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Strong Belnap Helmers CPA, 5865 Tyrone Road, Suite 102, Reno, NV (2026)

08/10/2021

IRS Warns Businesses About Tax Promoter Scams – Did You Know?

As part of the Dirty Dozen list of the worst tax scams of 2021, the IRS has issued multiple warnings to business taxpayers about tax promoters. These individuals and entities promise to help businesses claim large deductions and credits that will dramatically reduce their tax. Many tax promoters charge substantial fees for their “services,” which often involve schemes that violate IRS regulations.

Some tax promoter scams deal with the Research and Experimentation Credit, commonly called the Research & Development or R&D Credit. Promoters often mislead business owners into believing that they can claim sizable R&D Credits with relatively little effort. In reality, to legally claim this credit, a business must demonstrate that a designated research activity satisfies a long list of IRS requirements. In addition, the progress of qualified research activities, and all associated expenses, must be thoroughly documented over a period of time.

Similarly, while conservation easements can provide legitimate tax deductions, tax promoters often peddle bogus “syndicated easements” based on phony partnerships. The IRS rejects many of these arrangements, and has recently stepped up enforcement of conservation easement rules. Tax promoters also push “micro-captive” insurance scams, pension plans that abuse international tax treaties, and shady methods to improperly defer capital gains on property sales.

The IRS recently created a new Office of Promoter Investigations (OPI) to crack down on these and similar scams. Importantly, the OPI is authorized to pursue action against not only promoters, but also any businesses that participate in the scams. In general, if a tax-reducing scheme sounds too good to be true, it usually is. To protect your enterprise, check with a business tax professional about the rules and regulations before claiming any of these deductions or credits.

08/04/2021

IRS Identity Protection PINs – Did You Know?

Beginning in 2021, the IRS now offers IP PINs to all interested taxpayers. Unlike a Social Security Number (SSN), this unique code is known only to the taxpayer and the IRS. Having an IP PIN helps to protect you against others filing fraudulent returns in your name, along with other forms of tax-related identity theft.

If you choose to obtain an IP PIN, you will need to include it on all electronic and paper IRS forms filed in 2021, including your 2020 federal tax return. Thereafter, you will receive a new IP PIN each year by mail. Although there is currently no way to opt out of the program once you have registered and received a PIN, the IRS plans to allow opt-outs beginning with tax year 2022.

The easiest way to apply for an IP PIN is to use the Get an IP PIN tool at http://www.IRS.gov/IPPIN. You will need to verify your identity by providing your legal name, birthdate, federal tax filing status, mailing address, and SSN or Individual Taxpayer Identification Number (ITIN). You will also need a financial account other than a checking or savings account, such as a major credit card, student loan, auto loan, mortgage, or home equity loan. If you have a mobile phone, you can request an activation code to receive your IP PIN instantly. Otherwise, the IRS will mail you the code you need to complete your registration and get your PIN.

If you cannot complete the online verification process but your adjusted gross income (AGI) is $72,000 or less, you may file Form 15227 (Application for an IP PIN) by mailing or faxing it to the IRS. You can then use your most recent tax return to complete the verification process over the phone with an IRS agent. Otherwise, you can apply for an IP PIN in person by making an appointment at an official IRS Taxpayer Assistance Center.

07/26/2021

Summer Activities May Affect Your 2021 Taxes – Did You Know?

Both major life events and small changes to your work or family routines can have an impact on your taxes. These events and changes often occur during the summer, especially this summer with the economy reopening. If your life circumstances take either a planned or unexpected turn this summer, you may want to take a few extra steps to prepare for tax season next spring.

If you get married, you should report any name or address change to the Social Security Administration, IRS and post office to ensure that you receive important tax documents. If your child returns to in-person day camps or daytime education programs, some of the cost may qualify for the Child and Dependent Care Credit. Make sure to save records of all fees paid.

Seasonal and part-time work create a variety of record keeping and tax reporting considerations. If you are a student and do not earn enough money to owe federal income tax, you may need to file a 2021 tax return to claim a refund of any tax withheld from your pay. Those who earn side income from a part-time job or gig economy work may need to adjust their paycheck withholding for their primary job to make sure enough tax is withheld. You can use the IRS Withholding Estimator tool (link below) to check where you stand.

