A year of change...
Updated: Apr 4, 2021
Here we are, one year after the start of a pandemic that has affected everyone's life in one way or another.
The pandemic has affected the tax and accounting world as well, with stimulus monies available to businesses in the form of SBA Economic Injury Disaster Grants and Loans, PPP Loans which are forgivable if used for their intended purpose and now a second round of PPP Loans.
The affects on individuals and personal income taxes have been just as ever-changing as business taxes. The government issued stimulus money to most people in the Spring of 2020 and again in the early winter months of December 2020 through January 15, 2021, and it seems as though 90% percent of the population collected unemployment insurance benefits. Combine this with the rampant identity theft running wild between false unemployment insurance claims and false tax returns being filed with the IRS and NYS and it's a recipe for disaster.
In order to give taxpayers (and I would hope tax professionals) a little more time to sort through the changes and gather their tax information, IRS has extended the filing date to May 17, 2021. This allows an extra month to file and pay any balance that may be due with the tax return. The first estimated tax payment for 2022 remains due on April 15, 2021.
NYS has adopted the new filing date as well.
The IRS has recently ruled that the first $10,200 of unemployment benefits collected will be non-taxable as long as the taxpayer's income is below $150,000. As of this date (March 24, 2021), NYS has not announced that it plans to follow suit. Tax preparers are awaiting updates to IRS forms to accommodate this change and they are holding off on filing NYS tax returns for anyone with unemployment until an announcement comes from NYS regarding how they plan to handle unemployment.
Then there's the issue of the stimulus payments. Taxpayers must recall how much in stimulus money they received the first two times so that it can be reconciled with their 2020 tax return. If taxpayer's received more than they are entitled to, they don't have to pay it back. If they didn't receive as much as they are entitled to, then they will receive the difference after filing their 2020 tax return. The most difficult part of this, is trying to remember how much was received especially for taxpayers whose stimulus money came in the form of checks and not direct deposit.
If there has ever been a time to use a tax professional to prepare your tax return, this is the time. We are continually following the updates as they happen so that we can provide our clients with complete and accurate information.