The IRS recently announced a new way for practitioners and taxpayers to submit a power of attorney on-line to the IRS. Practitioners can use their existing IRS e-services account to request a power of attorney for a client. Once the request is completed and submitted by the practitioner using the e-services account, the client can electronically sign the power of attorney using an existing i...
Some taxpayers may have chosen to defer a portion of their self-employment tax that was due as part of their 2020 federal income tax return. This was discussed on pages 30 to 32 of the 2020 edition of the Tax Year 2020 M+O=CPE Individual Tax Year-End Workshop Reference Book. This deferral was also available for the employer-share of the Social Security portion of the self-employment tax due ...
As discussed in our June 24, 2021 post, the IRS has announced the procedure for taxpayers to optionally opt-out of receiving the advance child credit payments. It is important to note that spouses that file a joint income tax return must each separately opt out of receiving the advance child credit payments. If only one spouse opts out, then the IRS will send half of the joint payment amount...
The IRS has announced the procedure for taxpayers to optionally opt-out of receiving the advance child credit payments. Depending on a client’s circumstances, practitioners should consider warning clients to opt-out of receiving the advance payments. As discussed in our May 18, 2021 post, the IRS will begin making monthly advance payments of the newly-increased child tax credit on July 15, 2...
For the 2021 tax year, the requirement to take minimum distributions from retirement accounts once again applies. The requirement was suspended for the 2020 tax year, due to the pandemic. Practitioners should consider reminding affected clients about this requirement. In general, the requirement now applies to individuals who are 72 years or older. (Special rules and considerations continue ...
The New York State 2021 to 2022 budget creates an optional pass-through entity tax (PTET) which can be used as a possible workaround for owners of passthrough entities that are affected by the $10,000 federal limitation on the itemized deduction for state and local taxes (often referred to as the SALT cap). The optional tax is effective for tax years beginning on or after January 1, 2021. Whil...
The New York State 2021 to 2022 budget increased certain personal income tax rates for the 2021 tax year. Practitioners should consider warning affected clients about the effects of these new rates. The budget increases the 8.82% bracket to 9.65%. In addition, for taxable income over $5 million and up to $25 million, the new tax rate is 10.3%. For taxable income over $25 million, the new t...
The IRS has indicated that it has begun to issue refunds to taxpayers who paid 2020 income taxes on unemployment compensation before the retroactive change that excluded some or all of such compensation for certain taxpayers was enacted as part of the American Rescue Plan. These refunds were discussed in our April 1, 2021 post. The IRS is starting with refunds for single taxpayers and will m...
As discussed in our March 11, 2021 post, the American Rescue Plan expanded the child credit for 2021 and created an advance payment of a portion of the credit for certain taxpayers. Beginning in 2021, the maximum child tax credit is $3,600 per child for children under the age of 6 and is $3,000 per child for children between ages 6 and 17. The higher child credit amounts are phased out when modi...
As practitioners prepare extensions for clients as we approach the upcoming filing due date, it is important to warn clients that such extensions require the use of estimates for amounts that are not yet known. Practitioners should warn clients in writing, indicating that differences between actual amounts and estimates could cause the client to owe additional taxes, including penalties and in...
