Plymouth Township Summer Taxes & Winter Taxes

Plymouth Township Summer Taxes & Winter Taxes

Plymouth Township Summer Taxes & Winter Taxes

Any Questions? Contact ATS Advisors Plymouth

Your summer tax bill includes the tax levies for:

  • City of Plymouth
  • Plymouth-Canton Schools
  • State Education Tax (SET)
  • Wayne County Regional Educational Service Agency(RESA)
  • Enhanced Wayne County Regional Educational Service Agency (ENH RESA)
  • Schoolcraft College
  • Wayne County Operating

Summer tax bills are due August 10 annually.

Summer Tax Bills are payable through August 10 without penalty. They may be paid at the City Hall counter, placed in the drop box next to the book return at the library,  or deposited in the drop box in the City Hall lobby if the counter is closed.

 

Winter Taxes

Your winter tax bill includes the tax levies for:

  • Wayne County Voted Millage
  • Wayne County Jail
  • Wayne County Parks
  • Plymouth District Library
  • Huron Clinton Metro Authority
  • Detroit Regional Zoo
  • Detroit Institute of Arts Museum

Winter tax bills are due February 28 each year.

Winter Tax Bills are payable through February 28 without penalty. They may be paid at the City Hall counter, placed in the drop box next to the book return at the library,  or deposited in the drop box in the City Hall lobby if the counter is closed. All tax payments placed in the drop boxes by December 31 will be receipted as paid in the current year.

Additional information is provided on the back of your bill. Please review your tax bill to check the correctness of the information appearing on it. If you receive a bill in error, please return the tax bill to the City Treasurer’s Office. If you are the owner or agent of the property but the name or address information is incorrect, please correct it on the bill and mail it back with your payment. If you need additional information, please call the City Treasurer’s Office at 734- 453-1234, during regular business hours.

Here are the current millage rates.

In addition to paying your tax bill in person on via mail, there are several other options.

Online Payments

You can  pay your taxes online via a credit/debit card through the online property information site. There is a convenience fee associated with using this service.

Direct Payment
You may request that your payment be made automatically by completing Direct Payment Enrollment form.


Special Payment Deferments

The State of Michigan has a program that allows certain property owners to defer their tax payments.  Information on this program is available on the state’s website. The Step Forward Michigan program also provides property tax assistance.

403(b) retirement plan changes

IR-2022-196, November 7, 2022 – 403(b) retirement plan changes

WASHINGTON — The Treasury Department and Internal Revenue Service today announced the expansion of one of their programs for approving retirement plans. The IRS will now allow 403(b) retirement plans, which are used by certain public schools, churches and charities, to use the same individually designed retirement plan determination letter program currently used by qualified retirement plans.

Revenue Procedure 2022-40PDF details this expansion and includes other changes affecting individually designed retirement plans.

Highlights of these changes:

Revenue Procedure 2022-40 contains the following notable additions for 403(b) retirement plans:

  • Expansion for initial plan determination – Beginning June 1, 2023, 403(b) retirement plan sponsors may submit determination letter applications for all initial individually designed retirement plans based on the sponsor’s Employer Identification Numbers. (For further details, see section 12 of Revenue Procedure 2022-40PDF.)
  • Terminations – Beginning June 1, 2023, 403(b) retirement plan sponsors may also request a determination letter upon plan termination on a Form 5310, Application for Determination for Terminating Plan, or at any time thereafter without regard to their EIN.

Notable changes to procedures for submitting and processing individually designed retirement plans include:

  • Prior letter issued to a Pre-approved Plan adopter not treated as an initial plan determination – A determination letter issued to an adopter of a pre-approved retirement plan as a result of filing a Form 5307, Application for Determination for Adopters of Modified Volume Submitter Plans, is no longer considered in determining whether a plan sponsor is eligible to submit that plan for a determination letter for an initial plan determination on a Form 5300, Application for Determination for Employee Benefit Plan.
  • Scope of review – IRS generally will consider in its review qualification requirements and section 403(b) requirements that are in effect, or that have been included on a Required Amendments List, on or before the last day of the second calendar year preceding the year in which the determination letter application is submitted, subject to any specified modifications on the annual Employee Plans revenue procedure that provides the administrative and procedural rules for submitting determination letter applications, currently Revenue Procedure 2022-4.

These rules will apply to submissions of all individually designed retirement plans.

Revenue Procedure 2023-4, currently in development, will be released in the near future and will contain additional changes to procedural requirements for plan submissions, such as phasing-in mandatory e-submission of determination letter requests. Forms 5300 and 5310 will also be updated to reflect these changes.

 

Questions? Contact Us!

Tax Credits For Veterans & Other IRS News

Tax Credits For Veterans & Other IRS News

TAX PLANNING ALL YEAR 

HAVE YOU SEEN THIS? 

