Category: Uncategorized

On this week’s episode of MSATP TV, Rob Smith joins Executive Director Bill Feehley to tell us about his class OneNote – Your Own Personal Internet he will be presenting at the MSTAP Annual Convention & Banquet in Ocean City, MD on June 4th. Be sure to like/follow us on Facebook to catch all the MSATP TV episodes live.

Watch on YouTube. 

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The Young Professionals Leadership Program Application Deadline Extended | Applications Must Be in by April 16, 2021

If you are looking to build and develop your leadership skills or have an employee you would like to recommend to MSATP’s Young Professionals Leadership Program, the deadline to apply has been extended to April 16, 2021!

The mission of this year-long educational training and development program is to encourage qualifying individuals who display leadership skills to take charge in the new wave of the accounting and tax preparation professions. This program affords employers a cost-effective option to further the development of their staff, strengthen leadership capacity, and establish pathways to leadership within their practice.

MSATP has engaged top leadership trainers to build a curriculum that specifically fosters a community of support and resource to students and young professionals who show tremendous capability and enthusiasm for the profession. Only 10 professionals and students will be accepted into the program.

For more information, click here.

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IRS Provides Guidance for Employers Claiming the Employee Retention Credit for First Two Quarters of 2021 | A-2021-74

The Internal Revenue Service issued guidance for employers claiming the Employee Retention Credit under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) modified by the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (Relief Act).

Notice 2021-23 explains the changes to the Employee Retention Credit for the first two calendar quarters of 2021, including:

• the increase in the maximum credit amount,
• the expansion of the category of employers that may be eligible to claim the credit,
• modifications to the gross receipts test,
• revisions to the definition of qualified wages, and
• new restrictions on the ability of eligible employers to request an advance payment of the credit.

As a result of the changes made by the Relief Act, eligible employers can now claim a refundable tax credit against the employer share of Social Security tax equal to 70% of the qualified wages they pay to employees after Dec. 31, 2020, through June 30, 2021. Qualified wages are limited to $10,000 per employee per calendar quarter in 2021. Thus, the maximum employee retention credit available is $7,000 per employee per calendar quarter, for a total of $14,000 for the first two calendar quarters of 2021.

For more information, click here.

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Treasury, IRS Provide Guidance on Tax Relief for Deductions for Food or Beverages from Restaurants | IR-2021-79

The Treasury Department and the Internal Revenue Service issued Notice 2021-25 providing guidance under the Taxpayer Certainty and Disaster Relief Act of 2020. The Act added a temporary exception to the 50% limit on the amount that businesses may deduct for food or beverages. The temporary exception allows a 100% deduction for food or beverages from restaurants.

Beginning Jan. 1, 2021, through Dec. 31, 2022, businesses can claim 100% of their food or beverage expenses paid to restaurants as long as the business owner (or an employee of the business) is present when food or beverages are provided and the expense is not lavish or extravagant under the circumstances.

For more information, please click here.

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IRS Issuing Third Economic Impact Payments to Non-Filers and Most Federal Beneficiaries | COVID Tax Tip 2021-43

The IRS continues to issue the third Economic Impact Payment to eligible individuals. This includes Social Security recipients and other federal beneficiaries who do not normally file a tax return. Most of these payments will be sent electronically and received on April 7.

Most of these payments will be sent electronically – by direct deposits or to existing Direct Express cards – they should arrive on the official payment date of April 7.

This round of third payments applies to eligible Social Security retirement, survivor or disability, Supplemental Security Income, and Railroad Retirement Board beneficiaries who don’t file tax returns. In addition, many federal beneficiaries who filed a 2019 or 2020 tax return or used the Non-Filers tool last year were issued Economic Impact Payments, if eligible, during the last three weeks, along with other taxpayers.

For more information, click here.

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IRS Extends Additional Tax Deadlines to May 17 | COVID Tax Tip 2021-45

Following the extension of the filing and payment deadline for individuals to May 17, 2021, the IRS announced other tax deadline extensions to the same date.

Here’s what’s affected:

Contributions to IRAs and health savings accounts

People now automatically have until May 17, 2021, to make 2020 contributions to their:

• Individual retirement arrangements
• Health savings accounts
• Archer medical savings accounts
• Coverdell education savings accounts

The deadline for reporting and paying the 10% additional tax on amounts included in gross income from 2020 distributions from IRAs or workplace-based retirement plans is now May 17, 2021. Lastly, the due date for Form 5498 series returns related to these accounts is now June 30, 2021.

2017 unclaimed refunds The law provides a three-year window to claim a refund. Normally, April 15, 2021, is the deadline to claim a refund from tax year 2017 but, the IRS has extended it to May 17, 2021. To get the unclaimed refund, a taxpayer must properly address and mail the tax return, postmarked by May 17, 2021. If a taxpayer doesn’t file a return within three years, the money becomes property of the U.S. Treasury.

Foreign trusts and estates Foreign trusts and estates with federal income tax filing or payment obligations, who file Form 1040-NR, now have until May 17, 2021.

2021 Annual Filing Season Program application deadline Tax return preparers who’d like to participate in the Annual Filing Season Program for calendar year 2021 now have until May 17, 2021, to file their application with the IRS.

No extension for estimated tax payments April 15, 2021 is still the deadline to make first quarter estimated tax payments. Withholding is automatic for most employees, but some taxpayers’ income isn’t subject to income tax withholding. These taxpayers must generally make quarterly estimated tax payments. Income that may require estimated tax payments includes:

• Self-employment
• Interest
• Dividends
• Alimony
• Rentals

For more information, please click here.

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Join the Tax Payer Advocacy Panel and Help Improve the IRS; Apply by May 14 | IR-2021-73

The Internal Revenue Service today announced it is seeking civic-minded volunteers to serve on the Taxpayer Advocacy Panel (TAP).

The TAP is a federal advisory committee that listens to taxpayers, identifies major taxpayer concerns and makes recommendations for improving IRS service and customer satisfaction.

Taxpayers interested in serving on the panel may apply between April 5 and May 14.

