Ask the CPA
Procrastinate another month, if that’s your thing
It appears to me that spring is trying to show herself. Ah spring. New beginnings. The daffodils had their time, now it is time for Miss Iris to put on a show. My resident groundhog has made an appearance after snoozing under the back shed all winter.
Spring also means it is time to file your taxes. In past years, that would be this Thursday. This year, taxpayers get to procrastinate another month if that is your thing. Customers seem to be quite a bit more stressed than normal this season. I am no expert, but I suspect folks are ready to be done with the pandemic and return to doing all the daily routine things that were never given a thought before. Maybe that is why folks are taking their frustration out on the tax guy. That is OK – comes with the territory.
• For those of you who own a company or have an expense account, meals are back to 100% deductible beginning Jan. 1, 2021. The 50% limit is suspended through the end of 2022.
• Reminder to those of you who make quarterly estimated tax payments – the extension to May 17 for filing your taxes does not apply to estimated tax payments. Your first quarterly tax payment remains due April 15.
• Interesting factoid – The IRS is holding $1.3 billion worth of unclaimed tax refunds from 2017. There are two good reasons to make sure you did file 2017:
o Failure to file not only costs you any refund due, but you may also be eligible for the Earned Income Tax Credit. That was worth as much as $6,318 in 2017.
o In most cases, taxpayers have a three-year window to claim a tax refund. For 2017 returns, that window closes May 17, 2021. After that, the money becomes property of the U.S. Treasury.
• Masks, hand sanitizer and sanitizing wipes for coronavirus prevention are deductible medical expenses. Really.
• Students who received emergency financial aid grants because of an event related to the pandemic will not pay taxes on those grants.
Walk Off TD:
I want to urge folks who either normally do not file a tax return, or those who are thinking that because they were laid off in 2020 there is no reason to file a return, to utilize the IRS Free File program. Anyone who makes $72,000 or less has free access to brand-name software. About 3 million Americans have used this free service so far. The benefits are numerous. And they can be significant:
• As we discussed last week, anyone who did not receive the full amount of the first and second stimulus payments can claim the additional amount they are due as the Recovery Rebate Credit when you file.
• Tax benefits like the EITC, the Additional Child Tax Credit, and other credits are available to you even if you were laid off in 2020. If you worked in 2019, and made more money than in 2020, a new rule allows you to choose your 2019 income to figure these credits. The result is a higher credit amount due to you.
• Free file is perfect for those who were previously claimed by their parents but are no longer eligible – like college students.
Thanks for reading. It is time to take Jack the Heeler out for a walk. Please address any questions to firstname.lastname@example.org.