  • The Work Opportunity Tax Credit (WOTC) is a Federal tax credit available to employers of all sizes for hiring and employing a qualified veteran who have faced significant barriers to employment. This includes both taxable and certain tax-exempt employers located in the United States and in certain U.S. territories. While taxable employers claim the WOTC against income taxes, eligible tax-exempt employers can claim the WOTC only against payroll taxes. 
  • Up to $24,000 in wages may be taken into account in determining the WOTC for certain qualified veterans. 
  • A “qualified veteran” is a veteran who is any of the following:
    • A member of a family receiving assistance under the Supplemental Nutrition Assistance Program (SNAP) (food stamps) for at least a 3-month period during the 15-month period ending on the hiring date 
    • Unemployed for periods of time totaling at least 4 weeks (whether or not consecutive) but less than 6 months in the 1-year period ending on the hiring date 
    • Unemployed for periods of time totaling at least 6 months (whether or not consecutive) in the 1-year period ending on the hiring date 
    • Entitled to compensation for a service-connected disability and hired not more than 1 year after being discharged or released from active duty in the U.S. Armed Forces or 
    • Entitled to compensation for a service-connected disability and unemployed for periods of time totaling at least 6 months (whether or not consecutive) in the 1-year period ending on the hiring date 
  • See our September Tax Tip for information when hiring veterans: Help wanted? Businesses that are hiring should know about the work opportunity tax credit 

DID YOU KNOW? 

 

Questions? Contact ATS

IRS tax gap estimates

IR-2022-192, October 28, 2022 – IRS tax gap estimates

WASHINGTON — The Internal Revenue Service today released a new set of tax gap estimates on tax years 2014 through 2016 showing the estimated gross tax gap increased to $496 billion, a rise of over $58 billion from the prior estimate.

The gross tax gap is the difference between estimated ‘true’ tax liability for a given period and the amount of tax that is paid on time. As discussed below, it is important to note that the tax gap estimates cannot fully account for all types of evasion.

“These findings underscore the importance of ensuring fairness in our nation’s tax system,” said IRS Commissioner Chuck Rettig. “The increase in the tax gap estimates reflects that the IRS needs to do more, both in improving taxpayer service as well as working to improve tax compliance. The IRS remains committed to ensuring fairness and helping taxpayers while also working to better identify emerging compliance issues that contribute to the tax gap. The recent funding addition will help the IRS in many ways, increasing taxpayer education, significantly improving service to all taxpayers and focusing on high-income/high-wealth non-compliance in a fair and impartial manner supporting compliant taxpayers.”

After late payments and IRS efforts collected an additional $68 billion, the IRS estimated the net tax gap was $428 billion. This increase in the tax gap can be attributed to economic growth.

Between the two periods, 2011-2013 and 2014-2016, the estimated tax liability increased by more than 23 percent.

The tax gap estimates translate to about 85% of taxes paid voluntarily and on time, which is in line with recent levels. The new estimate is a slight improvement from 83.7 percent in a revised Tax Year 2011-2013 estimate, which dipped slightly from the original estimate released earlier. After IRS compliance efforts are taken into account, the estimated share of taxes eventually paid is 87% for 2014-2016.

The gross tax gap comprises three components:

  • Nonfiling (tax not paid on time by those who do not file on time, $39 billion),
  • Underreporting (tax understated on timely filed returns, $398 billion), and
  • Underpayment (tax that was reported on time, but not paid on time, $59 billion).

A particular challenge for tax gap estimation is the time it takes to collect compliance data, especially data on underreporting that come from completed examinations (audits). To address this issue, the current release includes estimated tax gap projections for Tax Years 2017-2019.

Based on the projections for 2017-2019, the estimated average gross tax gap is projected to be $540 billion per year. The associated voluntary compliance rate is projected to be 85.1 percent. The projection of enforced and other late payments is $70 billion, which yields a net tax gap projection of $470 billion. The associated non-compliance rate projection is 87.0 percent.

The gross tax gap nonfiling, underreporting, and underpayment component projections for Tax Years 2017-2019 timeframe are $41 billion, $433 billion, and $66 billion respectively.

As part of the larger effort to reduce the actual tax gap, the IRS will continue to fairly enforce the tax laws. In 2021, the latest year for which data is available, the IRS currently collected more than $4 trillion in taxes, penalties, interest and user fees.

Tax gap studies through the years have consistently demonstrated that third-party reporting of income significantly raises voluntary compliance with the tax laws. And voluntary compliance rises even higher when income payments are also subject to withholding. The IRS also has an array of other taxpayer service programs aimed at supporting accurate tax filing and helping address the tax gap. These range from working with businesses and partner groups to a variety of education and outreach efforts.

The voluntary compliance rate of the U.S. tax system is vitally important for the nation. A one-percentage-point increase in voluntary compliance would bring in about $40 billion in additional tax receipts.

The tax gap estimates provide insight into the historical scale of tax compliance and to the persisting sources of low compliance.

“Keeping the voluntary compliance rate as high as possible ensures that taxpayers believe our system is fair,” Rettig said. “The vast majority of taxpayers strive to pay what they owe on time. Those who do not pay their fair share ultimately shift the tax burden to those people who do, which fuels the tax gap. The IRS will continue to direct our resources to help educate taxpayers about the tax requirements under the law while also focusing on pursuing those who avoid their legal responsibilities.”

