Non-traditional families may qualify for advance child tax credit payments

Families come in all shapes and sizes – and some families may not realize they could receive advance payments of the 2021 child tax credit in the last months of this year. The IRS urges grandparents, foster parents or people caring for siblings or other relatives to check their eligibility.

For tax year 2021, families claiming the child tax credit will receive:

• Up to $3,000 per qualifying child between the ages of 6 and 17 at the end of 2021
• Up to $3,600 per qualifying child under age 6 at the end of 2021

The total of the advance payments, paid in 2021, will be up to 50 percent of the child tax credit.

A qualifying child can be a filer’s:

• son or daughter
• stepchild
• eligible foster child
• siblings, including stepsiblings or half-siblings
• a descendent of any of the above – for example a grandchild, niece or nephew.

Generally, a family qualifies for advance child tax credit payments if they have a qualifying child. Also, an individual — or their spouse, if married filing a joint return — must have their main home in one of the 50 states or the District of Columbia for more than half the year. In addition to the relationship requirements above, the child must also satisfy the following conditions:

1. For tax year 2021, a qualifying child is an individual who does not turn 18 before January 1, 2022 and the individual does not provide more than one-half of his or her own support during 2021.
2. The individual lives with the taxpayer for more than one-half of tax year 2021. For exceptions to this requirement, see IRS Publication 972, Child Tax Credit and Credit for Other Dependents.
3. The individual is properly claimed as the taxpayer’s dependent. For more information about how to properly claim an individual as a dependent, see IRS Publication 501, Dependents, Standard Deduction, and Filing Information.
4. The individual does not file a joint return with the individual’s spouse for tax year 2021 or files it only to claim a refund of withheld income tax or estimated tax paid.
5. The individual was a U.S. citizen, U.S. national, or U.S. resident alien. For more information on this condition, see IRS Publication 519, U.S. Tax Guide for Aliens.

How to get advance payments

The IRS’s Non-filer Sign-up Tool helps people who normally don’t have to file a tax return complete a simplified return to get advance child tax credit payments, the recovery rebate credit and Economic Impact Payments. The IRS tool is available through October 15, 2021.

People who are required to file a tax return should check in coming weeks. The IRS Child Tax Credit Update Portal will be updated to allow families to inform the IRS about the qualifying children they will claim on their 2021 tax return. The IRS can then adjust the family’s estimated 2021 child tax credit – and therefore adjust the amount of monthly advance child tax credit payments.

Courtesy of the IRS

If a family doesn’t receive advance child tax credit payments for a qualifying child, they can claim for 2021, they may claim the full amount of the allowable child tax credit for that child by filing a 2021 tax return.

Need tax assistance? Give us a call at 816-524-4949 or visit our website to schedule a consultation.

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$10,00 Sanction for Violating Rule 11 With Over-the-Top Allegations of Stay Violation

Bankruptcy Judge John E. Waites demanded $10,000 in sanctions under Rule 9011 for filing a Section 362(k) complaint asking for $50,000 in actual and punitive damages. The debtor owed about $900 to his doctor but did not list it in his chapter 13 papers. Six weeks after filing, the doctor’s office sent him a letter asking him to call, saying the debt was in default and might be sent to collections.

The debtor’s counsel informed the doctor’s office about the bankruptcy filing, but the office staff failed to save the change electronically. The debtor scheduled the debt and sent notices to the doctor. Two months later, the doctor’s computer system automatically sent the same letter again asking for payment. Without contacting the doctor’s office again, debtor’s counsel initiated an adversary proceeding asking for $50,000 in damages. The complaint alleged that the stay violation was flagrant, willful, intentional, wanton aggressive, devious, deceptive, manipulative, oppressive and abusive. The complaint went on to say that the debtor “would show” that the second collection letter was sent “with the express intent to annoy, threaten, cause harm, abuse, intimidate or harass.” The doctor admitted violating the automatic stay but contended it was in error.

