February 9, 2021 Update

Mike Sylvester • February 12, 2021

February 9, 2021

A few quick thoughts from SBS CPA Group

This is the second email of 2021 and it is a much shorter email.  The prior emails were much longer and explained various new tax law changes.

Individuals

Once you have everything gathered for your 2020 income taxes please drop everything off including a filled-out tax planner (You have to fill out at least page one of the tax planner).  Please do not drop anything off until you have everything.  Once you have everything please drop off fairly quickly because if you drop off now you can still beat the rush.

The largest problem we are having is in regards to the stimulus payments.  We need you to tell us exactly how much you were paid for round 1 and then we also need you to tell us exactly how much you were paid in round 2, and round 2 was received in January of 2021.  We must have both numbers and they cannot be combined into one number.  The 2 nd  stimulus payment paid in January of 2021 is reported on your 2020 income tax returns.

If you collected unemployment, please download your 1099-G form from the Department of Workforce Development website, and give it to us.

Businesses

Please make sure you tell your CPA when the SBA tells you that your round 1 PPP loan was forgiven, we must have this information.

Far fewer businesses qualify for the 2 nd  round of PPP loan funding; however, about 25% of our business clients might qualify for this funding.  Please contact your CPA if you have questions about this 2 nd  round of PPP loan funding.  Congress does not expect the 2 nd  round of PPP loan funding to be used; however, some of the banks are saying the money is going fast.  About 73 billion dollars in round 2 PPP loans have been distributed and the program has about 202 billion dollars left in it.  If you want to apply for a 2 nd  round PPP loan please contact your CPA this week.  If you get a 2 nd  round PPP loan please tell your CPA the amount of the loan and exact date you got the money.

As discussed in prior emails the rules surrounding the 2020 Employee Retention Credit (ERC) have changed.  This is a complicated program and only a few of our clients will qualify for the 2020 ERC.   That being said, we have a few clients who will be eligible for hundreds of thousands of dollars of ERC credits.  If you have any quarter in 2020 where your gross receipts (business revenue not counting PPP loans and EIDL advances) decreased by more than half please contact your CPA.  If your business was shut down for an extended period due to the Covid-19 lockdown and you paid your employees wages contact your CPA.

There is an expanded ERC for 2021 that will be easier to qualify for and is a much larger credit.  Our business clients really need to look at their 1 st  quarter 2021 gross receipts in early April.  You will qualify for a much larger Employer Retention Credit if either of the following is true for your business for Q1 2021:

Your Q1 2021 gross receipts are more than 20% less than your Q1  2019  gross receipts OR

Your Q4 2020 gross receipts are more than 20% less than your Q4 2019 gross receipts

You will qualify for the ERC for Q2 2021 if:

Your Q2 2021 gross receipts are more than 20% less than your Q2  2019  gross receipts OR

Your Q1 2021 gross receipts are more than 20% less than your Q4 2020 gross receipts

We are currently working on income taxes primarily; however, we are also looking at our clients as we do their income taxes to see if they qualify for the 2020 ERC.  Most of our clients do NOT qualify for the 2020 ERC; however, the few who do will get hundreds of thousands of dollars of credits.

Please watch your gross receipts in the first 2 quarters of 2021 and contact your CPA if you think you qualify for ERC 2021.  This credit can be as high as $7,000 per employee in both the 1 st  and 2 nd  quarters of 2021.  Currently the program ends June 30 th , 2021.   Businesses that qualify could get as much as $14,000 per employee just for the 1 st  two quarters of 2021.

If you know other business owners please feel free to forward this email to them and feel free to forward our prior emails to them.  There is a lot of help available for businesses due to Covid-19.

Mike Sylvester, CPA

The post February 9, 2021 Update appeared first on SBS CPA Group, Inc..

Share this Post!

