After each of the three Economic Impact Payments is issued, the IRS is required to mail a notice to each recipient's last known address. The notice provides information about the amount of the payment, how it was made and how to report any payment that wasn't received. Some people may receive multiple notices about each payment. Most people will simply file the notice with their tax records and won’t need to contact the IRS or take any further action.

Here are some details about each notice and what action some people may need to take.

• Notice 1444, Your Economic Impact Payment. The IRS mailed this notice within 15 days after the first payment was issued in 2020. Some people received another Notice 1444 if the IRS corrected or issued more than one payment in the first round. Taxpayers who received a Notice 1444 but did not receive their first payment should review the frequently asked questions for instructions on what to do if their first payment is lost, stolen, destroyed or has not been received. People should keep this letter with tax year 2020 records.
 
• Notice 1444-A, You May Need to Act to Claim Your Payment. The IRS mailed this letter last year to people who typically aren't required to file federal income tax returns but may have been eligible for the first Economic Impact Payment. People who didn't get a first and second Economic Impact Payment or got less than the full amounts, may be eligible to claim the 2020 Recovery Rebate Credit and must file a 2020 tax return even if they don't usually file a tax return.

• Notice 1444-B, Your Second Economic Impact Payment. The law that authorized the second payment gave the IRS more time to mail Notice 1444-B after the second payments were issued. This means people likely received their second payment several weeks before Notice 1444-B arrived. Taxpayers who received Notice 1444-B but didn’t receive the second payment should read the FAQs about what to do if their second payment is lost, stolen, destroyed or has not been received. People should keep this letter with tax year 2020 records. 

• Notice 1444-C, Your 2021 Economic Impact Payment. The IRS is mailing this letter to people who received a third Economic Impact Payment. People should keep this letter with tax year 2021 records.

People should keep any IRS notices they receive about Economic Impact Payments with other tax records. The IRS cannot issue replacement copies of these notices. Taxpayers who don't have their notices can view the amounts of their Economic Impact Payments through their online account.
​
More information:
Get My Payment
Do’s and Don’ts for taxpayers who get a letter or notice from the IRS

​"Tax Tips" are published to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.
 
The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
 
We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. 

Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs.   
 
We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at [email protected]. 
 
For more free resources, such as Tax Rates, Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com.

Monarch Accounting Group, Inc
145 Tower Drive, Suite 4
Burr Ridge, IL 60527
Phone (630) 320-372

With housing prices skyrocketing, more homeowners are considering cashing out to multiples over list price! Especially since one of the largest tax breaks available to most individuals is the ability to exclude up to $250,000 ($500,000 married) in capital gains on the sale of your personal residence. Making the assumption that this gain exclusion will always keep you safe from tax can be a big mistake. Here is what you need to know.
 
The rule’s basics
As long as you own and live in your home for two of the five years before selling your home, you qualify for this capital gain tax exclusion. In tax-speak you need to pass three hurdles:
 

• Main home. This tax term defines what a main home is. It can be a traditional home, a condo, a houseboat, or mobile home. Main home also means the place of primary residence when you own two or more homes.

 

• Ownership test. You must own your home during two of the past five years.

 

• Residence test. You must live in the home for two of the past five years.

 

• Other nuances.
  • You can pass the ownership test and the residence test at different times.
  • You may only use the home gain exclusion once every two years.
  • You and your spouse can be treated jointly OR separately depending on circumstances.

 
When to pay attention
 
You have been in your home for a long time. The longer you live in your home, the more likely you will have a large capital gain. Long-time homeowners should check to see if they have a capital gains tax problem prior to selling their home.
 
You have old home gain deferrals. Prior to the current rules, home-gains could be rolled into the next home purchased. These old deferred gains reduce the cost of your current home and can result in a capital gains exposure.
 
Two homes into one. Newly married couples with two homes have potential tax liability as both individuals may pass the required tests on their own property but not on their new spouse’s property. Prior to selling these individual homes, you may wish to create a plan of action that reduces your tax exposure.
 
Selling a home after divorce. Property transferred as a result of a divorce is not deemed a sale of your home. However, if the ex-spouse that retains the home later sells the home, it may have an impact on the amount of gain exemption available.
 
You are helping an older family member. Special rules apply to the elderly who move out of a home and into assisted living and nursing homes. Prior to selling property, it is best to review options and their related tax implications.
 
You do not meet the five-year rule. In some cases you may be eligible for a partial gain exclusion if you are required to move for work, disability, or unforeseen circumstances.
 
Other situations. There are a number of other exceptions to the home gain exclusion rules. This includes foreclosure, debt forgiveness, inheritance, and partial ownership.
 
