News & Tech Tips

Ohio Postpones Tax Filing Deadline to 5/17, Tax Conformity Passes

Kathleen Hargrove on March 25, 2021

OHIO TAX DEADLINE EXTENDED

 

Ohio Tax Commissioner Jeff McClain announced Wednesday that Ohio will be following the federal government and the IRS in extending the deadline to file and pay Ohio individual income and school district income taxes for tax year 2020.

 

The new deadline is May 17, an extension of approximately one month from the original deadline of April 15. The extension is intended to provide some relief to individuals impacted by the public safety measures adopted to contain the spread of the coronavirus.

 

As with the IRS extension, Ohio will be waiving penalty on tax due payments made during the extension. Also, as part of legislation passed addressing the continuing emergency, there will be no interest charges on payments made during the extension.

 

The filing extension, and waiver of penalty and interest, will be available to those filing Ohio individual income tax, and the school district income tax for tax year 2020.

 

In addition, the city of Columbus has also announced that they have extended their deadline to May 17 to align with the Federal and Ohio deadlines. It is expected that many cities and local jurisdictions will follow suit.

 

Please note that the first quarter estimated income tax payment for tax year 2021 is not impacted by this extension and must still be made by April 15.

 

 

TAX CONFORMITY PASSES

 

The final version of Senate Bill 18 has been passed by the Ohio House and Senate and now awaits Governor DeWine’s signature. It would conform Ohio with recent changes to federal tax law, including deductibility of expenses from the Paycheck Protection Program and excluding $10,200 in unemployment compensation from income tax.

 

Ohio-specific provisions in S.B. 18 will exclude the 2020 Ohio Bureau of Workers’ Compensation refunds/dividends from CAT; reduce pass-through entity withholding rates and exclude PPP second-draw loans from CAT.

 

The Ohio Legislative Service Commission published this analysis of the bill.

 

Because S.B. 18 is emergency legislation, the changes will be enacted into law immediately upon the Governor’s signature.

 

 

SOURCES: Ohio Department of Taxation, Ohio Society of CPAs

Considering an SBA Loan? Act Now.

Kathleen Hargrove on March 22, 2021

If you have been considering an SBA loan (other than PPP) for your business, this is an ideal time to apply.

 

We have compiled some key SBA loan related provisions included in the Economic Aid Act to further assist you with making this decision:

 

 

Extension of the Debt Relief Program established under the CARES Act

 

  • All borrowers with qualifying loans approved by the SBA prior to the CARES Act will receive an additional three months of P&I, starting in February 2021. Going forward, those payments will be capped at $9,000 per borrower per month.

 

  • After the three-month period described above, borrowers considered to be underserved—namely the smallest or hardest-hit by the pandemic—will receive an additional five months of P&I payments, also capped at $9,000 per borrower per month. They include:

 

  • Borrowers with SBA microloans or 7(a) Community Advantage loans

 

  • Borrowers with any 7(a) or 504 loan in the hardest-hit sectors, as measured by the severity of sector-wide job losses since the start of the pandemic. They include food service and accommodation; arts, entertainment and recreation; education; and laundry and personal care services.

 

 

  • SBA payments of P&I on the first 6 months of newly approved loans will resume for all loans approved between February 1 and September 30, 2021, also capped at $9,000 per month.

 

 

Modifications to 7(a) Loan Programs

 

  • Increases to 90 percent the loan guarantee amount on 7(a) loans, including for Community Advantage loans, until October 1, 2021.

 

  • Increases the Express Loan amount from $350,000 to $1 million on January 1, 2021, and then reverts permanently to a lower amount of $500,000 on October 1, 2021.

 

  • The Express Loan guaranty amount for loans of $350,000 and less is temporarily increased from 50 percent to 75 percent, and for loans above $350,000 the guarantee remains at 50 percent. On October 1, 2021, the guarantee reverts to 50 percent for all Express Loans.

 

 

Temporary Fee Reductions

 

  • Waives lender and borrower fees for both the 7(a) and 504 loan programs.

 

 

 

For further assistance with submitting an application or if you have any questions, please work with your Whalen advisor.

IRS Extends Filing and Payment Deadline

Kathleen Hargrove on March 18, 2021

The Treasury Department and IRS announced Wednesday 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 states that they will be providing formal guidance in the coming days.

 

Individual taxpayers can also postpone federal income tax payments for the 2020 tax year due on April 15, 2021, to May 17, 2021, without penalties and interest, regardless of the amount owed. This postponement applies to individual taxpayers, including individuals who pay self-employment tax. Penalties, interest and additions to tax will begin to accrue on any remaining unpaid balances as of May 17, 2021. Individual taxpayers will automatically avoid interest and penalties on the taxes paid by May 17.

 

Individual taxpayers do not need to file any forms or call the IRS to qualify for this automatic federal tax filing and payment relief.

 

If you need additional time to file beyond the May 17 deadline, please work with your Whalen advisor to request a filing extension until October 15.

 

The IRS urges taxpayers who are due a refund to file as soon as possible. Most tax refunds associated with e-filed returns are issued within 21 days.

 

This relief does not apply to estimated tax payments that are due on April 15, 2021. These payments are still due on April 15. Taxes must be paid as taxpayers earn or receive income during the year, either through withholding or estimated tax payments.

 

 

State Tax Returns:

 

The federal tax filing deadline postponement to May 17, 2021, only applies to individual federal income returns and tax (including tax on self-employment income) payments otherwise due April 15, 2021, not state tax payments or deposits or payments of any other type of federal tax.

 

State filing and payment deadlines vary and are not always the same as the federal filing deadline.