Estimating the tax gap; offshore, digital assets, other categories not fully represented

Given the complexity of the tax system and available data, no single approach can be used for estimating each component of the tax gap. Each approach is subject to measurement or nonsampling error; the component estimates that are based on samples are also subject to sampling error. For the individual income tax underreporting tax gap, Detection Controlled Estimation is used to adjust for measurement errors that results when some existing noncompliance is not detected during an audit. Other statistical techniques are used to control for bias in estimates based on operational audit data. Because multiple methods are used to estimate different subcomponents of the tax gap, no standard errors are reported. In addition, those reviewing this data should be mindful of these limitations when using these estimates.

Given available data, these are the best possible estimates of the tax gap components presented, although they do not represent the full extent of potential non-compliance. There are several factors to keep in mind:

  • The estimates cannot fully represent noncompliance in some components of the tax system including offshore activities, issues involving digital assets and cryptocurrency as well as corporate income tax, income from flow-through entities, illegal activities because data are lacking.
  • The tax gap associated with illegal activities has been outside the scope of tax gap estimation because the objective of government is to eliminate those activities, which would eliminate any associated tax.
  • For noncompliance associated with digital assets and other emerging issues, it takes time to develop the expertise to uncover associated noncompliance and for examinations to be completed that can be used to measure the extent of that noncompliance.

The IRS continues to actively work on new methods for estimating and projecting the tax gap to better reflect changes in taxpayer behavior as they emerge.

 

Contact ATS

2023 401k Limit & 2023 IRA Limit

2023 401k Limit & 2023 IRA Limit

IR-2022-188, October 21, 2022 – 2023 401k Limit & 2023 IRA Limit

WASHINGTON — The Internal Revenue Service announced today that the amount individuals can contribute to their 401(k) plans in 2023 has increased to $22,500, up from $20,500 for 2022. The IRS today also issued technical guidance regarding all of the cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2023 in Notice 2022-55PDF, posted today on IRS.gov.

Highlights of changes for 2023

The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased to $22,500, up from $20,500.

The limit on annual contributions to an IRA increased to $6,500, up from $6,000. The IRA catch up contribution limit for individuals aged 50 and over is not subject to an annual cost of living adjustment and remains $1,000.

The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased to $7,500, up from $6,500. Therefore, participants in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan who are 50 and older can contribute up to $30,000, starting in 2023. The catch-up contribution limit for employees aged 50 and over who participate in SIMPLE plans is increased to $3,500, up from $3,000.

The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs, and to claim the Saver’s Credit all increased for 2023.

Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or the taxpayer’s spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor the spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.) Here are the phase out ranges for 2023:

  • For single taxpayers covered by a workplace retirement plan, the phase-out range is increased to between $73,000 and $83,000, up from between $68,000 and $78,000.
  • For married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is increased to between $116,000 and $136,000, up from between $109,000 and $129,000.
  • For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the phase-out range is increased to between $218,000 and $228,000, up from between $204,000 and $214,000.
  • For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.

The income phase-out range for taxpayers making contributions to a Roth IRA is increased to between $138,000 and $153,000 for singles and heads of household, up from between $129,000 and $144,000. For married couples filing jointly, the income phase-out range is increased to between $218,000 and $228,000, up from between $204,000 and $214,000. The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.

The income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers is $73,000 for married couples filing jointly, up from $68,000; $54,750 for heads of household, up from $51,000; and $36,500 for singles and married individuals filing separately, up from $34,000.

The amount individuals can contribute to their SIMPLE retirement accounts is increased to $15,500, up from $14,000.

Details on these and other retirement-related cost-of-living adjustments for 2023 are in Notice 2022-55PDF, available on IRS.gov.

Can Grandparents Claim The Child Tax Credit?

Can Grandparents Claim The Child Tax Credit?

IR-2022-181, October 17, 2022

Tax Specialist Plymouth MI

 

WASHINGTON – The Internal Revenue Service reminded families today that some taxpayers who claim at least one child as their dependent on their tax return may not realize they could be eligible to benefit from the Child Tax Credit (CTC).

Eligible taxpayers who received advance Child Tax Credit payments last year should file a 2021 tax return to receive the second half of the credit. Eligible taxpayers who did not receive advance Child Tax Credit payments last year can claim the full credit by filing a 2021 tax return.

The IRS urges grandparents, foster parents or people caring for siblings or other relatives to check their eligibility to receive the 2021 Child Tax Credit. It’s important for people who might qualify for this credit to review the eligibility rules to make sure they still qualify. Taxpayers can use the Interactive Tax Assistant to check eligibility. Taxpayers who haven’t qualified in the past should also check because they may now be able to claim the credit. To receive it, eligible individuals must file a 2021 federal tax return.

What is the Child Tax Credit expansion?

The Child Tax Credit expansion, which is a part of the American Rescue Plan, increased the amount of money per child families can receive and expanded who can receive the payments.

The American Rescue Plan increased the Child Tax Credit from $2,000 to $3,600 per child for children under the age of six, from $2,000 to $3,000 for children over the age of 6 and raised the age limit from 16 to 17 years old.

The American Rescue Plan Act of 2021 expanded the Child Tax Credit for tax year 2021 only.

Who qualifies for the Child Tax Credit?

