Number Crunchers Accounting & Taxes LLC

05/26/2021

Information for taxpayers who may receive advance Child Tax Credit payments in 2021.

03/18/2021

Confusion abounds over eligibility rules, IRS payment methods and more.

03/13/2021

Copied from the IRS Site

FS-2021-04, March 2021

The Internal Revenue Service, on behalf of the Treasury Department, worked to quickly begin delivery of the third round of Economic Impact Payments authorized by Congress in the American Rescue Plan Act in March 2021. Here are answers to some common questions about this set of stimulus payments, which differ in some ways from the first two sets of stimulus payments in 2020, referred to as EIP1 and EIP2.
How much is the third Economic Impact Payment?

Those eligible will automatically receive an Economic Impact Payment of up to $1,400 for individuals or $2,800 for married couples, plus $1,400 for each dependent. Unlike EIP1 and EIP2, families will get a payment for all their dependents claimed on a tax return, not just their qualifying children under 17. Normally, a taxpayer will qualify for the full amount if they have an adjusted gross income of up to $75,000 for singles and married persons filing a separate return, up to $112,500 for heads of household and up to $150,000 for married couples filing joint returns and surviving spouses. Payment amounts are reduced for filers with incomes above those levels.
Who is eligible for the third Economic Impact Payment and what incomes qualify?

Generally, if you are a U.S. citizen or U.S. resident alien, you are eligible for the full amount of the third Economic Impact Payment if you (and your spouse if filing a joint return) are not a dependent of another taxpayer and have a valid Social Security number (see exception when married filing jointly) and your adjusted gross income (AGI) on their tax return does not exceed:

$150,000 if married and filing a joint return or if filing as a qualifying widow or widower
$112,500 if filing as head of household or
$75,000 for eligible individuals using any other filing statuses, such as single filers and married people filing separate returns.

Payments will be phased out – or reduced -- above those AGI amounts. This means taxpayers will not receive a third payment if their AGI exceeds:

$160,000 if married and filing a joint return or if filing as a qualifying widow or widower
$120,000 if filing as head of household or
$80,000 for eligible individuals using other filing statuses, such as single filers and married people filing separate returns.

For example, a single person with no dependents and an AGI of $77,500 will normally get a $700 payment (half the full amount). A married couple with two dependents and an AGI of $155,000 will generally get a payment of $2,800 (again, half the full amount). Filers with incomes of at least $80,000 (single and married filing separately), $120,000 (head of household) and $160,000 (married filing joint and surviving spouse) will get no payment based on the law.
Determining eligibility for the third Economic Impact Payment

Most eligible people will get the third Economic Impact Payment automatically and won't need to take additional action. The IRS will use available information to determine eligibility and issue the third payment to eligible people who:

Filed a 2020 tax return.
Filed a 2019 tax return if the 2020 return has not been submitted or processed yet.
Did not file a 2020 or 2019 tax return but registered for the first Economic Impact Payment using the special Non-Filers portal last year.
Are federal benefit recipients as of December 31, 2020, who do not usually file a tax return and received Social Security and Railroad Retirement Board benefits, Supplemental Security Income (SSI) and Veteran benefit recipients in 2020. The IRS is working with these agencies to get updated information for 2021 to assist with stimulus payments at a date to be determined. IRS.gov will have more details.

How do I find out if the IRS is sending me a payment?

Beginning Monday, people can check the status of their third payment by using the Get My Payment tool, available in English and Spanish only on IRS.gov. The tool is being updated with new information, and the IRS anticipates that updated information will be available soon.
How will the IRS know where to send my payment? What if I changed bank accounts?

The IRS will use data already in its systems to send the third stimulus payments. Taxpayers with direct deposit information on file will receive the payment that way. Those without current direct deposit information on file will receive the payment as a check or debit card in the mail.
Will people receive a paper check or a debit card?

The IRS encourages people to check Get My Payment for additional information; the tool on IRS.gov will be updated on a regular basis starting Monday, March 15. People who don't receive a direct deposit should watch their mail for either a paper check or a debit card. To speed delivery of the payments to reach as many people as soon as possible, some payments will be sent in the mail as a debit card. The form of payment for the third stimulus payment may differ from the first two.