The doctor’s lawyer sent the debtor’s counsel a draft of a motion for sanctions for violation of rule 9011(b). The debtor’s counsel did not withdraw the complaint or accept a settlement offer, so the doctor’s lawyer filed the sanctions motion. The sanctions motion pointed to the strident claims in the complaint and alleged that it was filed without an investigation reasonable in the circumstances and for an improper purpose, namely, to seek a settlement or payment rather than stop a stay violation.

There are numerous other cases in which this debtor’s attorney filed complaints seeking tens of thousands of dollars in damages based on “similar allegations of egregious conduct” arising from collection letters.

Considering bankruptcy? Give us a call at 816-524-4949 or visit our website to schedule a consultation with an attorney to determine if that is your best option.

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Ex-CEO Who Oversaw Doomed Nuclear Project Sentenced

A utility executive who repeatedly lied to keep investors pumping money into South Carolina’s $9 billion nuclear reactor debacle will spend two years in prison for fraud, a federal judge decided. Former SCANA Corp. CEO Kevin Marsh agreed with prosecutors that he should serve the sentence and the judge approved the deal, making him the first executive put behind bars for misleading the public on the project, which failed without ever generating a watt of power. Marsh said that he wants to serve his time as soon as he can because his wife of 46 years has incurable breast cancer, and he hopes to care for her after leaving prison. The judge agreed to have him report to a federal prison in North Carolina in early December.

U.S. District Judge Mary Geiger Lewis cited Marsh’s remorse and expansive cooperation with federal authorities as she reluctantly accepted the plea deal, which is well below the federal sentencing guidelines of five years. She said the prosecution and defense depiction of the crime Marsh committed is a “vanilla way to describe it,” adding that it understates “the seriousness of this non-disclosure.” A second former SCANA executive and an official at Westinghouse Electric Co., the lead contractor to build two new reactors at the V.C. Summer plant, have also pleaded guilty. A second Westinghouse executive has been indicted and is awaiting trial. Marsh pleaded guilty in federal court in February to conspiracy to commit wire and mail fraud, and in state court to obtaining property by false pretenses.

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Expanded tax benefits help individuals and businesses give to charity in 2021

Recent legislation includes several provisions to help individuals and businesses who give to charity. The new law generally extends four temporary tax changes through the end of 2021. Here’s an overview of these changes.

Deduction for individuals who don’t itemize
Usually taxpayers who take the standard deduction cannot deduct their charitable contributions. The law now permits taxpayers to claim a limited deduction on their 2021 federal income tax returns for cash contributions they made to certain qualifying charitable organizations.

These taxpayers, including married individuals filing separate returns, can claim a deduction of up to $300 for cash contributions to qualifying charities during 2021. The maximum deduction is $600 for married individuals filing joint returns.

Cash donations
Most cash donations made to charity qualify for the deduction. However, there are some exceptions. Cash contributions that are not tax deductible include those:

These exceptions also apply to taxpayers who itemize their deductions.

Cash contributions include those made by check, credit card or debit card as well as unreimbursed out-of-pocket expenses in connection with volunteer services to a qualifying charitable organization. Cash contributions don’t include the value of volunteer services, securities, household items or other property.

100% limit on eligible cash contributions made by taxpayers who itemize deductions in 2021
Taxpayers who itemize can generally claim a deduction for charitable contributions to qualifying organizations. The deduction is typically limited to 20% to 60% of their adjusted gross income and varies depending on the type of contribution and the type of charity.

The law now allows taxpayers to apply up to 100% of their AGI, for calendar-year 2021 qualified contributions. Qualified contributions are cash contributions to qualifying charitable organizations.

The 100% limit is not automatic; the taxpayer must choose to take the new limit for any qualified cash contribution. Otherwise, the usual limit applies. The taxpayer’s other allowed charitable contribution deductions reduce the maximum amount allowed under this election. Eligible individuals must make their elections on their 2021 Form 1040 or Form 1040-SR.

Corporate limit increased to 25% of taxable income
The law now permits C corporations to apply an increased corporate limit of 25% of taxable income for charitable cash contributions made to eligible charities during calendar year 2021. The increased limit is not automatic. C corporations must the choose the increased corporate limit on a contribution-by-contribution basis.

