Tax Season Update Jan. 20th, 2021

The IRS announced it will start accepting and processing 2020 tax returns on Friday, Feb. 12. This is later than in most previous years when tax season has started in late January. The IRS says the delay is due to the extra time it needs for programming and testing its systems following the tax law changes made by the Consolidated Appropriations Act, 2021 (CAA 2021), P.L. 116-260, which was enacted Dec. 27.

According to the IRS, much of the additional programming stems from the second round of recovery rebate credits authorized by the CAA 2021, which taxpayers can claim on their 2020 returns if they do not receive an economic impact payment.

The IRS anticipates starting to issue refunds for taxpayers who claim the earned income tax credit and/or additional child tax credit in the first week of March, for taxpayers who file electronically and provide direct deposit information and have no other issues with their returns.

The filing due dates have not changed.

  • S-Corporation & Partnership/LLC Returns are due by Tuesday, 03/16/2021.
  • S-Corporation & Partnership/LLC Returns that are not complete by 03/16/2021 can be extended to Wednesday, 09/15/2021.
  • This is the cutoff date that ALL BUSINESS TAX INFORMATION will need to be in our office for us to meet the 03/16 filing deadline.
  • The S-Corporation final filing deadline is 09/15/2021 with an extension. To ensure we have enough time to prepare the returns the cutoff date that ALL TAX INFORMATION will need to be in our office for us to meet the 9/15 filing deadline is Wednesday, August 18, 2021.
  • Individual Returns are due Thursday, April 15, 2021.
  • Individual Returns that are not complete by 04/15/2021 can be extended to Friday, 10/15/2021.
  • However, any tax due must be paid by 04/15/2021 to avoid interest and late payment penalty charges.
  • This is the cutoff date that ALL PERSONAL TAX INFORMATION will need to be in our office for us to meet the 04/15 filing deadline.
  • The final filing deadline is Friday, 10/15/2021 with an extension. To ensure we have enough time to prepare the returns the cutoff date that ALL TAX INFORMATION will need to be in our office for us to meet the 10/15 filing deadline is Friday, September 17, 2021.
  • This includes Schedule C Tax Returns. (Sole Proprietorships & Single Member LLC’s.)

We are still waiting for the new forgiveness application that was part of the new bill CAA 2021. This new application is much more streamlined than the current one and requires no supporting documents to be sent in. The SBA still has not published this form yet. The SBA website says these forms are still forthcoming. According to the bill the SBA has 24 days to produce this form. The bill was signed on 12/27, so we are hoping any day now.

The legislation added direction for a simplified application for Paycheck Protection Program (PPP) covered loans up to $150,000.

Sec 307 of Title III – Continuing the Paycheck Protection Program and Other Small Business Support in the Act instructs that a PPP loan that is not more than $150,000 will be forgiven if the eligible recipient:

  • Signs and submits to the lender a certification, including:
    • A description of the number of employees the eligible recipient was able to retain because of the PPP loan.
    • The estimated amount of the covered loan amount spent by the eligible recipient on payroll costs.
    • The total loan value.
  • The eligible recipient of these loans is not required to submit any documentation in addition to the certification and information required to substantiate forgiveness.
  • The act also repeals the requirement that PPP borrowers deduct the amount of any EIDL advance from their PPP forgiveness amount. So now the total PPP forgiveness should not be reduced due to the EIDL advance. The effective date for this change dates to the enactment of the CARES Act.
  • The SBA must create the simplified application form within 24 days of the bill’s enactment.

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