Tax Season Readiness
Greetings from the Seth & Alexander team!
The 2021 tax season began on January 24th. We’d like to remind you of important information regarding filing for the season.
Third Stimulus Payment
If you received a third stimulus payment (ARPA 2021 economic impact payment), eligible taxpayers can claim this credit on their Form 1040. Eligible taxpayers fall into the following categories:
Eligible for the Economic Impact Payment in 2021 but did not receive one
Did not receive the full amount for the Economic Impact Payment ($1400 for single filers and $2800 for those married filing jointly PLUS $1400 for every dependent claimed on the 2021 tax return under age 17 at then end of 2021)
Paycheck Protection Program (PPP) loans continued from 2020 into 2021. Amounts that are forgiven are not taxable. PPP funded allowable expenses are tax deductible.
Child Tax Credit
Up to 50% of the child tax credit was advanced to eligible families. Since this was an advance, it will deduct from the total amount of child tax credit the taxpayer(s) would normally receive for 2021. This was estimated from the 2020 return (or if not available, the 2019 return).
The IRS sent out Letter 6419 to help match this amount of the advance with the tax return filed. Keep in mind that if the amount reported on the return as advanced does not coincide with the IRS records (which are reflected on the Letter 6419) the processing of the return will be delayed.
If you have any questions, the Seth and Alexander Team is always here to help! Give us a call today!