National Taxpayer Advocate Erin Collins recently expressed her appreciation for the contributions of TAP volunteers to improve the experience of U.S. taxpayers. “I am grateful to these citizens for volunteering their time and talent to the Taxpayer Advocacy Panel,” she said. “I am very proud of the accomplishments of the TAP last year, and I look forward to the TAP bringing its valuable taxpayer perspective in recommending changes to tax administration to achieve the quality service that taxpayers expect and deserve.”

For more information, please click here.

On this week’s episode of MSATP TV, Executive Director Bill Feehley and Ellen Silverstein discussed MSATP’s Annual Convention & Banquet! Remember to follow us on Facebook to catch all our MSATP TV episodes live!

If you are interested in learning more about the Annual Convention & Banquet, please click here.

Watch on YouTube.

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Important Notice Regarding Your License Registration or Permit Renewal Dates – Occupational and Professional Licensing | Maryland Department of Labor

On March 9, 2021, Governor Larry Hogan issued Executive Order No. 21-03-09-03 addressing the renewal dates of expiring licenses, registrations and permits. The new order amends and restates the earlier executive order of March 12, 2020 concerning expiration dates.

From March 12, 2020 until March 9, 2021, the Maryland Department of Labor’s Division of Occupational and Professional Licensing has allowed licensees to operate under an extended status without requiring them to renew their respective licenses, registrations or permits during the governor’s mandated grace period. However, per the new order, we will now begin a phase-in period to restore expiration dates to normal intervals.

For more information, click here.

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Announcement 2021-7 | A-2021-07

Announcement 2021-7 notifies taxpayers that amounts paid for personal protective equipment for the primary purpose of preventing the spread of the Coronavirus Disease 2019 are amounts paid for medical care under § 213(d) of the Internal Revenue Code.  As a result, the announcement confirms that these amounts are qualified medical expenses eligible to be paid or reimbursed without being included in gross income under health flexible spending arrangements (health FSAs), Archer medical savings accounts (Archer MSAs), health reimbursement arrangements (HRAs), or health savings accounts (HSAs).  In addition, the announcement notifies administrators of group health plans regarding the ability to make certain plan amendments pursuant to the announcement.

Announcement 2021-7 will appear in IRB 2021-15, dated April 12, 2021.

For more information, click here.

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Paycheck Protection Program Extended

On March 30th, President Biden signed into law the two-month extension to apply for a Paycheck Protection Program (PPP) loan. As a refresher, the legislation extends PPP through May 31 and allows 501(c)(6) organizations and others more time to pursue a second PPP loan. Further, if eligible organizations apply by May 31, the Small Business Administration will permit lenders an additional 30 days to process and approve any outstanding applications.

Eligibility criteria for a second PPP loan are as follows: 

• The applicant received a first PPP loan and will or has used the loan only for authorized uses;
• The applicant employs no more than 300 people; and
• The applicant can demonstrate at least a 25-percent reduction in gross receipts between comparable quarters in 2019 and 2020.

For more information, please click here.

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Governor Hogan Announces Replenishment of Maryland’s Unemployment Insurance Trust Fund | Maryland Chamber of Commerce

On March 31st, Governor Larry Hogan was joined by legislative leaders to announce a historic, bipartisan agreement over how the state will spend the $6.355 billion in funding allocated to Maryland in the federal American Rescue Plan Act. The American Rescue Plan Act passed in early March with the promise of supporting struggling families and communities with direct relief. Included in the $1.9 trillion package is $360 billion earmarked for states, counties, cities and tribal governments to cover increased costs, replenish lost revenue and mitigate the economic fallout from the COVID-19 pandemic.

“I’m pleased to announce today that we have once again reached an historic bipartisan agreement on a fiscally responsible budget accord, which effectively targets relief to Marylanders most in need,” said Governor Hogan during the announcement.

Importantly, Governor Hogan’s announcement included the following:

• $1.1 billion will be spent to replenish Maryland’s Unemployment Insurance Trust Fund in order to maintain its solvency and stabilize rates over the next two calendar years;
• $800 million will be added to existing Maryland Emergency Economic Relief Programs;
• $600 million for the safe reopening of schools;
• $300 million for a broadband technology initiative to expand access to high-speed internet;
• $100 million for employment training and apprenticeship programs;
• $100 million to support state employees providing essential services during the pandemic;
• $500 million in infrastructure and transit improvements;
• $300 million to provide a critical lifeline for struggling Marylanders including low income with utility programs, temporary disability payments, etc.

For more information, click here.

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Carroll County Accepts Maryland Relief Act of 2021 and Maryland Recovery Now Grant Funding

The Carroll County Board of Commissioners voted to accept Maryland Relief Act of 2021 funding for Carroll County, involving four (4) new business grants from the State of Maryland including the Maryland Recovery: Nonprofits Carroll County grant. The State of Maryland Relief Act of 2021, passed in February 2021, includes more than $1 billion in tax relief and economic stimulus for struggling families and small businesses suffering because of the COVID-19 pandemic.

Application information including criteria, dollar amounts, and start/close dates vary for each grant with more information posted as it becomes available. All information will be available on the Department of Economic Development’s website. Interested businesses or persons should check the site regularly for updated information and apply online from this site.

For more information, please click here.

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University Students and Staff Should be Aware of IRS Impersonation Email Scam | Tax Tip 2021-42

People should be aware of an ongoing IRS-impersonation scam that appears to target educational institutions, including students and staff who have .edu email addresses. The suspect emails display the IRS logo and use various subject lines, such as Tax Refund Payment or Recalculation of your tax refund payment. It asks people to click a link and submit a form to claim their refund.

The scam website requests taxpayers provide their:

• Social Security number
• First name
• Last name
• Date of birth
• Prior year annual gross income
• Driver’s license number
• Current address
• City
• State/U.S. territory
• ZIP code/postal code
• Electronic filing PIN

For more information, please click here.

Executive Director Bill Feehley and Jim Arnie join us on MSATP TV for another update on the legislative changes making their way through Annapolis. Please follow us on Facebook to catch all our MSATP TV episodes live!

Jim and Bill will join us again on MSATP TV at the end of the legislative session for a review of the bills that were at first vetoed, but now have become law.

Watch on YouTube.

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American Rescue Plan Act of 2021 – Don’t File Related Amended Returns Yet

The IRS urges taxpayers not to file amended returns related to the new legislative provisions or take other unnecessary steps at this time.

