Stimulus Check Update: IRS Is Processing Checks
- The IRS on Friday began processing stimulus checks, which could arrive in Americans’ bank accounts as soon as this weekend.
- Unlike the prior rounds of checks, families will get a payment for all their dependents claimed on a tax return, not just their qualifying children under 17.
- Americans can check the status of their third payment by using the Get My Payment tool starting on Monday.
Officials from the Treasury Department and the IRS told reporters Friday afternoon that most Americans do not need to take any additional action to receive their payments and most will be delivered via direct deposit.
IRS officials said that full $1,400 payments are slated to go to individuals with adjusted gross incomes of up to $75,000, heads of households that make up to $112,500 and married couples filing jointly with annual income up to $150,000.
The third round of payments will be based on the taxpayer’s latest processed tax return from either 2020 or 2019. Americans can check the status of their third payment by using the Get My Payment tool starting on Monday.
Expenses used for PPP loan forgiveness: Deductible or not?
While the CARES Act excludes the loan forgiveness from gross income, it does not specifically address whether the expenses used to achieve the loan forgiveness would continue to be deductible. On April 30, 2020, the IRS issued Notice 2020-32 to provide guidance regarding the deductibility for federal income tax purposes of certain otherwise deductible expenses incurred in a taxpayer’s trade or business that the taxpayer uses to support loan forgiveness. The notice states that no deduction is allowed under the Internal Revenue Code for an expense that is otherwise deductible if the payment of the expense results in forgiveness of a PPP loan because the income associated with the forgiveness is excluded from gross income for purposes of the Code under CARES Act Section 1106(i). The notice cites Sec. 265 as the specific disallowance provision and also notes that case law and published rulings would disallow the deduction because the taxpayer has a reasonable expectation of reimbursement of those amounts.
Final thoughts
In deciding whether to take a position contrary to Notice 2020-32 and Rev. Rul. 2020-27 by deducting expenses used for receiving forgiveness for a PPP loan, practitioners should also consider their responsibilities under the AICPA’s Statements on Standards for Tax Services No. 1, Tax Return Positions, Circular 230, Regulations Governing Practice Before the Internal Revenue Service (31 C.F.R. Part 10), and Sec. 6694, Understatement of Taxpayer’s Liability by Tax Return Preparer. It is important that taxpayers decide the tax position they want to take, with help from professional advisers, and that the professional adviser document the client’s decision.
Reasonable compensation of S Corporation Shareholders
As a reminder, the IRS requires all S Corporation shareholders to take “reasonable compensation”. After the 2nd year of operations of your S Corporation, if the IRS challenges that reasonable compensation was not paid & reported on quarterly payroll returns and an annual W-2, they will reclassify 100% of shareholder distributions as wages.
Reasonable salary needs to be related to services performed. If there are other employees working in the S Corporation and business would continue with very little involvement from the owner, an argument could be raised for a lower salary to the shareholder.
What is a deductible medical expense?
If you itemize your deductions for a taxable year on Schedule A (Form 1040 or 1040-SR), Itemized Deductions PDF, you may be able to deduct expenses you paid that year for medical and dental care for yourself, your spouse, and your dependents. You may deduct only the amount of your total medical expenses that exceed 7.5% of your adjusted gross income. You figure the amount you’re allowed to deduct on Schedule A (Form 1040 or 1040-SR).
Tax checklist for newly married couples
Marriage changes a lot of things and taxes are on that list. Newlyweds should know how saying “I do” can affect their tax situation.
Here’s a checklist of items for newly married couples to review:
Deadlines to register for an Economic Impact Payment are just around the corner
Federal benefit recipients who don’t normally have a filing requirement but do have qualifying children must register by Wednesday, Sept. 30 to receive a $500 catch-up payment per child. Other non-filers have until Thursday, Oct. 15 to register for their Economic Impact Payment.
Anyone using the Non-Filers tool can speed up the arrival of their payment by choosing to receive it by direct deposit. Those who don’t choose direct deposit will get a check.
The deadline to claim a $500 payment for a qualifying child is Wednesday, Sept. 30, 2020.
Using The IRS Tax Withholding Estimator To Prepare for your 2019 Return
The IRS encourages everyone to use the Tax Withholding Estimator to perform a quick “paycheck checkup.” This is even more important following the recent changes to the tax law for 2018 and beyond. The Tax Withholding Estimator helps you identify your tax withholding to make sure you have the right amount of tax withheld from your paycheck at work.
Steps to Take Now to Get a Jump on Next Year’s Taxes
Tax planning is for everyone. Get ready today to file your federal income tax return next year. How to making necessary adjustments to withholding, gather records, renew expiring tax identification numbers and more.
Here’s Five Reasons to Use Direct Deposit for a Tax Refund
| As taxpayers prepare for the start of filing season, they should consider a direct deposit of any refunds due. It’s easy, safe, fast — and the best way to get a refund. That’s why 80 percent of taxpayers choose it every year.
IRS Direct Deposit:
Taxpayers should deposit refunds into accounts in their own name, their spouse’s name or both. Avoid making a deposit into accounts owned by others. Some banks require both spouses’ names on the account to deposit a tax refund from a joint return. Taxpayers should check with their bank for direct deposit rules. There is a limit of three electronic direct deposit refunds made into a single financial account or pre-paid debit card. The IRS will send a notice and a refund check in the mail to taxpayers who exceed the limit. Additional IRS Resources:
Share this tip on social media — #IRSTaxTip: Here’s Five Reasons to Use Direct Deposit for a Tax Refund. https://go.usa.gov/xnp8Q |
How to Value Non-Cash Contributions
Arthur Godfrey, radio and TV great, said . . . . . “I’m proud to be paying taxes in the United States. The only thing is – I could be just as proud for half the money.” Non-cash contributions is one of the most over looked deductions every year for several reasons. Items get donated without a detailed list so there is no way to value those items. In other instances, detailed lists may be available without a method of valuing the items. The information below should provide information and assistance in making the most of your non-cash contribution deductions.
Deduct it! Deduct it!
This paperback book helps you document and value your non-cash charitable donations. Fair market values are researched within the last quarter of the prior year across the country in used clothing stores, thrift shops, online, and other methods.
Salvation Army:
https://satruck.org/Home/DonationValueGuide
Goodwill:
https://www.goodwill.org/wp-content/uploads/2010/12/Donation_Valuation_Guide.pdf
Purple Heart:
http://www.purpleheartfoundation.org/donate/
You can find specifics regarding valuing your donations on this donate page.
All items donated to the Purple Heart, are deductible for income tax purposes at their present Fair Market Value. Internal Revenue code places the responsibility for the “Fair Market Value” upon the donor rather than the agency receiving the gift. The Internal Revenue advises that “Fair Market Value” is interpreted as that price which a buyer is willing to pay and a seller is willing to accept.