Taxpayers can claim the Child Tax Credit for each qualifying child who has a Social Security number that is valid for employment in the United States and issued by the Social Security Administration before the due date of their tax return (including an extension if the extension was requested by the due date).

To be a qualifying child for the 2021 tax year, the dependent generally must:

  • Be under age 18 at the end of the year.
  • Be their son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister or a descendant of one of these (for example, a grandchild, niece, or nephew).
  • Provide no more than half of their own financial support during the year.
  • Have lived with the taxpayer for more than half the year.
  • Be properly claimed as their dependent on their tax return.
  • Not file a joint return with their spouse for the tax year or file it only to claim a refund of withheld income tax or estimated tax paid.
  • Have been a U.S. citizen, U.S. national or U.S. resident alien.

What are the eligibility factors?

Individuals qualify for the full amount of the 2021 Child Tax Credit for each qualifying child if they meet all eligibility factors and their annual income is not more than:

  • $150,000 if they’re married and filing a joint return, or if they’re filing as a qualifying widow or widower.
  • $112,500 if they’re filing as a head of household.
  • $75,000 if they’re a single filer or are married and filing a separate return.

Parents and guardians with higher incomes may be eligible to claim a partial credit. Claiming these benefits can result in tax refunds for many individuals. Individuals should file electronically and choose direct deposit to avoid delays and receive their refund faster.

Finding free tax return preparation

A limited number of  Volunteer Income Tax Assistance and Tax Counseling for the Elderly (VITA/TCE) program sites remain open and available to help eligible taxpayers get their tax returns prepared and filed for free by IRS trained and certified volunteers. Low- and moderate-income taxpayers as well as those age 60 and above can check to see if there is an available site in or near their community by using the VITA/TCE Site Locator.

IRS Free File available until Nov. 17 to help more people receive credits

The IRS Free File program, available only through IRS.gov and offered in partnership the tax software industry’s Free File Alliance, offers eligible taxpayers brand-name tax preparation software to use at no cost. The software does all the work of finding deductions, credits and exemptions for which the taxpayer qualifies. It’s free for most individual filers who earned $73,000 or less in 2021. Some of the Free File packages also offer free state tax returns to those who qualify. Taxpayers who earned more than $73,000 in 2021 and are comfortable preparing their own taxes can use Free File Fillable Forms. This electronic version of paper IRS tax forms is also used to file tax returns online.

To help more people claim a variety of tax credits and benefits, Free File will remain open for an extra month this year, until November 17, 2022.

The IRS is sending letters to more than 9 million individuals and families who appear to qualify for a variety of key tax benefits but did not claim them by filing a 2021 federal income tax return. Many in this group may be eligible to claim some or all of the 2021 Recovery Rebate Credit, the Child Tax Credit, the Earned Income Tax Credit and other tax credits depending on their personal and family situation. The special reminder letters, which will be arriving in mailboxes over the next few weeks, are being sent to people who appear to qualify for the Child Tax Credit, Recovery Rebate Credit (RRC) or Earned Income Tax Credit (EITC) but haven’t yet filed a 2021 return to claim them. The letter, printed in both English and Spanish, provides a brief overview of each of these three credits.

These and other tax benefits were expanded under last year’s American Rescue Plan Act and other recent legislation. Even so, the only way to get the valuable benefits is to file a 2021 tax return. Often, individuals and families can get these expanded tax benefits, even if they have little or no income from a job, business or other source. This means that many people who don’t normally need to file a tax return should do so this year, even if they haven’t been required to file in recent years.

People can file a tax return even if they haven’t yet received their letter. The IRS reminds people that there’s no penalty for a refund claimed on a tax return filed after the regular April 2022 tax deadline. The fastest and easiest way to get a refund is to file an accurate return electronically and choose direct deposit.

Questions? Contact ATS Advisors Today

Oct. 17 tax extension deadline

IR-2022-175, October 7, 2022

WASHINGTON — The Internal Revenue Service today reminds taxpayers who requested an extension to file their 2021 tax return to do so by Monday, October 17.

While October 17 is the last day for most people to file a Form 1040 to avoid the late filing penalty, those who still need to file should do so as soon as possible. If they have their information ready, there’s no need to wait.

However, some taxpayers may have additional time. They include:

  • Members of the military and others serving in a combat zone. They typically have 180 days after they leave the combat zone to file returns and pay any taxes due.
  • The IRS calls special attention to people hit by recent national disasters, including Hurricane Ian. Taxpayers with an IRS address of record in areas covered by Federal Emergency Management Agency disaster declarations in Missouri, Kentucky, the island of St. Croix in the U.S. Virgin Islands and members of the Tribal Nation of the Salt River Pima Maricopa Indian Community have until November 15, 2022, to file various individual and business tax returns. Taxpayers in Florida, Puerto Rico, North Carolina, South Carolina, parts of Alaska and Hinds County, Mississippi, have until February 15, 2023. This list continues to be updated regularly; potentially affected taxpayers by recent storms should visit the disaster relief page on IRS.gov for the latest information.