The IRS is reviewing implementation plans for the newly enacted American Rescue Plan Act of 2021.

Additional information will be made available as soon as possible about:

• Unemployment (IRS emphasizes not filing amended returns, until it issues additional guidance)
• New round of Economic Impact Payments
• Child Tax Credit, including advance payments
• Other tax provisions

For more information, click here.

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The University of Maryland Robert H. Smith School of Business is hosting an event to teach students and young professionals how to complete and file a tax return. MSATP’s Executive Director Bill Feehley will be teaching the webinar and helping you get through tax season on March 31st from 5-6pm. If you wish to register, please send webinars@msatp.org for Zoom information.

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People Who Adopt May Benefit From This Special Tax Credit | IR-2021-37

The adoption process can be expensive. Fortunately, the adoption tax credit can help offset some those expenses Taxpayers who adopted or started the adoption process in 2020 should review the rules for this credit.

Here are some facts to help people understand the credit and if they can claim it when filing their taxes:

• The maximum adoption credit taxpayers can claim on their 2020 tax return is $14,300 per eligible child.
• There are income limits that could affect the amount of the credit
• Taxpayers should complete Form 8839, Qualified Adoption Expenses. They use this form to figure how much credit they can claim on their tax return.
• An eligible child must be younger than 18. If the adopted person is older, they must be physically or mentally unable to take care of themselves.
• This credit is non-refundable. This means the amount of the credit is limited to the taxpayer’s taxes due for 2020. Any credit leftover from their owed 2020 taxes can be carried forward for up to five years.

For more information, click here.

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New Small Business Loans of up to $500,000 | Maryland Chamber of Commerce

The Small Business Administration announced this Wednesday that starting the week of April 6, companies harmed by the coronavirus pandemic can borrow up to $500,000 through their Economic Injury Disaster Loan program. The agency has $270 billion left to lend through the pandemic relief program and raising the cap will now allow small businesses that had previously received a loan to apply for an increase.

For more information, please click here.

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Guidance on Employee Retention Credit

The IRS issued guidance for employers claiming the employee retention credit under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), as modified by the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (Relief Act), for calendar quarters in 2020. This guidance applies to qualified wages paid after March 12, 2020, and before January 1, 2021 and includes clarifications and describes retroactive changes applicable to 2020, primarily relating to expanded eligibility for the credit.

The IRS plans to release additional guidance soon addressing changes for 2021.

For more information, click here.

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Guidelines for the Retail Sales and Use Tax Exemption for Personal Protective Equipment

Effective March 11, 2021, Virginia House Bill 2185 and Senate Bill 1403 amend the Code of Virginia to add Va. Code § 58.1-609.14, providing a temporary exemption from the Retail Sales and Use Tax for qualifying purchases of personal protective equipment (PPE).

The exemption is only valid for qualifying purchases of PPE made on or after March 11, 2021, and prior to the expiration of the last executive order issued by Governor Northam related to the COVID-19 pandemic and the termination of the COVID-19 Emergency Temporary Standard and any permanent COVID-19 regulations adopted by the Virginia Safety and Health Codes Board. No refunds will be provided regarding purchases made prior to March 11, 2021, or after the expiration of the exemption.

For more information, click here.

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Report Large Cash Transactions; E-File Encouraged

The IRS recently reminded businesses of their responsibility to file Form 8300, Report of Cash Payments Over $10,000, and encourages e-filing to help them file accurate, complete forms. A fact sheet helps businesses understand how to report large cash transactions.

For more information, click here.

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What Employers Need to Know About Repayment of Deferred Payroll Taxes

The CARES Act allowed employers to defer payment of the employer’s share of Social Security tax. Employers must pay back these deferred taxes by their applicable dates.

For more information, click here.

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IRS Takes Steps to Help Marijuana Businesses Stay Compliant

The Commissioner of the IRS, Small Business/Self-Employed division, Eric Hylton, gives candid insights on a variety of cannabis industry issues from the federal perspective at an informational webinar; hosted by the Payments Banking and Compliance Conference. One of those issues being that states are already legalizing marijuana regardless of federal policy, creating complications that need to be addressed.

For more information, click here.

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Important Reminder Regarding ERC and PPP | Payroll Services LLC

Quarter 2 ERC:

As we enter the second quarter, if you qualified for the ERC based on revenue decline only, you will need to be sure you still qualify. You may qualify using Q1 2021 to Q1 2019, or if at the end of Q2, use Q2 2021 to Q2 2019.

Be sure to be on the look out for “re-opening” changes that may alter your “partial suspension” qualifications. We do our best to stay up to date on the surrounding states, however each County may do things different. If you have questions about your particular situation please reach out to us to discuss.

The ERC balances “reset” on April 1st. All qualified wages up to $10,000 will be eligible for a 70% refundable credit.

If you now qualify due to revenue decline please reach out to us so we can help you!

Reminder:

Many customers are now beginning to apply and or receive PPP funds. Please be sure to let us know immediately when you receive PPP funds. We will need to know the amount and the date you received funds.

Covered Period:

It is important that all customers use the 24 week Covered Period for both the 2020 PPP and 2021 PPP. If you are choosing to use another Covered Period, you must let us know immediately, otherwise we will use the 24 week period in our calculations.

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IRS, Treasury Disburse Another 37 Million Economic Impact Payments from The American Rescue Plan | IR-2021-63

Today, the Internal Revenue Service, the U.S. Department of the Treasury and the Bureau of the Fiscal Service announced they are disbursing approximately 37 million payments in the second batch of Economic Impact Payments from the American Rescue Plan. This brings the total disbursed payments from the American Rescue Plan to approximately 127 million payments worth approximately $325 billion.

As announced on March 12, Economic Impact Payments will continue to roll out in batches to millions of Americans in the coming weeks.

For more information please click here.

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Revenue Procedure 2021-19 and 2021-17 | RP-2021-19 & RP-2021-17

Revenue Procedure 2021-17 provides issuers of qualified mortgage bonds, as defined in § 143(a) of the Internal Revenue Code (Code), and issuers of mortgage credit certificates, as defined in § 25(c), with (1) the nationwide average purchase price for residences located in the United States, and (2) average area purchase price safe harbors for residences located in statistical areas in each state, the District of Columbia, Puerto Rico, the Northern Mariana Islands, American Samoa, the Virgin Islands, and Guam.

