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Member of Russell Bedford International, a global network of independent professional service firms.
With the year soon coming to an end, it’s time to think about year-end tax compliance, including W-2 reporting. While your outside payroll provider can report usual salary and wages without any issues, we often see errors in which employers don’t provide the W-2 preparer with taxable non-cash fringe benefits. Fringe benefits must be computed and included in employees’ wages prior to December 31 in order to allow for the timely withholding and depositing of payroll taxes.
Fringe benefits are forms of pay (other than money for the performance of services by employees) that are considered taxable income for that employee, unless specifically excluded by law. Certain taxable fringe benefits affect all employees while other taxable fringe benefits may only affect partners in a partnership or LLC, or more than two-percent shareholders in an S corporation.
The value of a company car used for personal travel must be included in the employee’s gross income as wages subject to FICA. This taxable fringe benefit applies to all employees with a company car. Be sure to request personal and total mileage from the individual so that the payroll provider can compute the taxable fringe benefit.
Most employees’ insurance coverage is a tax-free fringe benefit. However, health, dental, or vision insurance premiums paid on behalf of a partner or paid by the S Corporation on behalf of the two-percent shareholder is taxable for income tax purposes. These fringe benefits are only subject to federal income tax withholding (FITW) and state income tax withholding (SITW) and not FICA or FUTA. As insurance premiums may not be handled by the W-2 preparer, it’s up to the employer to ensure that this information is provided to the preparer for proper inclusion.
Employees are eligible to receive the first $50,000 of group life insurance coverage on a tax-free basis. Coverage in excess of $50,000 is taxable. For partners or two-percent S corporation shareholders the cost of all group-term life insurance coverage provided must be included in taxable wages.
The computation of the taxable benefit depends on the extent of coverage as well as the age of the insured. This fringe benefit is subject to FICA, however excluded from FITW, FUTA, and SITW. Please note that any life insurance coverage for which the corporation is both the owner and beneficiary does not meet the definition of group-term life insurance and therefore there is no income inclusion in the shareholder’s wages.
Unfortunately, year-end payroll reporting is not straightforward. There are different rules based on ownership status or the type of fringe benefits provided. Additionally, the computation of these taxable fringe benefits is the responsibility of the employer which is often why they become overlooked. If you have any questions or need assistance with your 2020 fringe benefits, please do not hesitate to contact us.
Please note that this blog is based on tax laws effective in November 2020, and may not contain later amendments. Please contact Cray Kaiser for most recent information.
Please note that this blog is based on laws effective in November 2020 and may not contain later amendments. Please contact Cray Kaiser for most recent information.
The U.S. Treasury Department and Internal Revenue Service (IRS) released guidance on November 18th clarifying the deductibility of expenses where a Paycheck Protection Program (PPP) loan has not been forgiven by the end of the year the loan was received. Here are the key points from the announcement:
It is important to note the newly released guidance does not address taxpayers with a fiscal year.
CK’s tax department is keeping a close eye on these developments. It is possible that Congress will act to offset the Treasury’s decision on deductible expenses. As soon as we have more information we will post it on our website. In the meantime, if you have any questions about your PPP loan and the deductibility of expenses, contact us at 630-953-4900.
If you already have a budget, it’s probably been difficult for you to stick with it this year. Unless you provide products and/or services that have been in great demand since COVID-19 took hold, you’ve likely had to adjust your budget significantly.
While there are still likely to be uncertainties next year, better days are ahead! And in the meantime, you can start proactively planning for 2021 by creating a budget. Your budget will increase your awareness of all of your projected income and expenses, which may make it less likely that you’ll find yourself constantly running short on funds.
Here are 10 tips for budgeting so you can make your process more effective and realistic:
1) Use what you already know. Unless you’re launching a new business, you already have the best resource possible: a record of your past income and expenses. Use this as the basis for your projections.
2) Be aware of your sales cycle. Even if you’re not a seasonal business, you’ve probably learned that some months or quarters are better than others. Budget conservatively for the slower months.
