September 2021

September

Some Taxpayers May Want to Unenroll from 2021 Advance CTC

Millions of U.S. households received their first advance payments of the 2021 Child Tax Credit (CTC) in July. While these payments will help many families, some taxpayers may come out better by unenrolling from the advance payment program. If the advance payments add up to more than your total credit for 2021, you may end up owing tax for the year.

In most cases, the IRS bases CTC advance payments on the taxpayer’s 2020 federal tax return, or their 2019 return if their 2020 return has not been processed. Certain life changes during 2021 could reduce your CTC amount, or even make you ineligible for the credit. Therefore, you may wish to consider opting out of advance payments if any of the following occur:

You can also choose to unenroll from advance payments simply because you want to receive your entire 2021 CTC when you file your tax return in the spring. To unenroll for any reason, use the IRS Advance CTC Update tool (link below). A tax professional can help you determine whether receiving advance payments or opting out makes more sense for your circumstances.

Note that for married couples filing jointly, both spouses must unenroll from advance payments. If only one spouse opts out, the other will still receive monthly advance payments equal to half of the original payment amount calculated for the household.

IRS Advance CTC Portal to unenroll: https://www.irs.gov/credits-deductions/child-tax-credit-update-portal

Tax Tip: Summer Activities May Affect Your 2021 Taxes

Both major life events and small changes to your work or family routines can have an impact on your taxes. These events and changes often occur during the summer, especially this summer with the economy reopening. If your life circumstances take either a planned or unexpected turn this summer, you may want to take a few extra steps to prepare for tax season next spring.

If you get married, you should report any name or address change to the Social Security Administration, IRS and post office to ensure that you receive important tax documents.

If your child returns to in-person day camps or daytime education programs, some of the cost may qualify for the Child and Dependent Care Credit. Make sure to save records of all fees paid.

Seasonal and part-time work create a variety of record keeping and tax reporting challenges. If you are a student and do not earn enough money to owe federal income tax, you may need to file a 2021 tax return to claim a refund of any tax withheld from your pay. Those who earn side income from a part-time job or gig economy work may need to adjust their paycheck withholding for their primary job to make sure enough tax is withheld. You can use the IRS Withholding Estimator tool to check where you stand.

Also keep in mind that income earned as a freelancer or independent contractor may be subject to self-employment tax. Figuring out whether you are officially an employee or an independent contractor can get tricky for temporary work. A tax professional can help you determine your status, and plan for self-employment tax if appropriate.

September
Day    
10  -  Employees Who Work for Tips – If you received $20 or more in tips during August, you must report them to your employer (employees are required to keep a daily record of tips). All tips must be reported on your individual income tax return. You can use Form 4070.
15  -  Corporations – Deposit the third installment of estimated income tax for 2021. A worksheet, Form 1120-W, is available to help you estimate your tax for the year.
15  -  Employers – Nonpayroll withholding. If the monthly deposit rule applies, deposit the tax for payments made in August.
15  -  Employers – Social security, Medicare, and withheld income tax. If the monthly deposit rule applies, deposit the tax for payments made in August.
15  -  Individuals – Make a payment of your 2021 estimated tax if you’re not paying your income tax for the year through withholding (or won’t pay in enough tax that way). This is the third installment date for estimated tax in 2021. You may be able to avoid having to pay estimated taxes by increasing your tax withholding. Penalties may be assessed if you do not pay enough tax through withholding and estimated tax payments or if your payments are late.
15 -   Partnerships – File a 2020 calendar year return (Form 1065). This due date applies only if you timely requested an automatic 6-month extension. Otherwise, see Partnerships under March 15, earlier. Provide each partner with a copy of their final or amended Schedule K-1 (Form 1065) or substitute Schedule K-1 (Form 1065).
15  -  S Corporations – File a 2020 calendar year income tax return (Form 1120-S) and pay any tax, interest, and penalties due. This due date applies only if you timely requested an automatic 6-month extension of time to file the return. Otherwise, see S corporations under March 15, earlier. Provide each shareholder with a copy of their final or amended Schedule K-1 (Form 1120-S) or substitute Schedule K-1 (Form 1120-S).

October
Day    
12  -  Employees Who Work for Tips – If you received $20 or more in tips during September, you must report them to your employer (employees are required to keep a daily record of tips). All tips must be reported on your individual income tax return. You can use Form 4070.
15  -  Corporations – File a 2020 calendar year income tax return (Form 1120) and pay any tax, interest, and penalties due. This due date applies only if you timely requested an automatic 6-month extension. Otherwise, see Corporations under April 15, earlier.
15  -  Employers – Nonpayroll withholding. If the monthly deposit rule applies, deposit the tax for payments made in September.
15  -  Employers – Social security, Medicare, and withheld income tax. If the monthly deposit rule applies, deposit the tax for payments made in September.
15  -  Individuals – If you have an automatic 6-month extension to file your income tax return for 2020, file Form 1040 or Form 1040-SR and pay any tax, interest, and penalties due.

November
Day    
01  -  Certain Small Employers – Certain small employers. Deposit any undeposited tax if your tax liability is $2,500 or more for 2021 but less than $2,500 for the third quarter.
01  -  Employers – Federal unemployment tax. Deposit the tax owed through September if more than $500.
01  -  Employers – Social security, Medicare, and withheld income tax. File Form 941 for the third quarter of 2021. Deposit or pay any undeposited tax under the accuracy of deposit rules. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the quarter timely, properly, and in full, you have until November 10 to file the return
10  -  Employees Who Work for Tips – If you received $20 or more in tips during October, you must report them to your employer (employees are required to keep a daily record of tips). All tips must be reported on your individual income tax return. You can use Form 4070.
10  -  Employers – Social security, Medicare, and withheld income tax. File Form 941 for the third quarter of 2021. This due date applies only if you deposited the tax for the quarter timely, properly, and in full.
15  -  Employers – Nonpayroll withholding. If the monthly deposit rule applies, deposit the tax for payments made in October.
15  -  Employers – Social security, Medicare, and withheld income tax. If the monthly deposit rule applies, deposit the tax for payments made in October.

December
Day    
10  -  Employees Who Work for Tips – If you received $20 or more in tips during November, you must report them to your employer (employees are required to keep a daily record of tips). All tips must be reported on your individual income tax return. You can use Form 4070.
15  -  Corporations – Deposit the fourth installment of estimated income tax for 2021. A worksheet, Form 1120-W, is available to help you estimate your tax for the year.
15  -  Employers – Nonpayroll withholding. If the monthly deposit rule applies, deposit the tax for payments made in November.
15  -  Employers – Social security, Medicare, and withheld income tax. If the monthly deposit rule applies, deposit the tax for payments made in November.

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