May 17 Ahead

Mayday! No, we mean May Tax Day. 

Amid the consternation over COVID, the federal tax deadline could slip by.  Remember, the Internal Revenue Service postponed the target for filing 2020 federal tax returns to May 17.

So here’s a reminder. If, by some chance, you haven’t given the government its due yet, you have until the end of the day on Monday to file.  The IRS continues to stress filing electronically, but a mailed return also works, provided it’s postmarked on May 17.

If you’re still not ready, you can file for extension of time to complete your return. Submit Form 4868, named “Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.” For a copy of the form, see https://www.irs.gov/pub/irs-prior/f4868–2020.pdf

The IRS will automatically delay the deadline for your paperwork until Oct. 15. BUT the IRS still expects you to estimate income and pay any taxes due by May 17.

Don’t forget state tax returns, either. In Minnesota, you don’t have to file an extension form. However, just as with the federal return, you must pay an estimate of taxes due to avoid penalties. Minnesota Department of Revenue accepts tax payments through its Web site.

For tax guidance, feel free to contact Eric Buechler, owner of   EricJohn Ltd and an enrolled agent recognized by the IRS.

Minnesota’s Encouraging Tax Credit


Here’s an encouraging sign for teachers working to earn their master’s degrees.

The State of Minnesota is encouraging by erasing as much as $2,500 from income taxes for their advanced studies. Licensed teachers in the state who completed a master of arts or master of science degree last year are eligible.

The state offers a one-time tax credit for each master’s degree. The write-off covers tuition, required fees and books. Save your transcripts, receipts and other proofs, the Minnesota Department of Revenue suggests.

The type of program is important. The teacher must have studied in a specific “core content area”, such as history or mathematics or fine arts. The subject must be directly related to his/her teaching license. However, the art of teaching itself (e.g. a master’s in education) does not qualify, the agency notes.

Teachers who began their master’s work after June 30, 2017, are eligible for the “Credit For Attaining Master’s Degree in Teacher’s Licensure Field.” Fill out Schedule M1CMD in your 2020 state tax return. It comes with instructions that answer many questions.
Teachers are able to claim the tax credit even if they received scholarships or other reimbursements for some expenses. But they’ll have to report that financial aid on the tax form.

Tax credits are particularly powerful benefits because they lower taxes themselves – not just income that is taxed.

For more information and guidance, contact Eric Buechler of EricJohn Ltd. He is an enrolled agent recognized by the Internal Revenue Service.

https://www.revenue.state.mn.us/masters-degree-teachers-licensure-field

A Shot In The Arm For Small Biz

President Joe Biden’s campaign to inoculate Americans nationwide against coronavirus now is coming to small businesses with a no-cost offer.  

The president hopes to persuade small and medium-sized businesses to give paid time off from jobs for workers to get vaccinated against COVID-19.

The government is not ordering the businesses to give the time off. However, using federal tax credits, it will give employers back their entire payments of sick leaves for workers to get vaccinated and, if necessary, to recover from any side effects of the shots. Costs of family leaves also are covered.

The offer is open between April 1 and Sept. 30, the Internal Revenue Service said in an announcement.  Businesses or non-profit organizations with fewer than 500 workers are eligible. That also includes self-employed business owners, IRS noted.

The tax credits were authorized in The American Rescue Plan Act, signed into law by Biden in March.  

See more details in this fact sheet at: https://www.irs.gov/newsroom/employer-tax-credits-for-employee-paid-leave-due-to-covid-19  

Eric Buechler, owner of EricJohn Ltd and an enrolled agent recognized by the IRS, is ready to help small businesses with the details of claiming the COVID-related tax credits.

Two Tax “Rescues” Now Uncertain In Minnesota

Americans owe their third round of stimulus payments to the enormous American Rescue Plan Act of 2021. Among its $1.9 trillion of aid, the recent law also issued a couple of tax breaks with broad application.    

Businesses nationwide were allowed to avoid federal taxes for loans that they had taken out and that subsequently were forgiven by the government under the Paycheck Protection Program (PPP).

Many workers who lost jobs also were allowed to exclude the first $10,200 of unemployment compensation they received last year (in 2020). In effect, the law erased that amount from the taxpayer’s income and from federal taxes.  

But what happened in Washington, D.C., hasn’t happened yet in Saint Paul.  Businesses and their workers still owe income taxes on both those “rescues.” A bill authorizing both has been passed by the Minnesota House of Representatives. But a companion bill (SF263) has been bogged down in the Senate, which now has adjourned until early April.

The issue is “conformity,” or adjusting state law to reflect federal changes, Neal Anthony, a columnist for the StarTribune newspaper, notes.

Under the federal PPP, businesses obtain an emergency loan to help pay costs caused by the coronavirus epidemic. If they spend the funds correctly, the federal government forgives the loan and the business does not have to repay it.

Normally, those forgiven amounts of  PPP loans and the first $10,200 of unemployment compensation are taxable in Minnesota. So, unless the Legislature conforms state tax code to exemptions in the federal American Rescue Plan Act, Minnesotans will have to declare both as taxable income.

