January 2022 Client Newsletter

Stephen Merritt, CPA, PC  |  Certified Public Accountants  |  (757) 420-5778
233 Business Park Drive, Suite 104, Virginia Beach, VA 23462

Caught Louis Sleeping on the Job!

What’s Inside

• Tax Provisions in the Infrastructure Investment and Jobs Act
• IRS Letter About Advanced Child Tax Credits
• Happenings at SMCPA
• Hours of Operation
• COVID-19

Tax Provisions in the Infrastructure Investment and Jobs Act

While the Infrastructure Investment and Jobs Act of 2021 (IIJA) is primarily a bill that improves roads, bridges, and transit, as well as authorizing additional funding for energy, water, and broadband improvement, there are some tax-related provisions included.

Employee Retention Credit Changes

The Employee Retention Tax Credit (ERTC), which was a tax credit enacted under the CARES Act, is a provision designated to help small businesses retain their employees during the COVID-19 pandemic by refunding payroll costs already spent. The ERTC was extended to quarters three and four of 2021 by the American Rescue Plan Act, only to have Q4 taken away for most employers by IIJA. Under IIJA, only employers who qualify as a “recovery startup business” will have access to the tax credit in the fourth quarter of 2021. A recovery startup business meets the following criteria:

• It began carrying on any trade or business after February 15, 2020, and
• Average annual gross receipts is less than $1,000,000 for the preceding three tax years (or in most cases, for 2020 and 2021).

Employers that are non-recovery-startup businesses who qualify for the ERTC based on full or partial government shutdowns or a certain level of decline in gross receipts still have three years to file an amended 941 (or similar return, such as 943, etc.) to claim any credits they are eligible for.

The ERTC is a complicated area affected by several different pieces of legislation and rules that vary from quarter to quarter and situation to situation. Please do contact us if you feel your business may be eligible for the ERTC.

Cryptocurrency Disclosures

The IRS is giving fair warning on cryptocurrency that they will be focusing more and more on this area in future years. While the disclosure question about cryptocurrency first appeared on the 2020 Form 1040 tax return, the wording has been modified slightly for 2021:

“At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency?”

Digital assets are defined as “any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology.” The definition of brokers is also expanded.

Deadline Extensions for Disaster Victims

For taxpayers affected by federally declared disasters, a 60-day extension is granted for:

• Filing income, estate, gift, employment, or excise tax return
• Payment of income, estate, gift, employment, or excise tax
• Filing a petition with the Tax Court or filing a notice of appeal on a Tax Court’s decision
• Allowance of a credit or refund of any tax
• Filing a claim for a tax credit or tax refund

To read more about the Infrastructure Investment and Jobs Act, review the fact sheet released by the White House.

IRS Letter About Advanced Child Tax Credits

The IRS announced that it will be sending out letters to everyone who received advance Child Tax Credit payments. Please be on the lookout for this letter and DO NOT throw it away.

IRS Letter 6419 will go out January 19, 2022. It will show the total amount of advance Child Tax Credit payments that your received in 2021.

Please provide us with a copy of this letter when you receive it. We will need it to reconcile the credit on your tax return.

Happenings at SMCPA

Louis is ready for a fresh start this New Year!

Tax Season Hours

Tax Season Schedule December 10, 2021 – May 2, 2022

Monday – Friday
8 AM to 5 PM

Coronavirus Disease (COVID-19)

Stephen Merritt, CPA, P.C. understands the challenge the impact COVID-19 has on our community.

Fully-Vaccinated individuals are not required to wear a mask while in our office.

Unvaccinated or not Fully-Vaccinated individuals must wear masks and follow COVID-19 protocol, such as social distancing, while in our office to stop the spread of COVID-19.

Tax documents may be mailed, FAXed, emailed, uploaded to client portal, or dropped off.

Final Returns can be picked up or mailed out.

As always, please call, we are happy to assist.

Stay safe and healthy!