By Mike Sylvester June 25, 2025
Summer has arrived in Fort Wayne, Indiana. Both the Internal Revenue Service and The Indiana Department of Revenue are sending more incorrect tax notices. Worse both have changed their notices to provide little, or any information, forcing us to reach out to them and talk to them to find out what their notice means. Both agencies are struggling due to budget cuts. We expect this to get worse over the next couple of years. We are happy to help you with tax notices; however, they currently take a long time to resolve, and we charge separately for resolving tax notices. The Internal Revenue Service is in complete disarray due to DOGE cuts and some reports show that the IRS may only answer 16% of phone calls they receive next tax season. Further, we are seeing it take the IRS years in some cases to respond to notices, and it now often takes them 6 to 12 months to process amended returns, old year returns, and returns for those who are deceased.  The tax agencies are much harder to deal with than they were five years ago; and we expect this to get worse due to budget cuts.
By Mike Sylvester June 25, 2025
SBS CPA Group implemented TaxDome this year. Our clients really like the easy-to-use portal, and more than half of our clients are using this platform. We expect that number to grow significantly. We like TaxDome and have received great feedback from our clients. A copy of your tax returns is in TaxDome. You can retrieve them yourself any time. If you need help please reach out to Nikkie Reyes at Admin@sbscpagroup.com or call her at 260-407-5000 and she can help you retrieve a copy of your tax returns from TaxDome or, if needed, she can get them to you in another way. If you have not opted into TaxDome, please opt in. Just email Nikkie or call her and she will help you opt in. If you are married and file a joint return both of you need to opt into TaxDome. Opting into TaxDome is not required for current clients next year. We really like TaxDome, and you will too. Please give it a chance. Mike Sylvester, CPA
By Mike Sylvester June 17, 2025
The Original Purpose of Social Security: A Three-Legged Stool Social Security is a cornerstone of the United States' social safety net. Many Americans depend on this program to fund their retirement. The most recent data available from the Social Security Administration highlights the program's critical role in retirement planning. Social Security benefits account for approximately 30% of the income for individuals ages 65 and older. Retirement income was envisioned as a three-legged stool consisting of pensions, personal savings, and Social Security, each contributing one-third. The program was never intended to serve as the primary source of retirement income. Many Lower-Income Retirees Rely Heavily On Social Security 51.8% of individuals ages 65 and older depend on Social Security for half or more of their income. 24.7% of people in this age group rely on it for 90% or more of their income. Statistics Regarding Which Retirees Depend On Social Security The extent of reliance varies significantly by income quintile ; note the first quintile is the lowest 20% of taxable income and the fifth is the highest 20%: In the 1st quintile, 64.1% rely on Social Security for 90% or more of their income in retirement. In the 2nd quintile, 47.8% rely on Social Security for 90% or more of their income in retirement. All the way up to the 5th quintile, none of whom rely on Social Security for 90% or more of their income in retirement. Can Social Security Survive Beyond 2033? The program faces significant challenges. Without reform, Social Security will not be able to pay full benefits by 2033 . This presents a critical issue for Congress, as reductions in benefits are politically and socially untenable. Many changes are being made to the program via the Department of Government Efficiency. Further The Social Security Fairness Act was passed into law on January 5 and this brought more changes to the program. How Social Security Benefits Are Calculated Despite its importance, many people are unaware of how their Social Security benefits are calculated. Since the Social Security Administration ceased mailing statements in 2011, individuals must proactively set up an online account to access this information. The benefit formula is intentionally progressive, favoring lower-income earners by replacing a higher percentage of their income. For higher-income earners, Social Security becomes less significant as a percentage of their total retirement income. Terminology For Calculating Your Social Security Benefit 1. Credits: To qualify, individuals must earn 40 credits. In 2025, one credit is earned for every $1,810 in covered earnings (most often wages), with up to four credits given annually. 2. Average Indexed Monthly Earnings: The AIME figure is based on a worker's 35 highest-earning years, adjusted for inflation. If fewer than 35 years of earnings exist, zeros are averaged in. 3. Primary Insurance Amount: This is the monthly benefit a person receives at full retirement age. PIA is calculated using a formula adjusted annually for inflation. 