3) Distinguish between essential and non-essential expenses. Enter your budget items for the bills and other expenses that must be covered before you add optional categories.
4) Keep it simple. Don’t budget down to the last paper clip. You risk budget burnout, and your reports will be unwieldy. Instead, think broader and expect that your exact expenses will fluctuate slightly.
5) Build in some backup funding. Just as you’re supposed to have an emergency fund in your personal life, try to create one for your business. Knowing that you have a cushion will give you peace of mind and financial protection.
6) Make your employees part of the process. Ask your staff for input in areas where they have knowledge. They may have suggestions for line items that can be eliminated or ways to get creative and save money (see #9).
7) Overestimate your expenses, a little. This can help prevent “borrowing” from one budget category to make up for a shortfall in another.
8) Consider using excess funds to pay down debt. It’s simple: debt costs you money. The sooner you pay it off, the sooner you can use those payments for non-essential items.
9) Look for areas where you can change vendors. As you’re creating your budget, think carefully about each supplier of products and services. Can you find less costly alternatives? Can you bring some of these expenses in-house?
10) Revisit your budget frequently. You should evaluate your progress at least once a month. In fact, you could even start by budgeting for only a couple of months at a time. You’ll gain a lot of knowledge about your spending and sales patterns that you can use for the future.
QuickBooks Online offers built-in tools to help you create a budget. To get started, click the gear icon in the upper right corner and select Budgeting under Tools. Click Add budget. At the top of the screen, give your budget a Name and select the Fiscal Year it should cover from the drop-down list by that field. Choose an Interval (monthly, quarterly, or yearly) and indicate whether you want to Pre-fill data from an existing year.
Tips for Budgeting: Use data from a previous year to create a new budget in QuickBooks Online.
The final field is labeled Subdivide by, which is optional. You can set up budgets that only include selected Customers or Classes, for example. Select the desired divider in that field, then choose who or what you want included in the next field. Click Next or Create Budget in the lower right corner (depending on whether you used pre-filled data) to open your budget template. If you subdivided the budget, you’ll see a field marked View budget for. Click the down arrow and select from the options listed there.
To create your budget, simply enter numbers in the small boxes supplied. Columns can be divided by months or quarters, and rows are labeled with budget items (Advertising, Gross Receipts, Legal & Professional Fees, etc.). When you click in a box, a small arrow appears pointing right. Click on this, and your number will automatically appear in the rest of that row’s boxes. When you’re done, click Save in the lower right. You can edit your budget at any time.
Tips for Budgeting: QuickBooks Online supplies a budget template that contains commonly used small business items.
QuickBooks Online provides two related reports: Budget Overview displays all of the data in your budget(s) and Budget vs. Actuals shows you how you’re adhering to your budget. To print these reports, select Reports from the navigation bar and then under Business Overview select the budget report you need.
We know that creating a budget can be challenging, but it’s so important – especially right now. We would be happy to look at your company’s financial situation and see how QuickBooks’ budgeting tools, and its other accounting features, can help you get a better understanding of your finances. Please feel free to reach out to our Accounting Services team today to get started and discuss additional tips for budgeting.
Please note that this blog is based on laws effective in September 2020 and may not contain later amendments. Please contact Cray Kaiser for the most recent information.
Regardless of the type of business you’re running, it’s safe to say that you’ve likely already been impacted by the ongoing COVID-19 pandemic. With no complete end to the situation in sight, many have begun to try to settle into whatever this “new normal” actually is. This, of course, presents its own fair share of challenges. Once you get your doors opened back up again, if they’re not already, you may start to think about other important events down the line: valuations and appraisals, risk assessments, and succession planning.
Thanks in no small part to COVID-19, many private enterprises and family-owned businesses have been forced to dramatically rethink their points of view on these strategies and other important wealth transition and succession planning topics. As a result, below are some things to take into consideration.
