Message Regarding Individual Tax Returns and Brief Update on More PPP Loans
We sent out an important email back on December 29th, 2020. We attached our tax planner and client letter. We believe this went into the junk email of some of our clients. This was a long and detailed email concerning tax law changes made on December 27th, 2020. We suggest you go back and retrieve this email and read it; further, we recommend you white list us so that you get all future emails.
This email is split into two different sections. The first section is for individual clients and this section is by far the larger section of this email. The second section is for business owners.
When should you drop off your tax return information to us?
We hope you drop everything off as soon as you have everything we need to prepare your taxes. Please do not send us anything until you have everything we need. You can drop everything off to our office (we have a 24 hour drop box), you can mail it to us, or your can send your CPA an email and they can send you a link so you can send us information via our secure web portal.
There were two rounds of Stimulus payments and the most recent round came out in January of 2021. We must know exactly how much you received in Stimulus payments for each round. The IRS says they have sent each of you a Notice 1444 for the 1st round payment and a Notice 1444A for the 2nd round payment. Please be very sure you give us these notices and if you do not have them that you make it very clear on your tax planner exactly how much you received in both 1st and 2nd round Stimulus payments.
If you did not receive the amount of round 1 and round 2 Stimulus you were supposed to please make that very clear on your tax planner. If you returned a stimulus payment to the IRS due to a death please make sure we know that as well.
What if I did not get enough in Stimulus Payments?
If the IRS did not pay you enough in Stimulus payments this will be handled on the 2020 income tax returns we handle for you.
Many of our clients received unemployment payments in 2020. This is taxable income. If you received unemployment income you must give us your 1099G form. You can print this off from your Indiana Department of Workforce Development Uplink account or they will mail you one on or before January 31st, 2021.
When will the IRS process your income tax returns?
The IRS is not going to start processing income tax returns until February 12th, 2021. This is by far the latest the IRS has started processing tax returns in modern history. We can and need to electronically file a lot of returns before then; however, the IRS is not going to start processing them until February 12th, 2021. Please drop everything off as soon as you have everything.
Will you get a tax refund in 2021?
We will not know until we do your income taxes; however, we are sure that fewer of our clients will get refunds this year for two reasons. The first and largest reason is many of our clients collected unemployment and unemployment is taxable income. The second reason is a lot of our clients either did Roth Conversions or pulled extra money out of retirement. We expect more of our clients to owe than normal.
If you are due a refund when will you get it?
The IRS is telling people that refunds will be much slower this year since the IRS is not going to start processing returns until February 12th, 2021. This year it is more important than ever that you get your refunds through direct deposit; remember if you want direct deposit you must fill out your bank information on our tax planner or give us a voided check when you drop everything off. You will get your refunds faster through direct deposit and I am sure most of us have experienced mail delays over the last few weeks.
When you pick up your returns ask whoever gives them to you when they expect you to get your refunds. If you do not get your refund when expected the only way you can determine when you should get the refund is for you to go to the IRS website and use the “Where is my Payment” tool. To use this tool you need:
The first Social Security number listed on the return (Taxpayer).
Your filing status, for example Married Filing Joint, Single, Head of Household, Married Filing Separately.
Your exact refund amount.
You should not use this tool unless a week has passed since you signed all of our forms. You can only call the IRS if it is 21 days after we e-filed your returns and you should expect very long delays if you call the IRS. We suggest you use the “Where is my Payment” tool on the IRS website.
90% of taxpayers receive their refunds within 21 days of e-filing their returns if they use direct deposit. If you have your refunds mailed to you most of you should expect the IRS to put the checks in the mail within 28 days of us e-filing your returns.
Very few people will get IRS refunds even through direct deposit before March 5th, 2021. If you get everything to us early you may be able to get your refund on February 27th, 2021 if you use direct deposit.
PPP Loans Round 1.
If you applied for one of these loans please make very sure your CPA knows that you received one and exactly when it was forgiven and how much was forgiven.
PPP Loans Round 2.
The second round of PPP loans opens on Tuesday January 19th, 2021. This loan is intended for struggling businesses and we discussed the qualifications in detail in the December 29th email.
If you need more information about this please call your CPA or better yet send them an email.
Covid-19 sick pay.
If you or an employee is sick with Covid-19 or self-quarantining with Covid-19 please give your CPA a call or better yet send them an email.
Mike Sylvester, CPA, MBA