News for Your Week Ahead: April 16, 2021

On this week’s episode of MSATP TV, John Kennedy joins Executive Director Bill Feehley to tell us about his class Creating a Culture of Measurement and MetricHe will be presenting at the MSATP Annual Convention & Banquet in Ocean City, MD on June 1, 2021.

Watch on YoutTube.

Coming Up: On Tuesday, April 20th at 10 a.m., Bob Jennings will join Bill Feehley on MSATP TV to discuss his presentations at MSATP’s Annual Convention: TaxSpeaker Security and TaxSpeaker Preparation, Compilations and Reviews. Tune in on Facebook for information on this exciting event!

Comptroller Franchot: Revised Individual Tax Forms are Ready | Taxpayers Eligible to Subtract Unemployment Benefits Must Use Maryland Form 502LU

Comptroller Peter Franchot announced today that all individual Tax Year 2020 tax forms have been updated and are ready for use by taxpayers and tax preparers, effective immediately.

Ordinarily, April 15 would be the deadline for filing federal and state income taxes, but those due dates have been pushed back due to emergency legislation in Annapolis and Washington, D.C., that required extensive changes to the current year tax forms.

The tax forms ready for use as of today (April 15) are:

  • 502 Maryland Resident Income Tax Return
  • 502CR Maryland Personal Income Tax Credits for Individuals and Instructions
  • 502LU Legislative Updates Addition/Subtraction Modifications *(New Form)*
  • 502X Maryland Amended Tax Form and Instructions
  • 505 Nonresident Income Tax Return
  • 505X Nonresident Amended Tax Return

All forms will be available at www.marylandtaxes.gov. Third-party tax software vendors will have the updated forms available once they have successfully completed all necessary testing.

In just over two months since the start of the tax season, the Comptroller’s Office has processed more than 1.7 million tax returns and issued $1.17 billion in refunds to approximately 1.22 million taxpayers.

For more information, click here.

Revenue Ruling 2021-08 | RR-2021-08

Revenue Ruling 2021-08 provides various prescribed rates for federal income tax purposes including the applicable federal interest rates, the adjusted applicable federal interest rates, the adjusted federal long-term rate, and the adjusted federal long-term tax-exempt rate. These rates are determined as prescribed by § 1274.

The rates are published monthly for purposes of sections 42, 382, 412, 642, 1288, 1274, 7520, 7872, and various other sections of the Internal Revenue Code.

Revenue Ruling 2021-08 will be in IRB:  2021-18, dated May 3, 2021.

For more information, click here.

Important Information Regarding Certain Filing and Payment Deadlines in Virginia: New Individual Income Tax Filing and Payment Deadline | Virginia Tax Bulletin 21-5

Individual income tax returns and payments required to be made with such returns for Taxable Year 2020 that were originally due May 1, 2021, are now due on or before May 17, 2021. As a result, no penalties will apply so long as a return is filed and full payment is made by May 17, 2021. In addition, pursuant to Virginia Tax’s authority to waive the accrual of interest during a declared state of emergency in the commonwealth, no interest will apply so long as a return is filed and full payment is made by May 17, 2021.

The new filing and payment deadline for certain Taxable 2020 returns applies to composite returns filed on behalf of nonresident owners. However, all other Virginia tax payment, withholding, and filing deadlines remain the same, including the requirement for calendar year filers to make their first estimated payments for Taxable Year 2021 by May 3, 2021.

For more information, click here.

Claiming The Employee Retention Credit in The First and Second Calendar Quarters 2021 | COVID Tax Tip 2021-49

IRS issued guidance for employers claiming the employee retention credit under the Coronavirus Aid, Relief, and Economic Security Act modified by the Taxpayer Certainty and Disaster Tax Relief Act of 2020.

Notice 2021-23 explains the changes for the first and second calendar quarters of 2021, including:

  • the increase in the maximum credit amount
  • the expansion of the category of employers that may be eligible to claim the credit
  • modifications to the gross receipts test
  • revisions to the definition of qualified wages
  • new restrictions on the ability of eligible employers to request an advance payment of the credit

Eligible employers can now claim a refundable tax credit against the employer share of Social Security tax equal to 70% of the qualified wages they pay to employees after December 31, 2020, through June 30, 2021. Qualified wages are limited to $10,000 per employee per calendar quarter in 2021. The maximum employee retention credit available is $7,000 per employee per calendar quarter, for a total of $14,000 for the first two calendar quarters of 2021.

For more information, click here.

IRS Letters Explain Why Some 2020 Recovery Rebate Credits are Different Than Expected | IR-2021-76 

As people across the country file their 2020 tax returns, some are claiming the 2020 Recovery Rebate Credit (RRC). The IRS is mailing letters to some taxpayers who claimed the 2020 credit and may be getting a different amount than they expected.

It’s important to remember that the first and second Economic Impact Payments (EIP) were advance payments of the 2020 credit. Most eligible people already received the first and second payments and shouldn’t or don’t need to include this information on their 2020 tax return.

People who didn’t receive a first or second EIP or received less than the full amounts may be eligible for the 2020 RRC. They must file a 2020 tax return to claim the credit, even if they don’t usually file a tax return.

For more information, click here.