can qualify for the credit during their lifetimes. Before claiming the LLC for a student in your household, however, check whether the student qualifies for the American Opportunity Tax Credit (AOTC). The AOTC has higher income limits and a higher maximum credit amount ($2,500). In addition, unlike the LLC, the AOTC may be partially refundable if your tax is reduced to less than zero. For students who do not qualify for either the AOTC or LLC, it may still be possible to claim an above-the-line income deduction for tuition and fees. A professional tax advisor can help you determine your eligibility for these valuable education tax credits and deductions.

IRS Extends Deadline to Register for Stimulus Payments Did You Know? The IRS has extended the deadline for some Americans to register to receive their 2020 coronavirus Economic Impact Payments (EIPs, also called stimulus payments). The new deadline of midnight on November 21, 2020 primarily applies to those who are not required to file federal income tax returns, and also have not yet registered for or received their EIPs. Those who meet these criteria are urged to use the ...IRS online non-filers registration tool (link below) to submit their information and receive their EIPs as soon as possible. Choosing the direct deposit option will speed up the payment process. Generally, those who do not provide banking information for direct deposit will receive their stimulus payments by check. Note that for most people who are required to file a 2019 tax return but requested an extension, the deadline to file remains October 15. Federal return filers who qualify for EIPs generally receive their payments automatically; no separate registration is required. Beginning two weeks after they register to receive a payment, those who qualify for EIPs can track the status of their payments by using the online Get My Payment tool (link below). IRS EIP Registration Tool for Non-Filers: https://www.irs.gov/coro/non-filers-enter-payment-info-here IRS Get My Payment EIP Tracking Tool: https://www.irs.gov/coronavirus/get-my-payment

Tax deadline quickly approaching

Tax extension deadline quickly approaching

Extensions and FBAR Deadline - Did You Know? For taxpayers who requested extensions to file various 2019 returns, the filing due date for those returns is October 15, 2020. This deadline applies to multiple filings that were originally due on April 15, 2020. (For most of these forms, the filing due date without an extension was subsequently changed to July 15, 2020 by the IRS due to the COVID-19 pandemic.) The October 15 deadline to file under an extension applies to several ...common returns, including: 2019 INDIVIDUAL INCOME TAXES: Most individual taxpayers who requested an automatic extension to file their 2019 federal tax returns must file by October 15. However, additional extensions may be available to some taxpayers affected by recent disasters, including hurricanes and western wildfires. 2019 CORPORATE INCOME TAXES: The October 15 deadline also applies to C corporations that requested an extension to file their 2019 corporate income tax returns (Form 1120). FOREIGN BANK ACCOUNT REPORT (FBAR): Many U.S. taxpayers, including individuals and businesses, must file an annual report of their foreign bank and other financial accounts, called an FBAR. Typically, filing an FBAR is necessary if the total value of a taxpayer's foreign accounts exceeds $10,000 at any time during the calendar year. However, certain accounts, such as those held within a qualified IRA or other retirement plan, may not need to be reported. Most taxpayers who are required to file a 2019 FBAR and have not yet done so must file by October 15. Remember that in general, an extension to file tax returns is NOT an extension to pay any tax due. Therefore, those who have not yet filed but expect to owe 2019 tax should estimate the amount they owe and pay that amount as soon as possible, even if they will not file their returns until October 15. Immediate payment will minimize any interest charges and late payment penalties. A tax professional can help you determine how much to pay and/or if an FBAR is required.

Meet your Tax Extension Deadline

Meet the IRS October 15th extension deadline

AOTC Tuition Credit Offers Tax Savings for Students or Parents Did You Know? If you, your spouse or any of your dependents are currently enrolled in a higher education program, or were enrolled for a previous academic period in 2020, you may qualify for the American Opportunity Tax Credit (AOTC). The AOTC program allows eligible taxpayers to claim a credit for tuition costs and certain school fees. To qualify for the credit, a student must be taking post-secondary classes ...at an eligible higher learning institution, in pursuit of a degree or other recognized certification or credential. In addition, students must meet ALL of the following eligibility requirements: - They are or were enrolled at least half time for at least one academic period (as defined by the school) in 2020. - They had not completed their first four years of higher education as of January 1, 2020. - Neither the AOTC nor its predecessor, the Hope credit, has been claimed more than four times total for the student, including the current year. - The student and the person claiming the credit (if different from the student) must have a valid taxpayer identification number (TIN) before the due date for the tax return. Additional eligibility criteria may apply to both the student and the educational institution. To claim the full credit, taxpayers must have a modified adjusted gross income (MAGI) of $80,000 or less for individuals, or $160,000 or less for couples filing jointly. A reduced credit may be available for individual taxpayers with a MAGI between $80,000 and $90,000 (between $160,000 and $180,000 for joint filers). Those with higher incomes may not claim the credit. The maximum allowed credit per eligible student is $2,500, up to $1,000 of which may be refundable. You may claim the credit for multiple students in your household if they all meet the eligibility standards. For students who do not qualify, you may still be able to claim either the Lifetime Learning Credit or an above-the-line income deduction for tuition and fees. A tax professional can help you determine which credits and/or deductions provide the greatest tax benefit for you.

Educator Expense Deduction Did You Know? If you are a teacher, principal, counselor, or classroom aide who works at least 900 hours a year in a state-accredited school (grades K-12), you may qualify for the Educator Expense Deduction. This IRS rule allows you to deduct up to $250 on your tax forms ($500 for joint filers who are both educators, but not more than $250 each) for classroom supplies that you purchase at your own expense. Allowed expenses include traditional sch...ool supplies like rulers and markers, computer equipment and software, along with specialty items like athletic gear for physical education classes. A qualified tax advisor can help you determine which of your expenses qualify for the deduction. You may not have to itemize deductions in order to claim the Educator Expense Deduction, but the IRS does require that you have written evidence for every expense. During this hectic back-to-school period when classroom expenses are most likely to occur, it is important to remember to save your receipts.

Is the IRS after you? Do you need to file back taxes? Wait no longer, MM Tax Preparation and Financial Services can help you! With over 15 years of experience, Maurico Midence has assisted the Bay Area and greater Northern California with individual and business tax preparation and planning. Conveniently located near HWY 80, Mauricio and his team of tax professionals are waiting for your visit!