TAX UPDATES

LOCAL EARNED
INCOME TAX

The Local Earned Income Tax filing deadline has *NOT* been extended beyond the April 15, 2021 due date.

While the PA Department of Revenue and the IRS announced that income tax filing deadlines for their 2020 final returns are extended to May 17, 2021, no such change has been made for the Local Earned Income Tax Filing deadline.

We will continue to monitor announcements from the Governor’s Office, the State Legislature and the Department of Community and Economic Development regarding any potential change in the filing deadline.

Absent notice from at least one of these entities, the April 15th deadline cannot change.

Returns filed after this date will be assessed penalty, interest and costs regardless of extensions by the PA Department of Revenue and the IRS.

TAXES PAID ON
UNEMPLOYMENT BENEFITS

The IRS announced on April 1st that it will be recalculating the taxes Americans paid on unemployment benefits to make sure those who filed before the American Rescue Plan was signed into law don’t miss out on a key provision in the bill.

Eligible taxpayers who are married filing jointly can exclude up to $20,400 in unemployment benefits from their taxable income, $10,200 for all other taxpayers.

The money being returned to early filers will be automatically refunded this spring and summer according to the IRS.

The first refunds are expected to be in May and will continue into the summer months.

The IRS will also apply any overpaid money to outstanding tax bills.

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For most eligible taxpayers, the IRS will take care of everything and there is no need to file an amended return.

The IRS will start the recalculation process with the returns filed by Americans eligible for the $10,200 unemployment compensation exclusion.

The second phase will include people who are married filing jointly and those with more complicated returns.

The only situation in which a taxpayer would need to file an amended return is if the IRS recalculation makes that person eligible for federal credits and deductions they wouldn’t have otherwise qualified for:

“For example, the IRS can adjust returns for those taxpayers who claimed the Earned Income Tax Credit (EITC) and, because the exclusion changed the income level, may now be eligible for an increase in the EITC amount which may result in a larger refund. However, taxpayers would have to file an amended return if they did not originally claim the EITC or other credits but now are eligible because the exclusion changed their income.”

The IRS recommends those taxpayers review their state returns as well.

2020 Individual Income Tax Filing Deadlines

On March 17, 2021, the I.R.S. extended the individual tax filing deadline from April 15, 2021 to May 17, 2021.

On March 18, 2021, the PA Dept. of Revenue extended the deadline for taxpayers to file their 2020 Pennsylvania personal income tax returns and make final 2020 income tax payments to May 17, 2021.

Even with these extensions, we will continue to process returns with our goal to have most clients filed by the original April 15 deadline. So we encourage clients to continue to prepare and provide information to meet that goal.

2020 Unemployment

Effective January 1, 2020 the first $10,200 per person of unemployment is non-taxable for the 2020 tax year.

If you received unemployment compensation and your return has been filed, we are waiting for updates from the I.R.S. on how to proceed. They are asking that no amended returns be filled in this regard currently.

If we have your tax return information and you received unemployment, we had to hold your return until we received additional updates from the I.R.S. Those updates are being released and those returns will be processed shortly.

Advance Premium Tax Credit & Increased Child Tax Credit

New rules may reduce any repayment of and advance repayment you would be charged if you were insured through the Affordable Care Act during 2020 regarding the Advance Premium Tax Credit

If you qualify, you may see an increase in the Child Tax Credit for 2021 and an advance may be sent before the end of the year.

This may negatively impact your amount due or refund next year.

We will provide additional information as it becomes available in the future.

YOBCO & COVID-19

In compliance with Governor Tom Wolf’s order of the closure of all non-life sustaining businesses in Pennsylvania resulting from the COVID-19 Virus, the offices of Young, Oakes, Brown & Co., P.C. will be closed effective 8:00 AM on Friday, March 20, 2020. We will remain closed until we are given permission to resume normal operations.

In the meantime, our staff will be working remotely and communicating with clients as necessary. Any arrangements needed to be made to continue servicing our clients regarding income tax preparation and other engagements will be coordinated between staff and clients while conforming to the Governor’s guidelines.

As always, servicing the needs of our client’s is our first priority, and we will make every attempt to continue to do that while also being cognizant of this pandemic.

We appreciate your patience during this process, and we hope to resume normal hours and operations as soon as possible. Stay safe and healthy.

– YOBCO

ABOUT OUR FIRM

Established in 1917, YOBCO is one of central Pennsylvania’s most experienced accounting and consulting firms, currently serving more than 775 businesses, local governments, and not-for-profit organizations, and 3,000 individuals.

OUR PHILOSOPHY

YOBCO’s philosophy of personalized service means that two senior staff members are assigned to business, local government, and not-for-profit organization accounts, ensuring that you’ll receive an in-depth, diversified approach to all your needs.

WHAT WE DO

YOBCO offers a complete range of consulting and accounting services for businesses, local governments, not-for-profit organizations and individuals. We proudly serve businesses from any sector and look forward to working with you.

Learn More About Us