Revenue Procedure 2021-19 provides guidance with respect to the United States and area median gross income figures for use by issuers of qualified mortgage bonds under § 143(a) of the Internal Revenue Code and issuers of mortgage credit certificates under § 25(c) (collectively, “issuers”) in computing the income requirements under § 143(f).  This revenue procedure provides that issuers must use either (1) the income figures the Department of Housing and Urban Development (“HUD”) released most recently or (2) the income figures HUD released immediately prior to the income figures HUD released most recently, determined as of the date a mortgage loan or mortgage credit certificate is committed to a mortgagor.  This revenue procedure also provides a 90-day transition period, following the release of the HUD income figures in a current calendar year, for issuers to use the income figures HUD released during the second calendar year prior to the current calendar year.  The Department of the Treasury and the IRS have decided to publish this revenue procedure as permanent guidance consistent with comments received and to cease publishing annual revenue procedures providing income figures for purposes of computing the income requirements of § 143(f).

Picking up the thread of discourse from our previous entry, we continue on our tour of the disciplines of Philosophy, with our first stop being on the matter of logic. We briefly covered Aristotle and his famous work, “De Interpretatione” in our last post.ⁱ

In this book, the great thinker laid down his observations about affirmations, negations, oppositions, and contradictions through the use of certain key words including, ‘all’, ‘no’, ‘some’, and ‘not’.

As stated in the previous post, later scholars would take this work, particularly in chapters 6-7, and set forth a diagram we know today as the ‘Square of Oppositions’. Some of you may be familiar with the premise that ‘All men are mortal. Socrates was a man.  Therefore, Socrates was mortal.’ and similar constructs. This is the foundation of logic.

We will now delve into the Square of Oppositions as it formed the basis for western thought for some 2,000 years. Even though we in this modern age have moved beyond the square, and that after 2,000 years the square had become a hinderance to our thought process, we must start our journey here because of its historic importance.

Imagine what it must have been like for these early thinkers. What we think of as our inner voice, or subtext, these people must have thought as if they were hearing literal voices in their heads. Aristotle’s work, in this context, is a monumental achievement and a testament of the human potential to rise above our humble beginnings.

To put this idea into some context, Aristotle is roughly halfway between the civilization that built the Sphynx, estimated to be about 4,500 years old, and our modern age.  It took humanity at least 2,100 years to get to a point where we could begin our journey into that most complex creation in the entire universe, the human brain.

Now to the square.ⁱⁱ

We start with the four Aristotelian Propositions:

• All S are P
• No S are P
• Some S are P
• Some S are not P

Mapped out on the square we can see that if one proposition is true, then it’s contradictory proposition cannot be true.

For example, all tax laws make sense may be true (ostensibly, but that would be a subject for metaphysics – that was a tax joke.) And if all tax laws make sense is a true statement, then it is not possible for the statement that no tax laws make sense to be true as well. In this case, either they all make sense, or they all don’t make sense.

Propositions that use the word ‘all’ or ‘no’ are referred to as the Universal Positive or Universal Negative, respectively.

Moving to the more ambiguous propositions containing the word, ‘Some’, we can see complexity.

If some tax laws make sense, it is also possible for some tax laws to not make sense, BUT, if some tax laws make sense and some tax laws do not make sense, then it is not possible for no tax laws to make sense any more than it is possible for all tax laws to make sense.

Ok, if your head is spinning, let’s bring this back to our real world.

If a client incurs an expense and they want to deduct it and they are a sole proprietor, then that expense must be both ordinary and necessary.  This construct from IRC Sect 162 sets forth a proposition that is a universal positive for this expense in question. If the expense is ordinary, but not necessary, it can’t be deducted. If the expense is necessary but not ordinary, it can’t be deducted. If the expense is neither ordinary nor necessary, it cannot be deducted. Only the universal positive allows for the deduction – but there’s more to it, because this is tax.

The expense must be both ordinary and necessary, and properly documented with a receipt of some form.

Now we can expand the scope of our logical analysis further. All expenses that are ordinary and necessary may be deductible under IRC 162, but only if they are properly documented.  If all expenses that meet the requirements of IRC 162 are properly documented, they can be deducted. If none of the expenses are properly documented, they cannot be deducted. If some of the expenses are properly documented, some of the expenses can be deducted.  If some of the expenses are not properly documented, then some of the expenses cannot be deducted. (Yes, I know about the Cohen Rule, but honestly, if you’re relying on that, you might as well go hunting murder hornets without safety gear – an act that is profoundly illogical.)

We know this intuitively.  But think about it. There was a time when this kind of thought process was new, and people were in awe of this conceptual framework. I wonder what they’d make of Twitter.

With all that said, we still have to explain to people that while they may indeed have blank checks in their checkbook, they don’t necessarily have funds in their checking account. Not all properly endorsed checks can be successfully transacted through the bank. Some properly endorsed checks will not be able to be successfully transacted through the bank due to non-sufficient funds.  What is logical to us is magical to some.

Likewise, paying for an item on a credit card doesn’t mean it’s free. But before you try and explain that logic to your client, perhaps it might help to drink something strong, just to get in the proper frame of mind. (Just don’t drive after you’ve imbibed.)

Try forming a proposition on your own. Think of a subject and a predicate and see how they relate. One thing to remember in this exercise is that in order for your proposition to meet the standard of logical validity, the construction of the premises must be correct, AND the subject and predicate must be factual. All men are mortal. Socrates was a man.  Therefore, Socrates is mortal.

Here’s one:

Tech Tips covers technology for the accounting profession. Xero is a piece of technology for the accounting profession.  Therefore, Tech Tips covers Xero.

Here’s another:

Tech Tips loves preparing tax returns. Tax returns are a lot of fun to prepare. Therefore, Tech Tips has fun while preparing tax returns.

So, that second one…not logically valid. One of those premises is not factually correct (guess which). If at least one of the premises is not factually correct, the conclusion cannot be correct.

Here’s another:

Tech Tips loves spicy foods. Spicy foods can be healthy. Therefore, Tech Tips pops TUMS like candy.

