IRS processing delays for April electronic debits (04-21-21)
The IRS has stated that they are behind in withdrawing funds for first quarter estimated tax and extension payments made through auto withdrawals on or around April 15. This is why many practitioners have been notified by their clients that April payments have not been withdrawn from their accounts though the payments were properly scheduled. According to the IRS, this is not a tax software issue. It is the IRS who has been delayed in making the withdrawals from taxpayers’ accounts, and they are making the issue a priority. The problem is not just estimated taxes but all auto withdrawals made on or around April 15.
According to the IRS, there will not be any penalties for these late withdrawals, and no action is required by the taxpayers.
If you do not recieve direct deposit from the IRS, see link to enter in bank account number and routing number. The site is busy today, but keep trying. https://www.irs.gov/coronavirus/get-my-payment
IRS and CA extends filing deadline to May 17
Internal Revenue Service announced today that the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021. The IRS will be providing formal guidance in the coming days.
American Rescue Plan Act of 2021
Exemption for 2020 unemployment benefits
ARPA provides that if the modified AGI of a taxpayer for 2020 is less than $150,000, the taxpayer's 2020 gross income will exclude up to $10,200 of unemployment benefits ($10,200 each for a married couple). We are waiting for guidance from the IRS on how to report the exclusion. If you qualify for the exemption, your return will be delayed until we receive the update.
In a posting to its website, the IRS asked individuals who received unemployment benefits in 2020 and have already filed their 2020 tax return, not to file an amended return until the IRS issues additional guidance.
IRS begins sending third round of economic impact payments
The first batch of payments were sent by direct deposit this past weekend. Additional batches of payments will be sent in the coming weeks by direct deposit and through the mail as a check or debit card. The vast majority of these payments will be by direct deposit.
No action is needed by most taxpayers. The payments will be made automatically and, in many cases, people will receive them in the same way they received the first and second round of EIPs in 2020 (EIP 1 and EIP 2; for details of EIP 2). People can check the Get My Payment tool to see the payment status of their EIP3.
The IRS will automatically calculate the amount of EIP 3. In general, most people will get $1,400 for themselves and $1,400 for each of their qualifying dependents claimed on their tax return.
The Fact Sheet says that the IRS will use available information to determine eligibility for, and amount of, EIP 3. The IRS will look first to the individual or couple's:
• 2020 tax return.
• 2019 tax return if the 2020 return has not been submitted or processed yet.
Some people won't be eligible for EIP 3 even if they received an EIP 1 or EIP 2. EIP 3 will begin to be reduced for individuals with adjusted gross income (AGI) of $75,000 or above ($150,000 for married filing jointly.) The reduced payments end at AGI of $80,000 for individuals ($160,000 for married filing jointly); people with AGI above these levels are ineligible for a payment. EIP 3s for heads of household have different AGI limits.
ARPA provides that an EIP 3 cannot be offset to pay various past-due federal debts or back taxes.
EIP 3 differs from EIP 1 and EIP 2. EIP 3 differs from EIP 1 and EIP 2 in several respects:
•EIP 3 will be larger for most people. Most families will get $1,400 per person, including all dependents claimed on their tax return. Typically, this means a single person with no dependents will get $1,400, while a family of four (married couple with two dependents) will get $5,600.
• Unlike the first two payments, EIP 3 is not restricted to children under 17. Eligible families will get a payment based on all of their qualifying dependents claimed on their return, including older relatives like college students, adults with disabilities, parents and grandparents.
California Delays PPP Guidance
California has yet to make a final determination on whether to conform state tax code to current federal tax rules related to the treatment of expenses associated with forgiven Paycheck Protection Program (PPP) loans. Under AB 80 $150,000 of PPP loan forgiveness would be non-taxable. This has delayed the filing of most of our business clients. Please contact your state representatives to vote ASAP. http://findyourrep.
Derek, Lacy and Becky
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Rieber, Fohs & Associates is a full-service accounting firm serving clients throughout the Santa Cruz and San Francisco Bay Area, dedicated to providing our clients with professional, personalized services and guidance in a wide range of financial and business needs.
On this website, you will find information about Rieber, Fohs & Associates, including our list of services. We have also provided you with online resources to assist in the tax process and financial decision-making. These tools include downloadable tax forms and publications, financial calculators, news and links to other useful sites. Whether you are an individual or business in or around Santa Cruz, Rieber, Fohs & Associates has years of valuable experience assisting professionals with their accounting needs.
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