Welcome to Baxter Tax Consulting – Assisting you with your financial and tax needs for 62 years!
Estimated Tax Payment Deadlines:
- April 15
- June 15
- September 15
- January 15 of the following year
When Using Payment Vouchers:
- Each estimated tax payment should be paid by check or money order AND be accompanied by Form 1040-ES payment voucher.
- If you made an estimated tax payment last year you should receive a copy of the Form 1040-ES payment vouchers preprinted with your name, address, and social security number on it by mail from the Internal Revenue Service.
- Using the preprinted vouchers will speed up processing and reduce the chance of error.
- If you did not pay estimated taxes last year, but plan to do so this year, you will need to obtain a tax Form 1040-ES payment voucher from an accountant or via the Internet.
Please refer to www.IRS.gov for the proper address to mail your estimated tax payments.
Please make check payable to: “United States Treasury.” Add to the memo line on your check: 1040ES/1040 + the tax year for which you are paying.
Regarding Forms W-2 & 1099:
- Employers on or before January 31 of each year MUST mail these out.
- You will receive a separate W-2 Form from each employer for whom you have worked.
- If you have not received your W-2 Forms by February 15th, contact your employer or the Internal Revenue Service.
Regarding Form 1099:
You should receive your 1099 form(s) by February 1st of each year.
Underpayment Penalty – If you did not pay enough tax either through withholding or by making estimated tax payments, you will have an underpayment of estimated tax due AND you may have to pay a penalty fee.
Mandatory for this year – Coming in to have your taxes done? Due to new IRS and State regulations, the following information is needed for the completion of your tax return and for every person being claimed on your return.
Every person claimed on your return must provide copies of at least two of the following items:
- Driver’s License
- Social Security Card
- Birth Certificate
- Earned Income Tax Credit (EITC) – If you are claiming the EITC credit from any of the categories below, you must provide two different documents for each qualifying individual:
- School records or statement
- Landlord or property management statement
- Healthcare provider statement
- Medical records
- Childcare provider
- Social service records or statements
- Employer statement
- Place of worship statement
- Indian tribal official statement
- Disability of qualifying child
- Doctor Statement
- Other healthcare provider
- Social services agency statement
- Documents or other information
- Business license
- 1099 forms
- Bank statements
- Taxpayer summary of expenses
- Schedule C – If you are filling a schedule C you must bring the following:
- All bank statements
- 1099 K
- Proof of all deductions
- Mileage logbook
- Phone/Cell bills
- All receipts for meals and entertainment
- Proof of all schedule C deductions
What is New For Tax Season 2022?
Due Date of Return: File Form 1040 or 1040-SR by April 18, 2022 (not April 15). This is because of the Emancipation Day holiday in the District of Columbia – even if you do not live there. If you live in Maine of Massachusetts, you have until April 19, 2022. That is because of the Patriot’s Day holiday held in those states.
Tuition and Fees Deduction Not Available: The tuition and fees deduction is not available after 2020. Instead, the income limitations for the lifetime learning credit have been increased.
Economic Impact Payment (EIP): Any economic impact payment that you received is not taxable for federal income tax purposes, but will reduce your recovery rebate credit.
2021 Recovery Rebate Credit: This credit is figured like last year’s economic impact payment, EIP 3, except eligibility and the amount of the credit are based on your tax year 2021 information.
Standard Deduction Amount Increased: For 2021, the standard deduction amount has been increased for all filers. The amounts are:
Single or Married filing separately — $12,550.00
Married filing jointly, or Qualifying Widow(er) — $25,100.00
Head of Household — $18,800.00
Virtual Currency: If, in 2021, you engaged in a transaction involving virtual currency, you will need to answer “Yes” to the question on page 1 of Form 1040 or 1040-SR. All taxpayers, not just taxpayers who engaged in a transaction involving virtual currency, must answer this question.
Credits for Sick and Family Leave for Certain Self-employed Individuals: The Families First Coronavirus Response Act (FFCRA) helped self-employed individuals affected by Coronavirus by providing paid sick leave and paid family leave credits equivalent to those that employers are required to provide to their employees for qualified sick leave wages and qualified family leave wages. The Covid-related Tax Relief Act of 2020 extended the period during which individuals can claim these credits.