IRS Free File and other resources

IRS Free File is available to any person or family with an adjusted gross income (AGI) of $73,000 or less in 2021. Leading tax software providers make their online products available for free. Taxpayers can use IRS Free File to claim the Child Tax Credit, the Earned Income Tax Credit and other important credits. IRS Free File Fillable Forms is available for taxpayers whose 2021 AGI is greater than $73,000 and are comfortable preparing their own tax return—so there is a free option for everyone.

Online Account provides information to help file an accurate return, including Advance Child Tax Credit and Economic Impact Payment amounts, AGI amounts from last year’s tax return, estimated tax payment amounts and refunds applied as a credit.

Taxpayers can also get answers to many tax law questions by using the IRS’s Interactive Tax Assistant tool.

Additionally, taxpayers can view tax information in several languages by clicking on the “English” tab located on the IRS.gov home page.

Schedule federal tax payments electronically

Taxpayers can file now and schedule their federal tax payments up to the October 17 due date. They can pay online, by phone or with their mobile device and the IRS2Go app. When paying federal taxes electronically, taxpayers should remember:

  • Electronic payment options are the optimal way to make a tax payment.
  • They can pay when they file electronically using tax software online. If using a tax preparer, taxpayers should ask the preparer to make the tax payment through an electronic funds withdrawal from a bank account.
  • Online Account and IRS Direct Pay allow taxpayers to pay online directly from a checking or savings account for free, and to schedule payments up to 365 days in advance. Taxpayers should be aware they will need to create an account to use Online Account services.
  • Choices to pay with a credit card, debit card or digital wallet option are available through a payment processor. The payment processor, not the IRS, charges a fee for this service.
  • The IRS2Go mobile app provides mobile-friendly payment options, including Direct Pay and debit or credit card payments.
  • The Electronic Federal Tax Payment System (EFTPS) is convenient, safe and easy. Choose to pay online or by phone, using the EFTPS Voice Response System. EFTPS payments must be scheduled by 8 p.m. ET at least one calendar day before the tax due date

Oct. 17 tax extension deadline

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Michigan Student Loan Forgiveness

Gov. Whitmer Announces Tax-Free Public Service Loan Forgiveness

Michiganders do not have to pay state or federal taxes on federal loan forgiveness; approximately 1.4 million Michiganders have student loans

LANSING, Mich. – Today, Governor Gretchen Whitmer announced that student loan relief would not be treated as taxable income in Michigan. Approximately 1.4 million Michiganders eligible for relief will not owe any state taxes for receiving benefits of the Public Service Loan Forgiveness (PSLF) program or other student loan forgiveness. Today’s announcement builds on Governor Whitmer’s actions to make higher education more affordable for Michiganders in every corner of the state. Michigan Student Loan Forgiveness.

“Tax-free student loan forgiveness could benefit up to 1.4 million Michiganders and help keep money in their pockets,” said Governor Gretchen Whitmer. “Michigan PSLF recipients who serve their community will not be taxed for any amount of student loan relief they have received. In Michigan, we value the hard work that all our citizens put in to get the education they need. I will work with anyone to keep lowering the cost of higher education and help students not go into debt in the first place.”

“Our work to open pathways of opportunity for more Michiganders is critical to growing our economy, creating jobs, and building prosperity,” said Lt. Governor Garlin Gilchrist II. “Exempting student loan relief from taxable income builds on the work we have done to boost postsecondary education and skills training in Michigan. Governor Whitmer and I are committed to continuing this work and helping Michiganders access affordable education.”

“I was born in a western Kentucky coal town, daughter of Detroit auto factory workers. It was against the odds that I got my GED, and somehow clawed my way into the Honors College at Western Michigan University. I worked hard, held down a student job, became a Presidential Scholar, and got funding for a fellowship in grad school. Regardless of full fellowship funding, I still needed loans to survive, despite working three jobs during that time. My parents had no way of helping me,” said Melissa Milton-Pung, a project manager at the Michigan Municipal League and PSLF participant. “As the first person in my family to get a bachelor’s degree, then a master’s degree, the decision to go into public service was made easier by the promise of loan relief. It took 17 years for that forgiveness: 10 years of working to qualify, then 7 more years waiting for the program to finally work. I believe in this mission-oriented life and plan to continue to do good work in public service.”

Tax-Free Student Debt Relief

Typically, when debt is forgiven, the IRS treats it as taxable income. However, provisions of the American Rescue Plan have temporarily lifted this requirement. Any federal loans that are discharged between 2021 and 2025 will not be considered taxable income by the federal government. Because state tax law aligns with federal law, this temporary relief will be in effect in Michigan through 2025 as well.

Governor Whitmer’s Bipartisan Investments in Tuition-Free Certificates and Degrees 

Since taking office, Governor Whitmer has worked across the aisle to make college more affordable by expanding access to tuition-free certificates and degrees for Michiganders 25 and over and future educators, as well as scholarships for students pursuing degrees at public Michigan universities.  She established the bipartisan Michigan Reconnect program, which has put over 100,000 people on the path to tuition-free higher education or skills training. Governor Whitmer’s recent bipartisan education budget created the Mi Future Educator Fellowship, which provides $10,000 scholarships for 2,500 future Michigan educators. The budget also funded Grow Your Own Programs, helping districts train school staff for classroom positions, tuition-free.