One of the more unfortunate impacts that COVID-19 has had in the last few months involves a decrease in small business values across the board. The fact that both actual and expected revenues and earnings have likely decreased for many organizations, coupled with an increase in interest-bearing debt and liquidity issues in the market at large, all have a lot to do with this issue.
At the same time, it is entirely possible to mitigate risk to that end by keeping a few key things in mind. First and foremost, focus your attention on cash flows, the cost of capital, and growth as much as possible. One of the most critical considerations for a proper business valuation in these times involves figuring out what a recovery from COVID-19 will look like for your organization.
Obviously, certain industries have bounced back faster than others. Likewise, there are certain things that we just cannot know right now – like when a vaccine will be available and what effect that will have on the world. But you can focus on a few key areas – like whether you will experience a full recovery or only a partial recovery, and how long that impact will last – to make better determinations about projected cash flow and other growth-related factors.
On the plus side, all of this represents a unique opportunity for many people to take advantage of low small business valuations to minimize things like estate and gift taxes. Lower business valuations allow business owners like yourself to transfer a greater portion of your business assets and reduce your taxable estate. So, from that perspective, you’ll be able to gift assets against your lifetime exemption that would have previously been considered a taxable event had COVID-19 not occurred at all.
In general, you need to remember that the major goals of wealth transition and succession planning are that you’re attempting to preserve as much of your wealth AND your business as possible. Yes, it’s about making a plan that you can follow over time. But it’s also about being flexible enough to evolve that plan as conditions can (and likely will) change.
This is true for COVID-19’s impact on the supply chain. Even if your small business isn’t being directly impacted right now, the same might not be true of your supply chain partners or even your largest customers. This could have a considerable impact on your own operations, and if your organization is particularly vulnerable to these types of issues, you need to start thinking about ways to mitigate them as soon as you can.
Likewise, you may be one of the lucky few businesses that wasn’t actually negatively impacted by COVID-19 at all. Some industries are absolutely thriving right now – with manufacturers of personal safety gear and even a lot of food and beverage manufacturers being among them. If this describes your situation, it’s likely that you’ve seen a short-term increase in sales and, in all likelihood, profitability. How will this impact the future of your organization? Is this what the “new normal” looks like for you, or will you eventually return to pre-COVID levels? Do you have a way to determine this right now, or is time going to have to tell the story? These are all critical questions that you need to try to answer to make the best possible decisions in terms of succession planning.
In the end, understand that wealth transition and succession planning were always complicated processes, and COVID-19 has not done anyone any favors. No matter what, you need to recognize that this is an inherently specific process. So much is impacted by your own unique circumstances and the facts surrounding your organization. Likewise, your end goals will play an important role in the decisions you make, along with how they may have changed in the last few months.
However, if you’re able to keep these core best practices in mind and look at things through this new pandemic lens, you’ll be able to create the right plan for your objectives with as few potential downsides as possible. If you’d like to discuss wealth transition and succession planning strategies for your business, please contact Cray Kaiser. We’d be happy to help you.
Please note that this blog is based on laws effective in September 2020 and may not contain later amendments. Please contact Cray Kaiser for the most recent information.
The Internal Revenue Service (IRS) has resurrected a form that has not been used since the early 1980s, Form 1099-NEC (non-employee compensation). This form will be used to report non-employee compensation in place of Form 1099-MISC, which has been used since 1983 to report payments to contract workers and freelancers. Form 1099-MISC has also been used to report rents, royalties, crop insurance proceeds and several other types of income unrelated to independent contractors.
The revival of the 1099-NEC was mandated by Congress with the passage of the PATH Act back in 2015. However, there have been some complications with implementing the form, so its use has been delayed. It will now officially make its return in 2021 for payments made in 2020.
