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 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 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 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:

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

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 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 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


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!

Estimated Tax Payments for 3rd Quarter

IR-2022-157, September 6, 2022

WASHINGTON — The Internal Revenue Service reminds taxpayers who pay estimated taxes that the deadline to submit Estimated Tax Payments for 3rd Quarter is September 15, 2022.

Taxpayers not subject to withholding, such as those who are self-employed, investors or retirees, may need to make quarterly estimated tax payments. Taxpayers with other income not subject to withholding, including interest, dividends, capital gains, alimony, cryptocurrency and rental income, also normally make estimated tax payments.

In most cases, taxpayers should make estimated tax payments if they expect:

  • To owe at least $1,000 in taxes for 2022 after subtracting their withholding and tax credits.
  • Their withholding and tax credits to be less than the smaller of:
    • 90% of the tax to be shown on their 2022 tax return or
    • 100% of the tax shown on their 2021 tax return. Their 2021 tax return must cover all 12 months.

Special rules apply to some groups of taxpayers, such as farmers, fishermen, casualty and disaster victims, those who recently became disabled, recent retirees and those who receive income unevenly during the year. Publication 505, Tax Withholding and Estimated Tax, provides more information on estimated tax rules. The worksheet in Form 1040-ES, Estimated Tax for Individuals, or Form 1120-W, Estimated Tax for Corporations, has details on who must pay estimated tax.

How to figure estimated tax

To figure estimated tax, individuals must figure their expected Adjusted Gross Income (AGI), taxable income, taxes, deductions and credits for the year.

When figuring 2022 estimated tax, it may be helpful to use income, deductions and credits for 2021 as a starting point. Use the 2021 federal tax return as a guide. Taxpayers can use Form 1040-ES to figure their estimated tax.

The Tax Withholding Estimator on offers taxpayers a clear, step-by-step method to have their employers withhold the right amount of tax from their paycheck. It also has instructions to file a new Form W-4 to give to their employer to adjust the amount withheld each payday.

How to avoid an underpayment penalty

Taxpayers who underpaid their taxes may have to pay a penalty. This applies whether they paid through withholding or through estimated tax payments. A penalty may also apply for late estimated tax payments even if someone is due a refund when they file their tax return.

To see if they owe a penalty, taxpayers should use Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts. Taxpayers can also see the Form 2210 instructions under the “Waiver of Penalty” section. The IRS may waive the penalty if someone underpaid because of unusual circumstances and not willful neglect. Examples include:

  • Casualty, disaster or another unusual situation.
  • An individual retired after reaching age 62 during a tax year when estimated tax payments applied.
  • An individual became disabled during a tax year when estimated tax payments applied.
  • Specific written advice from an IRS agent given in response to a specific written request. The taxpayer must provide copies of both.

The fourth and final 2022 estimated tax payment is due January 17, 2023.

Other resources


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Michigan Home Heating Tax Credit

Michigan residents can apply for the Michigan Home Heating Tax Credit until Sept. 30

Tax credits are not just for tax season. The Community Economic Development Association of Michigan (CEDAM) is encouraging low- to moderate-income residents across the state to apply for the Home Heating Credit before the deadline of Sept. 30.

Each year, the Home Heating Credit is available to Michigan residents. This year there is $120 million allocated to provide qualified homeowners and renters in Michigan with heating assistance through the Home Heating Credit. This amount is significantly higher than previous years due to an additional $70 million in funding from the federal American Rescue Plan Act.

“The Michigan Department of Health and Human Services (MDHHS) wants to increase access to and usage of the Home Heating Credit program,” said MDHHS Director Elizabeth Hertel. “We are working with CEDAM to help get the word out to residents who need help keeping their heat turned on ahead of the fall and winter months.”

CEDAM was awarded a $1 million grant earlier this year to increase access to the Home Heating Credit benefit and free tax preparation services, and, in partnership with the Michigan Department of Health and Human Services, they are encouraging Michigan homeowners and renters to apply.

“Every family should be able to keep the heat on and stay warm and safe through our Michigan winters,” said Governor Gretchen Whitmer. “I am proud of the work we have done to fund and expand the Home Heating Tax Credit, and I urge families to apply by September 30 so they can be ready for the fall and winter. This credit goes directly to qualified homeowners and renters in Michigan, lowering their costs and saving them money to pay other bills and put food on the table. I will work with anyone to offer families real relief, and I am grateful to the Community Economic Development Association of Michigan for their work in getting this done.”

Last year, the average household received $216 from the Home Heating Credit benefit to reduce their residential heating costs. Additionally, recipients of food assistance benefits that have received a Home Heating Credit of greater than $20, may be eligible for an increase in their benefits.

“Eligible individuals should not wait to apply for the Home Heating Credit with the September 30 deadline approaching,” said State Treasurer Rachael Eubanks. “This important tax credit can provide some relief as we enter into the fall heating season, leaving more money available for other critical needs.”

In order to qualify, residents must be a homeowner, or a renter with a contracted lease and meet income requirements. The best way to apply for the Home Heating Credit, and a number of other tax credits available to Michigan residents, is to book an appointment at a local free tax preparation site.