Extension and Expansion of Credit for Qualified Sick and Family Leave Wages: The American Rescue Plan (ARP) of 2021, enacted on March 11, 2021, provides that certain self-employed individuals can claim credits for up to 10 days of “paid sick leave,” and up to 60 days of “paid family leave,” if they are unable to work or telework due to circumstances related to Coronavirus. Self-employed individuals may claim these credits for the period beginning of April 1, 2021, and ending September 30, 2021.
Form 9000, Alternative Media Preference: Beginning in 2021, taxpayers with print disabilities can use Form 9000 to elect to receive notices from the IRS in an alternative formats including Braille, large print, audio, and electronic. You can attach Form 9000 to your Form 1040 or 1040-SR or you can mail it separately.
All Taxpayers Are Now Eligible For Identity Protection PIN: Beginning in 2021, the IRS Identity Protection PIN (IP PIN) Opt-in Program has been expanded to all taxpayers who can properly verify their identity. An IP PIN helps prevent your social security number from being used to file a fraudulent federal income tax return.
Direct Deposit Is Now Available for Returns Filed Late: You can now receive a direct deposit of your refund even if you file your 2021 return after November 30, 2022.
Expanded Dependent Care Assistance: The ARP expanded the child and dependent care tax credit for 2021 by making it refundable for certain taxpayers and making it larger. The dollar limit on qualifying expenses in 2021 increases to $8,000.00 for one qualifying person and $16,000.00 for two or more qualifying people.
NOTE: The rules for calculating the credit have also changed; the percentage of qualifying expenses eligible for the credit has increased, along with the income limit at which the credit begins phasing out. Additionally, for taxpayers who receive dependent care benefits from their employer, the dollar limit of the exclusion amount increases for 2021.
Child Tax Credit: Under the ARP, the child tax credit has been enhanced for 2021. The child tax credit has been extended to qualifying children under age 18. Depending on modified adjusted gross income, you may receive an enhanced credit amount of up to $3,600.00 for a qualifying child under age 6 and up to $3,000.00 for a qualified child over age 5 and under age 18.
The enhanced credit amount begins to phase out where modified adjusted gross income exceeds $150,000.00 in the case of a joint return or surviving spouse, $112,500.00 in the case of a head of household, and $75,000.00 in all other cases.
If you or your spouse (if file jointly) lived in the United States for more than half the year, the child tax credit will be fully refundable even if you don’t have earned income. If you do not meet this residency requirement, your child tax credit will be a combination of a nonrefundable child tax credit and a refundable additional child tax credit, as was the case in 2020.
Schedule 8812 (now included in Form 1040): The Schedule 8812 (Form 1040) and its instructions have been revised to be the single source for figuring and reporting the child tax credits and credit to other dependents.
THE FOLLOWING IS THE MOST IMPORTANT CHANGE FOR 2022:
Letter 6419: If you received advance child tax credit payments during 2021, you will receive Letter 6419. Keep this notice for your records.
Additional Tax on Excess Advance Child Tax Credit Payments: If you received advance child tax credit payments during 2021 and the credits for figure using Schedule 8812 (Form 1040) are less than what you received, you may owe an additional tax.
Premium Tax Credit (PTC): The ARP expanded the PTC by eliminating the limitation that a taxpayer’s household income may not exceed 400% of the federal poverty line and generally increases the credit amounts. In addition, in 2021, if you receive unemployment compensation, you are generally eligible to claim the PTC if you meet the other requirements.
The Following Are Changes to the Earned Income Credit (EIC):
EIC Rules for Taxpayers Without a Qualifying Child: Special rules apply if you are claiming the EIC without a qualifying child. In these cases, the minimum age has been lowered to age 19 except for specified students who must be at least age 24 at the end of the year. However, the applicable minimum age is lowered further for former foster youth and qualified homeless youth to age 18.
EIC Rules for Taxpayers With a Qualifying Child: If you are claiming the EIC with a qualifying child, you should follow the rules that apply to filers with a qualifying child or children when determining whether you are eligible to claim the EIC even if your qualifying child has not been issued a valid Social Security Number (SSN) on or before the due date of your return (including extensions). However, when determining the amount of EIC that you are eligible to claim on your return, you should follow the rules that apply to taxpayers who do not have a qualifying child. (*** See paragraph above.)
