The IRS has officially extended the tax due date from April 15, 2021 to May 17, 2021.
The 2021 tax season has been a very challenging and dynamic one. The IRS has made yet another change to the current season, among others. At Leverone and Associates, Inc. we are committed to optimizing your tax situation and want to make you aware of the recent legislative changes so we can utilize this information when preparing your tax returns.
Recently, the government has modified the employee retention credit (ERC) for 2020 even if you had taken PPP funds. Past law stated small businesses could not take the credit if they took PPP funds. To qualify for the ERC the following applies:
a full or partial suspension of the operation of your trade or business during any calendar quarter because of governmental orders limiting commerce, travel or group meetings due to COVID-19
a significant decline in gross receipts.
A significant decline in gross receipts begins:
on the first day of the first calendar quarter of 2020
for which an employer’s gross receipts are less than 50% of its gross receipts
for the same calendar quarter in 2019.
The significant decline in gross receipts ends:
on the first day of the first calendar quarter following the calendar quarter
in which gross receipts are more than of 80% of its gross receipts
for the same calendar quarter in 2019
The ERC is available in the 2021 tax year as well. The ERC has been extended to apply to wages paid after June 30, 2021 and before January 1, 2022. Thus, an eligible employer can claim the refundable ERC against applicable employment taxes equal to 70% of the qualified wages it pays to employees in the third and fourth quarters of 2021.
We can help work through amending the 2020 payroll tax returns, and consult regarding 2021.
Finally, the recent stimulus bill passed has excluded unemployment income up to 10,200 for single taxpayers, and 20,400 for married filing joint taxpayers. This is retroactive as well to the 2020 tax year. We are awaiting more clarification on this and how it is to be reported. This exclusion ends when income on the tax return is greater than $150,000 for all filing status.