In fact, last Thursday (March 25), the Minnesota Department of Revenue issued a bulletin telling tax preparers how to add the unemployment compensation into their clients’ state tax returns.

To find expert guidance for planning and filing tax returns, contact EricJohn Ltd. owner Eric Buechler, who is an enrolled agent recognized by the Internal Revenue Service.

Update: Minnesota’s Willing To Wait, Too

Minnesota’s tax collector is just fine with adding about a month to the tax filing season, now underway. The state Department of Revenue announced Friday that it is extending the due date for filing tax returns and paying any taxes until May 17.

The new grace period tracks with last week’s decision by the Internal Revenue Service to accept federal returns for another four weeks, until May 17, before charging any penalties for late filings. They had been due by the normal deadline, April 15.

 The IRS cited effects of the coronavirus epidemic on taxpayers in pushing back the date. So did Minnesota Gov. Tim Walz in a news release.

The Minnesota extension applies to income tax returns and payments for 2020, but it does not cover estimated tax payments for the 2021 tax year. The action was not surprising, because the state tax return draws on figures in the federal return.

Both Minnesota Revenue and the IRS still urge taxpayers to file as soon as possible. But, if a little extra time makes things easier, it’s now officially OK and penalty-free.

For expert advice and tax preparation, feel free to contact Eric Buechler, an enrolled agent and owner of tax service EricJohn Ltd.

Federal Tax Day Pushed Back; Stay Tuned For State

By now, you’ve probably heard the timely taxing news. Reacting once again to the COVID-19 crisis, the Internal Revenue Service has extended the deadline for filing income tax returns by about one more month. The new due date is May 17.

But for now, taxpayers in Minnesota still can’t count on having another month to finish all of their tax chores for 2020.  That’s because the federal tax return is a starting point for their state  income tax returns and possibly for those in as many as 41 other states. The IRS postponement does not automatically push back their due dates.

 Generally, Minnesota does follow the federal lead.  Minnesota’s Department of Revenue did not immediately release any change in its April 15 deadline following  the IRS action on Wednesday (March 17).

Here are a few more details about the IRS extension:

  • The extension is automatic. No forms or requests are necessary.
  • Individual taxpayers can wait until May 17 to pay their federal income taxes for the 2020 tax year. That includes those filers who pay self-employment taxes. Any penalties or interest on amounts due will not begin until the same date.
  • Taxpayers asking for a regular filing extension (with Form 4868) will have until Oct. 15 to turn in their returns. As usual, they also must pay income taxes by due date, which is now May 17.  
  • The delay does not apply to any quarterly estimated tax payments for 2021 that are due on April 15, the IRS noted in its announcement.
  • See https://www.irs.gov/newsroom/tax-day-for-individuals-extended-to-may-17-treasury-irs-extend-filing-and-payment-deadline

Minnesota Revenue has said it will assist individual taxpayers who cannot make tax payments or owe interest on late payments for reasons related to the coronavirus epidemic.

Eric Buechler, owner of EricJohn Ltd., can offer expert advice about filing 2020 state or federal income taxes. He is an enrolled agent recognized by the IRS.

Minnesota Rewards Political Contributions To Winners Or Losers

Election contributions were flowing in Minnesota in 2020. Did you get into the thick of it with a contribution to your favorite candidate? Hope you kept the right receipt.

Politically active Minnesotans can find at least some reward for their donations in state codes. The Political Contribution Refund promises to repay as much as $50 (individual) or $100 (married couple) for gifts to Minnesota office-seekers and political parties in the state last year.

To claim it, you need only to be a registered voter, or just be eligible to become a voter. Of course, you also must have given one or more contributions during 2020.

Here’s the caution about the receipt. To back up their donations, contributors must submit the original receipt – Form EP-3 – issued by the candidate or party. (No, even a handwritten thank-you from the candidate won’t work.)  Minnesota Department of Revenue warns that, without that EP-3, “We will send your (application) form back to you.”   

Let us mention one other important detail. Taxpayers should not send in the Form PCR with an income tax return. Minnesota Revenue says that could delay processing of both the refund and the return.  See the form with its instructions at https://www.revenue.state.mn.us/sites/default/files/2019-12/pcr_20.pdf

The instructions give some specifics about the state offices and political organizations qualifying for contributions and the refund.

The due date for the 2020 Form PCR is April 15, 2021, the same day as for income tax returns. By the way, the PCR for tax year 2021 also is already online at the Minnesota Revenue site.

 Eric Buechler, owner of EricJohn Ltd., can dig deeper into this Minnesota refund or take on more complicated issues in preparing your state or federal taxes.   

Another three months! Feds aid small businesses with sick pay costs through March

Last year, the government offered help to small business inundated with coronavirus-related costs for sick pay and family leaves. Businesses with fewer than 500 employees could receive dollar-for-dollar relief for those expenses.

