Client Resources

The Washington State Supreme Court has cleared the way for the state to collect certain capital-gains taxes from individuals.  And the reporting of the capital-gains taxes will be required for the 2022 tax year filings (filed by April 15, 2023).  The WA State Supreme Court is still considering the legality of this tax, with the central issue for the court: Is the capital gains tax an income tax or an excise tax? As with most other states – and confirmed by IRS rulings, capital gains are recognized as income.  But WA State classifies income as property.  And due to strict WA State constitutional restrictions on collecting property taxes, this disallows any form of income tax collection. 

Arguments are still to be heard by the WA State Supreme Court, and a decision will not be forthcoming until sometime in the Spring of 2023.  Even though the decision is yet to come, this lifting of the stay now allows WA State to collect this capital gains tax until the WA State Supreme Court says otherwise.  

If you are a Washington resident, please click on the button below to see how this will affect you and your 2022 tax filing. 

More Details

Certain IRS notices are now available to view and download using an IRS.gov account (these notices will continue to be sent to taxpayers by mail as well). These notices can be found under the “Notices and Letters” tab within the IRS.gov account.

If you’ve used the IRS online services before, login with your username and password. If you haven’t previously registered for an online account, sign up at IRS.gov/account. To register you will need a a mobile phone to receive a security code text message as well as a financial account number linked to your name. 

Washington State is the first state in the nation to create a publicly funded insurance program providing residents with a basic level of long-term care benefits. Participation is mandatory unless the individual opts out (which must happen before Nov 1, 2021). To opt out, residents may apply for an exemption with proof of personal long-term care insurance prior to this opt out date. 

Program Details:
-The program will be fully funded by WA workers through a payroll deduction starting in January of 2022.
– Starting January 1st, a 0.58% tax will be assessed on gross wages with no wage cap ($580 for every $100K earned)
– Residents will be considered vested if they’ve paid this tax for 10 years without a break of 5 consecutive years or for 3 of the last 6 years
– Vested residents will be allotted $100/day with a lifetime benefit of $36.5K (amount will adjust with inflation)

Who Might Want To Opt Out:
– Higher income residents who could purchase a more robust policy for less premium than the payroll tax
– Residents who are newer to the workforce and would thus pay into the fund for decades, ultimately paying more in tax than they would receive in benefits
– Residents who plan on retiring before the benefits are available
-Residents who plan on retiring outside of Washington or want the flexibility to do so
– Self-employed individuals who are considering returning to work for another company where they would be a W-2 employee, and therefor, subject to the tax

Important changes to the Child Tax Credit will help many families get advance payments of the credit starting this summer. The IRS will pay half the total credit amount in advance monthly payments and you will claim the other half when you file your 2021 income tax return. These changes apply to tax year 2021 only. If the IRS has processed your 2020 tax return or 2019 tax return, these monthly payments will be made starting in July and through December 2021, based on the information contained in that return. Please click the button below for more information regarding these payments.

IF YOU RECEIVE THESE PAYMENTS FROM THE IRS, PLEASE KEEP TRACK OF THEM!

Advance Child Tax Credit Payments

Upcoming 2021 COVID-19 Relief Bill & How This Will Affect Your 2020 Tax Preparation and Filing

The upcoming 2021 Covid-19 Relief Bill is currently waiting for approval from the House of Representatives and then a final signature from President Biden. The projected scheduling for this to be completed is March 11th. 

Once the bill is signed into action, the US Treasury must rewrite the current 2020 tax forms to reflect all of the new codes and regulations from this bill. Once the US Treasury completes their updating, the 2020 tax software used by all taxpayers and tax preparers must be rewritten to reflect these changes. This will take additional time. It is our estimate that this entire process will take several weeks as the US Treasury will also be in the process of sending out the new stimulus payments to those who qualify. Because of the time needed to complete this process, the preparation of your return will definitely be delayed. We will not know by exactly how long, but we ask for your patience while we navigate through the changes. 

Below are some of the benefits (for those who qualify) of the COVID Relief Bill:

– Additional Stimulus Money
– Specific Amounts of Unemployment Money Received Will Be Tax Free
– Expanded Child Tax Credits
– Additional Tax Credits For Childcare Costs And Adult Care Costs
– A Certain Amount Of Student Loan Debt Cancellation And Extension On The Pause of Student Loan Repayment
– Rental Assistance For Certain Rentals And Small Landlords
– Many Changes To The PPP & EIDL Loan Regulations And Certain Deferments/Caps On SBA Loans

Once the COVID Relief Bill is finalized and we have access to the official bill, we will most likely find even more potential benefits.  

The $900 billion Pandemic Relief Bill, which included the second stimulus package, was signed on December 27^th, 2020. In this stimulus package, there are several new items which could potentially apply to your business

Dec 27th Pandemic Relief Bill Information

Many employers are experiencing fraudulent unemployment claims for employees who are still working and receiving a salary.  If you have received a letter or email notice from ESD that one of your employees is filing for unemployment but you know that employee did not make a claim, your employee must notify ESD of this fraudulent reported claim. 

How to Handle a Fraudulent Unemployment Claim in Your Name (PDF)

Filing Your 2019 1040 Returns By US Mail Are Taking Much Longer Than Normal

If you mail in your paper Form 1040, U.S. Individual Income Tax Return, rather than having it filed electronically, it normally can take up to 6 to 8 weeks to process your return.  However, due to staffing issues, the IRS is saying that processing paper tax returns could take several weeks longer than normal This means it could be 2 to 3+ months before they begin processing. This delay will also apply to paper filing of amended returns (Form 1040X – which must be paper filed) for any previous years being amended including 2019.  We encourage you to keep a record of the date you mail in any return. 

