by NFS | Jun 7, 2021 | Archives, Blog Posts
The second quarter Federal and State estimated tax deadline is quickly approaching! The due date is June 15, 2021. Please be sure to submit your payments on time to avoid penalties.
As we previously communicated to you, the IRS has announced that certain Post Office Boxes will be closed in Hartford, CT after this year. While the change of address will not be effective until January 1, 2022, the IRS is asking for taxpayers to begin using the new mailing addresses during calendar year 2021. This change affects taxpayers living in the states listed below who, in the past, have mailed payments to Hartford, CT.
We recommend mailing all estimated tax payments to the new address listed below located in Louisville, KY or paying your estimates online (Instructions for paying online to IRS and MA are below).
Form 1040 and 1040SR with payment in the following states: Arkansas, Delaware, Illinois, Indiana, Iowa, Kentucky, Maine, Massachusetts, Minnesota, Missouri, New Hampshire, New Jersey, New York, Oklahoma, Vermont, Virginia, Wisconsin
Internal Revenue Service
P.O. Box 931000
Louisville, KY 40293-1000
Form 1040-ES with payment in the following states: Arkansas, Connecticut, Delaware, District of Columbia, Illinois, Indiana, Iowa, Kentucky, Maine, Maryland, Massachusetts, Minnesota, Missouri, New Hampshire, New Jersey, New York, Oklahoma, Pennsylvania, Rhode Island, Vermont, Virginia, West Virginia, Wisconsin
Internal Revenue Service
P.O. Box 931100
Louisville, KY 40293-1100
Instructions to make a Federal IRS estimated tax payment
- Click here or go to the IRS website at www.irs.gov/payments
- Under “Pay Your Taxes Now”, choose “Bank Account (Direct Pay)” or “Debit Card or Credit Card”. Please note there is a fee for paying your taxes with a debit or credit card.
- In the “Reason for Payment” box, click the drop down arrow and choose “Estimated Tax”
- The “Apply Payment To” box defaults to 1040ES (for 1040, 1040A, 1040EZ)
- In the “Tax Period for Payment” box, choose 2021
- Click Continue
- Confirm Continue
- Follow screens, filling in required information to make the payment.
Instructions to make a Massachusetts estimated tax payment:
- Click here or go to the MassTaxConnect website at https://mtc.dor.state.ma.us/mtc/
- You may create an account by completing the “Log In” section or choose “Make a payment” under Quick Links.
- Under “Payment Type” click “Individual Payment” then “Next”
- Under “Taxpayer Identification” enter your name, social security number, confirm social security and telephone numbers
- Under “Select Payment Type” choose “Estimated Payment” to make an estimated payment for tax year 2021
- Click “Next”
- Fill in the amount to pay and choose method of payment. Please note there is a fee for paying with a debit or credit card.
- Follow screens to complete payment.
These instructions are for one-time payment or you can schedule all future payments at once.
If you have any questions, please call us here at Northeast Financial Strategies at (800) 560-4637.
by NFS | May 18, 2021 | Archives, Blog Posts
The federal income tax deadline has passed for most individual taxpayers. However, some haven’t filed their 2020 tax returns or paid their tax due.
If an individual taxpayer is owed a refund, there’s no penalty for filing late. On the other hand, tax owed and not paid by May 17, 2021 is subject to penalties and interest.
Anyone who didn’t file and owes tax should file a return as soon as they can and pay as much as they can to reduce penalties and interest. Electronic filing options, including IRS Free File, are still available on IRS.gov through October 15, 2021, to prepare and file returns electronically.
Taxpayers should then review their payment options. The IRS has information for taxpayers who can’t pay taxes they owe.
Some taxpayers may have extra time to file their tax returns and pay any taxes due. This includes some disaster victims, taxpayers living overseas, certain military service members and eligible support personnel in combat zones.
Filing soon is very important because the late-filing and late-payment penalties on unpaid taxes add up quickly. However, in some cases, a taxpayer filing after the deadline may qualify for penalty relief. For those charged a penalty, they may contact the IRS by calling the number on their notice and explain why they couldn’t file and pay on time.
