This article will help you:
- Navigate the new forms and calculations on tax year 2021 and 2020 returns due to the CARES Act and other pandemic relief and stimulus legislation.
- Understand and clear diagnostic reference #54055 in 2019 returns.
- Find clients' 2019 returns that you previously filed who may benefit from amending their return to apply the relief provisions.
New for tax year 2022:
- Form 8915-F is used for all retirement disaster distributions and repayments occurring in 2021 and later.
For tax year 2021 returns:
- Per treasury guidance (Notice 2021-25 ), beginning Jan. 1, 2021, through Dec. 31, 2022, businesses can claim 100% of their food or beverage expenses paid to restaurants.
- Corporations can deduct qualified relief contributions paid between Jan. 1, 2020 and Feb. 25, 2021, up to 100% of their income. Learn more here.
- Corporations can deduct certain donations for major disasters paid between Jan. 1, 2020 and Feb. 25, 2021, up to 100% of their income. Learn more here.
Apply key CARES Act provisions to your 2020 returns
- For help deducting $300 of cash contributions when taking the standard deduction, see 1040 Charitable Contributions FAQs.
- How to enter stimulus payments and figure the Recovery Rebate Credit will help you report your clients' economic impact payments and claim the Recovery Rebate Credit.
- If your client took a distribution from a 401(k), IRA, or similar plan, see How to enter coronavirus-related retirement plan distributions to help you generate Form 8915-E.
- For clients who received relief through the Paycheck Protection Program, see How to enter forgiven PPP loans and EIDL grants in ProConnect Tax or How to enter forgiven PPP loans for individual returns.
- Entering the Employee Retention Credit will help you make adjustments to the tax return if the Employee Retention Credit was claimed on a payroll tax filing (Form 941 or 944).
- Generating Form 7202 in ProConnect Tax will show you how to complete the Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals for 2020 and 2021.
- Common questions on Schedule SE will help you elect to defer self-employment tax payments.
- For businesses who normally deduct the expense of meals, meals provided by a restaurant are 100% deductible through Jan. 1, 2021 to Dec. 31, 2022. All other meals are still limited to 50%.
Apply the CARES Act provisions ref. 54055 in tax year 2019
The following e-file critical diagnostic will generate on all individual tax returns:
"The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020. To apply the provisions of that law, check the "CARES Act provisions" box in the Miscellaneous Information screen. Ref. #54055"
To clear the diagnostic in the 2019 return:
- Go to the Input Return tab.
- On the left-side menu, select General.
- Click on the Misc. Info./Direct Deposit screen.
- Select the Miscellaneous section at the top of the input screen.
- Check the box labeled Apply the Coronavirus Aid, Relief, and Economic Security (CARES) Act provisions.
You'll need to check this box for every tax return you file going forward to ensure the return is accurate and using the latest tax laws. This feature allows you to only apply the CARES Act provisions to returns you file after the law’s passage, and prevent calculations from changing on returns you previously filed without your knowledge.
This checkbox will apply three key changes to the tax return:
- Suppress Form 461, so business losses are not limited by it.
- If Form 8990 is part of the return, a diagnostic will generate alerting you that the 50% limitation is not yet implemented in the program.
- Apply the latest net operating loss calculations.