 

Currently, the state of Ohio has not announced an extension and still lists their due date as April 15, 2021. We will keep you informed if Ohio and other states follow suit with this extension and notify you as that information becomes available.

 

 

For more information or further assistance with your filing, please contact your Whalen advisor.

 

 

SOURCE: IRS.gov

IRS Launches Tracking Tools

Kathleen Hargrove on March 16, 2021

As the latest round of stimulus payments have started hitting some bank accounts, The IRS has updated the “Get My Payment” tool on its website with further information on when to expect payments.

 

You can check the status of your payment here.

 

The third round of Economic Impact Payments will be based on a taxpayer’s latest processed tax return from either 2020 or 2019. That includes anyone who used the IRS non-filers tool last year, or submitted a special simplified tax return.

 

For those who received the first two stimulus checks but didn’t receive a payment via direct deposit, they will receive a check or a prepaid debit card. Social Security and other federal beneficiaries will generally receive this third payment the same way as their regular benefits. A payment date for this group is expected to be announced soon.

 

In addition, the “Where’s My Refund” page is also live on the IRS website.

 

You need the following information to track the status of your tax refund:

 

  • Social Security number or Individual Taxpayer Identification Number
  • Filing status (single, married or head of household)
  • Exact refund amount in whole dollars (can be found on your tax return)

 

The tool will show you one of three messages to explain your tax return status:

 

  • Received: The IRS now has your tax return and is working to process it.
  • Approved: The IRS has processed your return and confirmed the amount of your refund, if you’re owed one.
  • Sent: Your refund is now on its way to your bank through direct deposit, or as a paper check to your mailbox.

 

 

For more information or further assistance with your filing, please contact your Whalen advisor.

 

 

SOURCE: IRS

$1.9 Trillion Stimulus Bill Passed

Kathleen Hargrove on March 11, 2021

A $1.9 trillion U.S. coronavirus relief package was passed by the Senate on Saturday 3/6, and has now been signed by the House of Representatives as well.

Known as the American Rescue Plan Act, H.R. 1319, the bill will now be sent to President Biden’s desk to be signed into law. It is expected to be signed by the President ahead of the 3/14 expiration for the $300/week federal funds added to unemployment checks.

 

The Senate bill retains most of the tax provisions in the House bill, however, eligibility for the recovery rebate credits (to be paid to most taxpayers in advance as economic impact payments) would phase out more quickly than it did in the two previous rounds.

 

For single taxpayers, the phaseout will begin at an adjusted gross income (AGI) of $75,000 and the credit will be completely phased out for taxpayers with an AGI over $80,000.

 

For married taxpayers who file jointly, the phaseout will begin at an AGI of $150,000 and end at AGI of $160,000. And for heads of households, the phaseout will begin at an AGI of $112,500 and be complete at AGI of $120,000.

 

Under the House bill, the phaseout range was $25,000 for single taxpayers (i.e., from AGI of $75,000 to AGI of $100,000), $50,000 for joint filers, and $37,500 for heads of household.

 

The Senate bill also includes:

 

 

Extended Unemployment Benefits

 

The American Rescue Plan extends unemployment benefits of $300 a week through September 6, 2021. In addition, the first $10,200 in 2020 benefits is tax free for families making $150,000 or less.

 

It also provides a 100% subsidy of COBRA health insurance premiums so unemployed workers can remain on their employer healthcare plans through the end of September.

 

 

Expanded Child Tax Credit

 

The legislation calls for payments of $3,000 a year for each child ages 6 to 17, and $3,600 for each child under age 6 for couples who make $150,000 or less and single parents who make $112,500 or less. Payments would be sent by direct deposit on a monthly basis.

 

As written, the bill provides for one year of credit payments. The idea behind regular payments is to help families pay for ongoing costs instead of claiming a credit when they file their taxes. The credit is refundable, meaning everyone who qualifies will get it no matter their tax situation.

 

 

Continued Eviction and Foreclosure Moratoriums

 

The legislation includes $30 billion in emergency rental assistance and $10 billion for mortgage assistance.

 

 

Student Loan Forgiveness

 

While the plan does not include student loan forgiveness, it does include a provision that any student loan forgiveness passed between Dec. 30, 2020 and Jan. 1, 2026, will be tax free. Normally, loan forgiveness counts as taxable income.

 

 

Schools and Childcare Block Grants

 

The bill sets aside $130 billion for K-12 education. This money will be used to reduce class sizes, improve ventilation, purchase personal protective equipment, and fund other steps to help schools reopen safely.

 

 

Help for Businesses

 

A new program for restaurants and bars allocates $25 billion in pandemic assistance grants. The grants can provide up to $10 million per company with a limit of $5 million per physical location and used to cover payroll, rent, utilities and other expenses. The Paycheck Protection Program will receive an additional $7.25 billion and more non-profits will now be allowed to apply for forgivable loans to help cover payroll and other operating expenses.

 

 

State and Local Government

 

The American Rescue Plan includes $350 billion in aid to states, cities, tribal governments, and U.S. territories. These funds are designated to help replace lost tax revenue due to the pandemic.

 

 

Increased Food Aid

 

Includes $510 million for the FEMA Emergency Food and Shelter Program which will be used to provide overnight shelter, meals, one month’s rent or mortgage assistance and one month’s utility payments.

The American Rescue Plan Act provides extended emergency nutritional assistance to food-stamp recipients, including a 15% increase in benefits that will continue through September, instead of expiring at the end of June.

 

 

Pandemic Response

 

About $50 billion will pay for additional COVID-19 testing and contact tracing, and $19 billion will help increase the size of the public health workforce. About $16 billion will fund vaccine distribution and supply chains.

 

SOURCE: Journal of Accountancy

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