Taxpayers who have a history of filing and paying on time often qualify for administrative penalty relief. A taxpayer usually qualifies if they have filed and paid timely for the past three years and meet other requirements. For details, taxpayers should visit the first-time penalty abatement page on IRS.gov.
State filing and payment deadlines may be different from the federal deadline. A list of state tax division websites is available through the Federation of Tax Administrators.
If you need any assistance in getting your taxes prepared, please do not hesitate to contact us here at Northeast Financial Strategies, Inc.
by NFS | May 14, 2021 | Archives, Blog Posts
WASHINGTON – The Internal Revenue Service will begin issuing refunds this week to eligible taxpayers who paid taxes on 2020 unemployment compensation that the recently-enacted American Rescue Plan later excluded from taxable income.
The IRS identified over 10 million taxpayers who filed their tax returns prior to the American Rescue Plan of 2021 becoming law in March and is reviewing those tax returns to determine the correct taxable amount of unemployment compensation and tax. This could result in a refund, a reduced balance due or no change to tax (no refund due nor amount owed).
These corrections are being made automatically in a phased approach, easing the burden on taxpayers. The first phase is underway and includes the simplest returns. The next phase will include the more complex tax returns which the IRS anticipates will take through the end of summer to review and correct.
The first phase of adjustments is being made for single taxpayers who had the simplest tax returns, such as those filed by taxpayers who did not claim children or any refundable tax credits.
The IRS will issue refunds resulting from this effort by direct deposit for taxpayers who provided bank account information on their 2020 tax return. If valid bank account information is not available, the refund will be mailed as a paper check to the address of record. The IRS will continue to send refunds until all identified tax returns have been reviewed and adjusted.
These refunds are subject to normal offset rules, such as past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support or certain federal nontax debts (i.e., student loans). The IRS will send a separate notice to the taxpayer if the refund is offset to pay unpaid debts.
The IRS will send taxpayers a notice explaining the corrections, which they should expect within thirty days of when the correction is made. Taxpayers should keep any notices they receive for their records. Taxpayers should review their return after receiving their IRS notice(s).
Correction to any Earned Income Tax Credit (EITC) without qualifying children and the Recovery Rebate Credit are being made automatically as part of this process. However, some taxpayers may be eligible for certain income-based tax credits not claimed on their original return, such as the EITC for their qualifying children. If so, they should file an amended tax return if the revised adjusted gross income amount makes them eligible for additional benefits.
More complex corrections will begin upon the completion of the first phase and involves couples filing as married filing jointly.
Unemployment compensation is taxable income. The American Rescue Plan excludes $10,200 in 2020 unemployment compensation from income used to calculate the amount of taxes owed. The $10,200 per person exclusion applies to taxpayers, single or married filing jointly, with modified adjusted gross income of less than $150,000. The $10,200 is the amount of income exclusion, not the amount of the refund. Refund amounts will vary and not all adjustments will result in a refund.
The legislation also suspends the requirement to repay excess advance payments of the Premium Tax Credit (excess APTC). If a taxpayer paid an excess APTC repayment amount when they filed their 2020 return, the IRS is also refunding this amount automatically. If the IRS corrects the taxpayer’s account to reflect the unemployment income exclusion, the excess APTC amount that the taxpayer paid will be included in that adjustment. The IRS is also adjusting accounts for those who repaid excess APTC but did not report unemployment compensation on their 2020 tax return.
Taxpayers who have not yet filed a tax return should follow the guidance for Forms 1040 and 1040-SR, which details how to exclude unemployment compensation. Should you need assistance in filing or you have some questions about the adjustment that was made, please contact us here at NFS.
by NFS | May 5, 2021 | Archives, Blog Posts, COVID
The Paycheck Protection Program has run out of money for most borrowers before its planned May 31 end, the Small Business Administration said.
Going forward, the program will only accept new applications from community financial institutions, which typically serve minority borrowers, as about $8 billion in funding was set aside for such businesses.