Also keep in mind that income earned as a freelancer or independent contractor may be subject to self-employment tax. Figuring out whether you are officially an employee or an independent contractor can get tricky for temporary work. A tax pro can help you determine your status, and plan for self-employment tax if appropriate.

IRS Withholding Estimator: https://www.irs.gov/individuals/tax-withholding-estimator

07/19/2021

IRS Begins Sending 2021 Advance Child Tax Credit Payments – Did You Know?

On July 15, the IRS sent the first round of advance payments of the 2021 Child Tax Credit (CTC) to over 30 million families. Qualifying households will receive monthly payments of up to $300 per child under age 6, and up to $250 per child age 6 through 17, through the end of 2021. The payment amount depends on the taxpayer's adjusted gross income (AGI). Generally, the advance payments will total half the CTC that the IRS anticipates for the taxpayer for 2021.

The IRS is sending most CTC advance payments by direct deposit, so millions of taxpayers have already received their first payment. Paper checks are mailed in cases where the IRS does not have banking information for a qualifying family. It may take a week or more for mailed payments to arrive. Upcoming payments will be sent on August 13th, and on the 15th of September, October, November and December.

The IRS will automatically calculate and send advance CTC payments to taxpayers who qualify and have done any ONE of the following:
- Filed a 2020 federal income tax return
- Filed a 2019 federal income tax return
- Used the 2020 IRS Non-Filers Tool for Economic Impact Payments (EIPs)
- Used the 2021 Non-Filers Signup Tool for Advance CTC (see link below).

The IRS urges all potentially eligible Americans who are not required to file federal tax returns and have not yet used an online Non-Filers Tool to do so as soon as possible. If you filed returns for both 2019 and 2020 but the IRS has not yet processed your 2020 return, your advance payments will initially be calculated based on your 2019 return. Your monthly payment amount may change after your 2020 return is processed.

You can also use the Advance CTC portal to check your CTC eligibility, update your banking information, or opt out of advance payments if you prefer to claim your entire credit when you file your 2021 tax return.

IRS 2021 Advance CTC site, including Non-Filers Signup, Eligibility and Unenroll Tools:
https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021

07/13/2021

100% Business Deduction for Restaurant Food & Beverage in 2021 – Did You Know?

A special tax rule may enable many businesses, including sole proprietors and independent contractors, to take larger meal expense deductions in 2021 than the IRS usually allows. Ordinarily, deductions for food and beverage costs cannot exceed 50% of the actual expense. However, the 2021 rule enables businesses to deduct 100% of the cost of food and beverages from restaurants in certain cases beginning January 1, 2021 through December 31, 2022.

The provision defines a restaurant as a business that prepares food or beverages for retail customers to consume on-site, pick up, or receive by delivery. This definition excludes most grocery and convenience stores, unless the store contains a separate restaurant or cafe area. In addition, facilities overseen or owned by the employer claiming the deduction, such as a workplace cafeteria, generally do not qualify as restaurants under this rule.

In order for meal expenses to qualify for this special deduction, the following conditions must be met:

- The business owner or an authorized employee is present when the food and/or beverages are provided.
- The expense is paid to a restaurant, based on the definition above.
- The food and beverage costs are not lavish or extravagant for the circumstances.

The activity must also meet all the standard criteria for business meal deductions. A business tax advisor can help you determine whether your food and beverage expenses comply with IRS rules, and whether they qualify for a 100% deduction in 2021.

07/07/2021

IRS Issues New Warnings About Phone & Social Media Tax Scams – Did You Know?

The IRS recently updated its list of the 12 worst tax-related scams in America, known as the Dirty Dozen. Several current Dirty Dozen cases involve social media phishing, where scammers use social platforms to impersonate someone that a taxpayer knows and trusts.

For example, a scammer might "lurk" on a user's account, gathering personal information about the user from posts and public chats. The scammer then sends messages to the user that appear to come from a friend, family member or coworker. The messages may have links to websites related to the user's interests. However, clicking on the links triggers a download of spyware (software that the scammer uses to steal more private information) or ransomware.