Courtesy of the IRS

Increased limits on amounts deductible by businesses for certain donated food inventory
Businesses donating food inventory that are eligible for the existing enhanced deduction may qualify for increased deduction limits. For contributions made in 2021, the limit is increased to 25%. For C corporations, the 25% limit is based on their taxable income. For other businesses, including sole proprietorships, partnerships, and S corporations, the limit is based on their total net income for the year. A special method for computing the enhanced deduction continues to apply, as do food quality standards and other requirements.

Need help with taxes? Call us at 816-524-4949 or visit our website to book a free consultation.

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Rhode Island Man Sentenced for PPP Fraud Scheme

A Rhode Island man was sentenced to almost seven years in prison for fraudulently seeking more than $4.7 million in forgivable federal loans meant for businesses struggling during the coronavirus pandemic while he was still on probation from a previous conviction, federal prosecutors said. Michael Moller filed 11 fraudulent applications for Paycheck Protection Program loans. He used his own name, as well as the names of his father, his girlfriend’s brother, and his girlfriend’s son to apply for the loans to pay employees at businesses that did not exist. He actually received almost $600,000, some of which he used for a trip to Las Vegas, home renovations, and a car, prosecutors said. He was sentenced in U.S. District Court in Providence to five years and 10 months for the loan scam, and another year for violating the terms of his release on a federal bank robbery conviction. He was also ordered to pay full restitution. Moller also has multiple convictions in state and federal courts for larceny and tax fraud, authorities said.

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SBA Overpaid $4.5 Billion on ‘Illogical’ Small Business Grant Claims

An emergency relief program hastily rolled out in the early days of the pandemic had such poor fraud protections that it improperly doled out nearly $4.5 billion to self-employed people who said they had additional workers — even those who made wildly implausible claims, like having 1 million employees. The $20 billion program, called the Economic Injury Disaster Loan Advance, offered small businesses immediate grants of up to $10,000 in the months after the pandemic shuttered much of the economy. But hundreds of thousands of the grants it made were inflated because there was no system to catch applications with “flawed or illogical information,” Hannibal Ware, the Small Business Administration’s inspector general, wrote in a report. The report, which described how the agency could have spotted obviously bogus applications by taking even rudimentary steps to prevent fraud, was the latest black eye for the SBA, a small department that was thrust to the front lines of the government’s pandemic response.

The agency also ran the Paycheck Protection Program, which gave out $800 billion in bank-issued loans but often left lenders and borrowers scrambling to comply with confusing and shifting rules. Fraud was a problem there, too: Tens of billions of dollars may have been taken improperly. The loan-advance grants were created by Congress in March 2020 as part of its first coronavirus aid package. Intended to quickly get money to devastated companies, the program offered grants to businesses that applied for a disaster loan — and allowed applicants to keep the money even if their loan request was rejected. In the 14 weeks the program operated before it ran out of money, nearly 5.8 million applicants received grants based on their company’s head count: $1,000 each for up to 10 workers. Sole proprietors and independent contractors who employed only themselves should have collected a maximum grant of $1,000 — but many collected bigger checks.

If you’re struggling financially as a result of the COVID-19 pandemic, we can help. Call us at 816-524-4949 or visit our website for a consultation to determine your best option.

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Zillow Says It Can’t Buy Any More Homes This Year

Real-estate company Zillow Group Inc. said that it will stop buying and flipping new houses for the remainder of this year. The online home-listing platform, which got into the business of buying, refurbishing and quickly selling homes more than three years ago, said it would instead focus on closing existing purchase contracts and selling the homes it has on hand. Zillow said that it has stopped the practice because it was experiencing backlogs related to renovating the homes and that it faces constraints for on-the-ground workers. “We’re operating within a labor- and supply-constrained economy inside a competitive real estate market, especially in the construction, renovation and closing spaces,” Chief Operating Officer Jeremy Wacksman said. “We have not been exempt from these market and capacity issues.”

