Manuel DaRosa, CPA
Accounting and Tax firm with offices in Taunton, Falmouth and Mansfield, MA
NEWSLETTERS

The agency will start accepting returns on Feb. 12, about two weeks later than usual. But you still have to file by April 15.

The start of tax filing season is postponed by a couple of weeks this year, but the government says it expects to pay most refunds reasonably quickly.

Typically, the Internal Revenue Service begins accepting and processing individual income tax returns in late January. But the agency has pushed back the start of filing to Feb. 12 for returns for the tax year 2020.

The shift was needed, the I.R.S. said, to allow the agency to update and test its systems to reflect late-year tax changes approved by Congress, including a second round of economic stimulus payments.

“This start date will ensure that people get their needed tax refunds quickly while also making sure they receive any remaining stimulus payments they are eligible for as quickly as possible,” the I.R.S. commissioner, Charles P. Rettig, said in prepared remarks.

This is shaping up to be another challenging tax season for the I.R.S., which has struggled in recent years with reduced budgets that have forced it to make do with fewer workers and outdated computer systems. During the pandemic, it has also had the extra work of distributing stimulus checks.

Because of the coronavirus, the I.R.S. was delayed in processing some returns, particularly those filed on paper, according to the Taxpayer Advocate Service, the arm of the I.R.S. that speaks for filers. Though most people file returns electronically, about 16 million paper returns were filed last year. As of Dec. 25, there were still nearly seven million unprocessed individual returns from tax year 2019, according to the I.R.S. website.

Even so, the I.R.S. said, most taxpayers due a refund for the 2020 tax year will get it within three weeks if they file electronically and have the money deposited directly into their bank account. The average refund in recent years has been more than $2,500. Many families use refunds to pay bills or use it as a kind of forced savings plan.

The change in the start of filing season raised concerns about recipients of antipoverty tax credits, like the earned-income tax credit and the child tax credit, who typically have lower incomes and file early to get refunds quickly. But people claiming the credit can expect to receive their refunds beginning in early March, which is typical, as long as there are no issues with their tax returns, the I.R.S. said.

“This would be the same experience for taxpayers if the filing season opened in late January,” the agency said. By law, the agency cannot issue refunds to people claiming the credit until after mid-February, as part of anti-fraud efforts.

Tax Alerts
March 03, 2021
Tax Briefing(s)

COVID-19 GRANTS FOR MASSACHUSETTS SMALL BUSINESSES

Grants Overview

The Commonwealth of Massachusetts has made $50.8 million in grants available to support small businesses, microenterprises, and their employees, families and communities. Massachusetts Growth Capital Corporation (MGCC) will be administering these funds to businesses experiencing economic hardship and a loss of income due to the COVID-19 pandemic.

These funds were appropriated through the Commonwealth’s Supplemental Budget for Fiscal Year 2021 (FY21) as well as the CARES Act of 2020 and are divided into two programs. 

Grant funding is intended to help businesses adversely impacted by the pandemic. Preference will be given to small businesses whose owners are women, minorities, veterans, members of other underrepresented groups, who are focused on serving the Gateway Cities of Massachusetts, and those most negatively impacted by the COVID-19 pandemic. Preference will also be given to applicants that have not been able to receive aid from other federal programs related to COVID-19.

 

Timeline: Application will be open for 3 weeks

10/22/2020 at 12:00 PM – Application opens.

11/12/2020 at 12:00 PM – Application closes.

 

Applicant Eligibility:

Each program encompasses its own eligibility criteria, set forth below. Applicants must review the information to determine which program to proceed with applying.


The IRS has released new Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals. The form allows eligible self-employed individuals to calculate the amount to claim for qualified sick and family leave tax credits under the Families First Coronavirus Response Act (FFCRA) ( P.L. 116-127). They can claim the credits on their 2020 Form 1040 for leave taken between April 1, 2020, and December 31, 2020, and on their 2021 Form 1040 for leave taken between January 1, 2021, and March 31, 2021.


The IRS is urging employers to take advantage of the newly-extended employee retention credit (ERC), which makes it easier for businesses that have chosen to keep their employees on the payroll despite challenges posed by COVID-19. The Taxpayer Certainty and Disaster Tax Relief Act of 2020 (Division EE of P.L. 116-260), which was enacted December 27, 2020, made a number of changes to the ERC previously made available under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) ( P.L. 116-136), including modifying and extending the ERC, for six months through June 30, 2021.


The IRS has announced that lenders who had filed or furnished Form 1099-MISC, Miscellaneous Information, to a borrower, reporting certain payments on loans subsidized by the Administrator of the U.S. Small Business Administration (Administrator) as income of the borrower, must file and furnish corrected Forms 1099-MISC that exclude these subsidized loan payments.


The IRS is providing a safe harbor for eligible educators to deduct certain unreimbursed COVID-19-related expenses. The safe harbor applies to expenses for personal protective equipment, disinfectant, and other supplies used for the prevention of the spread of COVID-19 in the classroom, paid or incurred after March 12, 2020. All amounts remain subject to the $250 educator expense deduction limitation.


With some areas seeing mail delays, the IRS has reminded taxpayers to double-check before filing a tax return to make sure they have all their tax documents, including Form W-2, Wage and Tax Statement, and Forms 1099. Many of these forms may be available online. However, when other options are not available, taxpayers who have not received a W-2 or Form 1099, or who received an incorrect W-2 or 1099, should contact the employer, payer, or issuing agency directly to request the documents before filing their 2020 tax returns.


The IRS has highlighted how corporations may qualify for the new 100-percent limit for disaster relief contributions, and has offered a temporary waiver of the recordkeeping requirement for corporations otherwise qualifying for the increased limit. The Taxpayer Certainty and Disaster Tax Relief Act of 2020 ( P.L. 116-260) temporarily increased the limit, to up to 100 percent of a corporation’s taxable income, for contributions paid in cash for relief efforts in qualified disaster areas.


The IRS has announced that tax professionals can use a new online tool to upload authorization forms with either electronic or handwritten signatures. The new Submit Forms 2848 and 8821 Online tool is now available at the IRS.gov/TaxPros page. The new tool is part of the IRS's efforts to develop remote transaction options that help tax practitioners and their individual and business clients reduce face-to-face contact.


The IRS has urged taxpayers to e-file their returns and use direct deposit to ensure filing accurate tax returns and expedite their tax refunds to avoid a variety of pandemic-related issues. The filing season opened on February 12, 2021, and taxpayers have until April 15 to file their 2020 tax return and pay any tax owed.


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