2021 Tax Season Client Letter
20201 Tax Season
The tax season is upon us and I would first like to thank everybody for being patient during the last tax season. Between Washington, D.C. and the Pandemic, last year brought many challenges for all of us. This year should be relatively calmer, and I have attended many classes and seminars to make sure I understand the new changes and can use them to minimize your tax liability.
The Covid-relief bills signed into law last December and March include a number of provisions that could impact your 2021 tax return. Other 2021 tweaks are the result of new rules or annual inflation adjustments.
There are big changes for the 2021 child tax credit, they can be confusing, but they're only temporary. If elected, half of the 2021 credit amount is being paid in advance through monthly payments that started on July 15 and ended on December 15. You'll claim the other half of the credit on your 2021 tax return. You'll also have to reconcile the monthly payments that you receive from the IRS in 2021 with the child tax credit that you're actually entitled to claim when you file your 2021 return. If the credit amount exceeds the total monthly payments, you can claim the excess credit on your return. But if the credit amount is less than the payments, you may or may not have to pay the excess back.
The American Rescue Plan also made significant improvements to the child and dependent care credit.
Required minimum distributions (RMDs) are back for 2021. Seniors were allowed to skip their RMDs in 2020 without having to pay a penalty. But the RMD suspension only applied for one year. So, anyone who is at least 72 years old by the end of the year is required to take an RMD for 2021.
Unfortunately, the exemption for unemployment compensation expired. Once again unemployment compensation will be fully taxed as if it were wages.
The 2021 standard mileage rate for business driving fell from 57.5¢ to 56¢ a mile. The mileage allowance for medical travel and military moves also declined from 17¢ to 16¢ a mile in 2021.
If you're self-employed, there are many 2021 tax law changes that could impact your bottom line. Here are just a few, the deduction for business meals is increased from 50% to 100% for 2021 and 2022 and Self-employment taxes cannot be deferred in 2021 as they were in 2020.
The first day to file this year was January 24th. The deadline for most businesses is March 15th and the deadline for personal income tax is April 15th. As always, I understand that tax season is no fun, but I want to help make it as painless as possible.
Thank you so much for your business,
Denise Castro, CPA
Denise Castro CPA 2021 Covid Operating Guidelines
Visiting our office: Using common sense is always welcome. We are asking everyone who visits our office to please wear a mask. Obviously, if you are sick or have been recently exposed to covid please do not come into the office. We can gather your information in many ways.
You can use our new “Intuit Link”. This allows you to upload your scanned documents, check statuses, and approve or sign documents. Let us know if you would like to try this free, secure service and we will send an invitation to sign up.
You can mail your documents. Many clients choose this option especially those who live out of our area.
You can use our dropbox next to the front door
We can come to your vehicle and you can hand off the documents. Our staff will be wearing a mask and we ask that you do the same.
You can electronically send them using email, Google Drive or Dropbox.
When your taxes are complete:
You can use Intuit Link to see the status of your tax return and review it.
Or we can mail, email or use Google Drive or Dropbox
We can deliver your tax return to your vehicle.
Reviewing and Filing your taxes:
We can review your taxes via telephone or video chat, including Skype, Facetime, Messenger, or Android Video.
You can approve and sign your taxes via Intuit Link, or because of covid regulations via email.
My tips for a “Less Stressful” tax season
First go ahead and start gathering your information. All of your W2’s, 1099’s, Mortgage and Brokerage statements are arriving. Create a central location to collect these documents.
Next, you can contact my office for a “Client Organizer” pre-filled with last year’s data or some of you may prefer to download a generic “2021 Client Organizer” from our website at www.denisecastroCPA.com.
Finally, we need to receive your information before the week of the deadline. For businesses, we have already started requesting that you submit your information by Feb. 15th. For individuals, we recommend March 15th. We realize that life happens and it can be difficult, but waiting until the last minute raises both our stress levels.