“There are over 70 locations across Michigan where residents can go to meet with trained, expert tax professionals at no cost,” said Matt Hetherwick, director of individual tax programs at Accounting Aid Society. “Everyone should file a tax return, even if they are not required to, because tax credits and benefits are waiting to be claimed.”

Free tax preparation is a community service designed to help Michigan residents improve their financial wellbeing. Residents who qualify for free tax preparation include those with disabilities, those with limited English-speaking ability and those who earn less than $58,000 per year. Tax preparation providers are trained volunteers who are experts in taxes and have an accuracy rate, on average, higher than their for-profit colleagues.

If you are looking to talk with an experienced CPA about this credit, reach out to us today at: ATS ADVISORS

Michigan Student Loan Forgiveness

MICHIGAN NEWS / Aug.24.2022 / MLive

A student debt plan announced by President Joe Biden Wednesday will bring Michigan Student Loan Forgiveness for many Michigan borrowers. The Biden administration plans to forgive $10,000 per borrower and $20,000 per Pell Grant recipient who are making less than $125,000 individually or $250,000 for households. A pause on student loan repayments will also be extended “one final time” through Dec. 31. And the income-driven repayment plan is being overhauled to reduce costs for borrowers.

“Here’s what my administration is going to do to provide more breathing room for people, so they are less burdened by student debt,” Biden said during an Aug. 24 press briefing.

White House officials say 43 million Americans will be impacted with about 20 million seeing their debt erased. In Michigan, there are 1.4 million student loan borrowers holding $51.3 billion in debt, federal data shows. About 700,000 of those with federal student loans will see their debt cut in half or erased completely, according to the governor’s office. “People can use these savings to buy a home, start a business, get married, or start a family. I will work with anyone to keep lowering the cost of higher education and offering more paths for Michiganders to earn a higher education tuition-free, without going into debt in the first place,” said Gov. Gretchen Whitmer in a statement.

A two-year pause on federal student loan payments has now been extended eight times throughout the pandemic. With each deadline, Biden faced increasing pressure to take broader action to address the $1.7 trillion student debt crisis. The current payment pause was set to expire on Aug. 31. “It undoubtedly will help Michiganders who have student debt. Not only the $10,000 reduction in debt but also the deferment of payments until the end of the year,” said William Elliott, a University of Michigan professor of social work who researches college savings accounts, college debt and wealth inequality. Nearly 425,000 Michigan borrowers have less than $10,000 in debt and another 283,000 have less than $20,000, federal data shows. Cumulatively they account for half the state’s student borrowers and hold about 12% of the debt. The bulk of the debt in Michigan, about $45 billion, is carried by 50% of student borrowers. Elliott says removing the “albatross of student debt” will change how Michigan borrowers view their futures, ability to save, employment prospects and the economy. “It’s not enough for some, but it’s going to be a whole lot for others. And it will help all,” he said. “Sometimes in policy, that’s the best thing you can do in the moment.”

Nearly 8 million Americans will get automatic student debt relief, according to the White House. The U.S. Department of Education expects to launch an application in coming weeks for the remaining borrowers. Only loans taken out before June 30, 2022 are eligible for forgiveness. The announced changes to income-driven repayment plans will reduce costs for low- and middle-income borrowers. Income limits will be raised, and borrowers will be required to spend only 5% of their income on loans, down from 10%. Additionally, loan balances for those with $12,000 or less will be forgiven after 10 years instead of 20 years. And unpaid monthly interest won’t accumulate for those on an IDR plan even with a $0 payment. “I believe my plan is responsible and fair. It focuses the benefit on middle class and working families. It helps both current and future borrowers and will fix a badly broken system,” Biden said.

The plan, setting a precedent for student debt forgiveness, will likely be challenged in court. About 59% of Americans are worried student loan forgiveness will worsen inflation, a recent CNBC Momentive Poll found. Deputy director of the National Economic Council Bharat Ramamurti disputed these concerns saying the restart of payments will bring “billions of dollars a month” to the federal government. The Wharton School of the University of Pennsylvania estimated this week a $10,000 forgiveness plan with a $125,000 income limit will cost the federal government about $300 billion. Elliott believes student loan forgiveness should be the “first step and not the last step” in addressing the high cost of college.“I do think that it needs to be pressed upon (Biden) that this is not the end and there needs to be additional things done to finance education in a more equitable way that are more long-term and impactful,” he said. “We’re addressing the symptom. The symptom is because of a bad way to finance education, people have large amounts of debt.” Elliott says action can be taken by U.S. lawmakers, state governments and local municipalities to lower the cost of college including public service forgiveness programs and children’s saving accounts.

