Tax Alerts from CCH

The IRS announced that it will be issuing two separate information letters to taxpayers this month (January 2022). Please include these letters, if applicable, with your 2021 individual tax information. These payments need to be reconciled on the 2021 individual income tax return. You may send them as soon as received or provide them with the rest of your data.

If you received either a first or second round PPP loan after March 31, 2021, the forgiveness of that loan will be taxable on your California income tax return. Depending on the size of the loan, you may need to pay additional amounts for your 2021 California estimated taxes to account for this income increase.

As we approach year-end, it is time to think about steps you may take to help reduce your 2021 tax bill. In what appears to be the new normal, 2021 is shaping up to be a year with plenty of tax law changes. COVID-related disaster relief, signed into law last December, made several favorable (mostly temporary) changes to the 2021 rules. In March, the American Rescue Plan Act, with another set of tax law changes, was enacted. In addition to the known changes impacting 2021, we may also end the year with some other big (and probably not so favorable) tax law changes.

California recently passed AB 150, which included a provision to establish an elective passthrough entity (PTE) tax. This passthrough entity tax is intended to provide California taxpayers a method to structure their state income tax compliance in a way which provides some relief from the current federal limits on individual state and local tax deductions.

You may recently have received a letter from the IRS stating that on July 15, 2021 the IRS will begin issuing advance Child Tax Credit payments for those with qualifying dependents. As you prepare to receive these payments, it is important to understand a few issues.

April 23, 2021 - California Bill AB-80 was recently amended and includes some significant changes as it pertains to PPP Loan Forgiveness for California Tax purposes.

While we are extremely grateful for the economic impact payments (i.e. stimulus checks) that have been issued, these payments cause complications in the preparation of individual tax returns. If you have any questions or concerns, please do not hesitate to contact us.

To Our Valued Clients and Friends, In recent years we have noticed an uptick in IRS and FTB notices. The #1 cause of these notices are incorrect estimated tax payment amounts being reported on individual taxpayer returns.

You may have read one of the many headlines which represent the forgiveness of the Payroll Protection Program (PPP) loans is not taxable. While this statement is technically truthful, it is not the whole story. We have received more information in the last few months that the Internal Revenue Service (IRS) will be interpreting the law such that PPP loan forgiveness is taxable.

It is possible that additional COVID-19-related tax changes may be implemented as the year progresses. As always, we are paying close attention to the ever-changing tax environment to discover tax planning opportunities that may put more cash in your pocket. In the meantime, here are some ideas to evaluate this fall.