Accounting Group of Western New York, CPA, PC remains open and dedicated to assisting you. Please find some helpful resources below, but please reach out to us with any questions.
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CARES Act Paycheck Protection Program (PPP)
Pass-Through Entity Tax (PTET)
The Pass-Through Entity Tax (PTET) is an optional tax that partnerships or New York State S-Corporation may elect. This is an annual election that is applied to certain income for tax years beginning after January 1, 2021.
The deadline to opt-in to the optional PTET for 2021 is October 15, 2021. We, as tax professionals, are unable to make the election on your behalf. Your business needs a New York State Business Online Services account to opt in. If your business does not have an account, you should create one immediately.
Due to many different variables, such as taxable income and individual tax rates, we cannot provide a one size fits all recommendation. Please review the NY.gov website to view information and various calculators that can be adjusted for your specific tax situation.
As always, please do not hesitate to contact our office to discuss this information.
Child Tax Credit
The first monthly payment of the expanded and newly-advanceable Child Tax Credit (CTC) from the American Rescue Plan will be made on July 15, 2021. Roughly 39 million households - nearly 90 percent of children in the United States - are slated to begin receiving monthly payments without any further action required. The IRS is relying upon data from tax returns from 2019 and 2020 to determine eligibility for the program. As such, their records might not be up-to-date. To avoid potentially owing the credit back to the IRS or missing out on this opportunity, we encourage all of our clients to contact us and visit the IRS website for more information.
Documentation Notices - New York State
We are aware that New York State is sending notices to individuals requesting supplemental documentation regarding their withholdings. We believe the IRS is in the process of uploading 2020 tax information to their database and will be sending the data to the New York State Department of Taxation and Finance.
In the event of receiving a notice from either New York State or the IRS, please reach out to our office for more information and assistance.
Reminder: Individual Tax Deadline Extended
Both federal and New York State individual income tax returns are now due on May 17, 2021. This is an automatic extension provided by the government.
If you need extra time beyond the new deadline, our office will be happy to file an extension with a due date of October 15, 2021 for your individual income tax returns.
SBA Defers EIDL Payments Until 2022
The SBA announced on Friday that EIDL borrowers won't have to begin making payments until 2022. Deferrals depend on the calendar year the loan was made:
The SBA also granted an additional 12-month deferral period for principal and interest of existing disaster loans approved prior to 2020 that were in regular servicing status as of March 1, 2020.
Borrowers may voluntarily continue to make payments during the deferment, as interest will continue to accrue on the outstanding loan balance during this period. Read more, here.
IRS Spoofing Email
If you receive an email from the IRS stating you are due an extra refund of $1,400 and must act, it is incorrect.
Do not open any links in the email and alert us as soon as possible.
The IRS will never send emails to request personal or financial information.
Economic Impact Payment Information
If you were eligible to receive an Economic Impact Payment (“Stimulus Check”), please provide this information to us with your 2020 tax materials. If you are unsure whether or not you received a payment, we recommend checking your IRS.gov tax account, under the “Tax Records” tab.
If you have any questions regarding your EIP status and/or signing up for IRS.gov, do not hesitate to contact our office. Please note that we are open on Saturdays from 9 a.m. to 1 p.m. to further assist you throughout tax season.
IRS Glitch Sends Erroneous Notice
109,000 people received Notice CP21C from the IRS telling them they'll get a smaller stimulus payment or won't get one at all. These mailings were sent erroneously due to a system glitch. According to The Trusted Professional, "[t]he notice that should have gone out was one saying the IRS couldn't issue to these taxpayers its first Economic Impact Payment (the $1,200 that was part of the CARES Act) because it hadn't processed their 2019 return and there was no 2018 return to use as an alternative. . . . [R]ecipients can disregard the notice, and eligible individuals can still claim the Recovery Rebate Credit (RRC) on their 2020 tax return."
New York State Announces Treatment of PPP
On January 15, 2021, the NYS Department of Taxation and Finance announced that it would follow the federal treatment of PPP loans. This means that any forgiven PPP loan will be excluded from federal and NYS income for businesses and individuals. For the expenses paid with forgiven PPP funds, NYS will follow federal regulations and will deem those expenses deductible.