Jim Sullivan, Founder & President of ATS Advisors

If Jim Sullivan is not on the golf course or spending time with his family, he is hard at work building his businesses and helping his community. Jim founded ATS Advisors in 1996 and has been steadily growing the business ever since. ATS Advisors is a full-service CPA firm. The company offers individual, business, non-profit, and estate tax preparation services.“I have known Jim for many years and he is the type of guy that is always available to help no matter the circumstance” (Greg WGCC)

James R. Sullivan, CPA is the founder and President of ATS Advisors, A Certified Public Accounting Firm. (ATS) Jim works with owners, controllers, CFOs, general management, directors and board committees to assist them in developing accounting and tax strategies and programs. As the President, he is an account manager for clients in many industries, including construction, law firms, manufacturing, finance, non-profit and healthcare, for assignments in all areas of taxations, strategic planning, mergers and acquisitions as well as accounting and audit.

Jim has over twenty years of experience in designing and implementing tax strategies and accounting management programs, for organizations of all sizes. His experience includes tax strategies and accounting program development, as well as extensive work with other accounting firms in the areas of governance, strategic and operational planning. He has managed and been involved with valuations and merger and acquisition deals of numerous companies of various sizes ranging from $500,000 in revenue up to $190,000,000 in revenue.

Prior to founding ATS, Jim Sullivan was a staff accountant at several CPA firms; Jim was also a CFO, controller and manager at various private companies. His prior experiences have given him exposure to various industries including, construction, consulting, IT staffing, software development, and environmental and emergency remediation services.

A recognized expert in federal as well as multi state taxation with a knack for putting the mind numbing complexities of the tax code into plain English;

Jim works closely with the University of Michigan and MICPA as an instructor in various tax and accounting topics. His continuing education classes and the University’s Tax Practitioner Institute have been attended by hundreds of participants throughout the State. He has spoken at tax and accounting conferences as well as specific industry conferences on a national basis.

Jim earned his Bachelor’s degree in accountancy from The University of Notre Dame, South Bend, Indiana. Jim is a licensed Certified Public Accountant in the State of Michigan. He is a member of the Michigan Association of CPA’s and the American Institute of CPA’s. He is also a veteran of the US Army having served with distinction in Saudi Arabia and Iraq during Operations Desert Shield and Desert Storm with the 101st Airborne Division, 187th Airborne Infantry Regimental Combat Team.


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Educator Expense Deduction Rises to $300

WASHINGTON — As the new school year begins, the Internal Revenue Service reminds teachers and other educators that they’ll be able to use the Educator Expense Deduction to deduct up to $300 of out-of-pocket classroom expenses for 2022 when they file their federal income tax return next year.

This is the first time the annual limit has increased since the special educator expense deduction was enacted in 2002. For tax years 2002 through 2021, the limit was $250 per year. The limit will rise in $50 increments in future years based on inflation adjustments.

For 2022, an eligible educator can deduct up to $300 of qualifying expenses. If they’re married and file a joint return with another eligible educator, the limit rises to $600. But in this situation, not more than $300 for each spouse.

Who qualifies?

Educators can claim this deduction, even if they take the standard deduction. Eligible educators include anyone who is a kindergarten through grade 12 teacher, instructor, counselor, principal or aide in a school for at least 900 hours during the school year. Both public and private school educators qualify.

What’s deductible?

Educators can deduct the unreimbursed cost of:

  • Books, supplies and other materials used in the classroom.
  • Equipment, including computer equipment, software and services.
  • COVID-19 protective items to stop the spread of the disease in the classroom. This includes face masks, disinfectant for use against COVID-19, hand soap, hand sanitizer, disposable gloves, tape, paint or chalk to guide social distancing, physical barriers, such as clear plexiglass, air purifiers and other items recommended by the Centers for Disease Control and Prevention.
  • Professional development courses related to the curriculum they teach or the students they teach. But the IRS cautions that, for these expenses, it may be more beneficial to claim another educational tax benefit, especially the lifetime learning credit. For details, see Publication 970, Tax Benefits for Education, particularly Chapter 3.

Qualified expenses don’t include the cost of home schooling or for nonathletic supplies for courses in health or physical education. As with all deductions and credits, the IRS reminds educators to keep good records, including receipts, cancelled checks and other documentation.

Reminder for 2021 tax returns being filed now: Deduction limit is $250

For those who received a tax filing extension or still need to file a 2021 tax return, the IRS reminds any educator still working on their 2021 return that the deduction limit is $250. If they are married and file a joint return with another eligible educator, the limit rises to $500. But in this situation, not more than $250 for each spouse.

File electronically when ready. Tax-filing software uses a question-and-answer format that makes doing taxes easier. Whether a return is self-prepared or prepared with the assistance of a tax professional or trained community volunteer, the IRS urges everyone to file electronically and choose direct deposit for refunds. For details, visit Electronic Filing Options for Individuals.

In addition, the IRS urges anyone who owes taxes to choose the speed and convenience of paying electronically, such as with IRS Direct Pay, a free service available only on For information about this and other payment options, visit Pay Online.

Taxpayers who requested more time to file an accurate return have until October 17, 2022. Those who have what they need to file, however, should file as soon as possible to avoid delays in processing their return. Taxpayers are urged to file electronically when they are ready and avoid the last-minute rush to file at the deadline.


Contact ATS today, with any tax related questions!