agsdi-bullhorn

BIG ISSUES

IRS: Know your COVID-Related Tax Options (Employees & Employers)

Jump to the Information Most Helpful For You

Individuals & Famlies

Defer Your Social Security

The IRS issued guidelines for the order President Trump signed August 8 that allows certain employees to not pay in the 6.2% tax payment for social security. The deferral is effective September 1 through Dec 31 of 2020. The maximum amount you can defer is $2232.

EMPLOYERS REMEMBER: there is already an employer-payroll tax deferral in place under the CARES act.

  • Employees must opt-in for this deferral with employees.
  • Qualification: employees earning less than $4,000 during a bi-weekly pay period
  • Employees will have to pay these deferred taxes eventually. Be prepared to pay the 6.2% of taxes in the first quarter of 2021 – i.e. January 1, 2021, and ending on April 30, 2021.

You must opt-in to defer your taxes. If you want to use this deferral, tell your employer not to withdraw your portion of social security from your paycheck.

 

Receiving Unemployment: Be Prepared to Pay Taxes

Unemployment compensation is taxable. You can have taxes withheld from this compensation to avoid owing taxes when you file your income tax return next year.

Federal law allows recipients to choose a flat 10% withholding from these benefits to cover part or all their tax liability. To do this, recipients should complete Form W-4V, Voluntary Withholding Request, and give it to the agency paying their benefits. Don’t send the form to the IRS. If the paying agency has its own withholding request form, use it instead.

Recipients who don’t choose voluntary withholding, or if the withholding isn’t enough, can make quarterly estimated tax payments. The payment for the first two quarters of 2020 was due on July 15. Third quarter is due September 15, 2020 and fourth quarter on January 15, 2021. Taxpayers can visit IRS.gov to view all payment options.

Other Tax Options

Economic Impact Payments for US Citizens, permanent residents, or qualifying resident aliens, even if you don’t normally file taxes may qualify for a $1,200 plus $500 per child. HURRY: Sign Up is by October 15.

Tax Law Changes Extended or Changed

Impacted are:

  • Mortgage Insurance Premiums
  • Medical Expenses
  • Tuition
  • Energy Efficient Homes
  • Work Opportunity Credit
  • Earned Income
  • IRA Contribution Maximum Age
  • Increased age for mandatory distributions
  • Expansion of section 529 plans

Free 2020 Tax Filing

File for free through IRS.gov/freefile.

If you earned less than $69,000 or less in 2019, you can use a Free File Provider to have your taxes done.

 

For Businesses & Tax Exempt Entities

What’s Available

  • IRS Asks for Help Reaching People who are eligible for Employee Retention Credit but who don’t normally file a return BY OCTOBER 15. Tools >>
  • Employee Retention Credits
  • COVID-Related Paid Leave
  • NOL Carrybacks of C-Corporations
  • Tax Exempt NOL Carrybacks
  • Payroll Support for Air Carriers and Contractors

Health Plans and Retirement Plans

  • Relief for retirement plans and IRAS
  • High-deductible health plans
  • Temporary relief for retirement plan participants signing remotely
  • Filing and Payment Deadlines

IRS Approves Digital Signatures For:

  • Form 3115, Application for Change in Accounting Method
  • Form 8832, Entity Classification Election
  • Form 8802, Application for U.S. Residency Certification
  • Form 1066, U.S. Income Tax Return for Real Estate Mortgage Investment Conduit
  • Form 1120-RIC, U.S. Income Tax Return for Regulated Investment Companies
  • Form 1120-C, U.S. Income Tax Return for Cooperative Associations
  • Form 1120-REIT, U.S. Income Tax Return for Real Estate Investment Trusts
  • Form 1120-L, U.S. Life Insurance Company Income Tax Return
  • Form 1120-PC, U.S. Property and Casualty Insurance Company Income Tax Return
  • Form 8453 series, Form 8878 series, and Form 8879 series regarding IRS e-file Signature Authorization Forms
  • Form 706, U.S. Estate (and Generation-Skipping Transfer) Tax Return;
  • Form 706-NA, U.S. Estate (and Generation-Skipping Transfer) Tax Return;
  • Form 709, U.S. Gift (and Generation-Skipping Transfer) Tax Return;
  • Form 1120-ND, Return for Nuclear Decommissioning Funds and Certain Related Persons;
  • Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts; and
  • Form 3520-A, Annual Information Return of Foreign Trust With a U.S. Owner.

Post expires at 7:10pm on Saturday May 1st, 2021

Next

Submit a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Share This