The reason for the change is to control fraudulent credit claims, primarily for the earned income tax credit (EITC), which is based on earned income from working. Scammers were filing tax returns before the normal February 28 due date for 1099-MISC, which does not give the IRS time to cross-check the earned income claimed in the returns. As a stopgap measure, 1099-MISC filings that included non-employee compensation were required to be filed by January 31, the same due date as W-2s, another source of earned income. By using the 1099-NEC for non-employee compensation, the IRS will be able to eliminate the problems created by having two filing dates for the 1099-MISC.
What will be included on Form 1099-NEC?
Luckily, the 1099-NEC is quite simple to use since it only deals with non-employee compensation (which is entered in Box 1). There are also entries for federal and state income tax withholding.
If you operate a business and engage the services of an individual other than one who meets the definition of an employee (i.e. an independent contractor), and you pay him or her $600 or more for the calendar year, you are required to issue the individual a Form 1099-NEC soon after the end of the year. This will help you avoid penalties and the prospect of losing the deduction for his or her labor and expenses in an audit.
The due date for filing Form 1099-NEC with the IRS AND mailing the recipient a copy of the 1099-NEC that reports 2020 payments is February 1, 2021. Please note that the due date is usually January 31, but because that date falls on a weekend in 2021, the due date becomes the next business day, February 1, 2021.
It is not uncommon to have a repairman out early in the year, pay him less than $600, then use his services again later in the year and have the total for the year exceed the $599 limit. As a result, you may have overlooked getting the information from the individual needed to file a 1099 for the year. Therefore, it is good practice to always have individuals who are not incorporated complete and sign an IRS Form W-9 the first time you engage them and before you pay them. Having a properly completed and signed Form W-9 for all independent contractors and service providers eliminates any oversights and protects you against IRS penalties and conflicts. If you have been negligent in the past about having W-9s completed, it would be a good idea to establish a procedure for collecting W-9s in the future.
As a reminder: IRS Form W-9 is provided by the government as a means for you to obtain the vendors’ data you’ll need to accurately file the 1099s. It also provides you with verification that you complied with the law in case a vendor gave you incorrect information. The W-9 is for your use only and is not submitted to the IRS.
The penalties for failure to file the required informational returns are $280 per informational return. The penalty is reduced to $50 if a correct but late information return is filed no later than 30 days after the required filing date of February 1, 2021. It may also be reduced to $110 for returns filed after 30 days but no later than August 1, 2021. And please note, if you are required to file 250 or more information returns, you must file them electronically.
Cray Kaiser can help you prepare your 1099s for submission to the IRS. If you’d like assistance, please contact us today at 630-953-4900. We’d be glad to help you!
Please note that this blog is based on laws effective in September 2020 and may not contain later amendments. Please contact Cray Kaiser for the most recent information.
During the COVID-19 pandemic, the Internal Revenue Service (IRS) furloughed many of its employees or had them work from home to mitigate the spread of the virus. Many IRS offices remained shuttered for months, thus a backlog of millions of pieces of unopened mail, including IRS checks, accumulated in trailers set up outside IRS facilities.
The unopened mail included payment checks, creating a problem for many electronically filed returns with tax due because the IRS computer shows a tax return filed but no payment made. Because the IRS utilizes a significant amount of automation, its computers began automatically generating tax-due notices to those who had mailed in payments. While most IRS facilities have reopened and IRS employees have returned to work, it will take them weeks, if not months, to get all of the backlogged mail opened and processed.
After receiving complaints from taxpayers and members of Congress, the IRS put information on its website about these outstanding payments. They stated that the payments will be posted as of the date when they were received by the IRS, not the date when they process them. In most cases, this will eliminate or minimize penalties and interest for late payments. So, if you mailed a check to the IRS that has yet to clear your bank, with or without a return, the IRS says that you should not cancel or put a stop-payment on the check. However, you should be sure that you have adequate funds in the account from which the check was written, so that the check will clear when the IRS does process it.
Normally, the penalty for a dishonored payment (a bounced check) of over $1,250 is 2% of the amount of the check, money order, or electronic payment. If the amount is $1,250 or less, the penalty is the amount of the check, money order, or electronic payment, or $25, whichever is lower.