This one is not logically valid either, even though both premises are factually correct, the logical construction is not valid. To workshop that 3^rd premise, the premises must be related in some way.

Tech Tips loves to eat spicy foods. Eating spicy foods cause Tech Tips to experience heartburn. Therefore, Tech Tips pops TUMS like candy.

Or…Tech Tips loves to eat spicy foods. Spicy foods can be healthy. Therefore, Tech Tips eats healthy.

This last version is technically valid, but it highlights the limits of Aristotelian logic. It’s binary, linear, constrained. It can’t capture the complexity of the world we inhabit today, but it’s a good place to start the journey because it gives us our origin. And for every journey, we need two points, an origin and a destination.

Now, that we’ve had a brief (trust me, this is very brief) introduction to logic, we’ll next turn our attention to the field of epistemology.

Fun!

We’d like to hear from you! Please submit your own tech tips to us!  We will award a free subscription to The Tax Book to the person who submits the best tip. Please submit your tips to this email address:  techtips@msatp.org

Thanks, and catch you next time!

Executive Director Bill Feehley and Paycheck Protection Program (PPP) expert Peter Haukebo of Frost Law  provide an update on the program as well as how to handle forgiveness of the loans. Be sure to watch to stay up to date.

Watch on YouTube.

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Michael Ashley of Registered Agents joins Executive Director Bill Feehley to discuss how Registered Agents can help with you incorporation needs.

Watch on YouTube.

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Passed: American Rescue Plan Act of 2021

On March 10, Congress passed the $1.9 trillion American Rescue Plan Act of 2021 (H.R. 1319), which President Biden was signed into law on March 11th.

As a quick refresher, the legislation makes several important changes to the PPP:

1.    Most 501(c) nonprofits will gain access to the Program.
2.    The “affiliation rules” will be lifted for 501(c)(3) and 501(c)(6) organizations. This means that an organization’s headcount would be considered “per physical location” rather than in-total and across all locations. As such, a 501(c)(3) with more than 500 employees and/or a 501(c)(6) with more than 300 employees – but at multiple locations – would be eligible for PPP.
3.    An additional $7.25 billion will be made available to the PPP.

Unfortunately, the American Rescue Plan Act does not extend the PPP’s current March 31 expiration. Stakeholders across industry continue to press Congress for a plainly necessary extension. POLITICO reports there is strong bipartisan support in the House to extend the Program to May 31.

With the PPP taking $7.25 billion of the $1.9 trillion relief pie, the American Rescue Plan Act includes myriad other provisions to provide further assistance to individuals, families, nonprofits and businesses.

For more information, click here.

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Biden Announces PPP Changes Designed to Help Underserved Borrowers

Funding for the federal Paycheck Protection Program (PPP) is scheduled to close on March 31, 2021. About $150 billion in PPP funding remains available.

In February, President Biden announced a series of changes to the PPP intended to make the program more accessible to all small businesses and those who have been left behind in previous relief efforts. Changes include:

· Establishing a 14-day window, starting, February 24^th, when only businesses with fewer than 20 employees are eligible to apply to the PPP Program

· Dedicating $1 billion for PPP loans for sole proprietors, independent contractors, and self-employed individuals in low-to-moderate-income areas and revising the loan calculation formula for these applicants

· Eliminating a rule restricting businesses that are at least 20% owned by an individual who was arrested or convicted of a felony related to financial assistance fraud in the previous five years or any other felony within the previous year

· Eliminating a rule restricting businesses that are at least 20% owned by an individual who is delinquent on student debt from receiving PPP loans

· Clarifying that non-citizens may apply using individual taxpayer identification numbers

For more information, click here.

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What Employers Need to Know About Repayment of Deferred Payroll Taxes | COVID Tax Tip 2021-32

To give people a needed temporary financial boost, the Coronavirus, Aid, Relief and Economic Security Act allowed employers to defer payment of the employer’s share of Social Security tax. IRS Notice 2020-65 allowed employers to defer withholding and payment of the employee’s Social Security taxes on certain wages paid in calendar year 2020. Employers must pay back these deferred taxes by their applicable dates.

The employee deferral applied to people with less than $4,000 in wages every two weeks, or an equivalent amount for other pay periods. It was optional for most employers, but it was mandatory for federal employees and military service members.

For more information please click here.

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Franchot Extends State Income Tax Filing Deadline to July 15 | State, Federal Pandemic Relief Programs Require Extensive Changes to Tax Forms, Updates Anticipated by April 15.

Maryland Comptroller Peter Franchot on March 11 announced that he is extending the state income tax filing deadline by three months until July 15, 2021. No interest or penalties will be assessed if returns are filed and taxes owed are paid by the new deadline.

The extension, which applies to individual, pass-through, fiduciary and corporate income tax returns, including first and second quarter estimated payments, is due to recent and pending legislation at the state and federal levels that impact 2020 tax filings and provide economic relief for taxpayers harmed by the COVID19 pandemic.

To stay up to date and to learn about the availability of revised and new tax forms visit the RELIEF Act Information page on the marylandtaxes.gov website.

If you have any RELIEF questions, call (833) 345-0787 or email ReliefAct@marylandtaxes.gov.

For more information please click here.

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Here’s How People Can Request a Copy of Their Previous Tax Return | Tax Tip 2021-33

Taxpayers who didn’t save a copy of their prior year’s tax return, but now need it, have a few options to get the information. Individuals should generally keep copies of their tax returns and any documents for at least three years after they file.

If a taxpayer doesn’t have this information here’s how they can get it:

Ask the software provider or tax preparer
Individuals should first check with their software provider or tax preparer for a copy of their tax return.

Get a tax transcript
If a taxpayer can’t get a copy of a prior year return, then they may order a tax transcript from the IRS. These are free and available for the most current tax year after the IRS has processed the return.
To protect taxpayers’ identities, this document partially hides personally identifiable information such as names, addresses and Social Security numbers. All financial entries, including the filer’s adjusted gross income, are fully visible. People can get them for the past three years, and they need to allow time for delivery.

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Tax Time Guide: Didn’t Get Economic Impact Payments? Check Eligibility for Recovery Rebate Credit | IR-2021-49

The Internal Revenue Service reminds first-time filers and those who usually don’t have a federal filing requirement to consider filing a 2020 tax return. They may be eligible to claim the  Recovery Rebate Credit, a new refundable credit, authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the COVID-related Tax Relief Act.

