Performing Financial Services, INC.

Business Advertising Expenses – Did You Know?

If you have business income, including earnings from small business ownership or many self-employment activities, you may qualify to deduct advertising expenses on your tax return. In general, the IRS allows taxpayers to deduct “ordinary and necessary” business expenses. Generally, advertising and marketing costs are considered ordinary and necessary if:

- They are common in your trade, field or industry; AND
- They are helpful and appropriate for your trade or business.

Typical deductible expenses include traditional advertising (such as signage, print, and TV and radio ads), along with paid ads on social media or freelancing platforms. You may also be able to deduct costs associated with “goodwill advertising” that enhances the visibility of your product, service or brand. For example, you might run an ad that mentions your business, but primarily promotes an upcoming charity event or educates the public about an important cause.

Deductible marketing costs may also include expenses related to providing food, entertainment or facilities to the public to promote community goodwill. However, IRS rules governing deductions for meal and entertainment expenses have very specific requirements. A business tax professional can help you determine whether you can deduct your goodwill advertising and other marketing costs, and if so, how to document expenses and claim your deduction.

IRS 2021 Advance CTC Payments FAQs – Did You Know?

The IRS recently answered a number of common questions about the 2021 Child Tax Credit (CTC) advance payments that Americans began receiving in mid-July. Here are the highlights:

DO I HAVE TO PAY TAX ON THE CTC ADVANCE PAYMENTS?

No. The CTC is a tax credit. As long as you qualify for the credit, the advance payments do not count as income and are not taxable. You can check your eligibility using the IRS Advance CTC Eligibility portal (link below).

WILL ADVANCE CTC PAYMENTS DISQUALIFY ME FOR OTHER FEDERAL PROGRAMS?

No. Because these payments are not income, they will not affect eligibility for federal programs with income limits, like the Earned Income Credit, Pell Grants, or higher education credits.

WILL THE IRS REDUCE THE PAYMENTS DUE TO BACK TAXES OR OTHER DEBTS?

No. Past-due taxes, overdue child support, and other federal or state debts will not affect CTC advance payment amounts. However, these issues may affect a taxpayer's final CTC amount when they file their 2021 tax return, possibly reducing their refund or increasing their tax. Also, some states do allow reduction of CTC advance payments to cover a taxpayer's private debts.

I AM ELIGIBLE FOR THE 2021 CTC BUT MY ADVANCE PAYMENTS ARE DELAYED?

The most common reason for a delay in receiving advance CTC payments is that the IRS does not have your current mailing address or banking information. Check the IRS Advance CTC Update portal (link below) to see if you need to update your info. The IRS is also withholding advance CTC payments to victims and possible victims of tax-related identity theft, to prevent further fraud. These payments will be sent when the ID theft cases are resolved.

If you are unsure whether it is best for you to accept CTC advance payments, or to opt out and claim the entire credit when you file your 2021 tax return, a tax professional can help you decide.

IRS Advance CTC Eligibility portal: https://www.irs.gov/credits-deductions/advance-child-tax-credit-eligibility-assistant

IRS Advance CTC Update portal: https://www.irs.gov/credits-deductions/child-tax-credit-update-portal

6-Month Filing & FBAR Extensions Deadline

For taxpayers who have extensions to file their 2020 returns, the filing due date for those returns is Friday, October 15, 2021.

The October 15 deadline to file under an extension applies to several common returns, including:

2020 INDIVIDUAL INCOME TAXES:

Most individual taxpayers who requested an extension to file their 2020 federal tax returns must file by October 15. However, additional extensions may be available to some taxpayers affected by recent disasters.

2020 CORPORATE INCOME TAXES:

The October 15 deadline also applies to C corporations that requested an extension to file their 2020 corporate income tax returns (Form 1120).

FOREIGN BANK ACCOUNT REPORT (FBAR):

Many U.S. taxpayers, including individuals and businesses, must file an annual report of their foreign bank and other financial accounts, called an FBAR. Typically, filing an FBAR is necessary if the total value of a taxpayer's foreign accounts exceeds $10,000 at any time during the calendar year. However, certain accounts, such as those held within a qualified IRA or other retirement plan, may not need to be reported. Most taxpayers who are required to file a 2020 FBAR and have not yet done so must file by October 15.

Remember that in general, an extension to file tax returns is NOT an extension to pay any tax due. Therefore, those who have not yet filed but expect to owe 2020 tax should estimate the amount they owe and pay that amount as soon as possible, even if they will not file their returns until October 15. Immediate payment will minimize any interest charges and late payment penalties.

IRS Working with Three Collection Agencies Beginning Fall 2021

The IRS sometimes refers taxpayer accounts to private collection agencies (PCAs). These agencies may contact affected taxpayers directly about their tax debts. To protect taxpayers from collection scams, the IRS publishes information about the PCAs that are currently under contract with the federal government. Beginning September 23, 2021, the three PCAs with official IRS authorization for tax account collections are:

- CBE Group, based in Waterloo, Iowa (phone 800-910-5837)
- Coast Professional, Inc., based in Albion, New York (phone 888-928-0510)
- ConServe, based in Fairport, New York (phone 844-853-4875)

The IRS always sends a letter to taxpayers to inform them that their accounts have been referred to a PCA, showing the name and contact info of the PCA. If the PCA listed does not appear on the above list, the letter may be fraudulent and the taxpayer should call the IRS for more information. The PCA will also send a letter confirming that it has received the IRS referral. Both of these letters have detailed information to help taxpayers verify that any future calls or notices from the PCA are legitimate.

PCAs under contract with the IRS are authorized to discuss payment options with taxpayers, but NOT to take enforcement actions like imposing a lien or levy. Taxpayers should always make payments only to the IRS or U.S. Treasury. A representative of an authorized PCA will never ask a taxpayer to make a payment directly to the PCA. The IRS advises taxpayers who receive suspicious calls from someone claiming to represent a PCA to end the calls, and instead call the PCA listed on their IRS notice directly.

Quarterly Estimated Tax Payments - Reminder

If you are making quarterly estimated tax payments to the IRS, the due date for the June 1 - August 31 quarter of the year is September 15, 2021.

For payments made using IRS Direct Pay, you can make payments until 8PM EST, and for payments using a credit or debit card, payments can be made up to midnight on the due date.