News & Announcements

ENHANCED CHILD TAX CREDITS COMING IN JULY

As a result of the most recent $1.9 Trillion relief package, the IRS will be issuing child tax credits in the form of monthly payments, expected to begin in July of 2021.

In 2021, taxpayers can receive a fully refundable credit for dependents:

  • $3,600 per child under 6 years of age
  • $3,000 per child under 18 years of age

These credits are available in full to single taxpayers with Adjusted Gross Incomes of $75,000 or less and $150,000 or less for married filing joint taxpayers ($112,500 or less for head of household)

There are two phase-out calculations that can apply to taxpayers that earn above these limits.

If you have questions about how this may impact your situation, please reach out to us.

EMPLOYEE RETENTION CREDIT UPDATES

As a result of legislation from December of 2020 and recent notice by the IRS, there are new rules for eligibility of the Employee Retention Credit (ERC)

  • Credit is available to all businesses in operation during January 1, 2021 through June 30, 2021 IF:
    • A full or partial suspension of the operation of their trade or business during this period because of governmental orders limiting commerce, travel or group meetings due to COVID-19, or
    • A decline in gross receipts in a calendar quarter in 2021 where the gross receipts of that calendar quarter are less than 80% (20% or greater decline) of the gross receipts in the same calendar quarter in 2019
  • Refundable tax credit against the employer share of Social Security tax equal to 70% of the qualified wages paid to employees after December 31, 2020, through June 30, 2021
    • Qualified wages are limited to $10,000 per employee per calendar quarter in 2021 ($7,000 per employee, per quarter for a total of $14,000 per employee in 2021)
  • Qualified Wages defined:
    • For an employer that averaged 500 or fewer full-time employees in 2019, qualified wages are generally those wages paid to all employees during a period that operations were fully or partially suspended or during the quarter that the employer had a decline in gross receipts regardless of whether the employees are providing services. 
    • For an employer that averaged more than 500 full-time employees in 2019, qualified wages are generally those wages paid to employees that are not providing services because operations were fully or partially suspended or due to the decline in gross receipts. 
  • The ERC is claimed on the Employer’s Quarterly Federal Tax Return Form 941 using Worksheet 1 from the last page (20) of the form’s instructions to calculate the credit. (both attached for reference)

pdff941.pdf819.53 KB   pdfi941.pdf303.36 KB

Read more: EMPLOYEE RETENTION CREDIT UPDATES

Bill to be introduced to extend Estimated Payment due date

Thursday, Rep. Lloyd Smucker, R.-Pa., announced that he is introducing a bill that would postpone the due date for first-quarter 2021 estimated tax payments from April 15, 2021, to May 17, 2021.

  • The IRS’s original postponement of the filing deadline indicated no extension would be made for 1st quarter estimated payments
  • Firms have been questioning the effectiveness of an automatic extension that did not delay the estimates
  • The AICPA has been advocating for a delayed 1st quarter estimate due date since late March

Shuttered Venue Grant Portal Closes for Repairs on Opening Day

The $16.25 billion Shuttered Venue Operators Grant (SVOG) program opened for the first time on Thursday and closed the same day for repairs.

  • The SBA acknowledged technological difficulties almost immediately after opening, then later in the afternoon shut the portal down completely.
  • Along with the shutdown came news that the program funds are not expected to be released until late April at the earliest.
  • Concerns have also been raised by the Inspector General about the potential for fraud with lack of fund accountability.  Where recipients need little documentation to obtain lump sums in the form of Grant money.

The IRS Clarifies the Temporary 100% Meal Deduction for 2021-2022

Under the Consolidated Appropriations Act, 2021, business expense deductions for Meals (normally limited to 50%) are temporarily allowed at 100% under specific rules.

  • Only applies to
    • Amounts paid or incurred after Dec. 31, 2020, and before Jan. 1, 2023
    • Paid to a Restaurant
      • a business that prepares and sells food or beverages to retail customers for immediate consumption, regardless of whether the food or beverages are consumed on the business’s premises
  • Does not apply to:
    • Payments to a business that primarily sells prepackaged food or beverages not for immediate consumption, including a grocery store; specialty food store; beer, wine, or liquor store; drug store; convenience store; newsstand; or a vending machine or kiosk
    • Any eating facility located on the employer’s business premises and used in furnishing meals excluded from an employee’s gross income under Sec. 119; or
    • Any employer-operated eating facility treated as a de minimis fringe under Sec. 132(e)(2), even if that eating facility is operated by a third party under Regs. Sec. 1.132-7(a)(3).

IRS TO ISSUE AUTOMATIC UNEMPLOYMENT-RELATED REFUNDS

The IRS has said that it will take steps this spring and summer to automatically correct returns that were filed prior to the American Rescue Plan Act form March 11th which made the first $10,200 of unemployment benefits from 2020 non-taxable to the Federal Government for those taxpayers with an AGI of less than $150,000. ($20,400 for Married Filing Joint).

“Taxpayers do not need to file amended returns unless the calculations make the taxpayers newly eligible for additional federal credits and deductions not already included on the original tax returns.”