People should watch their mail carefully. The Economic Impact Payment Card, or EIP Card, will come in a white envelope prominently displaying the U.S. Department of the Treasury seal. It has the Visa name on the front of the Card and the issuing bank, MetaBank®, N.A. on the back of the card. Information included with the card will explain that this is an Economic Impact Payment. More information about these cards is available at EIPcard.com.
How are married couples affected, if only one spouse has a Social Security number?

As with EIP2, joint filers where only one spouse has a Social Security number (SSN) will normally get the third payment. This means that these families will now get a payment covering any family member who has a work-eligible SSN.

For taxpayers who file jointly with their spouse and only one individual has a valid SSN, the spouse with a valid SSN will receive up to a $1,400 third payment and up to $1,400 for each qualifying dependent claimed on the 2020 tax return.

Active Military: If either spouse is an active member of the U.S. Armed Forces at any time during the taxable year, only one spouse needs to have a valid SSN for the couple to receive up to $2,800 for themselves in the third stimulus payment.
Is any action needed by Social Security beneficiaries, railroad retirees and those receiving veterans' benefits who are not typically required to file a tax return?

Most Social Security retirement and disability beneficiaries, railroad retirees and those received veterans' benefits in 2020 should not need to take any action to receive a payment. As with the first two stimulus payments, the IRS is to send out the new payments the same way benefits are normally paid. The IRS is working directly with other federal agencies to obtain updated 2021 information for recipients.

Some people who will receive an automatic third payment based on their federal benefits information may need to file a 2020 tax return even if they don't usually file. If your third payment does not include a payment for your qualified dependent who did not receive a third payment, you must file a 2020 tax return to be considered for an additional third payment even if you don't normally file.

If you're eligible and didn't get a first or second Economic Impact Payment or got less than the full amounts, you may be eligible for the 2020 Recovery Rebate Credit but you'll need to file a 2020 tax return. See the special section on IRS.gov: Claiming the 2020 Recovery Rebate Credit if you aren't required to file a tax return.
I didn't file a 2019 or 2020 tax return and didn't register with the IRS.gov non-filers tool last year. Am I eligible for a payment?

Yes, if you meet the eligibility requirements. While you won't receive an automatic payment now, you can still get all three payments. File a 2020 return and claim the Recovery Rebate Credit.

The IRS urges people who don't normally file a tax return and haven't received any stimulus payments to look into their filing options. The IRS will continue reaching out to non-filers so that as many eligible people as possible receive the stimulus payments they're entitled to.

The IRS encourages people to file electronically, and the tax software will help figure the correct stimulus amount, which is called the Recovery Rebate Credit on 2020 tax forms. Visit IRS.gov/filing for details about IRS Free File, Free File Fillable Forms, free VITA or TCE tax preparation sites in the community or finding a trusted tax professional.
Will people who receive a payment get a notice from the IRS?

Yes. As with EIP1 and EIP2, people will receive an IRS notice, or letter, after they receive a payment telling them the amount of the payment. They should keep this for their tax records.
Where can I get more information?

For more information about Economic Impact Payments, visit IRS.gov/eip. Check the payment status at IRS.gov/getmypayment. For other COVID-19-related tax relief, visit IRS.gov/coronavirus.

We are offering help for individuals, families, businesses, tax-exempt organizations and others – including health plans – affected by coronavirus (COVID-19).

02/28/2021

I recently had two businesses contact me because someone claims to be a non-profit & states they don’t have to pay sales taxes. All they want to do is put their name on the ticket & have you give it to your accountant they will know what to do with it.

A 501(c)(3) organization is a non profit for for federal purposes. The organization does not have to pay federal income taxes. They also get a letter from the IRS stating they are a 501(c)(3) .

The 501(c)(3) does NOT mean you don’t have to pay AZ TPT tax.

According to the AZ department of revenue non profit organizations are not automatically exempt from the TPT tax. They pay the TPT tax when they purchase but are exempt from collecting TPT tax when they sell. There are some business classifications that are exempt from paying the TPT tax when purchasing & they are listed on the AZ Department of Revenues site. Most of them are health care related. The local soccer team is not exempt. For businesses that qualify the state of AZ issues an exemption certificate a copy of the exempt letter from the State of AZ & a copy of the organization’s 501(c)(3) letter is given to the vendor. The exempt letter is NOT your Corp standing with the AZ Corp commission. You have to apply for the exempt certificate. Just writing your name, name & address of the organization does not fly. Eating in a restaurant is not an exempt organizations purpose & would probably never be exempt.