That all would have ended on Dec. 31, but Congress has extended government help for another three months. It was among the myriad of aid measures in enacted into law on Dec. 27 (Tax Relief Act of 2020).

 So, now, the nation’s small businesses can claim a tax refund for wages paid to their COVID-struck workers for sick leaves taken until March 31.  In addition, those companies also can be reimbursed for as much as 10 weeks of wages for an employee’s family leave if it is related to COVID-19.  For example, caring for his or her child when the regular day care closes could qualify for the payment.

Here’s how it works. The relief isn’t an immediate or direct payment like a stimulus check. Essentially, the business claims a credit against any employment taxes owed on its quarterly return. But this credit also is fully refundable. In short, if there are more credits than taxes, the employer issues a direct payment (electronic deposit or check) for the difference. 

So, small employers – including both for-profit and some non-profit organizations – will want to keep those costs in mind as they prepare quarterly employment tax returns. Unless Congress takes more action, this special tax break lasts only for leave costs up to March 31.

We should note that employers with fewer than 50 workers can ask for a special exemption from providing family leaves. Of course, they also would not benefit from these refunds.  

The Internal Revenue Service talks about the sick pay/family leave reimbursements in more depth at this link: https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-paid-leave-provided-by-small-and-midsize-businesses-faqs

Small business owners also can seek advice about their situations from a tax specialist such as Eric Buechler, owner of EricJohn Ltd. He is an enrolled agent recognized by the Internal Revenue Service.

Tax Season Is Just Ahead, But A Bit Delayed

Relax, early filers!  You might be ready for the IRS, but the IRS is not yet ready for you.

Taxpayers itching to file their 2020 tax returns at the first possible moment will have to wait about two weeks longer than usual this year.

The Internal Revenue Service has set Feb. 12 as the first day of the 2021 tax season. That’s when the agency will start accepting and processing an estimated 150 million federal returns. Last year’s kick-off came on Jan. 27.

Tax returns will be due on April 15, according to an IRS announcement. That is the normal deadline date.

The IRS says that it needs time to program its computers for tax-related changes in the latest law sending stimulus payments and other benefits to Americans. President Trump signed the legislation on Dec. 27, 2020.

We should note that many people using tax preparation software can send returns to those software companies right away. However, the returns actually will not be submitted to the IRS until Feb. 12.

As in the past, the IRS advises electronic filing, and direct deposit of refunds. The average refund from 2019 returns was more than $2,500, according to the agency.  

As tax season opens, be sure about your tax situation. Contact Eric Buechler, owner of EricJohn Ltd., for expert advice and preparation of federal and state returns. Eric is an enrolled agent recognized by the IRS.

PPP Reappears, Improved and Expanded

Small businesses were not left behind in the latest stimulus package. The government again is ramping up “PPP”, the Paycheck Protection Program.


It was revived just before year-end with 284 billion bucks of support for small employers. Among other improvements, Congress managed to clear up a tax dilemma that had troubled many of those companies.


In short, the original PPP has been intended to help businesses reeling from the economic effects of the coronavirus epidemic. It’s a wide-ranging relief measure. The federal government provided $525 billion to fund 5.2 million loans in the first version last spring.
The loans went out at 1 percent interest, with no other fees. But, most of all, they were forgivable. If the business used the money within PPP guidelines, the feds simply wiped away repayment. Of course, a vital use was payroll for employees.


Now, here’s where Congress fixed a tax mess from the initial program.  The money from loans that had been forgiven clearly came tax-free, according to the law. But the Internal Revenue Service was not allowing businesses to deduct expenses paid from those forgiven PPP funds. In the improved PPP, Congress explicitly stated that any forgiven funds simply will not appear in gross income on tax returns. Any spending with them also will not affect business deductions and will not reduce workforce-related tax credits.

Let us offer a rundown of some of the more important features of what we will call “PPP2”:

• Sizes of eligible businesses 500 or fewer employees; if it’s an initial PPP loan; 300 workers for businesses seeking second loan.

• Expanded types of businesses: Included in PPP2 are sole proprietors, independent contractors, self-employed workers, seasonal employers, (generally operating no more than seven months a year) and certain types of non-profit organizations not covered in the prior round.

 • Financial losses: For a second loan, a 25% decline in gross receipts in any quarter in 2020 compared to the same one in 2019.

• Maximum loan in new round: $2 million. Business still must establish necessity for loan.

• Simplified forgiveness app:  Businesses that obtained loans smaller than $150,000 can use a single-page application for forgiveness. The U.S. Small Business Administration is required to produce the application this month (January 2021).

• Types of expenses allowed:  Expanded to include business software, unreimbursed expenses to repair property damage from civil unrest that happened in 2020, costs of protecting workers, especially from COVID-19, and some expenses owed to suppliers, experts at National Law Review note.

The new PPP is authorized until March 31, 2021. Like the latest stimulus package, it was part of the enormous Consolidated Appropriations Act of 2021. To decide how PPP2 fits your small business, feel free to contact Eric Buechler, owner of EricJohn Ltd. and an enrolled agent recognized by the IRS.