A final thought
The key to obtaining the full benefit of this tax exclusion is in retaining good records. You must be able to prove both the sales price of your home and the associated costs you are using to determine any gain on your property. Keep all sales records, purchase records, improvement costs, and other documents that support your home’s capital gain calculation.

"Tax Tips" are published to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.
 
The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
 
We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. 

Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs.   
 
We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at [email protected]. 
 
For more free resources, such as Tax Rates, Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com.

Monarch Accounting Group, Inc
145 Tower Drive, Suite 4
Burr Ridge, IL 60527
Phone (630) 320-3720

What you need to know

The whirlwind of tax changes just keeps going. Now if you have children 17 or under there is a new, higher child tax credit in place for 2021. Here is what you need to know:
​
Age matters. The old credit was for children under the age of 17. The new credit goes through age 17 and includes an increased credit for children under the age of 6.

The new credit amount. The child tax credit goes from $2,000 per qualifying child up to $3,000 per child. The amount increases to $3,600 per child if your child is under the age of six.

Fully refundable. You will get the child tax credit even if you do not owe tax. The old rules required $2,500 in minimum earnings and only up to $1,400 of the credit was refundable.

Phaseouts just got a lot more complicated. As with the past child tax credit, you can only receive the credit if your income is below a threshold amount. The $200,000 threshold for unmarried taxpayers and $400,000 threshold for married taxpayers is still in place for the first $2,000 of the 2021 credit. To get the entire $3,000 or $3,600 credit in 2021, your adjusted gross income must be under $75,000 for single taxpayers, $112,500 for head of household taxpayers, and $150,000 for married taxpayers.

New periodic payments. The new child tax credit also allows you to receive monthly payments for 50 percent of the credit from July 2021 through December 2021. There will be a new IRS website to opt out of receiving monthly payments if you prefer to receive your entire child tax credit when you file your 2021 tax return in 2022.

Unless noted, the other requirements to receive the child tax credit stay in place. So you must still pass rules for the relationship test and support tests to qualify. As always, should you have questions please feel free to contact us.

"Tax Tips" are published to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.
 
The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
 
We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. 

Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs.   
 
We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at [email protected]. 
 
For more free resources, such as Tax Rates, Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com.

Monarch Accounting Group, Inc
145 Tower Drive, Suite 4
Burr Ridge, IL 60527
Phone (630) 320-3720

Now is the time to make your estimated tax payment

Despite the individual tax filing due date being delayed until May 17, 2021, there is no delay in paying first quarter estimated tax payments for the 2021 tax year. So it is time to review your tax situation for the 2021 tax year and make an estimated quarterly tax payment using Form 1040-ES.

First quarter due date: Thursday, April 15, 2021
You are required to withhold or prepay throughout the 2021 tax year at least 90 percent of your 2021 total tax bill, or 100 percent of your 2020 federal tax bill.* A quick look at your 2020 tax return and a projection of your 2021 tax obligation can help determine if a quarterly payment might be necessary in addition to what is being withheld from any paychecks.

Here are some things to consider:

Underpayment penalty. If you do not have proper tax withholdings throughout the year, you could be subject to an underpayment penalty. A quick payment at the end of the year may not be enough to avoid the underpayment penalty.

W-2 withholdings have special treatment. A W-2 withholding payment can be made at any time during the year and be treated as if it was made throughout the year. If you do not have enough to pay the estimated quarterly payment now, you may be able to adjust your W-2 wage withholdings to make up the difference.

Self-employed. In addition to paying income taxes, self-employed workers must also account for paying Social Security and Medicare taxes. Creating and funding a savings account for this purpose can help avoid the cash flow hit each quarter to pay your estimated taxes.

Use your refund? An alternative option to pay your 2021 first quarter estimated tax is to apply some or all of your 2020 tax refund.

ALERT! The tricky part of this approach in 2021 is with the individual tax filing due date being delayed until May 17, 2021, the IRS hasn't announced whether it will apply a penalty to 2020 refunds applied to 2021's tax obligation as a first quarter payment if made after April 15.

Pay more in the first quarter. By paying a little more than necessary in the first quarter, you can be in a position to adjust future estimated tax payments downward later in the year if your 2021 tax obligation appears like it will be lower than you originally thought.

Not sure if you need to make a quarterly payment? Take a quick look at your 2020 tax return to see the amount of tax you paid. Divide the tax by the number of paychecks for the year. Is enough being withheld from your paycheck? Consider adjusting your withholdings with your employer if you think it is necessary to cover your 2021 tax bill.
​
*If your income is more than $150,000 ($75,000 if married filing separate), you must pay 110 percent of your 2020 tax obligation to be safe from an underpayment penalty on your 2021 tax return.
 ​
"Tax Tips" are published to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.
 
The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
 
We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. 

Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs.   
 
We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at [email protected]. 
 
For more free resources, such as Tax Rates, Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com.

