Federal Tax News
1. The deadline for the third 2021 estimated tax payment is coming up on September 15.
Changes in the economy brought by COVID-19 include a new crop of self-employed persons, such as gig-economy workers. Like most people with income that isn’t subject to withholding, these workers may need to make estimated tax payments for the first time.
Generally, estimated tax payments are required for those who expect to owe a net tax of $1,000 or more on their 2021 federal tax returns. Underpayments or late payments could result in penalties, even if you expect a refund. To calculate payments, use Form 1040-ES (Estimated Tax for individuals). Contact us with questions. Here is more information: http://bit.ly/2Xh7y8Q
2. A best-selling author loses in court.
The author argued in a federal appeals court that some of the income from her writing and related activities wasn’t self-employment income. She earned most of her income through contracts with publishers of her books. She also earned income from a noncompete agreement and the licensing of her likeness and name.
The author argued that the number of hours she spent writing and doing promotional activities made them “sporadic” activities that weren’t a trade or business or subject to self-employment tax. She reported some income as “supplemental income” and didn’t pay self-employment tax on it, but the court rejected the approach. (Slaughter, CA 11, 8/3/2021)
3. The IRS is providing relief to certain employers claiming the Work Opportunity Tax Credit (WOTC).
Specifically, the tax agency has provided a 28-day extension of the deadline for employers claiming the WOTC to submit a request to a designated local agency to certify that an employee hired between January 1, 2021 and October 8, 2021, is a designated community resident or a qualified summer youth employee. To be certified as such, an employee must have a principal place of residence within an Empowerment Zone where the employee continuously resides.
This transition relief allows employers to submit Form 8850 for these employees until November 8, 2021. (Notice 2021-43)
4. Protect your financial health in case of a disaster.
When disaster strikes, the IRS warns that quick access to your personal records is crucial. While there’s time, follow these tips. Review and update your emergency plan annually. Create electronic copies of documents, such as bank statements, tax returns and insurance policies, and keep them in a safe place. Take photos or a video record of valuables to assist you if you need to file a claim.
Keep in mind that if you’re affected by a disaster, there may be tax relief available in the form of deductible losses on your tax return. You may also qualify for help from FEMA. For more information, visit: https://bit.ly/3CFu8sc
5. The IRS announces that 2021 family leave tax credits are available for employees who help others receive vaccinations.
Wages paid for leave taken to accompany an individual who’s obtaining a COVID-19 vaccination (or to care for an individual who’s recovering from a vaccination) may be considered qualified family leave wages for purposes of the qualified family leave wages credit.
In addition, wages may be considered qualified sick leave wages for purposes of the qualified sick leave wages credit. This rule applies to wages paid, and to self-employment income, with respect to leave taken from April 1, 2021, through September 30, 2021. For more information: https://bit.ly/3jGnmtc