02/16/2021

Needed a laugh this morning. Have a great day

02/04/2021

Yes, Small Businesses, Expenses Paid with Forgiven PPP Loans Are Deductible
By Office of Advocacy On Dec 28, 2020

The small businesses were worried, restless in their beds, as nightmares of tax liabilities danced in their heads. Then, in the late-night hours of Monday, December 21, 2020, a little holiday spirit was sprinkled over small businesses when Congress passed the Consolidated Appropriations Act, 2021. The President did not sign the bill into law until Sunday, December 27, 2020. The appropriations act includes the COVID-related Tax Relief Act of 2020, which provides for the full deductibility of ordinary and necessary business expenses that were paid with a forgiven or forgivable PPP loan.

In March 2020, the CARES Act was signed into law, and the Paycheck Protection Program (PPP) was created to provide much needed economic relief to small businesses struggling under the weight of state and local stay-at-home and business closure orders put in place to stem the tide of the coronavirus pandemic. The CARES Act provided for forgiveness of PPP loans that were used to cover payroll and other enumerated expenses, and specifically stated that a forgiven PPP loan was not taxable income. The legislation did not speak to the treatment of business deductions paid with such loans. One month later – after millions of dollars of PPP loans had been distributed – the IRS published Notice 2020-32, which provided guidance on the agency’s position that otherwise deductible business expenses paid with forgiven PPP loans would not be deductible because under section 265 of the Internal Revenue Code they flowed from a class of tax-exempt income – a forgiven PPP loan. Treasury Secretary Steven Mnuchin publicly stated that such “double-dipping” was not allowed. Although Congress informed Treasury directly that its position was contrary to the congressional intent of the PPP and the tax community and small business stakeholders also voiced their concerns with the agency’s position, the IRS released additional guidance in November that reaffirmed its position that otherwise deductible business expenses paid with a forgiven PPP loan, or one with a reasonable expectation of forgiveness, were not deductible.

On December 4, 2020, the Office of Advocacy (Advocacy) held a roundtable to discuss the federal and state tax issues surrounding the PPP, which approximately 150 people attended. The roundtable speakers, representatives of KPMG and the Tax Foundation, both opined – and the majority of small business stakeholders in attendance agreed – that the IRS guidance on the deductibility of expenses paid with forgiven PPP loans missed the mark and undercut the purpose of the PPP. Advocacy conveyed the need for a legislative fix for the issue to the House and Senate Small Business Committees in a December 15, 2020, letter.

Without a legislative fix, small businesses with forgiven PPP loans or those with a reasonable expectation of forgiveness were facing likely tax increases of up to 37 percent for 2020. For many small businesses, such an increase would be devastating to their financial health and create an insurmountable deficit in the uncertain economic times the pandemic has created. Finally, Congress stepped in and clearly stated that business expenses paid with forgiven PPP loans are deductible. Section 276 of the bill states:

For purposes of the Internal Revenue Code of 1986—

‘‘(1) no amount shall be included in the gross income of the eligible recipient by reason of forgiveness of indebtedness described in subsection (b),

‘‘(2) no deduction shall be denied, no tax attribute shall be reduced, and no basis increase shall be denied, by reason of the exclusion from gross income provided by paragraph (1), and

‘‘(3) in the case of an eligible recipient that is a partnership or S corporation-

‘‘(A) any amount excluded from income by reason of paragraph (1) shall be treated as tax exempt income for purposes of sections 705 of the Internal Revenue Code of 1986, and ‘‘(B) except as provided by the Secretary of the Treasury (or the Secretary’s delegate), any increase in the adjusted basis of a partner’s interest in a partnership under section 705 of the Internal Revenue Code of 1986 with respect to any amount described in subparagraph (A) shall equal the partner’s distributive share of deductions resulting from costs giving rise to forgiveness described in subsection (b).’’

The deductibility of business expenses paid with forgiven PPP loans is effective for subsequent PPP loans, as well as for business expenses paid with emergency Economic Injury Disaster Loan (EIDL) grants and targeted EIDL advances. This legislative fix makes the PPP a true lifeline for small businesses who are struggling during the pandemic. The holiday wishes of many small businesses have been granted, and Congress could be heard saying as they drove off the Hill, “A better tax season to all, and to all a good night!”

04/01/2020

Found on Google from myfox28columbus.com