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RECOVERY REBATE CREDIT & Social Sec Card Wording

RECOVERY REBATE CREDIT ELIGIBILITY

You are not eligible for the Recovery Rebate Credit claimed on a 2020 tax return if any of the following applies:

  • You may be claimed as a dependent on another taxpayer's 2020 return (for example, a child or student who may be claimed on a parent's return or a dependent parent who may be claimed on an adult child's return).
  • You do not have a Social Security number that is valid for employment issued before the due date of your 2020 tax return (including extensions). Some exceptions apply for those who file married filing jointly where only one spouse must have a valid Social Security number to claim the credit.
  • You are a nonresident alien.                 
  • You are an estate or trust.

Including Extensions

In reading code (if you ever try to read it you will know why it is called CODE) and regulations (U.S. Treasury Dept interpretation of the Code--this is what we think it means) you will find the term INCLUDING EXTENSIONS.

 

This means INCLUDING A TIMELY FILED EXTENSION.

Earned Income Credit & Valid Social Security Number

                                              

Earned Income Credit & Valid Social Security Number

To qualify for the EITC (Earned Income Tax Credit), everyone you claim on your taxes must have a valid Social Security number (SSN). To be valid, the SSN must be:

  • Valid for employment
  • Issued before the due date of the tax return you plan to claim (including extensions*)

For the EITC, IRS will accept a Social Security number on a Social Security card that has the words, "Valid for work with DHS authorization," on it.

For the EITC, IRS will NOT accept:

  • Individual taxpayer identification numbers (ITIN)
  • Adoption taxpayer identification numbers (ATIN)
  • Social Security numbers on Social Security cards that have the words, "Not Valid for Employment," on them

For more information about the Social Security number rules for the EITC, see Rule 2 in Publication 596, Earned Income Credit.

                                               

Rule 2—You Must Have a Valid Social Security Number (SSN) To claim the EIC, you (and your spouse, if filing a joint return) must have a valid SSN issued by the Social Security Administration (SSA) by the due date of your return (including extensions*). Your qualifying child must have a valid SSN issued on or before the due date of your return (including extensions*) for you to claim a higher EIC credit amount based on that child.

Note *Including extensions” means a timely filed extension.

 

2021 Tax Law Change - Business Meals

Business Meals are now 100% deductible.

2022 Gift Tax

Starting in 2022 the gift tax exclusion is $16,000 per donor in a calendar year.

IRS Backlog Continues

In late November, IRS has still yet to process 6.5 million personal 2020 tax returns.
And it is 2.6 million amended returns behind.

IRS Amended Returns as of 09-08-21

IRS is behind on alot of stuff......
 
Including, as of 09.08.21 ....
 
2.8 MILLION Amended Returns have yet to be processed!

02-18-21 IRS behind in Processing 11 million 2019 returns!

A group of Republicans on the House Ways and Means Oversight Subcommittee sent a letter Wednesday 02.18.21 to IRS Commissioner Charles Rettig complaining about the backlog of approximately 11 million unprocessed tax returns from the 2019 tax year. The backlog of unprocessed mail from the pandemic has created a ripple effect that’s continuing into this year’s tax-filing season, which opened last Friday.

The problem isn’t only with the mail, which piled up last year in trailers outside IRS facilities until IRS employees could return to their offices and open it. While most of the millions of pieces of mail have reportedly been opened, much of it remains unprocessed. That’s causing headaches for taxpayers and tax professionals alike, who are coping with past due notices sent automatically by IRS computer systems, even when payments were sent months ago, according to the investigative news site ProPublica. Taxpayers have had trouble with receiving their Economic Impact Payments from last year and are also having trouble reaching the IRS by phone this year, with the agency continuing to be understaffed due to the pandemic and budget cuts in past years.

LLC ROADMAP (Operating Business with Rental Activity)

 ACCOUNTING (You have TWO businesses)

• The bookstore or contracting business (example) is an operating business. Keep revenue and expenses separate from the rental business. This does not mean a separate checking account but it may be easier to maintain records. That is up to you.
 
o The bottom line profit is taxable for income and self-employment tax.
 
• The rental part is called a passive activity. Keep revenue and expenses separate from the bookstore.

o The bottom line profit is taxable for income tax but NOT self-employment.
 

PAYMENTS TO MEMBERS

1. Just take it. That is called a DRAW. Partners are NOT required (unlike a corporation) to DRAW according to ownership percentage. The DRAW itself is not a taxable event. The members (that’s what partners are called in an LLC – members) are taxed on the bottom line profit whether they take it (DRAW) or not.
 
2. There are NO W2 wages in partnership accounting.
 
3. If partners/members are being paid the equivalent of wages, that is called a GUARANTEED PAYMENT. That amount is deducted by the LLC as an expense. It is income taxed and self-employment taxed to the partner/member receiving the GUARANTEED PAYMENT.
 

SUMMARY

• Payment for services would be a GUARANTEED PAYMENT. Deductible by the LLC and taxable to the recipient.

• Just taking money (DRAW) is not in itself a taxable event, it is just money being transferred. The LLC does not receive a tax deduction.
 
 

2020 Efile Personal Tax Start Date is Feb 12, 2021

The opening day for filing 2020 individual returns electronically is scheduled for Monday, February 12, 2021, see IR-2021-16, which explains the February 12, 2021 start date for individual tax return filers allows the IRS time to do additional programming and testing of IRS systems following the December 27, 2020 Consolidated Appropriations Act (H.R. 133) tax law changes that provided a second round of Economic Impact Payments (EIP 2) and other benefits.