ACA Penalty Abatement for Prior Year Tax returns
President Trump signed Executive Order 13765 to remove the penalty for not having ACA qualified health insurance. If you paid a “shared responsibility penalty” for prior tax years for not having qualified health insurance, you can file Form 843 to request a refund of the penalty.
Required Minimum Distributions aka RMDs
Are suspended for 2020 tax year. This was part of the CARES act. Taxpayers are not required to make RMDs for 2020.
IRS Campuses around the country are backlogged
IRS campuses were shut down for three months due to COVID. There is an estimated 10 million correspondence backlog, sitting in semi-trucks at the various IRS Centers. Response to taxpayers has and could continue to take 6-12 months. Additionally, checks for payments of 2019 taxes, or 2020 estimated taxes are taking weeks or even months to be cashed. CP14 collection letters are going to taxpayers who actually paid their taxes, but IRS hasn’t had time to cash the checks yet.
Returning Economic Impact Payments ?
It is estimated that 3 million people got Stimulus Payments that were incorrect or who were not eligible for the $1200, $2400 or $500 for dependents. Some people got double payments, or payments went to deceased people, or payments to children who were not eligible for the payments because they didn’t provide more than half their own support. Will these over payments have to be returned? We don’t know yet. There is no official guidance yet. What we do know is that the DRAFT 1040 tax return for 2020 has a Line Item to reconcile the EIPs. What we don’t have, is the form instructions to guide through the reconciliation process. All that said, it is likely that many of the incorrect EIP payments may not have to be returned. We won’t know till next tax season.
Gain on Sale of Main Home might be taxable?
Two factors determine if part of the gain of your principal residence might be taxable. One, if you have ever taken business use of home depreciation, the accumulated depreciation is recaptured as taxable gain within certain limitations. Two, if the home had periods of “Nonqualified use” any time after January 1, 2009. Nonqualified Use could be, you rented the home out for a period of time or didn’t use the home as your main home for a taxpayer or spouse. Or, you lived in another home but not your main home. If there was Nonqualified Use, a portion of the gain on your main home could be taxable.
PPP Loan Forgiveness Processing to start soon
Beginning September 26th. SBA Form 3508 or 3508-EZ are the Loan Forgiveness Application forms. Information about these forms is at the SBA and IRS websites.
The $600 per week unemployment money during COVID
Is fully taxable. If taxpayers did not have federal or state income tax withholding taken from this income, there could be a big surprise when 2020 tax returns are filed. This COVID unemployment comp is not tax free nor is it forgivable income.
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