Tax & Accounting Update
Targeted EIDL Advance
Small Business Administration has recently come out with the program where qualifying businesses that are located in a low-income area could apply for an additional up to $15,000 in grants. This grant would not have to be paid back. For more details about the program and if your business qualifies, please click on the link below.
Estimated Payment Dates
The new bill has been proposed where federal estimated tax payment deadline would be due 15th day after the end of each quarter (April 15, July 15, October 15, and January 15). Currently, estimated payments are due at uneven intervals April 15, June 15, September 15, and December 15. The new schedule could make it easier to remember and it will affect individuals, small businesses, estates, and trust. For more information client on the link below.
Tax Topics Simplified
Child Tax Credit Explained
Currently (for 2020) child tax credit is $2,000 per qualifying child under age 16 and $500 for qualifying child over age of 16. Currently, this is nonrefundable credit which means, if you have $3,000 in tax liability your child tax credit can offset only that $3,000. Even though you have 2 children and each of them qualify as qualifying child (2 x $2,000 = $4,000), you will NOT be getting $1,000 back in refund ($4,000 CTC – $3,000 tax liability= $1,000 nonrefundable credit).
The Government has decided for 2021 to give child tax credit in the amount of $3,000 per qualifying child between age of 6 and 17 and $3,600 per qualifying child under age of 6. You have an option to get this in installments or you can choose to get this credit whenever you file your 2021 tax return. It is almost like another stimulus check that you would be getting in installments but this time it is only on your child. Also, for 2021 the IRS is making this credit to be refundable credit. If you have tax liability of $3,000 and CTC is $4,000 you will be getting $1,000 as refund.
I have recently been asked from several clients if they should take advance child tax credit payments or if they should wait till they file their 2021 tax return. I would advise that if you are not in an urgent need for money, wait till you file your tax return. Please keep in mind that If you take money now you will not have this credit whenever you file your 2021 tax return.
News you can use
6.1% Increase in Social Security Payments is on its way
Seniors and other social security beneficiaries may be getting the biggest increase in social security payments in almost 40 years coming up in January 2022. This increase of possibly 6.1% is a result of surging inflation that the economy has been going through. The more precise percentages of increase will be announced later this year. For more information click on the link below.