Most individuals eligible for the Recovery Rebate Credit have already received the full amount in two rounds of payments, known as Economic Impact Payments. All legally permitted first and second Economic Impact Payments have been issued.

For more information please click here.

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Here’s What Taxpayers Should Do If They Have Missing or Incorrect Documents| Tax Tip 2021-26

Taxpayers should double-check to make sure they have all their documents before filing a tax return.

Taxpayers who haven’t received a W-2 or Form 1099 should contact the employer, payer or issuing agency and request the missing documents. This also applies for those who received an incorrect W-2 or Form 1099.

If they can’t get the forms, they must still file their tax return on time. To avoid filing an incomplete or amended return, they may need to use Form 4852, Substitute for Form W-2, Wage and Tax Statement or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.

For more information please click here.

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Multiple Taxes: RELIEF Act Discussed 

The Maryland Comptroller has issued a Tax Alert discussing the recently enacted Recovery for the Economy, Livelihoods, Industries, Entrepreneurs, and Families (RELIEF) Act, which provides income and sales tax relief. (TAXDAY, 2021/02/17, S.5 ; TAXDAY, 2021/02/17, S.6 ) Corporate Income Subtraction for Coronavirus Relief Payments Under the Act, businesses may subtract coronavirus relief payments on their Maryland return. Coronavirus relief payments includes grants or loans applied for after…

To continue reading please click here.

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Maryland RELIEF Act Support for Businesses

With the passage of the RELIEF act of 2021 by the Maryland General Assembly, new COVID-19 relief will soon be made available for certain Maryland businesses through the Maryland Department of Commerce. They anticipate accepting initial applications for the new funding in mid-March and will update their website as details about these Commerce programs become available.

The funding will be targeted toward certain groups of businesses including:

• $10 million for businesses who do not collect sales tax and can demonstrate a need for assistance
• $500,000 for businesses seeking to set up online sales or help employees telework
• $10 million for small, minority and women-owned businesses
• $8 million for private commuter bus operators and local transit systems

Visit the business resources website for additional funding available and the latest information.

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What’s in the Federal Stimulus Package for Marylanders?

On Wednesday, the House approved the final version of President Biden’s $1.9 trillion coronavirus relief bill including $1,400 stimulus checks, massive expansions to the federal tax credits and nearly $6.4 billion in direct funding for Maryland’s state and local governments.

More than 2.5 million Maryland households would get direct stimulus payments of up to $1,400, totaling $6.25 billion flowing into Marylanders’ wallets. The stimulus bill also expands the child tax credit benefiting 1.1 million children and lifting more than 52,000 children out of poverty, according to Senators Van Hollen and Cardin.

Under the new bill, Maryland will also receive a total of $6.35 billion in aid for state and local governments, with $3.87 billion of that funding directed towards emergency services, vaccine distribution and other needs.

To read more, please click here.

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State Legislators Want Role in Maryland’s Stimulus Spending

As the U.S House passed the $1.9 trillion federal stimulus plan on Wednesday, the Maryland House temporarily slowed work on the state budget, giving appropriators time to understand the flood of federal money headed to the state. The House Appropriations Committee, which is leading the charge on the passage of Maryland’s 2022 budget, delayed a meeting on final budget decisions to allow top legislators to work with Governor Hogan on guiding the federal stimulus spending.

To read more, please click here.

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Child Tax Credit and Expansion of the Earned Income Credit

SB0218 was introduced in this year’s Maryland General Assembly and was passed by both the Senate and House. It was Enacted Under Article II, Section 17(b) of the Maryland Constitution as Chapter 40.

This emergency bill expands eligibility of the State and local earned income tax credits and thereby the State and local poverty level credits, by allowing a taxpayer to claim the tax credit notwithstanding certain federal requirements.

The bill also creates a refundable credit against the State income tax equal to $500 for each dependent child who is a qualified dependent under Section 152  of the Internal Revenue Code and is under the age of 17 years and has a disability. In order to qualify, a taxpayer must have a federal adjusted gross income of $6,000 or less.  The credit is reduced by the amount of any federal child tax credit claimed for the child in the year. This bill applies to tax years 2020 through 2022 and terminates June 30, 2023.

Executive Director Bill Feehley and CPR Committee member Jim Arnie provided a legislative update for the current session. Be sure to watch so you can get up to date!

Watch on YouTube.

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Jerry Lotz of CostSeg Energy Solutions joins Executive Director Bill Feehley to discuss the tax savings for owners/lessors of commercial/residential rental property.

Watch on YouTube.

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Have questions about PPP Loan Forgiveness? Join @Frost Law PPP expert Peter Haukebo right here on MSATP TV live on March 11, 2021 at 10 a.m. to get your questions answered! Comment your questions on our Facebook page, or email info@msatp.org. Don’t forget to tune in for the live presentation!

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IRS Reminds Businesses to Report Large Cash Transactions; E-File Encouraged | IR-2021-47

The IRS reminds businesses of their responsibility to file Form 8300, Report of Cash Payments Over $10,000, and encourages e-filing to help them file accurate, complete forms.

Although many cash transactions are legitimate, information reported on Form 8300 can help stop those who evade taxes, profit from drug trading, engage in terrorist financing and conduct other criminal activities. The government can often trace money from these illegal activities through payments reported on complete, accurate forms.

For more information, click here.

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Tax Time Guide: Didn’t Get Economic Impact Payments? Check Eligibility for Recovery Rebate Credit | IR-2021-49

The IRS reminds first-time filers and those who usually don’t have a federal filing requirement to consider filing a 2020 tax return. They may be eligible to claim the  Recovery Rebate Credit, a new refundable credit, authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the COVID-related Tax Relief Act.

Most individuals eligible for the Recovery Rebate Credit have already received the full amount in two rounds of payments, known as Economic Impact Payments. All legally permitted first and second Economic Impact Payments have been issued.

For more information, click here.