Monarch Accounting Group, Inc
145 Tower Drive, Suite 4
Burr Ridge, IL 60527
Phone (630) 320-3720

The third Economic Impact Payment is different from the first and second payments in several ways.
 
The third Economic Impact Payment is an advance payment of the 2021 recovery rebate credit. The two earlier payments are advance payments of the 2020 recovery rebate credit. Eligible people who didn't get a first and second Economic Impact Payment or got less than the full amounts, may be eligible to claim the 2020 recovery rebate credit and must file a 2020 tax return even if they don't usually file a tax return.
 
The third Economic Impact Payment will be larger for most eligible people. Eligible individuals who filed a joint tax return will receive up to $2,800, and all other eligible individuals will receive up to $1,400. Those with qualifying dependents on their tax return will receive up to $1,400 per qualifying dependent.
 
More people qualify as dependents. Unlike the first two payments, the third payment is not restricted to children under 17. Eligible families will get a payment for all qualifying dependents claimed on their return. This may include older relatives like college students, adults with disabilities, parents and grandparents.
 
Income phase-out amounts are different for the third payments.
Taxpayers will not receive a third payment if their Adjusted Gross Income exceeds:

• $160,000, if married and filing a joint return or if filing as a qualifying widow or widower.
• $120,000, if filing as head of household.
• $80,000 for eligible individuals using other filing statuses, such as single filers and married people filing separate returns

This means that some people won't be eligible for the third payment, even if they received first or second EIPs or are eligible for a 2020 recovery rebate credit.
 
Some people may be eligible for a Supplemental Payment.
The amount of the third payment is based on the taxpayer’s latest processed tax return from either 2020 or 2019. If the taxpayer's 2020 return hasn’t been processed, the IRS used 2019 tax return information to calculate the third payment.
 
If the third payment is based on the 2019 return, and is less than the full amount, the taxpayer may qualify for a supplemental payment. After their 2020 return is processed, the IRS will automatically re-evaluate their eligibility using their 2020 information. If they’re entitled to a larger payment, the IRS will issue a supplemental payment for the additional amount.
 
Changes to earlier eligibility requirements. For taxpayers who file jointly and only one individual has a valid SSN, the spouse with a valid SSN will receive up to a $1,400 third payment and up to $1,400 for each qualifying dependent claimed on their 2020 tax return. For taxpayers who don’t have a valid SSN, but have a qualifying dependent who has an SSN, they will only receive up to $1,400 for a qualifying dependent claimed on their return only if they meet all other eligibility and income requirements. If either spouse was an active member of the U.S. Armed Forces at any time during the taxable year, only one spouse needs to have a valid SSN for the couple to receive up to $2,800 for themselves, plus up to $1,400 for each qualifying dependent.
 
If married taxpayers filing jointly did not receive one or both of the first two Economic Impact Payments because one spouse didn’t have a Social Security number valid for employment, they may be eligible to claim a 2020 recovery rebate credit on their 2020 tax return for the spouse with the SSN valid for employment.

"Tax Tips" are published to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.
 
The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
 
We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. 

Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs.   
 
We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at [email protected]. 
 
For more free resources, such as Tax Rates, Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com.

Monarch Accounting Group, Inc
145 Tower Drive, Suite 4
Burr Ridge, IL 60527
Phone (630) 320-3720​

Good news, that is sometimes not so good

For some reason, some believe it is better to receive than give when it comes to filing taxes. While that may help your savings account, it is not always a great idea.

​Here's why.

You are giving the IRS an interest-free loan. Granted, interest rates are pretty low, but every dollar you earn money on, is one more dollar of yours and one less of Uncle Sam's.

Debt costs a lot. While interest on savings is low, the same is not necessarily true for credit card and other forms of debt. Why not lower your withholdings throughout the year and use the extra money to pay down your debt?

IRS identity theft is common. The longer you have your money in the hands of the IRS, the higher the chance some unsavory character is going to try to get it for themselves. Should this happen to you, the IRS will fix the problem....eventually. In the meantime, there is paperwork and tons of hurdles to overcome while your refund is delayed.

You could fund something else. Instead of money being parked at the IRS, you could be investing in your retirement or funding a Health Savings Account to pay for medical expenses in pre-tax dollars! So in addition to saving money in interest, you could actually be lowering your tax bill!

Let's face it, sometimes knowing you get a refund versus a tax bill is less stressful. But, for the savvy taxpayer you can possible accomplish both!

"Tax Tips" are published to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.
 
The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
 
We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. 

Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs.   
 
We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at [email protected]. 
 
For more free resources, such as Tax Rates, Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com.

Monarch Accounting Group, Inc
145 Tower Drive, Suite 4
Burr Ridge, IL 60527
Phone (630) 320-3720