Alternatively, the scammer may hack into a social media user's email or phone, then send fake messages to the user's friends and family. These messages may trigger malware downloads, or ask for donations to fake charities. All of these phishing methods can ultimately lead to tax-related identity theft. The IRS advises everyone to check the privacy settings on their social media accounts, and limit what they share publicly to prevent lurkers from mining personal data. If you receive an email or message from someone you know with a link or file, confirm that they sent it with a phone call or message them back.

The IRS also reminds Americans of the ongoing threat of phone scams involving IRS impersonation. Scammers may claim to be calling about a federal tax lien, or may threaten people with arrest for supposed tax issues. Remember that the IRS rarely initiates contact with taxpayers by phone, and NEVER demands payment via prepaid debit card, money order, wire transfer or gift card. If you ever doubt the legitimacy of an IRS phone call, do not provide any personal information. Hang up, then call the IRS directly at 1-800-829-1040 to ask about the call you received, along with any supposed issues raised by the potential scammer.

06/28/2021

Three New IRS Tools for 2021 Child Tax Credit Advance Payments - Did You Know?

The IRS recently launched three new online tools (links below) to help eligible Americans claim and manage their advance payments of the 2021 Child Tax Credit (CTC). In addition to increasing the maximum CTC amount and raising the age limit for qualifying children, the American Rescue Plan authorized the IRS to send monthly advance payments of the 2021 credit to millions of eligible families beginning on July 15.

The Child Tax Credit Eligibility Assistant helps families find out whether they qualify for the 2021 CTC. You do not need to set up an IRS online account in order to use this tool. Just answer 2-5 questions about whether you claimed the CTC in 2019 or 2020, where you live, and, in some cases, your tax filing status, family size and income. If the tool determines that you may qualify for the credit, you can follow the MANAGE YOUR ADVANCE PAYMENTS link to make sure you are enrolled to get monthly payments by check or direct deposit beginning in July.

The Child Tax Credit Update Portal provides additional information on eligibility for the 2021 CTC. However, in order to use it, you must either have an IRS online account, or go through an identity verification process. Once you determine that you are eligible, you can use this tool to:

- Unenroll from the program (for example, if you qualified for the CTC in 2019 or 2020 but do not expect to qualify in 2021 due to a family status or income change)
- Opt out of receiving advance payments, and instead receive your 2021 credit as a lump sum when you file your tax return
- Update your mailing address, family size, banking information for direct deposit, etc.

Most eligible families do not need to take any action, and will automatically receive monthly advance payments of the 2021 CTC from July through December. However, if you qualify for the credit but did not file a 2019 or 2020 tax return, you may need to register for this program using the Non-Filers Signup Tool. If you qualified for the CTC in past years but did not claim it, a tax professional may be able to help you file an amended return and perhaps receive an IRS refund for the credit.

CTC Eligibility Assistant: https://www.irs.gov/credits-deductions/advance-child-tax-credit-eligibility-assistant

CTC Update Portal: https://www.irs.gov/credits-deductions/child-tax-credit-update-portal

Non-Filers Signup Tool: https://www.irs.gov/credits-deductions/child-tax-credit-non-filer-sign-up-tool

06/21/2021

Summer Jobs - Did You Know?

If you're starting a summer job or know a teen or student who is, here is a useful tax-saving tip:

Students and teenage employees normally have taxes withheld from their paychecks by their employer after filling out a Form W-4.

However, if the job is regarded as self-employment, like baby-sitting or lawn care can be, they should keep good records of all expenses to help maximize potential deductions.

In the case of lawn care, potential deductible expenses may include business cards, fliers, fuel, equipment rentals, chemicals, work mileage, etc. A tax professional can help advise on potential deductible expenses.

06/14/2021

IRS Notifying Families Who May Qualify for Advance CTC Payments – Did You Know?

The American Rescue Plan Act of 2021 made three key changes to the Child Tax Credit (CTC) for tax year 2021. First, it increased the age limit for qualifying children to 17. Second, it raised the maximum credit from $2,000 per child up to $3,600 per child under 6, and $3,000 per child of age 6 through 17. Finally, it authorized the U.S. Treasury to make monthly advance payments of the 2021 credit beginning this July.

