Child Tax Credit 2021: Eligible or Opt-Out? 

Child Tax Credit 2021: Eligible or Opt-Out? 

Many Americans received their first advance payments from the child tax credit program on or around July 15, 2021. These payments were passed as part of the American Rescue Plan as an advance on the child tax credit for the 2021 tax year. However, some recipients may be surprised to learn they may not be eligible for the payments already received because of changes in taxable income for 2021 or children who turned 18 during 2021. (more…)

REMINDER: Apply Now for PPP1 Loan Forgiveness 

For businesses which received PPP1 loans during the early wave of funding, the time to apply for forgiveness is now. The first PPP loan payments are due 10 months after the end of your covered period. For example, if you received a PPP loan on April 17, 2020, your 24-week covered period ended on October 1, 2020 and your first loan payment will be due on August 1, 2021. Your bank will need time to process your application so the time to apply is now.

A borrower can apply for forgiveness once all loan proceeds for which the borrower is requesting forgiveness have been used. Borrowers can apply for forgiveness any time up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months after the last day of the covered period, then PPP loan payments are no longer deferred, and borrowers will begin making loan payments to their PPP lender.

Reminders about applying for loan forgiveness:

1.    Determine which forgiveness application you will complete: The SBA provides 3 different versions of the PPP loan forgiveness application form, verify with your accountant or bank that you are using the correct form.

2.   Gather your documents: There are specific documents you will need to retain and/or submit for your application. If you plan to start gathering documentation on your own, here’s what you may need: payroll documents for all payroll periods that overlapped with the covered period, full-time equivalent (FTE) documents and certain non-payroll documents.

3.   Submit the forgiveness form and documentation to your PPP lender: Complete your loan forgiveness application and submit it to your lender with the required supporting documents and follow up with your lender to submit additional documentation as requested. Consult your lender for additional guidance and provide requested documentation in a timely manner.

For those of you receiving PPP2 loans in 2021, the earliest you can apply for loan forgiveness is 8 weeks from your loan funding date.

 

Qualifying for Tax Breaks for a Dependent Parent

For many families, the tables may turn, and adult children provide financial support for their parents. For example, you might have moved your in-laws from a long-term care facility into your home during the pandemic for safety and convenience. Or your widowed father might still live in his own home, but his pension might not be enough to cover his living expenses, so you pay his rent and substantial medical costs. (more…)

Bring Home a Tax Credit for Adoption

When you adopt a child, you could bring home more than a bundle of joy. You may also be in line for a valuable tax credit.

For 2021, a tax credit of up to $14,440 for adoption of a special needs child can come in handy for qualified parents facing the daunting costs of adoption (up from $14,300 for 2020). For other adoptions the credit is equal to qualified adoption expenses, up to a maximum of $14,440. (more…)

4 Tax-Saving Credits for Families

Families may be able to cash in on various tax credits to offset their tax liability on a dollar-for-dollar basis. Plus, recent legislation has enhanced some of the credits for 2021. Here’s an overview of four key tax credits for families that are currently on the books. (more…)

Not-for-Profit Reporting of Gifts-in-Kind

The Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) 2020-07 with the goal of increasing transparency about contributed nonfinancial assets for not-for-profit entities. Examples of nonfinancial assets covered under this ASU include:

• Donated legal and accounting services
• Donated medicine
• Donated rental space
• Donated travel
• Donated equipment
• Donated radio, TV and digital advertising

The ASU does not apply to contributed securities or other financial assets.

Under the new standard, material or significant contributions of nonfinancial assets will be more clearly presented on the face of the financial statements with a separate breakout. The terminology to be utilized can be at the discretion of the entity and may include “Contributed nonfinancial assets” or the historically utilized “Gifts-in-kind.” Additional disclosures will be required to further disaggregate such contributed nonfinancial assets by major type including amount of revenues recognized, utilization of programs/activities, donor restrictions and valuation techniques and inputs utilized.

