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Category Archives: COVID Tax Tips

HomeArchive "COVID Tax Tips"
  Consolidated Appropriations Act, 2021: Health and Dependent Care Flexible Spending
April 06 2021 RgKAdmin14 Tax Tips, Flexible Spending Accounts, COVID Tax Tips 0 comments Tags: FSA, Health FSA, Dependent Care FSA, Flexible Spending Accounts

COVID-19 has impacted Flexible Spending Accounts. Be sure you take advantage of these changes if they apply to you.

The Consolidated Appropriations Act, 2021 provides that employers may adopt certain temporary rules to assist employees enrolled in health or dependent care flexible spending accounts without jeopardizing their status as a cafeteria plan.

Generally, a cafeteria plan is a separate, written benefit plan maintained by an employer under which employees have the opportunity to select the particular benefits that they desire. Flexible spending accounts (FSA) typically operate under a cafeteria plan and may be funded through an employee’s pre-tax contribution.

Health Flexible Spending Accounts

Health FSAs are commonly used to reimburse employees for medical expenses not covered by insurance, including insurance co-payments, deductibles, amounts in excess of coverage limits, and medical expenses that may be outside the scope of coverage, such as the cost of eyeglasses.

Dependent Care Flexible Spending Accounts

The funds in a Dependent Care FSAs can be used to reimburse for the qualifying costs to care for a dependent child under the age of 13, a disabled spouse, or a disabled relative who lives with the taxpayer for more than half the year.

Due to the COVID-19 crisis, employers who sponsor a flexible spending account may choose to permit one or more of the following temporary changes without compromising their cafeteria plan’s status as a cafeteria plan:

·    Health FSAs and dependent care FSAs may allow any remaining balances at the end of the 2020 plan year to roll over into the 2021 plan year;

·    Health FSAs and dependent care FSAs may allow any remaining balances at the end of the 2021 plan year to roll over into the 2022 plan year;

·    Health FSAs and dependent care FSAs may extend grace periods for plan years ending in 2020 and 2021 for up to 12 months;

·    Health FSAs may allow employees who terminate participation during the 2020 or 2021 plan year to use up their unspent balances through the end of the plan year;

·    Dependent care FSAs may increase the age limit for certain eligible employees’ qualifying children from 13 to 14 for purposes of determining whether expenses may be paid or reimbursed;

·    Health FSAs and dependent care FSAs may allow participants to make prospective election changes during 2021 without regard to any change of status requirements.

Employers who choose to implement any or all of these changes may implement them immediately and retroactively. They may amend their plans in the year after the year that the change is effective.

If you would like more information on the temporary rules for health and dependent care flexible spending accounts, please call our office at 610-296-2500.

 

This blog provides summary information regarding the subject matter at the time of publishing. Please call with any questions on how this information may impact your situation. This material may not be published, rewritten, or redistributed without permission, except as noted here. This blog includes, or may include, links to third party internet web sites controlled and maintained by others. When accessing these links the user leaves this blog. These links are included solely for the convenience of users and their presence does not constitute any endorsement of the Websites linked or referred to nor does ROBERT J KRATZ & CO have any control over, or responsibility for, the content of any such Websites. All rights reserved.

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Keystone Collections Group and Berkheimer Tax Innovations adopt extended filing deadlines.
June 17 2020 RgKAdmin14 COVID Tax Tips 0 comments

In response to the COVID-19 crisis, Keystone Collections Group and Berkheimer Tax Innovations have adopted some of the Federal and Pennsylvania extended filing deadlines as follows:

Keystone Collections Group: 
For local Earned Income Tax (EIT) purposes, Keystone is extending the Individual filing deadlines to match the State and Federal date of July 15, 2020. Keystone will not apply penalty and interest on Tax Year 2019 Final Return payments until after July 15, 2020.

Keystone has not specified delaying due dates for 2020 quarterly estimates.

