Frequently Asked Questions (FAQ)
IS STUDENT LOAN FORGIVENESS TAXABLE?
Taxpayers earning less than $125,000 per year ($250,000 if married filing jointly) who have student loan debt may be eligible for up to $10,000 in debt forgiveness. Affected taxpayers need not worry because the American Rescue Plan Act of 2021 excludes forgiven student loans from a borrower’s taxable income through 2025.
Do I qualify for the 2021 Child Tax Credit and Advance Child Tax Credit Payments?
The child tax credit is bigger and better than ever for 2021. The credit amount is significantly increased for one year, and the IRS is making monthly advance payments to qualifying families from July through December.
But the changes are complicated and don't help everyone. For instance, there are now two ways in which the credit can be reduced for upper-income families. That means some parents don't qualify for a larger credit and, as before, some won't receive any credit at all. More children qualify for the credit in 2021. And, when you file your 2021 tax return, you will have to reconcile the advance payments you received with the actual child tax credit you are entitled to.
https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021
What if I did not get my unemployment tax refund?
Under the (ARP) package which funded another round of unemployment benefit extensions, there was a late provision added that provided a tax break on unemployment insurance (UI) benefits. This tax break exempted the first $10,200 in unemployment benefits/compensation received in 2020 (not in 2021). For married couples, this amount would be $20,400. This exemption went a long way to prevent the surprise unemployment income tax hits many jobless American households have seen or are potentially facing when filing their tax return. If you did not get your unemployment tax refund, contact a Tax Pro at Maximum Return - they can help!
How does an amenDed tax return work?
IRS Form 1040X is the form you fill out to amend or correct a tax return. On that form, you show the IRS your changes to your tax return and the correct tax amount. Starting in 2020, you can file Form 1040X electronically (until then, the only option was to mail it). Only tax year 2019-2021 Forms 1040 and 1040-SR returns can be amended electronically. If you’re fixing more than one year of returns, you’ll need to fill out a separate Form 1040X for each. You’ll also need to include forms or schedules affected by the changes. If you're filing Form 1040X to get money back, you generally need to do so within three years of filing your original return or within two years of paying the tax, whichever is later.
If you catch an error before the IRS does, or you receive new tax documents after you’ve already filed — you may want to amend you tax return. Contact Maximum Return - they can help!
How much are the IRS Economic Impact Payments (STIMUlus Checks)?
EIP-1
First issued March 2020
$1,200 per eligible individual
$2,400 for married joint filers
$500 for each qualifying child or dependent under 17 years old
Total payment amount will be phased out by $5 per $100 of income above these thresholds:
$75,000 singles
$112,500 heads of households
$150,000 married filing jointly
EIP-2
First issued December 2020
$600 per eligible individual
$1,200 for married joint filers
$600 for each qualifying child or dependent child under 17 years old
Total payment amount will be phased out by $5 per $100 of income above these thresholds:
$75,000 singles
$112,500 heads of households
$150,000 married filing jointly
EIP-3
The third round of Economic Impact Payments will be based on the taxpayer's latest processed tax return from either 2020 or 2019. This means that some people won't be eligible for the third payment even if they received a first or second Economic Impact Payment or claimed a 2020 Recovery Rebate Credit. For more information click on the IRS link below.
https://www.irs.gov/coronavirus/third-economic-impact-payment
NYS - Consumer Bill of Rights Regarding Tax Preparers
Know your rights before you hire a tax return preparer. Most tax return preparers act within the law and treat their clients fairly, but there are some who do not. Check out the NYS Consumer Bill of Rights for more information.