To provide fair and equitable treatment during the COVID-19 emergency, the IRS is providing relief from bad-check penalties. The dishonored payment penalty will be waived for dishonored checks that the IRS received between March 1 and July 15 due to delays in processing. However, interest and other penalties may still apply.
The short answer: nothing. The IRS has decided to suspend mailing certain tax-due notices to taxpayers temporarily until the unopened mail backlog is cleared up. So, if you have received a tax-due notice but know that you already paid the tax, the IRS asks that you wait to contact it about any unprocessed paper payments that are still pending.
For now, it’s important to be patient. There’s no reason to send additional correspondence to the IRS as it would just be added to the mountains of unopened mail. And due to high call volumes, giving the IRS a call will be of little use at this time.
If you have any concerns about your uncashed IRS check, please contact Cray Kaiser.
Please note that this blog is based on laws effective in September 2020 and may not contain later amendments. Please contact Cray Kaiser for the most recent information.
All United States entities (including citizens and resident aliens as well as corporations, partnerships, and trusts) with financial interests in or authority over one or more foreign financial accounts (i.e. bank accounts and securities) need to report these relationships to the U.S. Treasury if the aggregate value of those accounts exceeds $10,000 at any time during the year. Failure to file the required forms can result in severe penalties.
The U.S. government wants this information for a couple of pretty obvious reasons. First, foreign financial institutions may not have the same reporting requirements as U.S.-based financial institutions. For example, they probably won’t issue the 1099 forms to report interest, dividends and sales of stock. By requiring those in the U.S. to divulge their foreign account holdings, the IRS can more easily cross-check to see if foreign income is being reported on the individual’s tax return.
The second and probably more significant reason is that the information in the report can be used to identify or trace funds used for illegal purposes or to identify unreported income maintained or generated overseas.
For 2019, the due date for filing this report was April 15, 2020, but the government grants an automatic extension to October 15, 2020 for those who didn’t file by April 15. This filing, the Report of Foreign Bank and Financial Accounts (FBAR), is not made with the IRS; rather, it involves completing Bank Secrecy Act forms and filing them electronically through the U.S. Treasury’s Financial Crimes Enforcement Network.
A penalty of up to $10,000 may be imposed for a non-willful failure to report; the penalty for a willful violation is the greater of $100,000 or 50% of the account’s balance at the time of the violation. Both the $10,000 and $100,000 amounts are subject to inflation adjustment, which, as of February 2020, brings them to $13,481 and $134,806, respectively. A willful violation is also subject to criminal prosecution, which can result in a fine of up to $250,000 and jail time of up to five years.
PLEASE NOTE: On Schedule B of the Form 1040 tax return, you must state whether you have a financial interest in or signature authority over one or more foreign financial accounts. If you answer yes but don’t file the FBAR, your failure to file may be considered willful, which could subject you to the larger fine and jail time.
The term “financial account” includes securities; brokerage, savings, checking, deposit and time deposit accounts; commodity futures and options; mutual funds and even nonmonetary assets (i.e. gold). Such an account is classified as “foreign” if the financial institution that holds it is located in a foreign country. Shares of a foreign stock or of a mutual fund that invests in foreign stocks are not considered foreign if they are held in an account at a U.S. financial institution or brokerage, so they do not need to be reported under the FBAR rules. In addition, an account maintained at a branch of a foreign bank is not considered a foreign financial account if the branch is physically located in the U.S.
You may have an FBAR requirement and not even realize it. For instance, say you have relatives in a foreign country who have put your name on their bank account in case of an emergency; if the value of that account exceeds $10,000 at any time during the year, you will need to file the FBAR. The same would be true if your name was added to several of your foreign relatives’ smaller-value accounts that add up to more than $10,000 at any time during the year. As another example, if you gamble at an online casino that is located in a foreign country and your account exceeds the $10,000 limit at any time during the year, you will need to file the FBAR.