Berkheimer Tax Innovations:  
For local EIT purposes, the new due date for 2019 Final Returns and 1st quarter 2020 estimated payments is July 15, 2020.

Berkheimer has not specified delaying the due date for 2nd quarter 2020 estimates.

We will continue to monitor and update as new information becomes available.

As always, should you have any questions or concerns regarding your tax situation please feel free to call.

This blog provides summary information regarding the subject matter at time of publishing. Please call with any questions on how this information may impact your situation. This material may not be published, re-written or redistributed without permission, except as noted here. This blog includes, or may include, links to third party internet web sites controlled and maintained by others. When accessing these links the user leaves this blog. These links are included solely for the convenience of users and their presence does not constitute any endorsement of the Websites linked or referred to nor does ROBERT J KRATZ & CO have any control over, or responsibility for, the content of any such Websites. All rights reserved.
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PA Department of Revenue Extends Tax Deadline
June 17 2020 RgKAdmin14 COVID Tax Tips 0 comments

On Saturday, March 21, 2020, The Pennsylvania Department of Revenue announced the deadline for taxpayers to file their 2019 Pennsylvania personal income tax returns is extended to July 15, 2020.

Pennsylvania will waive penalties and interest on 2019 personal income tax returns, payments and estimated tax payments for the first and second quarters 2020 through the new deadline of July 15, 2020.

As a result of the above action and since now both the Federal and Pennsylvania tax filings have been extended to July 15, 2020, our firm will no longer be working tax season hours but will continue to prepare and complete your returns on a timely basis. Our physical offices will remain closed until further notice.

At this time, the local governments have not made any announcements extending their filing and payment deadlines.

As always, should you have any questions or concerns regarding your tax situation please feel free to call.

This blog provides summary information regarding the subject matter at time of publishing. Please call with any questions on how this information may impact your situation. This material may not be published, re-written or redistributed without permission, except as noted here. This blog includes, or may include, links to third party internet web sites controlled and maintained by others. When accessing these links the user leaves this blog. These links are included solely for the convenience of users and their presence does not constitute any endorsement of the Websites linked or referred to nor does ROBERT J KRATZ & CO have any control over, or responsibility for, the content of any such Websites. All rights reserved.
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Employee Retention Credit Available for Businesses Impacted by COVID-19
June 17 2020 RgKAdmin14 COVID Tax Tips 0 comments

The Treasury Department and the Internal Revenue Service have launched the Employee Retention Credit, designed to encourage businesses to keep employees on their payroll. The refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19.

Does my business qualify to receive the Employee Retention Credit?

The credit is available to all employers regardless of size, including tax-exempt organizations. There are only two exceptions: State and local governments and their instrumentalities and small businesses who take small business loans.

Qualifying employers must fall into one of two categories:

  1. The employer’s business is fully or partially suspended by government order due to COVID-19 during the calendar quarter.
  2. The employer’s gross receipts are below 50% of the comparable quarter in 2019. Once the employer’s gross receipts go above 80% of a comparable quarter in 2019, they no longer qualify after the end of that quarter.

These measures are calculated each calendar quarter.

How is the credit calculated?

The amount of the credit is 50% of qualifying wages paid up to $10,000 in total. Wages paid after March 12, 2020, and before Jan. 1, 2021, are eligible for the credit. Wages taken into account are not limited to cash payments, but also include a portion of the cost of employer provided health care.

How do I know which wages qualify?

Qualifying wages are based on the average number of a business’s employees in 2019.

Employers with less than 100 employees: If the employer had 100 or fewer employees on average in 2019, the credit is based on wages paid to all employees, regardless if they worked or not. If the employees worked full time and were paid for full time work, the employer still receives the credit.

Employers with more than 100 employees:  If the employer had more than 100 employees on average in 2019, then the credit is allowed only for wages paid to employees who did not work during the calendar quarter.

I am an eligible employer. How do I receive my credit?