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IRS Releases 2021 National Public Liaison Meeting Schedule

The IRS has released its revised 2021 National Public Liaison Meeting Schedule. The specific updates are as follows:

1. The 2021 Nationwide Tax Forums will no longer take place in person. The Tax Forums are now virtual.
2. Specific dates are provided for the virtual Tax Forums.

To see the full schedule please click here.

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Comptroller’s Office Mails 27,000+ Payments to Marylanders Stuck in Unemployment Disputes

ANNAPOLIS, Md. (March 4, 2021) – Comptroller Peter Franchot today announced that checks to the 27,181 recipients identified by the Maryland Department of Labor for unemployment grants have been processed and mailed. The payments were processed less than 24 hours after the Labor Department provided the Comptroller’s Office with a list of recipients, as required by the RELIEF Act.

The RELIEF Act provided appropriations for 32,000, one-time $1,000 grants to unemployment insurance filers who remain in adjudication and have not received unemployment payments. Under the legislation, the Secretary of Labor determines recipients of the unemployment grants, and the Comptroller’s Office – as the State’s paymaster – would disburse payments to the identified grant recipients.

For more information, click here.

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Tips to Help Take the Stress out of Tax Season

Every filing season comes with its own set of challenges and 2021 is no different. The IRS wants taxpayers get the information they need as quickly as possible. Taxpayers can keep in mind these tips when they get ready to file. Following them will help get this year’s taxes done accurately and refunds issued timely.

• Gather records. Good recordkeeping makes preparing a tax return easier. It can also ensure taxpayers do not overlook deductions and credits.
• Start with IRS.gov. IRS.gov is available around-the-clock and it’s the fastest way to get assistance. Millions of people use IRS.gov for filing and paying taxes, getting information about their accounts or answers to tax questions. The IRS Services Guide outlines the many ways taxpayers can get help from the IRS.
• Use online tools. IRS.gov has many useful online tools. The Interactive Tax Assistant provides answers to many tax questions specific to an individual’s circumstances. It gives the same answers that an IRS representative would give over the phone.
• Choose a reputable preparer. Taxpayers can self-prepare or use a tax preparer. IRS.gov has resources to help people choose a tax pro. The IRS Directory of Federal Tax Return Preparers provides information on who has a professional credential or participates in the IRS Annual Filing Season Program.
• File electronically. IRS Free File can help taxpayers figure things like their earned income tax credit, child and dependent care credit, and recovery rebate credit. MilTax online software is also available for the members of military and certain veterans, regardless of income, and is offered through the Department of Defense. Some Free File options are available in Spanish.
• Choose direct deposit. Filing electronically and choosing direct deposit is the safest and easiest way to file an accurate tax return and the fastest way to get a refund.
• Report all income. Taxpayers must report their income from all sources, including the gig economy, Forms W-2, Wage and Tax Statements, and Forms 1099. Other income may be reportable as well, even if the taxpayer does not receive a statement.
• Report unemployment benefits. Taxpayers who received unemployment benefits in 2020, must report the amount received as taxable income on their tax return.
• Avoid errors. Taxpayers should take extra time to review their tax return so they can file a complete and accurate return and avoid refund delays. Filing electronically is the most accurate way to eliminate many common errors. Check all names and double check all Social Security numbers as well as, account and routing numbers for direct deposit.
• Review Publication 17. This guide is available in English and Spanish on IRS.gov and translations in Russian, Vietnamese, Korean and Chinese – simplified and traditional – will be available soon. The new format makes it easier to navigate and faster to download. The 2020 edition is now accessible on most personal electronic devices as an eBook.

 

Are you looking for a safe and secure payment processing system for clients paying via credit or debit card? USB Payment Processing is your go to solution for secure and accurate payments which reduces the chances of charge backs. Visit their website for more information.

Watch on YouTube.

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Taxpayers Must Report Gig Economy Income On Their Tax Return

In 2020, many people joined the gig economy to help make ends meet during the pandemic. Whether it’s a side business or a primary source of income, all taxpayers need to understand how their gig work affects their taxes. The bottom line is taxpayers must report gig economy income on their tax return.

For more information on the gig economy, please click here.

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New COVID Relief Law Now Signed | Checks Start This Week
The Maryland Legislature passed Governor Larry Hogan’s Maryland RELIEF Act of 2021 this past Friday and the bill was signed into law on Monday, February 15. Beginning TODAY, Tuesday, February 16, Comptroller Peter Franchot and the staff of the Comptroller’s Office will begin processing more than $200 million in payments to our most vulnerable families, people stuck awaiting decisions on their unemployment insurance claims, and struggling businesses and nonprofit organizations.

Visit the RELIEF Act Information page on the marylandtaxes.gov website to:
• check eligibility for payments
• watch a video from Comptroller Franchot
• read Frequently Asked Questions
If you have any RELIEF questions, call (833) 345-0787 or email ReliefAct@marylandtaxes.gov.

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Sales and Use, Tobacco Taxes | Digital Advertising Tax Imposed, Tobacco Taxes Increased

The Maryland Senate voted to override Gov. Larry Hogan’s veto of a bill that taxes digital advertising in the state. The legislation was vetoed by Gov. Hogan on May 7, 2020. Tobacco taxes are also increased under the bill. Digital Advertising Tax Digital advertising includes ad services on a digital interface, including banner ads, search engine ads, interstitial ads, and other comparable types of ads.

To learn more please click here.

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#TechTips: Betamax and Bank Feeds

In this installment of #TechTips, we discuss the integration of bank feeds and the cloud. ⁠The cloud has been billowing in our skies for the better part of a decade now.  Visions of bank feeds and seamless integrations have beckoned us to journey towards the mythical land of Paperless Office, just outside of the famed Shangra-La and not too far from Atlantis.

Continue reading more on our blog.

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Working From Home: Why Is My Internet So Slow?

In this week’s blog we discuss internet bandwidth and how it has an effect on things like zoom meetings and general productivity as you are now working from home. Many may have felt all things internet were so much faster while at the office. We are here to help explain why and what you can do to correct this problem.

Continue reading more on our blog.

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Grab your favorite cup of coffee and join your fellow tax professionals for a morning coffee hour! This is your chance to talk shop, make connections, and discuss your current tax season issues…

Event Details:

• Date: Wednesday, February 24, 2021
• Time: 9:00 a.m. – 10:00 a.m.
• Cost: Free!

