As 2021 draws to a close our thoughts all turn to enjoying the holidays. But don’t forget that right after the New Year begins, you’ll need to pay attention to taxes. The Internal Revenue Service (IRS) has several suggestions about steps you can take before the holiday season to make the tax season simpler and easier.
Donate to charity. Although the limits on deducting charitable donations remain in place, you may still be able to take advantage of last minute financial support of a tax-exempt organization. Before making a donation the IRS recommends you confirm the status of the group through their Tax Exempt Organization Search web page. Also, you may be able to claim a deduction for a cash donation of up to $300 ($600 for married couples filing jointly) even if you do not itemize your deductions.
Check the status of your Individual Taxpayer Identification Number. Some ITIN numbers expire on December 31, 2021 and must be renewed prior to filing your federal tax return. ITINs with middle digits 70 through 88 have expired. In addition, ITINs with middle digits 90 through 99, if assigned before 2013, have expired. Individuals who previously submitted a renewal application that was approved, do not need to renew again.
Set up direct deposit of your refund. You are more likely to receive any tax refund due to you if you have it deposited directly into your bank account.
Make a salary deferral. You can defer part of your 2021 salary (up to a limit of $19,200) to a retirement plan, which can help maximize the tax credit available for eligible contributions.
Get ready to file. Start organizing yourtax records now to help make preparing a complete and accurate tax return easier. Organizing now may help avoid errors that lead to processing delays and might also help you uncover overlooked deductions or credits. Among the records you should have ready before filing are:
Form 1095-A, Health Insurance Marketplace Statement, to reconcile advance Premium Tax Credits for Marketplace coverage
Letter 6419, 2021 Total Advance Child Tax Credit Payments to reconcile your advance Child Tax Credit payments
Letter 6475, Your 2021 Economic Impact Payment, to determine whether you’re eligible to claim the Recovery Rebate Credit
Your best move is to open a conversation with your tax advisor now instead of waiting until the filing deadline approaches. Taxes have become too complex to leave to the last minute. If you do not have a trusted tax advisor we invite you to contact Gray, Gray & Gray at (781) 407-0300.
The recently enacted American Rescue Plan includes an expanded refundable Child Tax Credit (CTC) for the 2021 tax year. Many taxpayers will receive part of their credit in 2021 before filing their 2021 tax return. This will take the form of a monthly payment of up to $300 per month for each child under age 6, and up to $250 per month for each child age 6 and above. These monthly payments will be made to approximately 39 million households, which covers about 88 percent of all children in the U.S.
The payments will be made automatically and are scheduled to begin on July 15 and continue through December. The payments will be made through direct deposit, paper check or debit cards.
For tax year 2021, families claiming the CTC will receive up to $3,000 per qualifying child between the ages of 6 and 17 at the end of 2021. They will receive $3,600 per qualifying child under age 6 at the end of 2021. Under the prior law, the amount of the CTC was up to $2,000 per qualifying child under the age of 17 at the end of the year. The increased amounts are phased out for households with incomes over $150,000 for married taxpayers filing a joint return and qualifying widows or widowers, $112,500 for heads of household, and $75,000 for all other taxpayers.
For additional information, please contact Gray, Gray & Gray at (781) 407-0300.
U.S. restaurants that have been impacted by the prolonged economic downturn due to the COVID-19 pandemic may be getting some relief in the form of a $26.8 billion Restaurant Revitalization Fund. The U.S. Small Business Administration (SBA) will open registration for the fund at restaurants.sba.gov on Friday, April 30 at 9 am EDT. Applications will open on Monday, May 3 at noon EDT, and will remain open until all funds are distributed. It is recommended that potential applicants register in advance and familiarize themselves with the eligibility requirements and necessary documentation they will need to apply.
For the first 21 days that the program is open, the SBA will prioritize applications from businesses owned and controlled by women, veterans, and socially and economically disadvantaged individuals. Following the 21 days, all eligible applications will be funded on a first-come, first-served basis.
The SBA has also created a $9.5 billion set-aside for smaller restaurants: $5 billion for applicants with 2019 gross receipts of not more than $500,000; $4 billion is set aside for applicants with 2019 gross receipts from $500,001 to $1,500,000; and $500 million for applicants with 2019 gross receipts of not more than $50,000.
The Restaurant Revitalization Fund provides a total of $28.6 billion in direct relief funds to restaurants and other hard-hit food establishments that have experienced economic distress and significant operational losses due to the COVID-19 pandemic. This program will provide restaurants with funding equal to their pandemic-related revenue loss up to $10 million per business and no more than $5 million per physical location. Funds must be used for allowable expenses by March 11, 2023.
If you are a restaurant owner or operator and have questions about eligibility or the application process for the Restaurant Revitalization Fund, please contact Gray, Gray & Gray at (781) 407-0300.
College students and staff who use email addresses ending in “.edu” are the target of a new “phishing” scam aimed at accessing personal information. The Internal Revenue Service (IRS) has received complaints about the email scam from both public and private colleges and universities.
The suspicious emails display the IRS logo and use various subject lines such as “Tax Refund Payment” or “Recalculation of your tax refund payment.” It asks people to click a link and submit a form to claim their tax refund. The fake website asks taxpayers to provide their:
Social Security number
Date of Birth
Prior Year Annual Gross Income (AGI)
Driver’s License Number
ZIP Code/Postal Code
Electronic Filing PIN
Students, faculty and staff who receive this scam email should not click on the link in the email, but instead should report it to the IRS. For security reasons, save the email using “save as” and then send that attachment to email@example.com or forward the email as an attachment to firstname.lastname@example.org.
The IRS reminds taxpayers who believe they have a pending refund that they can easily check on its status at Where’s My Refund? on IRS.gov. If you feel you have fallen victim to a phishing tax scam, or have questions about tax return security, please contact Gray, Gray & Gray at (781) 407-0300.
The research and development (R&D) tax credit is one of the most powerful tools your architectural or engineering firm could use to ease your tax burden. In light of the global pandemic, with many businesses struggling to stay afloat, R&D could become a great boost to your cash flow. The recently passed CARES Act provides a unique opportunity for R&D and net operating loss interplay. Those who may qualify should take a close look at eligibility.
Through the Power of More Gray, Gray & Gray can be a guiding force for growth and profitability in your business. Check out our new video to hear directly from a few of our team members about how we deliver the Power of More for our clients.
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More attention. More expertise. More opportunity. More solutions for your ever-changing needs. More than you’ve asked for. More than you expect.
Thinking of gift giving? Taxpayers who wish to give monetary gifts can take advantage of the annual gift tax exclusion to give up to $15,000 to each person on their gift list without paying a gift tax or eating into their lifetime estate and gift tax exemption. This exclusion is essentially doubled for married couples, as each spouse can gift $15,000 without triggering the gift tax. Annual gifts over the $15,000 per person limit will require you to file a gift tax return, but no tax will be due unless your total lifetime gift exceeds $11,400,000.
As always, you should consult with a qualified tax advisor before making any decisions. We’d be happy to discuss the advantages of gift giving with you. Please call our Tax Department at (781) 407-0300.