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Dave Koohy
Coastal Financial Group & Island Tax Associates

www.islandtaxassociates.com
(401) 846-4290

April Tax News


The IRS has announced that the official tax filing date is now May 17th, which is great news for all of you late filers. To clarify, this means you do not have to file for an extension unless you plan to file after May 17th.  No late fees or penalties will be assessed until after that date. However, even if you file for an extension, you still have to pay your projected amount of taxes due. If not, penalties will be assessed starting on May 18th.

  For more details, read here.      

If you haven't met with me yet to close out your 2020 tax year, call us at (401) 846-4290 at your earliest convenience. You may choose to meet in-person at my office, which is constantly being disinfected per Covid 19 requirements, or by a Zoom video meeting. 

Go to our website for the list of what you need to bring to your meeting.
 

REFER A FRIEND AND GET 10% OFF YOUR BILL

 Tax News Around and About  



The Individual Health Mandate Explained


Yes, we are back to that.  There’s a new item to consider when filling out the Rhode Island personal income tax return this season: It’s Rhode Island’s health insurance mandate, which took effect last year and shows up on returns this tax filing season. Rhode Island’s health insurance mandate (also known as the “individual mandate” or “health coverage mandate”) was enacted on July 5, 2019. The mandate to have sufficient health-care coverage (technically known as “minimum essential coverage”) took effect on January 1, 2020. It is somewhat similar to the federal mandate as it existed in early December 2017 (prior to the enactment later that month of the federal Tax Cuts and Jobs Act). Details of the mandate are spelled out in the forms and instructions, which are available via this link.

Read More 
 



Filing Season Tax Treatment of Stimulus Payments 


The Internal Revenue Service has advised taxpayers and tax preparers that income from the federal economic impact payments (sometimes called “stimulus payments”, “COVID-19 payments”, or “recovery rebates”) is not included in a person’s gross income for federal tax purposes. A person’s federal adjusted gross income is the starting point for computing a person’s Rhode Island personal income tax return. Therefore, because the economic impact payments are not treated as income for federal tax purposes, they are not treated as income for Rhode Island personal income tax purposes. In other words, the income you received in 2020 from the federal economic impact payments is free from federal and Rhode Island personal income tax. Form RI-1040H If you’re eligible for a property tax relief credit on Form RI-1040H, do not treat your federal economic impact payments as income for purposes of the Rhode Island property-tax relief program’s $30,000 annual household income limit. To put this another way: When you are figuring out what counts as income for purposes of the property tax relief credit on Form RI1040H, do not count your federal economic impact payments.  
 
 

Amounts Paid for Personal Protective Equipment Qualify for Medical Deduction


The IRS said that amounts paid for personal protective equipment (PPE), including masks, hand sanitizer, and sanitizing wipes, for the primary purpose of preventing the spread of COVID-19 can be treated as amounts paid for medical care under Sec. 213(d) (Announcement 2021-7). As a result, amounts paid by an individual taxpayer for COVID-19 PPE for use by the taxpayer, the taxpayer’s spouse, or the taxpayer’s dependents that are not compensated for by insurance or otherwise are deductible under Sec. 213(a) if the taxpayer’s total medical expenses exceed 7.5% of adjusted gross income.
 
 

Guidance on Rhode Island Tax Treatment of Unemployment Benefits


The Rhode Island Division of Taxation today provided guidance explaining that Rhode Islanders will be able to deduct up to $10,200 of unemployment compensation on their federal personal income tax returns under a recent federal law change, but must include that same amount as income on their Rhode Island state income tax returns under current Rhode Island law.1

I hope you and yours are staying safe and healthy. If you have any questions or concerns, please feel free to email me at coastalfinancial@aol.com or call at (401) 846-4290.

 
Best, 
Dave 
Copyright © 2021 Island Tax Associates, All rights reserved.

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Island Tax Associates
575 East Main Road
Wyatt Square
Middletown, RI 02842-7273

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