2025 Social Security Payout Example: How The Formula Works Bend points are critical to the calculation and can be used to ensure you draw as much as possible in retirement. For a retiree with an AIME of $7,391 (This is annual wages of $88,692 in 2025 dollars): • 90% of the first $1,226 = $1,103.40 • 32% of the amount between $1,226 and $7,391 = $1,972.80. • Total PIA = $3,076.20 (before Medicare premiums). Strategies To Maximize Your Social Security Benefits To optimize benefits: • Aim for an AIME of at least $1,226, as the first tier yields a 90% replacement rate. • Understand that amounts above $7,391 are replaced at only 15%. Reviewing your lifetime earnings is crucial to ensure accuracy. Errors are far easier to correct early on than later on, when reconstructing decades-old income records may be challenging. Will Your Social Security Be Taxed? What Retirees Should Know Since 1983, up to 85% of Social Security income has been subject to federal taxes, depending on other income sources. This makes the program more progressive but also adds complexity to retirement planning. Consider discussing this with your tax professional and financial planner. When Should You Start Collecting Social Security? When to begin drawing Social Security benefits is a critical decision, particularly for married couples. Meeting with a qualified financial planner may be appropriate. Starting benefits early results in reduced monthly payments, while delaying up to age 70 increases them. Careful analysis and planning are essential to maximize lifelong benefits. Final Thoughts: Why Understanding Social Security Matters More Than Ever Social Security is a vital program for most Americans. Understanding its mechanics and planning effectively can significantly impact your retirement security and should be carefully considered before retirement. I do some consulting on this topic and if you want to hire me to do some Social Security planning please send me an email at Mike@sbscpagroup.com . Mike Sylvester, CPA
February 1, 2025
Tax Season hours at SBS CPA Group (Feb 2 nd -April 15 th ) Monday thru Friday 8:30am to 6:00pm Saturday 9:00am to 4:00pm
January 31, 2025
Tax season is here! We’re ready to start filing returns and need your documents all at once . Please provide: Your completed tax planner All source documents How to Send Your Documents Please choose one method: ✅ TaxDome – Upload all documents, name them , and click “done uploading” so we know you're finished. ✅ Drop off – Bring them to our office. ✅ Mail – Send them to our office. ✅ Email – Send everything to your CPA. Why Use TaxDome? If you activate your TaxDome account, you can: ✔️ Download copies of your tax returns ✔️ Upload documents easily ✔️ Sign returns electronically (if both spouses have emails on file) Important: TaxDome emails come from notifications@taxdome.com . If you didn’t get an invitation, check your spam folder. Still no email? Contact Nikkie Reyes at admin@sbscpagroup.com or call 260-407-5000 . We look forward to another great tax season!  SBS CPA Group Team
January 26, 2025
Starting in 2024, members of qualifying health care sharing ministries will be able to deduct their health care sharing expenses on their Indiana tax returns. Qualified health care sharing expenses are defined as the amount paid by a qualified individual for membership in a health care sharing ministry. You must be a resident of Indiana and have been a member of a health care sharing ministry for at least a month during the year to receive the deduction. But what is a health care sharing ministry? A health care sharing ministry is a type of nonprofit organization where members share healthcare expenses based on mutual faith and commitment. It is not insurance-members help cover each other's medical costs. While they can be quite beneficial, they also have drawbacks. If you are considering switching to a health care ministry, do your research to decide if it is right for you.  Let your tax preparer know if you are a member of a health care sharing ministry. Keep track of your qualified health care sharing ministry expenses and make sure you give them to your tax preparer, along with all of your other documents, at tax time. Jennifer Thonert, CPA
January 25, 2025
