Newsletters

Tax Alerts
April 22, 2021
Tax Briefing(s)

Happy New Year 2021! 

 

Following is an update of a few of the new 2020 tax law changes.  If you are a returning client and would like a personalized client organizer for tax planning, request one via email at wendy@carefreetax1040.com.  An organizer is also on our website, www.carefreetax1040.com  under the info center tab.  There are about 90 financial calculators on the website, along with a number of financial and tax links including IRS and WI/IL Dept of Revenue websites.  This site is packed with lots of information that will be helpful for both tax information and planning. 

 

Our hope is to manage this season as normal as possible, while providing a safe environment.  We have taken extra precautions including an air purifier device that cleans the air every 30 minutes and can handle the covid micron size.  Cleaning will be done throughout the day.  We are trying to limit the number of clients in the office at this time.  Considering this, we would appreciate it if you would not bring children or additional people with you to your appointment.  If you are not comfortable with a face-to-face meeting, you are welcome to drop off or mail in your information.  We also have a secure link we can email to you if you’d like to submit the documents electronically.  Please do not email anything to us without asking for this secure link.

 

We hope 2020 was a year of being able to count blessings in the midst of such a challenging time in history.   Looking forward to seeing you soon!  Call 608-756-9930 to set up your appointment

 

Wendy and Robin


The IRS and the Treasury Department have automatically extended the federal income tax filing due date for individuals for the 2020 tax year, from April 15, 2021, to May 17, 2021. 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.


On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021. Some of the tax-related provisions include the following:


The IRS needs to issue new rules and guidance to implement the American Rescue Plan, experts said on March 11 as President Joe Biden signed his COVID-19 relief measure.


Strengthening tax breaks to promote manufacturing received strong bipartisan support at a Senate Finance Committee hearing on March 16.


IRS Commissioner Charles "Chuck" Rettig told Congress on February 23 that the backlog of 20 million unopened pieces of mail is gone.


The Tax Court ruled that rewards dollars that a married couple acquired for using their American Express credit cards to purchase debit cards and money orders—but not to purchase gift cards—were included in the taxpayers’ income. The court stated that its holdings were based on the unique circumstances of the case.


The IRS Office of Chief Counsel has embarked on its most far-reaching Settlement Days program by declaring the month of March 2021 as National Settlement Month. This program builds upon the success achieved from last year's many settlement day events while being shifted to virtual format due to the pandemic. Virtual Settlement Day (VSD) events will be conducted across the country and will serve taxpayers in all 50 states and the District of Colombia.


An individual who owned a limited liability company (LLC) with her former spouse was not entitled to relief from joint and several liability under Code Sec. 6015(b). The taxpayer argued that she did not know or have reason to know of the understated tax when she signed and filed the joint return for the tax year at issue. Further, she claimed to be an unsophisticated taxpayer who could not have understood the extent to which receipts, expenses, depreciation, capital items, earnings and profits, deemed or actual dividend distributions, and the proper treatment of the LLC resulted in tax deficiencies. The taxpayer also asserted that she did not meaningfully participate in the functioning of the LLC other than to provide some bookkeeping and office work.


A married couple’s civil fraud penalty was not timely approved by the supervisor of an IRS Revenue Agent (RA) as required under Code Sec. 6751(b)(1). The taxpayers’ joint return was examined by the IRS, after which the RA had sent them a summons requiring their attendance at an in-person closing conference. The RA provided the taxpayers with a completed, signed Form 4549, Income Tax Examination Changes, reflecting a Code Sec. 6663(a) civil fraud penalty. The taxpayers declined to consent to the assessment of the civil fraud penalty or sign Form 872, Consent to Extend the Time to Assess Tax, to extend the limitations period.


For 2021, the Social Security tax wage cap will be $142,800, and Social Security and Supplemental Security Income (SSI) benefits will increase by 1.3 percent. These changes reflect cost-of-living adjustments to account for inflation.


The IRS has issued final regulations that provide guidance for employers on federal income tax withholding from employees’ wages.


Have a Carefree Tax Season!