In the unfortunate event that the Covid-19 pandemic has caused irreparable damage to your business and you are forced to close down your business for good, we have provided some information below on how to go through that process.

Closing a WA State Business (PDF) 

In the document below, we have compiled a few notes and resources regarding economic impact payments from the government as well as WA unemployment insurance.

Economic Impact Payments and Unemployment Insurance (PDF) 

Previously, the IRS had only delayed the filing, liability payment, and first estimated payment deadlines from April 15th to July 15th. They just released an update delaying the June 15th second estimated payment deadline to July 15th as well.

We just wanted to inform you that the system the SBA used to process applications crashed over the weekend. Until we have further details, the only guidance we can offer is to re-apply for any loans you may have previously applied for.

You can find a link to the Seattle Times article about the system crash here

The Small Business Administration released guidance today to help calculate the total loan a company is eligible to receive under the Paycheck Protection Program

Paycheck Protection Program - Update (PDF) 

The IRS has advised that payments will begin approximately April 13^th.  The IRS is also warning that these payments could take up to 20 weeks for some people.  The indications are:

1) Taxpayers who have provided their direct depositing information through their 2018 or 2019 tax returns will be the first to receive their money.  This means approximately 60 to 70 million people will receive their stimulus funds in this manner.  The projection is that it will take up to 3 weeks to process all these direct deposit stimulus amounts. 

2) Beginning the week of May 4^th, the IRS expects to start issuing paper checks to those whose bank information isn’t already on file – a process that will take much longer. This accounts for approximately 80 million people.  The IRS can only produce about 5 million paper checks per week, and it could take up to 20 weeks to issue all of the checks.  Individuals with the lowest income (based on adjusted gross income) will receive their paper checks first.

3) There have been many questions regarding whether seniors on social security or railroad retirees and others who are otherwise not required to file a tax return are also eligible.  The answer is YES, if they meet the adjusted gross income thresholds, and they will not be required to file a return. The IRS will use the information from the forms SSA-100 or RRB-1099 to calculate the stimulus payment amount.

4) For those taxpayers who have already filed their 2019 tax returns, the IRS will use this information to calculate the stimulus payment amount.

5) For those tax payers who have not yet filed their 2019 tax returns, the IRS will use the information from their 2018 tax filing to calculate the stimulus payment amount.

For those taxpayers who have changed banks from after their 2018 or 2019 tax returns, or do not have a bank account for direct deposit information, the IRS plans to develop a web-based portal in about 2 weeks (this is just a projection from the IRS)  for those individuals to provide their banking information to the IRS online, so that individuals can receive payments sooner as opposed to checks in the mail. The IRS will post all key information on IRS.gov/coronavirus as soon as it becomes available.

The Coronavirus Aid, Relief, and Economic Security Act, (The CARES Act) was passed on Friday, March 27, 2020. This 880-page bill outlines the latest financial assistance available to individuals and small businesses. We have read through the entire bill, and we are breaking down the provisions and regulations into 5 separate, manageable segments. Each document will be defined by the highlights covered in its section. Therefore, for ease and simplicity, please read the opening paragraph in each section to see if any of the information provided is needed by you or your small business. If after reading our synopsis you have any questions, please do not hesitate to contact us.  We are here for you during this challenging time. 

1040 Tax Return Implications (PDF) Paycheck Protection Program (PDF) Coming Changes to Unemployment (PDF)

Allowable Delays in Payment for Credit Cards & Mortgages (PDF) Tax Credit for Retained Employees and Other Tax Code Changes (PDF)

In our previous IRS Information Update we incorrectly stated that the 2nd estimated payments were also delayed until July 15th. That is not the case and they are still due June 15th. We know some of you have also reached to us asking about this and we are sorry for the confusion. You can click here for more FAQ’s regarding filing and payment deadline delays (including IRA contribution deadlines)  

IRS Information Update - Corrected (PDF)

Due to the incredible high number of lay-offs in the region, we anticipate that the next few months will see a large portion of renters unable to make their full rent payments. In preparation, we’ve compiled a list of resources landlords may wish to provide to their tenants to help ease some of the burdens both they, as the property owner, and their renters will be facing. Renters feel free to check out these resources yourself as well. These resources include utility, food, and rent assistance. 

Resources For Tenants (PDF)  

Below we have compiled tips and instructions on how to apply for SBA disaster loans (for business entities, schedule C businesses, and renters). We have also created a document listing new payroll tax credits (announced by the IRS) for employers that are providing employees paid sick/family leave. 

SBA Disaster Loans Process - Businesses (PDF) SBA Disaster Loans Process - Renters & Sch C Businesses (PDF)

Employer Payroll Credits (PDF)

In our 3/19 post we provided an IRS update regarding payment of tax liabilities. This new post contains information about a delay in the tax filing deadline as well as other notable updates. 

IRS Information Update - Updated In 3/25 Post (PDF)

Below are the links to access the most current information we have in regards to Federal and WA State taxing authority filing deadlines and payment deadlines. As usual, please do not hesitate to contact us if you have any questions about the attached information.

Please note: The link labeled “IRS Information Update” contains information for both Individuals and Businesses. The other three links are specifically for businesses.

IRS Information Update (PDF) - Updated in 3/20 Post

ESD & L&I Update (PDF) B&O Extension - Step by Step (PDF)

We have put together several pages of information you may wish to use when working with employees you may need to lay off, or how to access money through loans, or what to do about paying your taxes when you have no income coming in. You can access these pages in the document below. We hope you find this material beneficial during these disconcerting times.

Employer COVID-19 Assistance (PDF)