Filed your taxes but haven’t received your refund yet? Here’s how to check it. How You File Affects the Processing Time Did you file your tax returns electronically and sign up for direct deposit? Mail paper returns? These things will affect the time it takes for you to receive your refund. If you filed your returns electronically, you can start checking for a refund status using the IRS’s Where’s My Refund? tool on their website as early as 24-48 hours after you submit your files. If you are using a mobile phone to check your refund status, all you need to do is download the IRS2Go app. In order to check your refund status, you’ll need a few things on hand: ITIN or Social Security Number Your filing status The exact amount you are expecting to receive from your refund The Where’s My Refund? tool should show a “Return Received” status within that 24-48 hour window of you filing electronically. Once the IRS finishes checking your returns, the status will change to “Refund Approved”, barring there were no issues with them. Once you receive the Approved status, you should likely receive your refund within 21 days. Once the IRS has sent your refund to your financial institution responsible for direct depositing the money into your bank account, the status will change to “Refund Sent”. If you filed a complete return electronically, your refund should be issued in less than 3 weeks. If you filed your returns on paper and mailed them, you should expect to have your refund six to eight weeks from the date the IRS receives them. Check the Date – Especially for EITC or ACTC The IRS opened their electronic filing on February 12, and as we stated above, you should be able to check your status within a day or two. But it’s also important to note that by law, the IRS can’t issue your refund before February 15. For those who claim Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC), the earliest you can get your …
6 Small Business Tax Credits
In a previous blog article, we covered everything you need to know about tax deductions. Today, we’ll talk about small business tax credits and offer some tips for taking advantage What Is a Tax Credit? A tax credit is a dollar-for-dollar reduction. NerdWallet explains “A few credits are even refundable, which means that if you owe $250 in taxes but qualify for a $1,000 credit, you’ll get a check for $750.” This is different from a deduction, which is a dollar amount you can subtract from your adjusted gross income. There are two types of tax credits, according to the IRS: Nonrefundable: tax credits where you get a refund only up to the amount you owe Refundable: tax credits where you get a refund, even if it’s more than what you owe Let’s go through some tax credits for the self-employed, including a few that have emerged in response to the coronavirus pandemic. Earned Income Tax Credit (EITC) The Earned Income Tax Credit is determined by income and is designed to help low- to moderate-income workers and families lower their tax burdens. To qualify, you must be between the ages of 25 and 65, be filing as an individual or married filing jointly, and be considered a low-income filer. Small Business Healthcare Tax Credit The Small Business Healthcare Tax Credit offers up to 50% in credits for “costs paid for premiums purchased through the Small Business Health Options Program (SHOP) plan for ACA coverage,” according to Zenefits. This tax credit is for businesses with fewer than 25 employees whose average salary is $50,000 or less per year. American Opportunity & Lifetime Learning Credits The American Opportunity Tax Credit is a credit for “qualified education expenses paid for an eligible student for the first four years of higher education.” The maximum annual credit is $2,500 per eligible student, which includes people whose modified adjusted gross income is $80,000 or less ($160,000 for married couples filing …
I Received a CP01H Notice, Now What?
Have you received a CP01H Notice? In this article, we’ll discuss what that means and how to fix it. What is a CP01H Notice? If you receive a CPo1H notice, it means the IRS wasn’t able to process your tax return and they’ve placed a lock on your account because the Social Security Number of the primary or secondary taxpayer you provided on your tax return belongs to someone who was deceased before the current tax year. Here’s what that means for you and how you can fix it if the notice has been sent due to an error. Why Did I Receive a CP01H Notice? The CP01H Notice is generated after the SSN you submitted was compared to the records the Social Security Administration has for you. Once the IRS has determined the SSN on your tax forms is incorrect, they send you the notice and lock your account. This is done to prevent identity theft. This may be a simple keying error, where someone (you or your tax preparer) entered an incorrect Social Security Number for you or your spouse (if you are filing jointly) Find out more about 1099 filing penalties here. Next Steps: Correcting an Error If you think the IRS received records in error, the first step you should take is to contact the Social Security Administration to correct the information. Once the Social Security Administration has corrected the information, you’ll need to follow the instructions on your CP01H notice to file your tax return. Next Steps: Unlocking Your Account Your account is automatically locked when the IRS sends the CP01H Notice, which means you’ll have to take some steps to have it unlocked. Here is a list of all the things you will need to send to the same address of the IRS campus where you filed your return in order to unlock your account, according to the IRS itself: A copy of your CP01H Notice letter A written request to unlock the account A photocopy of any one of the following items: Passport Driver’s license Social Security Card Other valid …