Tax Season Begins Feb. 12, 2021 for Individuals
On January 15, 2021, the IRS announced that tax season will begin on Friday, February 12, 2021, when the agency will start accepting and processing 2020 individual income tax returns. The delay is to give the “IRS time to do additional programming and testing of IRS systems following the December 27 tax law changes that provided a second round of Economic Impact Payments and other benefits.” This delay will result in some refunds hitting the bank later than usual.
As of January 15, 2021, the April 15, 2021 deadline (which was extended to July 15, 2020, last year) remains unchanged. We will be sure to update you as the situation develops.
Please contact our office for more information.
PPP Second Draw Applications Announced
From the Journal of Accountancy:
The application window for Paycheck Protection Program (PPP) forgivable loans will open Friday [January 15, 2021] for lenders with $1 billion or less in assets, the US Small Business Administration and Treasury announced.
The opening, which will take place at 9 a.m. ET, applies for both first- and second-draw PPP loans.
The program will begin accepting applications for first- and second-draw loans from large lenders on Tuesday, Jan. 19.
Second Round of Stimulus Checks
On December 29, 2020 the IRS announced that it would begin delivery of the second round of Economic Impact Payments as part of the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 to millions of Americans who received the first round of payments earlier this year. For more information on the second round of stimulus checks, click here.
The White House and Senate leaders announced a $2 trillion pandemic response measure on Wednesday that includes sending checks directly to people across the country impacted by the coronavirus crisis. The package provides one-time payments of $1,200 per adult and $500 per child under the age of 17. Married couples will receive $2,400.
However, payments phase out for individuals making more than $75,000. For every $100 you earn above the limit, payment drops by $5. Individuals making more than $99,000 and couples making more than $198,000 will not qualify for a payment.
The amounts will be determined based on 2019 tax returns. If a 2019 tax return has not been field, 2018 returns will be used. Last week, a Treasury Department request to Capitol Hill outlined a start date of April 6 with a second batch of checks going out on May 18.
Federal Income Tax Return Filing and Payment Relief
In Notice 2020-18 (PDF), the Treasury Department and the Internal Revenue Service (IRS) announced special Federal income tax return filing and payment relief in response to the ongoing Coronavirus Disease 2019 (COVID-19) emergency.
Below is a link to answers to frequently asked questions related to the relief provided in the Notice. These questions and answers will be updated periodically and are designed to be a flexible tool to communicate information to taxpayers and tax professionals in this changing environment. The answers to these questions provide responses to general inquiries and are not citable as legal authority. Accordingly, the Treasury Department and the IRS are continuing to consider additional IRB guidance on these issues addressed in these FAQs.
IRS FAQ link, here.
Paid Leave for Workers and Tax Credits for Small and Midsize Businesses
The U.S. Treasury Department, IRS, and the U.S. Department of Labor announced today that small and midsize employers can begin taking advantage of two new refundable payroll tax credits, designed to immediately and fully reimburse them, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees. This relief to employees and small and midsize businesses is provided under the Families First Coronavirus Response Act (Act), signed by President Trump on March 18, 2020.
The Act will help the United States combat and defeat COVID-19 by giving all American businesses with fewer than 500 employees funds to provide employees with paid leave, either for the employee’s own health needs or to care for family members. The legislation will enable employers to keep their workers on their payrolls, while at the same time ensuring that workers are not forced to choose between their paychecks and the public health measures needed to combat the virus.
Expansion of Tax Commissioner's Abatement Authority
The Treasury Department and IRS announced that the federal income tax filing due date is automatically extended from April 15, 2020, to July 15, 2020.
Taxpayers can also defer federal income tax payments due on April 15, 2020, to July 15, 2020, without penalties and interest, regardless of the amount owed. This deferment applies to all taxpayers, including individuals, trusts and estates, corporations and other non-corporate tax filers as well as those who pay self-employment tax.
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 July 15 deadline, can request a filing extension by filing Form 4868 through their tax professional, tax software or using the Free File link on IRS.gov. Businesses who need additional time must file Form 7004.
The IRS urges taxpayers who are due a refund to file as soon as possible. Most tax refunds are still being issued within 21 days.
Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. If desired, we would be pleased to perform the requisite research and provide you with a detailed written analysis. Such an engagement may be the subject of a separate engagement letter that would define the scope and limits of the desired consultation services.