CTC advance payments will be sent to millions of taxpayers by check or direct deposit on the 15th of July, September, October, November and December, as well as on August 13th. The maximum payment amount will be $300 per child under 6, and $250 per child of age 6–17.

The IRS recently mailed letters to over 36 million U.S. households to notify them of their potential eligibility for these monthly payments. In most cases, the IRS determined possible eligibility based on taxpayers' 2020 tax returns, or information they provided via the Non-Filers Tool for 2020 stimulus payments. In cases where a person has not yet filed a 2020 return or their return has not been processed, the IRS used their 2019 return instead.

Most eligible taxpayers do not need to take any action to begin receiving advance CTC payments. However, those who have not filed a 2019 or 2020 federal tax return should file as soon as possible to ensure that they get payments if they qualify. You can submit a 2020 return to qualify for CTC payments even if you owe no tax and usually do not have to file IRS returns.

In the coming weeks and months, the IRS will also add a number of online tools to help ensure that all eligible taxpayers receive their advance CTC payments. These will include an Update Portal to provide the IRS with information on changes to your income or family size, an opt-out tool and a tool to determine your eligibility for the credit.

06/10/2021

Quarterly Estimated Tax Payments - Reminder

If you are making quarterly estimated tax payments to the IRS, the due date for the April 1 - May 31 quarter of the year is June 15th, 2021.

For payments made using IRS Direct Pay, you can make payments until 8PM EST, and for payments using a credit or debit card, payments can be made up to midnight on the due date.

06/08/2021

2020 Tax Filing Deadline for U.S. Taxpayers Abroad Remains June 15, 2021

The IRS recently issued a reminder to American taxpayers living and working outside the U.S. that they must file their 2020 federal tax returns by Tuesday, June 15, 2021.

This June 15 deadline applies to U.S. citizens, dual citizens and resident aliens whose tax home and physical dwelling both lie outside the 50 states, D.C. and Puerto Rico. It also applies to active military personnel who were serving overseas on their normal filing due date. The IRS recommends attaching a note to your return explaining why you qualify for the special deadline.

Ordinarily, members of these groups may file their returns up to two months after the general IRS spring deadline. However, even though the IRS moved the 2020 tax filing deadline for U.S. residents from April 15 to May 17, 2021, the deadline for taxpayers outside the country did not change.

Many taxpayers abroad must file IRS returns even if they do not owe tax. For example, If you qualify for the Foreign Earned Income Exclusion or Foreign Tax Credit, which can reduce or eliminate your U.S. tax, you must file an IRS return to claim these benefits. You may have to file one or more forms disclosing your foreign bank accounts and other financial interests. A tax advisor can help you determine your filing requirements.

06/02/2021

Expanded Child Tax Credit for 2021 with Advance Payments – Did You Know?

The recently enacted American Rescue Plan Act (ARPA) made important changes to the Child Tax Credit (CTC) for 2021. The Act raises the maximum age for a child to qualify for the CTC from 16 to 17. The maximum credit amount will also increase from the 2019 and 2020 level of $2,000 per child. Qualifying taxpayers will receive a credit of up to $3,600 for each child age 5 or younger, and $3,000 per child age 6 through 17.

The increased CTC amount applies for eligible taxpayers with adjusted gross incomes (AGIs) in the following ranges:
Single: AGI of $75,000 or less
Married Filing Jointly: AGI of $150,000 or less
Head of Household: AGI of of $112,500 or less

Qualifying taxpayers with AGIs above these limits, but below $200,000 for individuals or $400,000 for joint filers, will still receive a credit of at least $2,000 per child. The 2021 CTC will completely phase out starting with AGIs above the $200,000 / $400,000 threshold. Married taxpayers who file separately typically only receive a partial CTC amount.

The CTC will also be fully refundable for 2021, meaning that if the credit reduces your tax to less than zero, you may receive an IRS refund. Furthermore, many people may receive up to 50% of their 2021 CTC in the form of advance payments. The IRS will start issuing these payments periodically beginning in July. The remaining credit amount will be calculated when you complete your 2021 federal tax return.

Unless Congress takes additional action, these special CTC provisions will apply ONLY for tax year 2021. The changes have no effect on your 2020 tax return. A tax professional can help you determine whether you qualify for the CTC, and how to claim the credit if you do.

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