This ASU is effective for annual periods beginning after June 15, 2021 and early adoption is permitted. Therefore, organizations with June 30 year-ends will be required to adopt and implement this standard for the year ending June 30, 2022.

Virginia Unitary Business Reporting Requirement – Due July 1, 2021

A provision of Virginia’s budget bill requires all corporations subject to Virginia income tax to file a one-time report with Virginia Tax by July 1, 2021. This report will show the difference between the amount of tax the corporation would pay if it filed as part of a unitary combined group and the amount of tax based on how they currently file.

What is a unitary combined group?

Section 3-5.23(A)(2) of HB 1800 defines a “unitary business” as a “a single economic enterprise made up either of separate parts of a single business entity or of a commonly controlled group of business entities that are sufficiently interdependent, integrated, and interrelated through their activities so as to provide a synergy and mutual benefit that produces a sharing or exchange of value among them and a significant flow of value to the separate parts.”. A “unitary business” includes certain partnership interests but does not include entities subject to Virginia’s insurance premiums tax or bank franchise tax. Further, a unitary combined group must exclude the income and apportionment factors for foreign corporations that have at least 80% of property, payroll and sales outside the United States or otherwise includable foreign corporations with income that is subject to the provisions of a federal income tax treaty.

What if my corporation is not part of a unitary combined group?

You are still required to file with the state of Virginia and let them know you are not a unitary combined group. This must be completed by July 1, 2021 to avoid a $10,000 penalty.

How do you complete the report?

All corporations should receive a two-page correspondence from the State of Virginia providing a correspondence ID number. Once this is received the report can be completed online at https://www.business.tax.virginia.gov/unitary/#/ubg/reporting. If correspondence has not yet been received, the correspondence ID can be obtained by calling 804-367-8037 and selecting option #4.

If you have further questions or need assistance, please contact your KWC adviser.

KWC Names New Principals

We are pleased to announce the promotions of Irene Walsh and Ben Stokes to principal with the firm.

“Irene and Ben embody the core values of the firm, demonstrating integrity, responsiveness and superior performance in all dealings with clients, coworkers and the community,” said Connie Hammell, Managing Principal of KWC. “It is my pleasure to introduce both as principals as we continue to grow as a top tier firm in the region.”

Irene Walsh is a new principal in KWC’s Family Wealth Services Group. She specializes in tax planning and compliance, for a wide range of clients, with a focus on high net worth individuals and their related fiduciary, gift, and estate matters. Irene works closely with investment advisors and attorneys to maximize client tax planning opportunities. Many of Irene’s clients have international tax exposure, and she works closely with their advisors and attorneys to meet their planning and compliance needs.

A graduate of Georgetown University, Irene has received numerous professional and personal awards and recognitions including CPA Practice Advisor’s 40 Under 40, and the Leadership Center for Excellence’s 40 Under 40. She has also served as a board member for the Northern Chapter of the Virginia Society of CPAs.

Outside of KWC, Irene is active in the rowing community. She is an adaptive rowing coach with Medstar National Rehabilitation Hospital and the United States Air Force Wounded Warrior Program. She has coached at the World Championship level and represented the United States as the head rowing coach at the Invictus Games for the past three Games. She volunteers as the treasurer for Baltimore Adapted Recreation and Sports, and Alexandria Community Rowing.

Ben Stokes is a new principal in the firm’s Business Services Group. He provides consulting, tax planning, and compliance services for closely held businesses and their ownership groups.

Ben has extensive experience in serving real estate-related industries including construction companies, real estate management groups, architectural services firms, and real estate brokerage firms.

Ben is a participant in an emerging leaders program consisting of future leaders from regional firms across the Southeast.

A graduate of the University of Mary Washington, Ben was born and raised in Northern Virginia. He is an avid fan of the Washington Nationals and DC sports. In his free time Ben can be found on the basketball court or reading up on current affairs.