Employers can be immediately reimbursed for the credit by reducing their required deposits of payroll taxes that have been withheld from employees’ wages by the amount of the credit.

Eligible employers will report their total qualified wages and the related health insurance costs for each quarter on their quarterly employment tax returns or Form 941 beginning with the second quarter. If the employer’s employment tax deposits are not enough to cover the credit, the employer may receive an advance payment from the IRS by submitting Form 7200, Advance Payment of Employer Credits Due to COVID-19.

Please call our office if you have any questions related to the employee retention credit and how you may qualify.

This blog provides summary information regarding the subject matter at time of publishing. Please call with any questions on how this information may impact your situation. This material may not be published, re-written or redistributed without permission, except as noted here. This blog includes, or may include, links to third party internet web sites controlled and maintained by others. When accessing these links the user leaves this blog. These links are included solely for the convenience of users and their presence does not constitute any endorsement of the Websites linked or referred to nor does ROBERT J KRATZ & CO have any control over, or responsibility for, the content of any such Websites. All rights reserved.
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Key 2020 Coronavirus Tax Changes
June 17 2020 RgKAdmin14 COVID Tax Tips 0 comments

Coronavirus uncertainty abounds. Thankfully, by monitoring tax changes on your behalf, we can work together to navigate the right path for you and your family. Here is a round-up of tax-related laws and information to help with tax planning for 2020.

  • Early distribution penalty waived The 10% early distribution penalty on up to $100,000 of retirement withdrawals for coronavirus-related reasons is waived during 2020. New tax rules allow tax liabilities on these distributions to be paid over a three-year period. So if you need the funds, you won’t see your tax bill skyrocket in one year. Even better, you can return these distributions back into your retirement account over a three-year period and not be subject to the annual contribution limits.

Action: This could be a great way to handle emergency payments until you receive a stimulus check, unemployment payments, or a pending small business loan.

  • Required minimum distributions (RMDs) waived for 2020 Required minimum distributions (RMDs) in the year 2020 for various retirement plans is suspended. The corresponding 50% penalty associated with not taking an RMD is also suspended in 2020 Action: Taking out distributions when the market takes a tumble can hurt retirement income for many years. This change allows you to wait to let the value in your retirement account rebound before you withdraw funds.
  • IRS installment agreement suspension The IRS is suspending payments of all amounts due from April 1 through July 15, 2020. If you do not pay your IRS installment payment during this time your installment agreement will not be in default. Interest will continue to accrue on these installment agreements. Action: Being on the bad side of the IRS is never fun. If you currently have an IRS installment agreement, look to take advantage of this delay.
  • Offers-in-compromise The IRS will allow you until July 15, 2020 to provide additional requested information for any pending offers-in-compromise (OIC) and will not close out the OIC during this time without your consent. The IRS is also suspending any payments due under an OIC until July 15, 2020.
  • Enforcement activities suspended? Not so fast…The filing and enforcement of liens and levies will generally be suspended. However, IRS Revenue Officers will continue to pursue high income non-filers and initiate other actions when warranted.
  • No new audits The IRS will not initiate new audits during this time but will act to protect the statute of limitations.

As always, should you have any questions or concerns regarding your tax situation please feel free to call.

 

This blog provides summary information regarding the subject matter at time of publishing. Please call with any questions on how this information may impact your situation. This material may not be published, re-written or redistributed without permission, except as noted here. This blog includes, or may include, links to third party internet web sites controlled and maintained by others. When accessing these links the user leaves this blog. These links are included solely for the convenience of users and their presence does not constitute any endorsement of the Websites linked or referred to nor does ROBERT J KRATZ & CO have any control over, or responsibility for, the content of any such Websites. All rights reserved.

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Tax Tips: Key 2020 Coronavirus Tax Changes
May 29 2020 RgKAdmin14 COVID Tax Tips 0 comments Tags: COVID Tax Tips, Coronavirus tax changes
Accounting Services 
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