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2021 Deadline for Forms 1099-MISC and 1099-NEC
Tax season is around the corner, so it’s time to start gathering information and preparing for the deadlines. What is the 2021 deadline for filing 1099s? The 2021 deadline for Forms 1099-MISC and 1099-NEC is Monday, February 1 since the typical deadline date, January 31, lands on a Sunday. The deadline for Form W-2 is also February 1, 2021. According to CPA Practice Advisor: A 2015 law made it a permanent requirement that employers file copies of their Form W-2, Wage and Tax Statements, and Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration by Jan. 31. That is also the date the Forms W-2 are due to workers. This includes Form 1099-NEC and 1099-MISC as it relates to independent contractors and related nonemployees. However, now that nonemployee compensation has been separated from Form 1099-MISC onto Form 1099-NEC, the deadline to e-file Form 1099-MISC is March 31, 2021. What does this mean for your business? Business owners need to file 1099s to the IRS and send pay statements to freelancers, contractors, and other miscellaneous earners by the deadline. This means you will want to start gathering the following information for the independent contractors who have worked for you in 2020: Full name Address Social Security Number or Individual Taxpayer Identification Number Learn more about the latest instructions for Forms 1099-MISC and 1099-NEC from the IRS here. Start your e-filing process with eFile360 E-filing is the quickest and safest way to submit forms, so e-file with eFile360. Create a free account today. Be sure to utilize our TIN Checking service, which helps you know if you are reporting accurate tax IDs and names. Learn more about our TIN Checking service here. …
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5 Common 1098 Questions
1098s are another subset of forms, much like 1099s, that have small but crucial differences between the different form types. As we approach the end of 2020, tax season will seem closer than ever after the strange circumstances this year brought around for businesses and tax filing. Here are some answers to 5 common 1098 form and filing questions. What is the deadline for filing 1098s? Copy A of the 1098 deadline for filing on paper with the IRS is February 28. If you are filing electronically, the due date is the end of March. Copy B must be provided to the borrower by the end of January. What happens if there are errors on my 1098? The most common errors associated with 1098 filing are: filing the wrong form type, reporting the wrong amount, reporting the wrong TIN or not including one at all, using the wrong year/version of the form, and not using the correct IRS form (you cannot download or copy). If you make an error that you are unable to fix, the best thing to do is contact an accountant or tax professional for help. Once you have the updated information, you need to file a correction for each form that had errors. What are the different types of 1098s and what are they used for? The primary function of 1098 forms is to report payments and contributions you made that have the potential to be deducted from your taxable income. There are seven different 1098 forms: 1098 (mortgage interest statement), 1098-C (contributions of motor vehicles, boats, and airplanes), 1098-E (student loan interest statement), 1098-F (fines, penalties, and other amounts), 1098-MA (mortgage assistance payments), 1098-Q (qualifying longevity annuity contract information), and 1098-T (tuition statement). For a bit more on these forms and what they are used for, take a look at our other blog post. What’s the most common 1098 form? The most common 1098 form is, incidentally, the 1098 itself without any dashes or letters following it. This form is used to report …
Changes for Tax Year 2021
The IRS has released its updates for the tax year 2021. As 2020 draws to a close, it’s hard to imagine even beginning to think about the tax year 2021, but the IRS has just released 2021 tax rates, standard deduction amounts, and more. These updates are not for you to use in 2021 on your tax year 2020 filings, but rather the information you’ll be using in 2022 to complete your taxes for the tax year 2021. Let’s break down some of the updates. Tax Brackets, Rates, and Deductions Forbes has some great infographics that clearly illustrate the tax rates and brackets both for individuals and for married individuals filing jointly. For married individuals filing jointly: 10% - for taxable income up to $19,900 12% - for taxable income between $19,900 and $81,050 22% - for taxable income between $81,050 and $172,750 24% - for taxable income between $172,750 and $329,850 32% - for taxable income between $329,850 and $418,850 35% - for taxable income between $418,850 and $628,300 37% - for taxable income over $628,300 For individual taxpayers: 10% - for taxable income up to $9,950 12% - for taxable income between $9,950 and $40,525 22% - for taxable income between $40,525 and $86,375 24% - for taxable income between $86,375 and $164,925 32% - for taxable income between $164,925 to $209,425 35% - for taxable income between $209,425 to $523,600 37% - for taxable income over $523,600 Along with these brackets and rates, the IRS also announced an increase in the standard deduction of $300 for married couples filing jointly and $150 for individuals for tax year 2021 – bringing that total to $25,100 and $12,550, respectively. The standard deduction for heads of households will also increase by $150. Exemptions For the tax year 2021, the AMT (alternative minimum tax) exemption amounts have been adjusted for inflation. They are as follows: Individuals: $73,600 Married filing jointly and surviving …