The SBA will continue to fund outstanding approved PPP applications from other lenders but won’t accept any new applicants.
The exhaustion of funds, which was announced Tuesday, comes just weeks after the PPP was extended through the end of May to allow borrowers more time to apply for the forgivable loans. While many lenders and borrowers thought that the program would likely run out of money ahead of the May 31 deadline, the exact timing wasn’t known.
“We did get caught off guard a little bit,” said Sam Sidhu, vice chairman and chief operating officer at Customers Bank, a subsidiary of West Reading, Pennsylvania-based Customers Bancorp. The bank, which was processing about 20,000 PPP loans per week, still has thousands of borrowers who are now stuck in the pipeline, Sidhu said.
Other lenders also have backlogs awaiting SBA approval, and more applications they could have submitted.
Chris Hurn, chief executive of Fountainhead Commercial Capital, a nonbank lender, said he has a backlog of more than 60,000 applications pending validation from the SBA, and nearly 35,000 more that could be submitted if the portal wasn’t closed.
“Everybody’s going to be waiting now to see what the SBA does, if anything,” said Hurn.
-CNBC
by NFS | Apr 2, 2021 | Archives, Blog Posts, COVID
Small business owners with certain forgiven federal loans during the COVID-19 pandemic can now exclude those funds from their gross taxable income in Massachusetts.
Gov. Charlie Baker signed into law Thursday afternoon legislation that makes enables “pass-through entities” with forgiven Paycheck Protection Program loans to get the same tax benefits that corporations do.
The congressional stimulus package in December allowed businesses with forgiven PPP loans to exclude the funds from gross taxable income while still claiming the deductions for expenses they paid using the PPP money, which tax experts and critics have described as a “double benefit.”
In Massachusetts, corporations got the same benefits because the state’s corporate tax code conforms to the federal corporate tax code automatically. But the state has a fixed individual tax code, meaning lawmakers had to pass legislation to ensure small businesses could get the same relief.
Residents who received unemployment benefits won’t be taxed on the first $10,200 if they live below 200% of the federal poverty level.
The new law also freezes the unemployment insurance rate for the calendar years 2021 and 2022, slowing the annual employer UI contribution rate. The rate was expected to increase hundreds of dollars per employee.
“This legislation takes a thoughtful and comprehensive approach in delivering critical relief to facilitate economic recovery for the people of Massachusetts,” Baker said in a letter to lawmakers.
While employers get a reprieve from UI rate hikes, the new law authorizes the state to issue special obligation bonds to repay federal advances and get the trust fund out of the red.
The bill also creates a $75 million COVID-19 emergency paid sick time program similar to the federal COVID leave benefits, requiring employers to give workers a week’s paid leave if they are infected with, isolated or quarantined due to COVID-19.
The paid leave also extends to those getting vaccinated or caring for family members who fit those same criteria.
“The mandate aptly addresses needs — immunization, isolation, and quarantine — that were not contemplated when the state’s Paid Family and Medical Leave program was designed,” Baker said.
Baker sent back two amendments that would tweak the state’s paid sick time program.
The first would require that employees on sick leave related to COVID-19 get no less than their regular rate of pay. The amendment would cap the sick pay at $850 or two-thirds of the regular rate of pay for family leave.
The program would offer benefits to part-time employees with “a regular schedule with consistent hours per week” as long as the paid sick leave is equal to the number of hours an employee works per week, on average over a two-week schedule.
The second amendment would extend a $40-per-employee tax credit to employers who lack access to the tax credit under the federal leave program. Extending the tax credit for all employees who aren’t covered, Baker said, would make it easier for employers to request the credit to the Executive Office of Administration and Finance without the risk of potentially having to rely on paperwork that could violate health private laws.
An employer would have to file the credit application and any amendment related to the application by Dec. 31.
This amendment would also set an end date of Sept. 30 for the COVID-19 emergency paid sick time program. Baker said setting an official deadline would address any uncertainty between employers and workers because the sick leave program’s end date would otherwise be whenever the $75 million fund dries up.