If you are an active member of the military, get ready to pay less state income tax to Indiana. Starting in 2024, Indiana will no longer tax any active-duty military pay. In prior years, Indiana would allow up to $5,000 of active military pay to be non-taxable, but a new law has passed making the entire amount exempt for those that qualify. To qualify, you must be a resident. To make sure you are considered an Indiana resident, confirm the following to be true: 1) Indiana is listed as your “home of record” on your military documents. 2) A DD Form 2058 is on file saying Indiana is your legal residence. 3) Your permanent address with the military is an Indiana address. 4) You have a current Indiana driver’s license. 5) You are registered to vote in Indiana. 6) You file an Indiana tax return. 7) You have ties to Indiana, such as a bank account. Once you determine that you are a resident, the next step is to file an Indiana tax return. Even if it is the only income you have, you must still file the return in order to claim the exemption. You do not have to attach proof to the return that you have active-duty status, but you are required to substantiate it if it ever gets called into question. Keeping a copy of your orders is advised. Also, make sure at tax time that your tax preparer knows you qualify for this exemption. Jennifer Thonert, CPA
January 24, 2025
Are you someone, or do you have an employee, who is not from Indiana but works here for short periods? Beginning in tax year 2024, Indiana has an income tax exemption for some nonresident employees. If they work in the state for 30 days or less, the state of Indiana will not collect income taxes on their wages. Employers do not need to withhold state income tax from these employees. However, it is only a state exemption-not a local one-so local income taxes will still need to be withheld, if applicable. In order for the nonresident to qualify for the exemption, the following circumstances must be met: 1) They must have been a nonresident for the entire year. 2) They must have worked in Indiana for 30 days or less. A workday counts as an Indiana workday if more than 50% of the hours that were worked that day were in Indiana (transit time does not count in the calculation). 3) They must not have the following professions: professional athlete, professional entertainer, or public figure that gets paid per event. These professionals will still be subject to income tax no matter how many days they work. Anyone who is exempted does not have to file an Indiana tax return, unless their employer withheld Indiana income tax. In that case, a tax return will need to be filed to get a refund. If the employee happens to cross the 30-day threshold, their entire year’s Indiana income then becomes taxable to the state, unless they are residents of a reciprocal state. Indiana has reciprocal tax agreements with six states: Illinois, Kentucky, Michigan, Ohio, Pennsylvania, and Wisconsin. People who live in those states but work in Indiana already do not pay Indiana state taxes, so the new rule does not affect them.  Make sure to let your tax preparer know if you are, or have, one of these employees.
January 16, 2025
In 2023, Indiana introduced the Attainable Homeownership Tax Credit, which is designed to encourage contributions to affordable housing initiatives in Indiana. If you are looking to contribute to a meaningful cause, while benefiting from a significant tax incentive, this credit could be a fantastic opportunity. Currently, the only organization approved by the Indiana Economic Development Corporation (IEDC) to receive credit-eligible contributions is Habitat for Humanity of Indiana (including its local affiliates). The tax credit equals 50% of your contributions to Habitat Indiana, with a maximum credit of $10,000 per taxpayer per year. For married couples filing jointly, the maximum credit is also $10,000 per couple. Contributions can include cash, checks, stocks, and bonds. These contributions are valued at their fair market value at the time of the donation. The value of services, labor, or reduced-cost equipment is not eligible for the credit. To claim the credit, Habitat Indiana will provide a certifying number (PIN) that must be listed on Schedule IN-OCC. The program has an annual statewide credit cap of $4 million per fiscal year (July 1 – June 30). Credits are allocated on a first-come, first-served basis, based on when returns are received. If the annual cap is reached, any credits claimed afterward will be permanently disallowed, though carryovers will remain valid. Credits are limited to your Indiana state tax liability after applying other nonrefundable credits. For example, if you qualify for a $10,000 credit but your state tax liability is only $8,000, the unused $2,000 can be carried forward to future years. This tax credit is a win-win: it supports Habitat Indiana’s mission to provide affordable housing while offering a substantial incentive for taxpayers. Whether you are an individual, a couple, or a business, contributing to this program can make a meaningful impact on Indiana communities. If you are considering contributing to Habitat for Humanity of Indiana, ensure your donation meets the eligibility criteria and plan to claim the credit promptly to avoid missing out due to the annual cap. For further questions about the Attainable Homeownership Tax Credit, feel free to reach out to the partner in charge of your account. Thank you for reading!  Nathan Skinner
December 20, 2024
SBS CPA Group will be closed Dec. 24th thru Dec. 26th, allowing our staff time to spend with family. We will also be closed New Year Day, Jan. 1st.
More Posts