Public Service Loan Forgiveness Program Background

If you work in public service, including the military, qualifying non-profits, or federal, state, local, or tribal governments, you may qualify for PSLF. After 10 years of public service employment and 120 on-time loan payments, you may be eligible to have your entire student loan balance forgiven.

As of July 2022, 7,000 Michiganders have had $406 million in loans forgiven under the PSLF. Over 147,000 more Michiganders may be eligible due to the recent PSLF waiver.

New temporary changes to the PSLF program make it easier than ever to have your debt forgiven. Some changes include allowing borrowers to receive credit for past periods of repayment that would otherwise not qualify for PSLF. However, these temporary changes end on October 31, 2022. Public servants should apply at: studentaid.gov/pslf/.

Until October 31, 2022, the U.S. Department of Education is offering public servants working in government and eligible non-profits a second chance to qualify for student loan forgiveness. An estimated 154,000 public service workers in Michigan could be eligible for student loan debt relief under the PSLF waiver. According to the Office of Federal Student Aid’s June report, over 6,000 Michiganders have taken advantage of the PSLF waiver and have had $358 million in loans forgiven.

The recent changes to the federal PSLF program allow previously ineligible borrowers – those with a non-Direct loan, who are not enrolled in an income driven repayment plan, who have missed a repayment, or made a partial repayment in the past – to receive credit toward loan forgiveness for the years they worked in government or a qualifying non-profit.

To apply for the PSLF waiver, borrowers should:

If borrowers have questions regarding their individual situation regarding Michigan Student Loan Forgiveness, they can visit or call FedLoan Servicing at 1-855-265-4038.

Congress created PSLF to recruit and retain top talent in the public sector workforce. If an individual works for federal, state, local, or tribal government or a qualifying non-profit for 10 years, makes 120 full, on-time loan payments, and submits all required paperwork, the federal government forgives all of their remaining student loan debt.

Though PSLF was established in 2007, it has faced implementation challenges. Prior to the PSLF Waiver, only 2.1% of eligible borrowers had been approved for loan forgiveness. The recent PSLF program overhaul is the U.S. Department of Education’s attempt to deliver on the program’s promise and thank the public service workforce for their dedication and support.

The PSLF: Champions Toolkit is available for employers and professional associations to help them amplify the PSLF waiver opportunity and connect borrowers to resources. The toolkit includes sample email correspondence and social media posts. It is available for download here.

 

Questions regarding Michigan Student Loan Forgiveness? Contact Us 

September 30th COVID penalty relief

IR-2022-163, September 22, 2022

September 30th COVID penalty relief

WASHINGTON — The Internal Revenue Service today reminded struggling individuals and businesses, affected by the COVID-19 pandemic, that they may qualify for late-filing penalty relief if they file their 2019 and 2020 returns by September 30, 2022.

Besides providing relief to both individuals and businesses impacted by the pandemic, this step is designed to allow the IRS to focus its resources on processing backlogged tax returns and taxpayer correspondence to help return to normal operations for the 2023 filing season.

“We thought carefully about the type of penalties, the period covered and the duration before granting this penalty relief. We understand the concerns being raised by the tax community and others about the September 30 penalty relief deadline,” said IRS Commissioner Chuck Rettig. “Given planning for the upcoming tax season and ongoing work on the inventory of tax returns filed earlier this year, this penalty relief deadline of September 30 strikes a balance. It is critical to us to not only provide important relief to those affected by the pandemic, but this deadline also allows adequate time to prepare our systems and our workstreams to serve taxpayers and the tax community during the 2023 filing season.”

The relief, announced last month, applies to the failure-to-file penalty. The penalty is typically assessed at a rate of 5% per month, up to 25% of the unpaid tax, when a federal income tax return is filed late. This relief applies to forms in both the Form 1040 and 1120 series, as well as others listed in Notice 2022-36, posted on IRS.gov.

For anyone who has gotten behind on their taxes during the pandemic, this is a great opportunity to get caught up. To qualify for relief, any eligible income tax return must be filed on or before September 30, 2022.

Those who file during the first few months after the September 30 cutoff will still qualify for partial penalty relief. That’s because, for eligible returns filed after that date, the penalty starts accruing on October 1, 2022, rather than the return’s original due date. Because the penalty accrues, based on each month or part of a month that a return is late, filing sooner will limit any charges that apply.

Unlike the failure-to-file penalty, the failure-to-pay penalty and interest will still apply to unpaid tax, based on the return’s original due date. The failure-to-pay penalty is normally 0.5% (one-half-of-one percent) per month. The interest rate is currently 5% per year, compounded daily, but that rate is due to rise to 6% on October 1, 2022.

Taxpayers can limit these charges by paying promptly. For more information, including details on fast and convenient electronic payment options, visit IRS.gov/payments. Penalty and interest charges generally don’t apply to refunds.

The notice also provides details on relief for filers of certain international information returns when a penalty is assessed at the time of filing. No relief is available for applicable international information returns when the penalty is part of an examination. To qualify for this relief, any eligible tax return must be filed on or before September 30, 2022.

