Category: Stimulus

Updates

3/17/2021

Today the IRS extended the tax deadline to May 17, giving us an extra month. Here's where we are:

1. We don't have any info about what states will do yet, last year they all conformed to the new date, but if any do not I will keep you apprised. Right now I'm assuming most will. If any states, particularly NY, don't conform, I will contact people about filing or extending.

2. At the moment, there is no extra time for IRA contributions, so if you are planning on doing a 2020 IRA contribution it still needs to be done before April 15. Same if you are hoping to claim a refund for 2017, you need to file by April 15. Estimated payments for first quarter are still due April 15.

3. If you are on hold with me because you have unemployment or payback of health insurance credits, keep hanging tight. I have yet to get a software patch to file these returns, but hopefully I will soon, and once I do I will start working through the backlog and getting you filed. You will get an email from me confirming your amounts and debits etc, then you will sign the efile docs and be filed. There is no need to email me, I will start working on these returns as soon as I get the patch. This extra month gives me some breathing room :) I will update here once I get the patch.

4. If you already filed, keep hanging tight, the IRS is not accepting amended returns yet and is telling people and preparers to hold off until they issue more guidelines. There is some talk of not needing to amend, of the IRS just issuing refunds, but we shall see. Again, no need to email me, I will be going through every filed return if amendments are necessary once the IRS starts accepting them. I will update here as things develop.

5. If you haven't filed yet, continue on as normal! I have extended available appointments through May 17, but I have slowed my pace a little to give me a break and to give me time to work on the backlog of unfiled unemployment returns, but there's no reason to hold off. If you have unemployment you will be on hold til I get the patch, but your return will be done and ready to go as soon as possible.

So to sum up, we're still waiting, but now we hopefully have a little more time!

I am really looking forward to things calming down and things not changing every 5 seconds!!!

Unemployment News and Stimulus Updates

3/5/2021

UPDATE: The stimulus has now been signed into law. There are LOT of provisions in it, but the most important for me are these 3:

1. The first $10,200 of unemployment is retroactively exempt from Federal taxation.

2. If you would have had to repay Health Insurance Premium Tax Credits for 2020, you now do not. Just for this year.

3. New stimulus checks for $1400 per person on a tax return. This is an advance 2021 tax credit, but it will go out based on the most recent return on file, 2019 or 2020. If you do not qualify based on that return but do based on 2021, you will get your $1400 when you file 2021. You will not have to repay it if you get it despite not qualifying based on 2021. Like the last stimulus, it's going out right away to whatever bank account or address is on file, and if there is any error you may have to do a payment trace, or wait til next year.

So what happens now?

If you have not yet filed, continue as normal, and I will hold your return if you have unemployment or payback of premium tax credits until the IRS issues guidelines and I get a software patch. That might be a couple of weeks. Please do not delay your appt or sending me your info, as of 3/11 there has not been an extension of tax season. 80% of my clients got unemployment, if you all wait then I will run out of space! If we get an extension and get some breathing room, I will update this post!

If you have already filed with me and you had unemployment or paid back health insurance credits (and thus would be affected by this), we will have to amend your return. I won't charge for the amendment and it should be fairly easy, its just a matter of logistics and getting through everyone. Obviously during tax season is not an ideal time for me to amend, so I will likely dedicate a small amount of time each day to doing a few until I get through them all, which also might take a while, but I will get to everyone eventually.

At the moment, this does NOT affect any state returns.

There is a LOT of other stuff in this bill, especially regarding Marketplace insurance and child credits, but I will have deal with that later! :) That all applies to 2021.

Hang tight, be patient, and watch this blog for news!

Changes to Unemployment?

2/15/2021

So there has been a bill introduced that might make the first 10 grand or so of unemployment tax free and a number of people have asked about this. I'm not encouraging holding off on filing for several reasons:

1. This is just a random bill. It's not part of the stimulus. It's not terribly likely this is going to pass unless someone big like Joe Biden or Chuck Shumer or Nancy Pelosi starts championing it. As of right now, it's just Dick Durbin.

2. If this does pass, it will be after half of America has already filed. Its unlikely the bill and the IRS would require all these people to file amended returns. Chances are the IRS could just automatically adjust people's income, and send people the difference.

3. In the unlikely event this bill passes AND we have to file amended returns to fix it, we can take care of it pretty easily after April 15.

Seriously though, Dick Durbin, the time to change tax law is December, NOT February after 50 million people have already filed. Dude.

I am however, very hopeful we will be getting another $1400, that seems pretty likely. Though whether it goes to people making up to 75k to 50k is up in the air.

Hang in there.

Are we getting more stimulus checks?

1/11/2021

Now that the Democrats are going to control the House and Senate as well as hold the Presidency, it seems incredibly likely that there will be more Covid-related stimulus. They might increase unemployment, there might be more programs for small businesses, there will almost certainly be aid to states and localities, but what most people want to know it, are we getting $2000?

First, if we do it probably won't be $2000 on top of the $600. It sounds like they want to give out an extra $1400 to bring the total of payments up to $2000.

Second, the people most in charge of this are Sens. Joe Manchin (D) along with maybe Susan Collins (R) and Lisa Murkowski (R). They are the most middle votes in the Senate right now, and at least one of them has to agree to $1400 checks in order for it to happen. If all of them refuse to vote for that, we don't get it. And Joe has stated he is iffy about it, so if we lose his vote we need one of the Republican ladies to step up.