You may also have to file IRS Form 8938, which is similar to the FBAR but applies to a wider range of foreign assets and has a higher dollar threshold. This form is filed with your income tax return. If you are married and filing jointly, you must file Form 8938 if the value of your foreign financial assets exceeds $100,000 at the end of the year or $150,000 at any time during the year. If you live abroad, these thresholds are $400,000 and $600,000, respectively. For other filing statuses, the thresholds are half of the amounts above. The penalty for failing to file Form 8938 is $10,000 per year; if the failure continues for more than 90 days after the IRS provides notice of your failure to file, the penalty can be as high $50,000.
As you can see, failure to comply with the foreign account reporting requirements can lead to severe consequences. Please contact Cray Kaiser if you have questions or need assistance meeting your foreign account reporting obligations.
Please note that this blog is based on laws effective in September 2020 and may not contain later amendments. Please contact Cray Kaiser for the most recent information.
Are you one of the many people in the United States who started working from home this year as a result of the coronavirus pandemic? You’re not alone. And while it is unclear how much longer the nation will be in the grips of this crisis, social distancing practices are likely to remain in place for most organizations. Some of the country’s most recognizable brands, including Facebook and Google, have already announced a work-from-home option that will extend through July 2021 for all of their employees, while others have made the ability to work remotely permanent.
As more and more organizations make the decision that their staff members can work from home either permanently or on a long-term basis, they may need to take a closer look at how nexus laws will be addressed — especially as several state governments are beginning to address work-from-home employees in terms of nexus and on tax revenue.
Traditionally, a state tax obligation is established when a business has a physical presence within its borders. That is what creates nexus. For example, if a Floridian goes to New York for a temporary job placement, they have an income tax obligation in New York for the money that they earn there. And if a Californian company places employees in Texas, then the company would have an obligation to follow Texas laws and pay Texas sales tax.
While New York Governor Andrew Cuomo explicitly continued making temporarily remote employees in New York liable for state income tax when COVID-19 struck, several states (including Massachusetts and Pennsylvania) made clear that the virus-related remote work would not trigger nexus obligations, at least as long as official work-from-home orders or states of emergency lasted. Today, as mandates are being lifted but companies continue to allow or enforce work from home, those states are beginning to reconsider their position.
While not every state has begun to address the tax ramifications of working-from-home due to COVID-19, Congress has. On July 27, 2020 new legislation was introduced with the goal of limiting the amount of state income tax that could be charged on income earned in state to residents of another state. The proposal revises Section 403 of the American Workers, Families and Employers Assistance Act (S. 4318), which says in part:
“No part of the wages or other remuneration earned by an employee who is a resident of a taxing jurisdiction and performs employment duties in more than one taxing jurisdiction shall be subject to income tax in any taxing jurisdiction other than: (A) The taxing jurisdiction of the employee’s residence (B) Any taxing jurisdiction within which the employee is present and performing employment duties for more than 30 days during the calendar year in which the wages or other remuneration is earned.”
The revision would extend the 30 days in part (B) to 90 days for calendar year 2020 “in the case of any employee who performs employment duties in any taxing jurisdiction other than the taxing jurisdiction of the employee’s residence during such year as a result of the COVID-19 public health emergency.”
Although this legislation has not been acted upon, we are hopeful that the federal government can provide overriding guidance on this issue. Without uniform guidance, each state is free to set their own nexus standards.
Nexus is a complicated topic. If you’re looking for additional information on nexus, click here. And as always, Cray Kaiser is here to answer your questions. Please contact us today to discuss how nexus impacts you and your business during the pandemic.
Please note that this blog is based on information known as of September 2020 and may not contain later amendments. Please contact Cray Kaiser for the most recent information.
As the November 2020 elections approach, you might want to know what the two front-running presidential candidates’ tax plans for the future are. The following is an overview of their positions, as we know and understand them today. However, the political and economic landscapes can and will change, and there is no assurance these plans won’t be revised or that they will have eventual Congressional backing. However, the information may be helpful as you look toward future tax planning.