Penalty relief is automatic. This means that eligible taxpayers who have already filed their return do not need to apply for it, and those filing now do not need to attach a statement or other documents to their return. Generally, those who have already paid the penalty are getting refunds, most by the end of September.

Penalty relief is not available in some situations, such as where a fraudulent return was filed, where the penalties are part of an accepted offer in compromise or a closing agreement, or where the penalties were finally determined by a court.

This relief is limited to the penalties that the notice specifically states are eligible for relief. For ineligible penalties, such as the failure-to-pay penalty, taxpayers may use existing penalty relief procedures, such as applying for relief under the reasonable cause criteria or the First-Time Abate program. Visit IRS.gov/penaltyrelief for details.

This relief doesn’t apply to 2021 returns. Whether or not they have a tax-filing extension, the IRS urges everyone to file their 2021 return soon to avoid processing delays. For filing tips, visit IRS.gov.

 

Any questions on the September 30th COVID penalty relief? Contact ATS Today

25 Michigan Small Business Tax Write-Offs

Here are 25 Michigan Small Business Tax Write-Offs that you can use to save money this upcoming tax season. These top tax write-offs will help speed up the income tax filing process and reduce the amount you owe to the government in taxes.

Questions? Contact ATS Advisors today!

1. Business Meals

As a small business, you can deduct 50 percent of food and drink purchases that qualify. To qualify, the meal needs to be related to your business and you need to keep the following documentation related to the meal:

  • Date and location of the meal
  • Business relationship of the person or people you dined with
  • The total cost of the meal

The easiest way to track business meal expenses is to keep your receipt and jot down notes on the back about the details of the meal.

2. Work-Related Travel Expenses

All expenses related to business travel can be written off at tax time, including airfare, hotels, rental car expenses, tips, dry cleaning, meals and more. You can reference the IRS website for a full list of deductible business travel expenses. To qualify as work-related travel, your trip must meet the following conditions:

  • The trip must be necessary to your business.
  • The trip must take you away from your tax home, i.e. the city or area in which your company conducts its business.
  • You must be travelling away from your tax home for longer than a normal work day and it must require you to sleep or rest on route.

3. Work-Related Car Use

If you use your car strictly for work-related purposes, you can write off all costs associated with operating and maintaining it. If your car use is mixed between business and personal reasons, you can only deduct costs that are related to the business usage of the vehicle. You can claim the mileage you use for business driving, either by deducting the actual miles traveled for business, or by using the standard mileage deduction of $0.56 per mile driven.

4. Business Insurance

You can deduct the cost of your business insurance on your tax return. If you have a home office, or use a portion of your home to run your business, you can deduct your renter’s insurance costs as part of your home office write-offs.

5. Home Office Expenses

Under new simplified IRS guidelines for home office expenses, home-based small businesses and freelancers can deduct five dollars per square foot of your home that’s used for business purposes, up to a maximum of 300 square feet. To qualify as a tax deduction, your work area has to be used exclusively for business (i.e. you can’t write off the square footage of your dining room if you do your work at the table during the day) and you need to use the home office regularly as your principal place for conducting business.

6. Office Supplies

You can write off office supplies including printers, paper, pens, computers and work-related software, as long as you use them for business purposes within the year in which they were purchased. You can also deduct work-related postage and shipping costs. Be sure to file all receipts for office supply purchases, for documentation.

7. Phone and Internet Expenses

If using the phone and internet is vital to running your business, you can deduct these expenses. If, however, you use the phone and internet for a mix of work and personal reasons, you can only write off the percentage of their cost that goes toward your business use. For example, if roughly half of your internet usage is business related, you can write off 50% of your internet expenses for the year.

8. Business Interest and Bank Fees

If you borrow money to fund your business activities, the bank will charge you interest on the loan. Come tax season, you can deduct the interest charged both on business loans and business credit cards. You can also write off any fees and additional charges on your business bank account and credit card, such as monthly service fees and any annual credit card fees.

9. Depreciation

When you deduct depreciation, you’re writing off the cost of a big-ticket item like a car or machinery over the useful lifetime of that item, rather than deducting it all in one go for a single tax year. Businesses usually deduct depreciation for long-term business investments that are more costly, so they’re reimbursed for the expense over the entire useful lifetime of the item. Here’s how to calculate depreciation:

Depreciation = Total cost of the asset / Useful lifetime of the asset

10. Professional Service Fees

Any professional service fees that are necessary to the functioning of your business, such as legal, accounting and bookkeeping services, are deductible for tax purposes. If you use accounting or bookkeeping software for your business, that would also qualify as a tax deduction. If you are having trouble determining whether a particular professional service expense is for work or personal use, these guidelines for legal and professional fees from the IRS can help you judge the nature of the expense.

11. Salaries and Benefits

If you’re a small business owner with employees, you can write off their salaries, benefits and even vacation pay on your tax returns. There are a few requirements for writing off salary and benefit expenses:

  • The employee is not a sole proprietor, partner or LLC member in the business
  • The salary is reasonable and necessary
  • The services delegated to the employee were provided

12. Charitable Contributions

You can deduct charitable donations that you make to qualifying organizations. If your business is set up as a sole proprietorship, LLC or partnership, you can claim these expenses on your personal tax forms. If your company is a corporation, you claim charitable donations on your corporate tax return.

