Advance child tax credit (CTC) payment recipients can still opt out even if they start receiving payments. The IRS began sending out payments or depositing them in bank accounts on July 15. The IRS announced that families can use its Child Tax Credit Update Portal to opt out of remaining payments. Any updates made by Aug. 2 will apply to the Aug. 13 payment and all subsequent monthly payments for 2021. Under a recent law, monthly advance CTC payments are being made to families under certain income thresholds. Parents may want to opt out so they receive the entire CTC as a refund when they file their 2021 returns or because they believe they won't qualify for the CTC when they file. To access the portal: https://bit.ly/36CRO1n
The IRS also explained that it sent "Letter 6417" to recipients before it began disbursing advance payments to them. The letter informed taxpayers of the amount of their estimated CTC monthly payments and indicated where they can find additional information about them. In January 2022, the IRS will send "Letter 6419" to provide the total amount of advance CTC payments disbursed during 2021. Save this letter for when you file your 2021 return.
Starting a business? How should you handle start-up expenses? Taxpayers can generally deduct the ordinary and necessary costs of operating a business. But tax law requires that most costs to get a business started must generally be amortized over time.
In one case, a patent attorney/ inventor and his wife were denied a deduction for the expenses of their visual device manufacturing company. The husband testified that during the years in question, the company was still in the process of "creating a manufacturable item" and didn't produce its first units until later. The 11th Circuit Court of Appeals ruled that the company was in the start-up phase and must amortize the related expenses. (Provitola v. Comm., 6/11/21)
Gig workers can deal with some complex tax issues, as one U.S. Tax Court case illustrates. In the case, a taxpayer maintained an account in his name with a ride sharing company. He provided rides to customers and recruited others to use his account to do the same. They rented his vehicles, which he purchased using car loans or at auctions, and he paid them with money the company deposited into his bank account.
For the year in question, the IRS argued that he failed to report gross receipts of over $540,000. He also didn't maintain proper records for payments to the drivers and their expenses. The court upheld the IRS determination of unreported income. (TC Memo 2021-79)
A tax break for educators who spend their own money. Schools will soon be reopening for the fall, and with that comes a nice tax deduction for certain educators. Eligible K-12 teachers, instructors, counselors, principals and aides who make qualified, unreimbursed purchases out of their own pockets can deduct up to $250 of the costs on their tax returns even if they don't itemize. If both spouses are eligible educators who file a married joint tax return, the deduction is $500.
This long-standing benefit for educators was updated earlier this year to add supplies used to prevent the spread of COVID-19, plus fees for professional development courses, books, supplies, computer equipment and related costs. Here's more: https://bit.ly/3rlQxFs
Did you know that there are three types of Social Security cards? All of them show a name and Social Security number (SSN) but some list work restrictions on the card. The Social Security Administration (SSA) issues one card for U.S. citizens and permanent residents; another that says "Not valid for employment;" and a third that says "Valid for work only with DHS authorization."
On a webpage, the IRS says that you should use your SSN to file your tax return even if it doesn't authorize employment, or if you've lost your employment authorization. Here's more from the SSA: https://bit.ly/3i76lrH