Recently, the IRS released it's annual "Dirty Dozen" of methods scammers use to take advantage of the public's apprehension in dealing with the IRS.  Due to the COVID-19 pandemic, scammers have additional opportunities with the Economic Impact Payments and other pandemic specific tax relief.  Click here to visit the IRS website and prepare yourself to be on guard for these scams.

Our last post identified stumbling blocks in the distribution of stimulus checks and how to overcome those stumbling blocks.  A lot has changed since then and yet the words "stumbling blocks" are still in play.  The IRS help page for the stimulus payments has mushroomed into a seemingly endless collection of FAQs but somehow all the questions have not been answered.  If you have not received your stimulus payment yet, click here to visit the trove of FAQs and hopefully you will find the answer you are searching for.  One last note, the IRS does provide a phone number for questions about the stimulus payments.  That number is (800)919-9835.

If the provisions of the CARES Act including the individual stimulus checks hasn't been anything else, it's been chaotic for sure.  As a result, the IRS is trying to smooth the bumps by developing a dedicated page at IRS.gov to find out the status of your stimulus check and to provide direct deposit information if your check hasn't been sent yet.  Although the button hasn't been made active yet, the fact that it is there gives hope that it will be live soon.  Click here to go straight to the IRS page to check on your stimulus. 

 Soon the first set of Stimulus Payments are set to go out.  These are the payments you have all heard a lot about in the news.  With these payments set to go out I thought it would be good to write and try to separate fact from fiction concerning these payments.  There is a lot of information out there about these, some good, some bad.  I will try to explain what I know about these payments in the bullet points below:

• The amounts of the Stimulus Payments are:

           o   $1,200 for single, head of household and married filing separate taxpayers
           o   $2,400 for married filing joint taxpayers
           o   $500 for each child listed as a dependent who is under 17

• These payments begin to phase out at various income (AGI) levels as follows:

           o   For singles and MFS it begins at $75,000 and total phase out is at $99,000
           o   For head of household it begins at $112,500 and total phase out is at $136,500
           o   For MFJ it begins at $150,000 and total phase out is at $198,000

• You will receive these payments one of two ways:

          o   Direct Deposit:  If the IRS has a bank account on record these payments will be direct deposited into that                               account.  To have a bank account of record you must have had a refund from your 2018 or 2019 Federal Form                         1040 direct deposited.   It is unclear if your banking information used to pay taxes due by EFT qualifies as a                          “bank  of record”. There is currently no clear guidance on that at this time.  Also there are various vendors stating                they can get your bank account set up with the IRS to receive the Stimulus Payment by direct deposit instead of                    paper check.  Use these at your own risk. 
         o   Paper Check:  If the IRS does not have a “bank of record” they will issue a paper check to the address on the                          latest return (2018 or 2019) filed.  If you have changed addresses since then you need to submit a Form 8822 to                    IRS as soon as possible.  You can find this form at www.irs.gov.

• These Stimulus Payments are 2020 Refundable Tax Credits.  They are being sent out now as “advance payments”.  When you file your 2020 return these credits will be “trued up” but ONLY in your favor.  Therefore if you received a reduced payment based on your 2018 or 2019 income level and for 2020 you fall below the phase out level you will receive the remaining portion of the credit when you file your 2020 return.  The same with children, if you had a child in 2019 or 2020 that you did not receive a credit for you will receive this credit when you file your 2020 return.  Currently there is no provision for a “crawl back” meaning if you received a payment based on your 2018 or 2019 return which would be phased out in 2020 you will not be required to pay it back.
• Because these payments are 2020 Tax Credits we will need to report this on your 2020 tax return.  NO, IT WILL NOT BE TAXABLE INCOME but will be reported.  You will receive a letter from the IRS within two weeks of them either making the direct deposit or mailing you a check.  This letter will report the amount of your payment.  Please keep this letter with your 2020 tax information.  If possible please go ahead and send us a copy when you receive it and we will place it in your file. 
• If you receive social security benefits and were not required to file a tax return for 2018 or 2019 you will still receive the Stimulus Payment.  The IRS will use records obtained from the Social Security Administration.  These payments will be direct deposited just as your social security benefits are.

 
As always know we are here for you should you have any questions.   Take care and stay safe.  This will be over soon.
 
J. Alan Hayes, CPA 

In an effort to keep liquidity in the economy and to allow businesses to endure the shutdowns and lack of traffic during this COVID-19 pandemic, the Treasury has made loans available to small businesses.  The two main loans are the Economic Injury Disaster Loan (EIDL) which is administered by the Small Business Administration and the Paycheck Protection Program (PPP) which is administered by local banks and credit unions approved as SBA 7(a) lenders.  To find more information about the EIDL loan including starting an application, visit the Small Business Administration's website via this link.  To find more information about the PPP loan including the terms and forgiveness provisions, contact your local SBA 7(a) lender or  visit the Small Business Administration's page about the PPP via this link.  The Treasury has also posted PPP loan information including an overview, information for lenders, information for borrowers, and an application to give an idea of information needed.  Click here and then select the applicable PDF for your situation.

Tennessee released Notice #20-07 on March 30, 2020 outlining the extension of the Business Tax filing and payment due date from April 15, 2020 to June 15, 2020.  It is important to note that the extended due date is different than the extended Franchise and Income Tax and Hall Income Tax due dates.  Click here to view the notice from the state.

Following in the footsteps of the IRS once again, the Tennessee Department of Revenue has moved the filing and payment due dates for Hall Income Tax returns.  Click here for the notice from the state.

As expected, the state of Tennessee Department of Revenue followed the lead of the IRS and moved the Franchise and Excise tax filing deadline and payment due date from April 15th to July 15th.  This includes quarterly estimated payments due April 15th.  The extension due date will remain October 15th per the notice.  Click here to read the notice from the Tennessee Department of Revenue.  

On March 21, the IRS moved the due date for all April income tax filings and payments due from April 15th to July 15th.  No action is required by the filer to receive the extended due date.  This applies to the first estimated payment due April 15th as well.  It is expected that most states will follow the lead of the IRS and move their due date as well.  When this is confirmed, we will post here on our website.  Click here to view the IRS notice.

The IRS and the Tennessee Department of Revenue have provided relief to those areas affected by the recent tornadoes.  The Federal Government declared Davidson County, Putnam County and Wilson County as Federal Disaster Areas after the tornadoes.  As a result, the IRS and state of Tennessee have moved the due date for selected returns for residents of these counties from April 15 to July 15.  Residents of these counties do not need to take any action to receive the extended date.  This applies to Federal Form 1040, Federal Form 1041, Federal Form 1120, Federal Form 941, Federal Form 990, Tennessee Form FAE 170, Tennessee Form INC 250 and all estimated tax payments, federal and state.  Click here for the IRS notice for further details.  Click here for the TDOR notice for state specific details.