13. Education

Any educational expenses you incur to bring value to your business are fully deductible for tax purposes. The requirements for education-related expenses are that the course or workshop must improve your skills or help maintain your professional expertise. Educational expenses that qualify for deductions include:

  • Courses and classes related to your field of work
  • Seminars and webinars
  • Trade publication subscriptions
  • Books related to your industry

14. Child and Dependent Care

Costs you incur for caring for children or adult dependents is tax deductible. If your own children are twelve years old or younger, you can write off costs associated with their care. Adult dependents also qualify for deductions, including spouses and some other related adults who are unable to care for themselves because of physical or mental disability.

15. Energy Efficiency Expenses

Upgrades that you make to your home to ensure it’s more energy efficient can qualify for tax credits. You can claim 30 percent of the cost of alternative energy equipment for your home, including solar panels, solar water heaters and wind turbines. The IRS site offers further details on the home energy tax credits.

16. Investments

If you borrow money in order to make investments, you can write off the interest paid on the loan. You can deduct the interest up to the point that it matches what you earned in investment income.

17. Foreign-Earned Income Exclusion

American citizens with businesses based abroad can, under certain circumstances, leave the foreign income they’ve earned off their tax return. To qualify for the exclusion, your tax home must be based abroad. This article can help you better understand the requirements for foreign-earned income exclusion.

18. Medical Expenses

You can claim both insurance premiums and medical care expenses, including doctor’s fees, prescription drugs and home care. If you’re self-employed and pay for your own health insurance then you can deduct your health and dental care insurance premiums.

19. Real Estate Taxes

Real estate taxes paid at the state and local levels can be deducted on your income taxes. Property taxes are included in these deductions and you can claim up to a total of $10,000.

20. Mortgage Interest

You can deduct interest payments made toward mortgage loans to buy, construct or improve your home if you use your home for business purposes. If you take out loans against your home equity, you can also deduct the interest on those loans.

21. Moving Expenses

If you move and the main reason for doing so is work related, you might be able to fully deduct the costs associated with the move. To qualify, your move has to pass the distance test. To pass the distance test your new job location has to be at least 50 miles farther from your former home than your old job location was from your previous home.

22. Retirement Contributions

If you contribute to an Individual Retirement Account, doing so helps reduce your taxable income for the year. Your total IRA contributions can’t exceed the total income you earned that year or it can’t exceed the annual maximum contribution, whichever one is less.

23. Advertising and Promotion

You can fully deduct expenses related to promoting your business, including digital and print advertising, website design and maintenance and the cost of printing business cards.

24. Client and Employee Entertainment

If you take business clients out, you can deduct the expense as long as you discuss business during the meeting and the entertainment takes place in a business setting for business purposes. You can deduct 50 percent of the cost of these entertainment expenses. You can also deduct as much as 100 percent of the cost of social events held for your employees.

25. Startup Expenses

If you launched a new business venture in the latest tax year, you can deduct as much as $5,000 in startup expenses you incurred in the lead up to your business launch. That can include costs associated with marketing your new business, travel and training costs.

How Do Business Tax Deductions Work?

Business tax deductions work by lowering your taxable income, thereby lowering the amount of tax you owe to the government as part of your tax return. To find out how to claim the most deductions possible, it’s a good idea to consult a professional, like a CPA. It’s the job of an accountant to know what tax deductions are available and how they can apply to your small business.

What Can Be Written off as Business Expenses?

Small businesses, freelancers and entrepreneurs can write off a range of business expenses when filing their income tax, including:

  • Car expenses and mileage
  • Office expenses, including rent, utilities, etc.
  • Office supplies, including computers, software, etc.
  • Health insurance premiums
  • Business phone bills
  • Continuing education courses
  • Parking for business-related trips
  • Business-related travel expenses, including flights, rental cars, hotels, etc.
  • Postage

What Is a 100 Percent Tax Deduction?

A 100 percent tax deduction is a business expense of which you can claim 100 percent on your income taxes. For small businesses, some of the expenses that are 100 percent deductible include the following:

  • Furniture purchased entirely for office use is 100 percent deductible in the year of purchase.
  • Office equipment, such as computers, printers and scanners are 100 percent deductible.
  • Business travel and its associated costs, like car rentals, hotels, etc. is 100 percent deductible.
  • Gifts to clients and employees are 100 percent deductible, up to $25 per person per year.
  • If you’re self-employed and pay your own health premiums, you can deduct those at 100 percent.
  • Your annual business phone bills are 100% deductible.

What Is a 1099?

A 1099 is an IRS tax form that’s used to report any income earned through sources other than employment, so independent contractors, freelancers and self-employed workers use the 1099 form. You can find out more about the 1099 tax form on the IRS site.

Can You Write off Previous Years’ Taxes?

As a small business, you may be able to write off the state and local taxes in the year you paid them, even if the taxes are from a previous year. However, you can’t deduct any federal taxes that you paid for a prior year.

 

Thank you for taking time to read our 25 Michigan Small Business Tax Write-Offs guide!