Rules for Separated Spouses: If you are married but do not file a joint return, you may qualify to claim the EIC if you live with a qualifying child for more than half the year and either life apart from your spouse for the last 6 months of 2021 or are legally separated according to your state law under a written separation agreement or a decree of separate maintenance and do not live in the same household as your spouse at the end of 2021.
Investment Income Limit Increased: The amount of investment income you can receive and still be eligible to claim the EIC has increased to $10,000.00.
Identity Verification: The IRS launched an improved identity verification and sign-in process that enables more people to securely access and use IRS online tools and applications. To provide verification services, the IRS is using ID.me, a trusted technology provider. The new process is one more step the IRS is taking to ensure that taxpayer information is provided only to the person who legally has a right to the data.
Personal Protective Equipment (PPE): Amounts paid for PPE, such as masks, hand sanitizer, and sanitizing wipes, for the primary purpose of preventing the spread of Coronavirus, are qualified medical expenses. If the amounts were paid or reimbursed under a health flexible savings account, health reimbursement arrangement, or any other health plan, the amounts are not deductible on Schedule A (Form 1040).
Standard Mileage Rates: The standard mileage rate allowed for operating expenses for a car when you use it for medical reasons decreased to 16 cents a mile. The 2021 rate for use of your vehicle to do volunteer work for certain charitable organizations remains at 14 cents a mile, and the rate for business use of a vehicle is 56 cents a mile.
Modified AGI Limit for Traditional IRA Contributions: For 2021, if you are covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is:
- More than $105,000.00 but less than $125,000.00 for a married couple filing a joint return or a qualifying widow(er),
- More than $66,000.00 but less than $76,000/00 for a single individual or head of household, or
- Less than $10,000.00 for a married individual filing a separate return.
If you, either live with your spouse of file a joint return, and your spouse is covered by a retirement plan at work but you are not, your deduction is phased out if your modified AGI is more than $198,000.00 but les than $208,000.00. If your modified AGI is $206,000.00 or more, you cannot take a deduction for contributions to a traditional IRA.
Modified AGI Limit for Roth IRA Contributions: For 2021, your Roth IRA contribution limit is reduced (phased out) in the following situations:
- Your filing status is married filing jointly or qualifying widow(er) and your modified AGI IS AT LEAST $198,000.00. You cannot make a Roth IRA contribution if your modified AGI is $208,000.00 or more.
- Your filing status is single, head of household, or married filing separately and you did not live with your spouse at any time in 2021 and your modified AGI is at least $125,000.00. You cannot make a Roth IRA contribution if your modified AGI is $140,000.00 or more.
- Your filing status is married filing separately, you lived with your spouse at any time during the year, and your modified AGI is more than zero. You cannot make a Roth IRA contribution if your modified AGI is $10,000.00 or more.
Business Meals: Section 210 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 provides for the temporary allowance of a 100% business meal deduction for food or beverages provided by a restaurant and pair or incurred after December 31, 2020, and before January 1, 2023.
Estimated Tax Changes for 2022: When you figure how much income tax you want withheld from your pay and when you figure your estimated tax, consider tax law changes effective in 2022.
Adoption Credit: The adoption credit and the exclusion for employer-provided adoption benefits have both increased to $14,440.00 per eligible child in 2020. The amount begins to phase out if you have modified AGI in excess of $216,660.00 and is completely phased out if your modified AGI is $256,660.00 or more.
Refunds For Returns That Were Filed LATE:
If you were due a refund but neglected to file a return, you must file a return within 3 years from the date the return was due (including extensions) to obtain a refund.
Frivolous Tax Returns:
- The IRS has published a list of positions that are identified as frivolous
- The penalty for filing a frivolous tax return is $5,000.00
- Remember to bring, fax, or scan via e-mail your relevant documents
Virtual Office Phones: (626) 599–8999, (626) 599-8998, (562) 588-3873, and/or (562) 357-4253
FAX: (626) 599-8073