show me the money!!

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Click on the Template image above or the XLS icon to download

More Info about the actc ...

  • In January 2022 IRS will send Letter 6419 to your address of record - typically the address shown on your last tax return filed.   MAKE SURE TO KEEP THAT LETTER!!

  • When you file your tax return for the 2021 tax year you will need to reconcile the amount of ACTC paid to you during 2021 and the amount for which you are eligible.

  • So how could the amount paid be different from the amount which I am eligible for?  Changes in income, family composition, filing status or something else.

  • Could you be obligated to repay some of the credit?  Unfortunately, yes ... but you may also qualify for repayment protection if your income level is below a threshold amount.  If you are Single, that amount is $80,000 of modified adjusted gross income (MAGI) or Married Filing Jointly then the MAGI threshold is $120,000.  This will need to be calculated on your 2021 tax return.

  • What can you do about it now?  You can use the Child Tax Credit Update Portal to make sure IRS has the latest information with regard to the above factors.

  • What if it is too late to update my ACTC?  IRS will work with you to repay the credit.  You may also be able to file an Offer in Compromise and prevail based upon doubt as to collectibility.

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Click on the icon above to go to the IRS website to check on your Stimulus Payment.

This may take a while to populate based on record IRS website activity.

paycheck protection package loan proceeds tracker

According to the Small Business Administration's Interim Final Rule - a copy of which can be obtained here - the PPP Loan proceeds used for Payroll Costs must be carefully documented so that the Borrower may apply for loan forgiveness.

Below is a spreadsheet that can be downloaded to track each disbursement from the PPP Loan, with percentage calculations so that you can monitor the 75% Payroll Cost threshold for loan forgiveness.

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Click on the Template image above or here to download from Google Drive

potential unintended consequences of the paycheck protection program

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Not quite as dire as the unfortunate individuals above, the Paycheck Protection Program may come with some unintended consequences.

Read the article by clicking here.

So ... Are Expenses Paid With Forgiven PPP Loan Proceeds Deductible?

I Believe They Are ... And Here is Why ...

Essentially IRS has concluded that any deductible expenses paid with forgiven Paycheck Protection Program loan proceeds are not deductible under the tax principle that expenses paid for with tax-exempt funds are not deductible.

However, there are tax precedents that fly in the face of IRS rulings on this matter, specifically the minister's housing or parsonage allowance.

IRS specifically includes the deductibility of mortgage interest and real estate property tax when paid for using amounts excludible from gross income.  IRC Sec 107 and IRS Publication 517

Read my in-depth discussion of this and how to present it on your tax return here.

 

UPDATE:

Congress has legislated that expenses paid with PPP loans that are forgiven are now deductible.  The Consolidated Appropriations Act Sec 276 states that "no deduction shall be denied, no tax attribute shall be reduced, and no basis increase shall be denied, by reason of the exclusion from gross income provided by" the CARES Act PPP loan forgiveness provisions previously passed.

The forgiven amount is considered "tax-exempt income" and for those S Corporation shareholders and partners in partnerships, it does create basis.  One of the complexities of this issue is that the year of the expense may not correspond with the year of forgiveness, which is the year in which basis will increase.

You will need to know your stimulus payment to complete your tax return

Here's How ...

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And you are Authorized ... Fill out the following ...

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The information for your Stimulus Payment ... aka Economic Impact Payment ... aka Recovery Rebate Credit should populate.

Use that information to complete the Recovery Rebate Credit worksheet for Form 1040, page 2, line 30.