Location: Zoom Meeting

IRS, Summit Partners Issue Urgent EFIN Scam Alert to Tax Professionals | IR-2021-34

The IRS, state tax agencies, and tax industry warned tax professionals of a new scam email that impersonates the IRS and attempts to steal Electronic Filing Identification Numbers (EFINs).

The Security Summit partners said the latest scheme, arriving just before the start of the nation’s tax season, should serve as another reminder that tax professionals remain prime targets for identity thieves. These thieves try to steal client data and tax preparers’ identities that will allow them to file fraudulent tax returns for refunds.

For more information, click here.

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Wolters Kluwer Webinar – PPP Updated Legislation: Requirements, SBA Guidance and Tax Implications | February 18, 12 – 1 p.m. ET

Wolters Kluwer’s Tax and Accounting and Banking Compliance segments have come together to provide this unique event that will offer expert insights from both the tax and commercial lending perspectives on the updated legislation and SBA guidance affecting the PPP program, including discussion of tax implications.

1. Commercial lending expert Michael Fuchs will provide a status update on the current round of PPP funding
2. Tax and accounting expert Greg White will walk you through:
   • key requirements,
   • the latest SBA guidance,
   • forms & required documentation, and
   • tax ramifications of receiving loans and forgiveness under the PPP.

To register for this event, please click here.

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Your Voice is Needed on NFIB’s Maryland Priorities | NFIB Small Business Legal Center

With bill introduction deadlines looming, policy makers in the General Assembly are rushing to get their legislative initiatives into the hopper.

House Bill 581 / Senate Bill 486 – The “Essential Workers’ Protection Act” – this bill, as introduced, will have far reaching consequences for nearly every small business in Maryland. While the definition of an “essential employer” and “emergency” are cause for concern, there are also other provisions troubling to the state’s job creators:

• Hazard Pay – employers required to pay workers defined as “essential” an additional $3 per hour in hazard pay
• Paid Leave – a new paid leave program whereby employers must provide 3 days of bereavement leave and 14 days of sick leave
• Right to Refuse Work – employees would be able to refuse work they deem hazardous without any clear definition or right by the employer to address potential abuse

For more information about NFIB’s position, click here.

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New IRS Form Available For Self-Employed Individuals to Claim COVID-19 Sick and Family Leave Tax Credits Under FFCRA | IR-2021-31

The IRS announced that a new form is available for eligible self-employed individuals to claim sick and family leave tax credits under the Families First Coronavirus Response Act (FFCRA).

Eligible self-employed individuals will determine their qualified sick and family leave equivalent tax credits with the new IRS Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals. They’ll claim the tax credits on their 2020 Form 1040 for leave taken between April 1, 2020, and Dec. 31, 2020, and on their 2021 Form 1040 for leave taken between Jan. 1, 2021, and March 31, 2021.

Continue reading IR-2021-31 here.

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Educators Can Now Deduct Out-of-Pocket Expenses For COVID-19 Protective Items | IR-2021-28

Eligible educators can deduct unreimbursed expenses for COVID-19 protective items to stop the spread of COVID-19 in the classroom. COVID-19 protective items include, but are not limited to:

• face masks;
• disinfectant for use against COVID-19;
• hand soap;
• hand sanitizer;
• disposable gloves;
• tape, paint or chalk to guide social distancing;
• physical barriers (for example, clear plexiglass);
• air purifiers; and
• other items recommended by the Centers for Disease Control and Prevention (CDC) to be used for the prevention of the spread of COVID-19.

Continue reading IR-2021-28 here.

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Critical Tax Credit Provides Significant Refund Boost to Millions

The Earned Income Tax Credit is the federal government’s largest refundable federal income tax credit for low- to moderate-income workers. See the IRS EITC news release for information on how to check eligibility, to see a list of workers who may be at risk for overlooking this important credit, helpful IRS YouTube videos and more.

To learn more about this tax credit, click here.

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Correction From Last Week

In last week’s eWeekly, Jackie Brown’s name was published incorrectly. We would like to again congratulate Jackie Brown on her new position as MACPA’s CEO!

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#TechTips: Compliance Lives

In this installment of #TechTips, we discuss the usefulness and the importance of cloud based storage and software. While we all have skepticism with the cloud especially as it pertains to compliance, when you stop and look into the uses, this is the future of accounting.

Read more over on our blog.

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Posture: Remember Being Told Sit Up Straight?

In our previous post we gave three tips and tricks on maintaining a healthy work-life balance while working from home. We would like to continue this week on providing further tips, as it pertains to maintaining good posture. I recall in grade school being told over and over to “sit up straight.” Now more than ever this small piece of advice, while it seemed so inconsequential then is essential now. Good posture is essential to maintaining a healthy work from home lifestyle during this pandemic. Some may find this difficult, especially since many may not be utilizing dedicated office furniture which is designed to assist in maintaining proper posture.

Read our tips on our blog.

While working from home shortens the commute, you may be wondering why is my internet access moving slower than when I was at the office? The answer to your question is your internet bandwidth. While many companies have a larger internet bandwidth at work you may not have the same at home.

Many of us pre-COVID may have streamed a few videos on YouTube and buffering may not have been much of an issue. Now with everyone at home on video conferences, you may not have enough bandwidth. Now while looking at your Internet Service Provider’s (ISP) website you may not be sure what you need. To help, please see what each of the metrics means as it relates to bandwidth.

• Download Speed: Download speed reflects how quickly you can access things online. Faster download speeds will load your websites, Netflix movies, and work email more quickly. Basically this is how fast data can come in to your various devices.
• Upload Speed: Upload speed tells you how quickly you can put things on the internet. Faster upload speeds will help get the more picture perfect video conference you are looking for or that email to send more quickly. Basically this is how fast data transfers out.
• Data: Everything you do online uses data, with streaming and downloading large files typically uses up the most data overall. Most internet providers allow you to use at least one TB of data each month but some offer unlimited data at a higher billing rate.

Review.org gives a very good recommendation for high speed internet and how much download and upload speed the most popular video web conferencing apps utilize (Zoom, Slack, Skype, Cisco Webex, Google Hangouts, etc.)

We hope you all are remaining safe and productive during this difficult time.