Individual Tax Rates
Capital Gains Tax Rates
Basis Step Up on Inherited Property
Range from 10% to 37%. The top rate is scheduled to return to 39.6% in 2026.
Range from 0% to 20%; Collectibles top rate is 28%.
A beneficiary uses as their basis of an inherited asset the fair market value at the date of death. (Basis is the amount from which future gain or loss is determined.)
Generally, would continue with current rates by extending the Tax Cuts and Jobs Act past 2025. However, would lower the rate for middle class taxpayers, possibly by bringing the 22% rate down to 15%.
Would continue with current rates by extending the Tax Cuts and Jobs Act beyond 2025.
No proposed change.
Would return the top rate to the pre-tax reform 39.6% immediately (if approved by Congress).
Increase top rate to 39.6% for taxpayers with over $1 million of income.
Would eliminate the step up, either by taxing “paper gains” at death or assigning the decedent’s basis to the beneficiary (details not clear at this time).
Again, these plans are only proposals of what changes might happen based on the election results. It takes acts of Congress to move plans into law. With various scenarios in play, it might be wise to look at proactive tax planning to minimize future tax liability. Please feel free to contact Cray Kaiser to discuss your tax planning for next year.
Please note that this blog is based on laws effective in September 2020 and may not contain later amendments. Please contact Cray Kaiser for the most recent information.
The Internal Revenue Service (IRS) announced that it would reopen the registration period for federal beneficiaries with children who did not receive a $500 per child Economic Impact (stimulus) Payment earlier this year. Here’s what you need to know:
The IRS urges certain federal benefit recipients to use the IRS.gov Non-Filers tool between August 15 and September 30 to enter information on their qualifying children in order to receive the supplemental $500 payments.
Those eligible to provide this information include people with qualifying children who receive Social Security retirement, survivor or disability benefits; Supplemental Security Income (SSI); Railroad Retirement benefits; and Veterans Affairs Compensation and Pension (C&P) benefits and did not file a tax return for 2018 or 2019.
The IRS anticipates the catch-up payments, equal to $500 per eligible child, will be issued by mid-October.
For those Social Security, SSI, Department of Veterans Affairs and Railroad Retirement Board beneficiaries who have already used the Non-Filers tool to provide information on their children, and who haven’t yet received payment, no further action is needed. The IRS will automatically make a payment in October.
For those who received Social Security, SSI, RRB or VA benefits and have not used the Non-Filers tool to provide information on their children, register online by September 30 using the Non-Filers: Enter Payment Info Here tool. However, anyone who filed or plans to file either a 2018 or 2019 tax return should file the tax return and not use this tool.
Any beneficiary who misses the September 30 deadline will need to wait until next year to claim the Economic Impact Payment as a credit on their 2020 federal income tax return.
Those who received their original Economic Impact Payment by direct deposit will also have any supplemental payment direct deposited to the same account. Others will receive a check. The status of the payments can be checked by using the Get My Payment tool. In addition, a notice verifying the $500-per-child supplemental payment will be sent to each recipient and should be filed with other tax records.
Those who are not required to file a tax return are still eligible to receive an Economic Impact Payment by using the Non-Filers’ tool, but they need to act by October 15 to receive their payment this year. Otherwise, they will need to wait until next year and claim it as a credit on their 2020 federal income tax return.
The Non-Filers tool is designed for people with incomes typically below $24,400 for married couples, and $12,200 for singles. This includes couples and individuals who are experiencing homelessness. People can qualify, even if they don’t work or have no earned income. But low- and moderate-income workers and working families eligible to receive special tax benefits, such as the Earned Income Tax Credit or Child Tax Credit, cannot use this tool. They will need to file a regular return.
If you have questions about the child stimulus payment or stimulus payments in general, please contact Cray Kaiser today.
