Unemployment Compensation – New Exclusion

Please stay tuned for information about the Advance Premium Tax Credit (APTC) — the IRS’s first priority was the Unemployment Exclusion change and we expect more information on the APTC in the near future.

The IRS has advised that you should not yet amend returns that had Unemployment Compensation or Repayment of the Advance Premium Tax Credit. Official IRS guidance is forthcoming.

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Third Stimulus Payment Update

The American Rescue Plan Act of 2021, which was signed into law on March 11, includes a third round of stimulus payments. The IRS will begin the process of depositing payments into accounts immediately, with the first wave of direct deposits hitting accounts early next week.

It is our understanding the IRS will use direct deposit (DD) information from 2020 and 2019 tax returns, with 2020 taking precedent if available. If DD info is not present on tax returns, the IRS will likely use DD info entered by the taxpayer into the Get My Payment (GMP) tool. If no DD info is available, the taxpayer will receive a check or debit card.

The GMP tool will not be updated with EIP3 data before Monday, March 15. Also, we don’t believe the IRS will be collecting any additional DD info through the GMP tool for EIP3.

Payments received in this third round of stimulus do not impact 2020 tax returns.

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Unemployment and Premium Tax Credit – ARP Act

The American Rescue Plan Act of 2021 makes a portion of unemployment compensation non-taxable for certain filers and eliminates repayment of excess funds received through the Advance Premium Tax Credit.

We ask for your patience while we work closely with the IRS and state taxing authorities to implement any necessary changes.

We know many of you are holding 2020 returns that have unemployment benefits or the Advance Premium Tax Credit. We expect the IRS to issue official guidance on these items in the near future.

For returns that have been filed with these items, we advise that you hold off on filing amended returns until the IRS provides official guidance.

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March 15 Deadline – Partnerships and S Corps

The deadline for filing calendar-year partnership and S corporation returns is March 15, 2021. These returns must be filed (e-filed or postmarked) by midnight (local time) on March 15, 2021. Fiscal-year returns will be due the 15th day of the 3rd month following the year-end.   

Both partnership and S corporation returns are allowed a six-month extension. Payment must accompany the return or extension if there are taxes due. An extension of time to file does not extend the time to pay taxes.

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