If we do wind up getting it, how will that work? Well it could go a couple of ways. If they do it fast enough, like right after Joe Biden gets inaugurated, they could just make it a credit on your 2020 tax return and get it to you that way. But I'm guessing it will take longer than that. In that case, they will do like they did before, and either direct deposit the money or mail out checks. So to prepare for that, make sure the IRS has your current address, fill out a change of address form at IRS.gov if you need to. When you file your taxes, provide your DD info even if you owe if you file early enough to get the check that way. We just want to avoid your check getting mailed to an address you aren't at anymore!

Should I get a PPP loan?

1/9/2021

Stimulus checks and extra unemployment are great, but there is also another major program in the stimulus, the Paycheck Protection Program (PPP)! While it's referred to everywhere as a loan, in most cases it's completely forgivable, meaning it really functions more like a grant, totally free money. For my clients, here is why you may or may not want or be able to get one:

1.   You need to have a Schedule C on your 2019 taxes. This means you had 1099-Misc from a contracting job, or some other self-employment work (like nannying, personal training, teaching lessons) that you reported on your taxes. This is not for people who just had W2s, you must have had business income.

2. You can't get BOTH unemployment and a PPP loan at the same time. The PPP loan is meant to cover 10 weeks of income, so if you get the loan, you have to stop claiming unemployment for 10 weeks. Now there is some wiggle room about when you stop for 10 weeks, but you do have to stop. So it's important to weigh the benefits of unemployment vs PPP carefully.

3. You have to be able to prove you were "in business" as of Feb 15, 2020. So if you just get random 1099s every now and again, that might not be enough. If you don't have contracting or self-employment income that got paid somewhere in the range of late-Jan to early Feb 2020, your application will likely be denied.

Other than that, there aren't a lot of additional requirements! You can get the PPP loan and still be getting other income, there is no requirement that your business has stopped. In fact, it's meant to help keep your business open, so you can get it if you business has slowed to nothing or if your business is humming along. If you have completely closed your business, that might be a different story, but if you are intending to keep your business going, even if it's on pause, then this loan was designed for you!

How much can you get? Take the profit amount on your Schedule C (line 31), and divide by 12, then multiply by 2.5 (or you can just multiply line 31 by .208333) And it's totally forgivable without you doing anything special, just filling out a short form. To compare to unemployment, divide that amount by 10. If you are getting more than that number on unemployment, you probably don't want to do this.

How can you get one? It's not a good idea to go through a big bank, your application will be low on their priority list. I would recommend using a fintech service like KServicing, BlueVine, or even PayPal. There are many, just google. They are the best places to go for small loans when you don't have an existing banking relationship. There are no fees to apply, the Feds are paying the fees to the banks.

What about a SECOND PPP Loan? Yeah, so in the new stimulus bill, if you already got a PPP loan last year, you can get another one for the same amount (or potentially more) if you meet some requirements.

1. You already got a PPP loan.
2. You can show that you had a 25% decrease in revenue either for the whole year of 2020 compared to 2019, or for any quarter in 2020 compared to the same quarter in 2019. If you don't have Quickbooks or some other software to keep track of your money, you might want to invest in that to create the necessary reports to prove revenue loss. Or we can do a draft Schedule C for 2020 if you are doing the year-over-year loss. This is about revenue, not profit, so deductions are not involved in this.

So if you are one of my clients who already got a PPP loan, you might be able to get another one!

If you want my help with this, please set up a personal financial planning appt on the scheduling page, I will be happy to help with your application for the loan and for forgiveness.

What's happening with the stimulus?

1/5/2021

Hi folks! So the House and Senate FINALLY passed a new stimulus bill and Trump finally deigned to sign it. So what's in it?

1. The biggie, $600 checks. As we speak, they are being direct deposited to accounts, and mailed out. Even if you got your previous $1200 stimulus direct deposited (DDed), you might not get your new one directly into your account. If you got a refund DDed when you filed 2019 OR specifically included direct deposit info when you filed your return then your stimulus should be DDed. If you owed money for 2019, even if you paid with direct debit, you are getting your check mailed and not DDed. And it's getting sent to whatever address the IRS has on file for you, which is likely the address you used when you filed 2019. If that's not where you are, you will need mail forwarding or hopefully a roommate or something at your old address who can grab it for you. If you have moved, have no ties to your old address, and haven't set up forwarding in time, then you can claim the $600 on your tax return, but you will have to wait til you file. The IRS has set a deadline of Jan 15 to get the money out, if you don't get your money by then, you have to wait til you file your 2020 taxes. Check to see where your money is here. My first stim check got DDed, but I just got my new one in the mail, so they are really churning them out.

2. More unemployment! They extended emergency unemployment benefits, and added $300 a week to whatever your state benefits are. So it's like the $600 extra per week you were getting last year, just, you know, less.

3. Opened up a new round of PPP loans! If you had Schedule C income in 2019 (so 1099s or self-employment!) and are NOT on unemployment, a PPP loan might be a great idea for you. They call it a loan, but it's 100% forgivable, so really, it's a grant. You can't get it with unemployment though, because it's meant to cover wages for 10 weeks. If you think you might benefit from a PPP loan, please do get in touch with me. And if you already got one, you can get another one if you can prove you had 1 quarter of revenue in 2020 that was 25% lower than the same quarter in 2020. Again, if this might be you, get in touch!

Updates

Unemployment News and Stimulus Updates

Changes to Unemployment?

Are we getting more stimulus checks?

Should I get a PPP loan?

What's happening with the stimulus?

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