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Wells Fargo to Pay $37.3 Million to Settle U.S. Claims It Fraudulently Overcharged Customers

Wells Fargo & Co. will pay $37.3 million to settle U.S. government claims it fraudulently overcharged commercial clients on foreign exchange services, the latest in a string of scandals over the bank’s treatment of customers. Yesterday’s settlement resolves U.S. Department of Justice civil fraud charges against the fourth-largest U.S. bank, and includes a $35.3 million fine plus a $2 million forfeiture. Wells Fargo previously returned $35.3 million to customers as restitution, making its total payout about $72.7 million. The Justice Department said that sales specialists jokingly used expressions such as “back the truck up” and “when in doubt, spread them out” when they were overcharging customers, with one referring to the sales group as a “bucket shop.” Wells Fargo declined to comment, pending required approval of the settlement by U.S. District Judge John Koeltl in Manhattan federal court. The San Francisco-based bank has been subject since 2018 to a Federal Reserve cap on assets, which must remain below $1.95 trillion until it improves its governance and risk controls. Wells Fargo has already paid more than $5 billion in fines since the scandals began in 2016.

Struggling financially? Call us at 816-524-4949 or visit our website to schedule a consultation.

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Consumer Financial Protection Bureau issues final rule to implement the Fair Debt Collection Practices Act

The Consumer Financial Protection Bureau (Bureau) issued a final rule to restate and clarify prohibitions on harassment and abuse, false or misleading representations, and unfair practices by debt collectors when collecting consumer debt. The rule focuses on debt collection communications and gives consumers more control over how often and through what means debt collectors can communicate with them regarding their debts. The rule also clarifies how the protections of the Fair Debt Collection Practices Act (FDCPA), which was passed in 1977, apply to newer communication technologies, such as email and text messages.

The rule establishes a presumption on the number of calls debt collectors may place to reach consumers on a weekly basis. A debt collector is presumed to violate federal law if the debt collector places telephone calls to a particular person in connection with the collection of a particular debt more than seven times within seven consecutive days or within seven consecutive days of having had a telephone conversation about the debt.

The rule also clarifies how consumers may set limits on debt collection communications to reflect their preferences and the limits on communicating with third parties about a consumer’s debt. The rule requires debt collectors who communicate electronically to offer the consumer a reasonable and simple method to opt out of such communications at a specific email address or telephone number. The rule also provides that consumers may, if the debt collector communicates through a medium of electronic communications, use that medium of electronic communications to place a cease communication request or notify the debt collector that they refuse to pay the debt.

The rule further clarifies that the FDCPA’s general prohibition on harassing, oppressive, or abusive conduct applies to telephone calls as well as other communication media, such as email and text messages, and provides examples demonstrating how the prohibition restricts emails and text messages. It also generally restates the FDCPA’s prohibitions regarding false, deceptive, or misleading representations or means and unfair or unconscionable means.

If you are in debt and would like to speak to an attorney, call our law office at 816-524-4949 or visit our website.

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CFPB Takes Action Against American Advisors Group for Deceptively Marketing Reverse Mortgages to Consumers

The Consumer Financial Protection Bureau (CFPB) filed a complaint and proposed consent order alleging that American Advisors Group (AAG) used inflated and deceptive home estimates to lure consumers into taking out reverse mortgages, according to a CFPB press release. The CFPB also alleges that AAG’s deceptive conduct violated a 2016 administrative consent order that addressed AAG’s deceptive advertising of reverse mortgages. If entered by the court, the proposed consent order would prohibit AAG from future unlawful conduct and require AAG to pay $173,400 in consumer redress and a $1.1 million civil money penalty. American Advisors Group, based in Irvine, Calif., is one of the nation’s leading providers of reverse mortgages. A reverse mortgage is a special type of home loan that allows homeowners who are 62 or older to access the equity they have built up in their homes and defer payment of the loan until they pass away, sell, or move out. The loan proceeds are generally provided to the borrowers as lump-sum payments, monthly payments, or as lines of credit. Homeowners remain responsible for paying taxes, insurance, and home maintenance, among other obligations.

Struggling to pay bills? Give us a call at 816-524-4949 or visit our website to schedule a consultation with an attorney to determine your best option.

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