The Treasury Department and Internal Revenue Service announced March 17th, that the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021. The IRS will be providing formal guidance in the coming days.
Eligible self-employed individuals will determine their qualified sick and family leave equivalent tax credits with the new IRS Form 7202, as an addendum to the 2020 Form 1040 for leave taken between April 1, 2020, and December 31, 2020, and the 2021 Form 1040 for leave taken between January 1, 2021, and March 31, 2021.
The FFCRA, passed in March 2020, allows eligible self-employed individuals who, due to COVID-19 are unable to work or telework for reasons relating to their own health or to care for a family member to claim refundable tax credits to offset their federal income tax. The credits are equal to either their qualified sick leave or family leave equivalent amount, depending on circumstances.
Eligible self-employed individuals must:
Dunham Tax Professionals wants to again remind you that proper documentation is key in establishing eligibility for the credits as an eligible self-employed individual. We’re available and here to help you get everything you deserve. Schedule an appointment today.
Applying for the Earned Income Tax Credit is more important than ever this year due to the important COVID-related changes.
This year, tax filers will see significant changes as a result of COVID-related stimulus checks and unemployment, which are not considered earned income. To allow more individuals to still claim their EITC this year, taxpayers who may have been out of work for much of 2020, for example, will be allowed to file tax returns based on their 2019 or 2020 earned income instead to remain eligible for the EITC.
The EITC is available to working families and individuals who meet certain income requirements. The amount of the refund depends on income, filing status and number of qualifying children claimed on their returns. For example:
This year, individuals who have been out of work in 2020 can still benefit from the EITC by choosing to calculate their EITC based on their 2019 income. This tax season, filers can choose to use either their 2019 or 2020 earned income to calculate the Earned Income Tax Credit on their 2020 income tax returns, as a result of the recently passed COVID-19 relief package. The lookback will also help people qualify for the refundable portion of the Child Tax Credit, which is allowed even if you do not owe any tax.\
There is also a potential Recovery Rebate Credit, which is a special one-time benefit that most people received last year in the form of an Economic Stimulus Payment. But eligible individuals who did not receive their stimulus check or received less than they were eligible for – either the first or the second payment – may be able to claim it when they file their 2020 taxes in 2021 under the Recovery Rebate Credit: Any eligible individual who did not receive the full amount of the stimulus check can claim the Recovery Rebate Credit on a 2020 Form 1040 or Form 1040-SR. Generally, this credit will increase the amount of your tax refund or lower the amount of the tax you owe.
Dunham Tax Professionals is always available to help you navigate these uncertain times, with all of the potential changes to tax code and issued guidelines as they occur. Please contact us, today, to make sure that you receive everything you are entitled to.
It’s tax season again, and we’ve been talking a lot about the new round of Payroll Protection Program – PPP – funding available to those business most affected by the COVID-19 pandemic.
Dunham Tax Professionals keeps this blog in an effort to inform you – in as timely a manner as possible – the things you need to know about the new round of funding and by now, we know that new SBA and IRS guidelines indicate that PPP funding is to be used for the following business expenses:
Previously, anything you spent your PPP loan on was not going to be tax deductible, but now, however, these expenses are tax deductible. Simply put, your PPP loan will not affect your tax filing process.
And while this is obviously great news, it is noteworthy that currently, there is not any change in the guidance for state and local tax treatment of PPP funds. Therefore, be sure to check with your own State and local tax authorities for additional information.
That’s where we come in: Dunham Tax Professionals always point out the importance of consulting with people who will help you through tax uncertainties – every step of the way. And now more than ever, we’re here for you.
Make an appointment today.
As we all know by now, COVID-19 hit us hard in 2020 – and resulting shutdown mandates and furloughs meant that there was a lot we either did not or could not do: And maybe you’re self-employed, so you think that these shutdowns, furloughs, relief packages and tax breaks that keep coming down just don’t apply to you.
Being self-employed can have the perk of being your own boss and possibly setting your own hours, but you have other responsibilities, too: in 2020, those responsibilities may have also meant that you missed work to take care of kids because their schools or daycare were closed, or if you missed work to care for someone sick or quarantined – or you missed work because you were sick or quarantined due to COVID-19.
If you’re self-employed, the IRS has a tax credit for you: Form 7202 allows for self-employed individuals to claim COVID sick and family leave tax credits under the Families First Coronavirus Response Act – FFCRA.
So many of us are taking care of our kids, and also our parents and grandparents as well, and obviously financial support and tax breaks are sorely needed to recognize that financial hit that happens when those of us who are self-employed need to focus on caregiving.
The IRS has issued an intricate form with instructions on how to calculate the sick leave or family leave amount, but both the sick leave and family leave credits to start with a basic question: What is the number of days you were unable to perform services.
According to estimates from the National Alliance for Caregiving, during the past year, 65.7 million Americans – or 29 percent of the adult U.S. adult population involving 31 percent of all U.S. households – served as family caregivers for an ill or disabled relative. Keep in mind, that this in generally care that is largely unpaid and/or given at a loss of income otherwise earned.
Dunham Tax Professionals is committed to helping its clients navigate these new and much needed tax breaks and incentives. Please contact us and set up a consultation, today, so that we can help you receive the credit that you deserve.
The Economic Aid Act, signed into law on December 27, 2020, brought new relief in the form of additional PPP funding. It also served to streamline the forgiveness application process for loans of $150,000 or less. In January, the SBA made that promise a reality.
There is a new version of the form 3508S which requires borrowers to provide the following information:
The application requires certification that the borrower complied with all requirements set forth in the PPP rules. Borrowers using this application for a second draw PPP loan will also need to certify the accuracy of the calculation and documentation related to the revenue reduction.
The Economic Aid Act amended language in new relief package now allows PPP borrowers to also claim employee retention tax credits – ERTC. Some borrowers may have payroll costs the qualify for the ERTC during their covered period.
It is certainly more than advisable to consult with a professional to see if you can also qualify to claim this. Dunham Tax Professionals is here and ready to help. Make an appointment today.