Update on the Federal Child Tax Credit (CTC)

We thought we would give everyone a brief description and update on the federal Child Tax Credit (CTC).  This has been one of the ‘levers’ that the federal government has pulled in order to get more money into the pockets of taxpayers that have children and fall within certain income limits.

What is the Child Tax Credit?

The CTC is a tax benefit to help families who are raising children.

What’s new for the tax year 2021 tax return?

  • Increase from $2,000 to $3,000 per child for children over the age of six
  • Increase from $2,000 to $3,600 for children under the age of six
  • Raised the age limit from 16 to 17
  • Full credit for families making up to $150,000 for married filing jointly or $112,500 for head of household
  • The full credit is now refundable (previously only up to $1,400 could be refunded)
  • Advance Child Tax Credit – starting in July of 2021
    • For every child 6-17 years old, families will get $250 each month
    • For every child under 6 years old, families will get $300 each month
    • Receive the remainder of the credit when you file your taxes

Please see the link below to see if you are eligible to receive these payments, check on your payments, or stop the advance payments from being received.


Your tax professionals will need to know if you received Advance Child Tax Credit payments during the year and if so, how much you received.  This will be reconciled on your 2021 tax return, with the balance of the credit being given to you.

Is the IRS Calling You?

The Internal Revenue Service (IRS) will never call you looking for personal information or payment information.  They almost always initiate these conversations by sending notices through the mail.

In some specific instances an IRS agent might attempt to call or show up at your home or business, but this is AFTER several notices have been sent to the taxpayer by mail.  If an agent comes in-person, they will have multiple forms of identification and credentials to verify their legitimacy.  One of those documents is a what they call a HSPD-12 card.  This is an official federal government ID card.

A more detailed image can be viewed here.

If you DO get a written notice in the mail, you ALWAYS have the opportunity to question or even appeal their findings.  Knowing your rights as a taxpayer is important in these situations.  For a quick reference, this link can be used to view the IRS Taxpayer Bill of Rights.

Of course, if you are in need of professional tax representation, our team at Buffalo Tax Strategies is available to help you Get Educated and Get Ahead!


The IRS Still Has Not Processed My Return – What Should I Do?

It is October 7th, 2021, and since this has been such a recurring theme in our office this year (regarding tax year 2020 personal returns), I thought it would be appropriate to put out a blog post with some guidance.  This was actually an email (reply) made to an actual client and it highlights some of the current frustrations that people are facing at this time.


Good Afternoon Amber,

I apologize for the delay, but if you’re still looking for assistance, I’ll try to address all your concerns:

I got your e-mail from A**** D******. I am at work right now but could set up a time to chat if you think you can help me.
We can absolutely setup a call if you’d like. I also have an online appointment scheduler: calendly.com/buffalotaxstrategies

So long story short, my family has not received our tax returns this year. I did have an office prepare them and they are being no help . They just say we have to wait. I have also received 2 letters basically stating the same thing from the IRS.
This is INCREDIBLY common this year. Unfortunately I have several clients still in ‘processing’ status. I’m sure you’re already aware of this, but here’s the link to the IRS ‘where’s my refund’ tool. https://www.irs.gov/refunds
If you use this tool, at least you can verify that the return is still ‘processing’ with the IRS.  If you have not received your refund, but the status on the IRS site shows ‘completed’ or ‘refund processed,’ that’s an issue.  

I have tried to call the IRS but it seems to be a lost cause. I have also heard, that this is really common this year. I was looking to see if you had any experience with any of your clients this year similar to this. Or if you had any idea of what we can do?
Again, it is very common this year. I haven’t heard of literally anyone that has been able to get through to the IRS in the past couple months. The best I have done / heard is to send a letter and wait up to 8 weeks for them to process it. It’s the only way I have gotten / heard of people getting any kind of response.  This can be incredibly confusing because you might still be getting letters from the IRS while they are still processing the letter with your reply.  

I can not even get the tax preparer we use to review the tax returns and make sure they were done correctly. It is very sad because if is a family owned agency and the father passed away in the middle of tax season. He was my connection there.
That’s incredibly unfortunate. If you’d like me to take a look at the return I’d be happy to give you some insight.

So we WILL be using you for next years taxes. Also, not that it matters, but I do have multiple accounts with A***. Just so you don’t think I am some rando. Any advise would be appreciated. Thank you so much for your time.
Much, much appreciated! Thank you for reaching out Amber, I hope this helps. Again, give me a call if you have any other questions or concerns.


Michael V. Knapp, CMA, IRS-EA
Buffalo Tax LLC
3411 Delaware Ave
Buffalo, NY 14217

Payroll Protection Program (PPP) Loan Documentation

With all the questions surrounding the PPP loan, I recently had an opportunity to email a client and go in-depth on the documentation required for the application. I think this information can be useful to any business owner trying to gain a better understanding:

I hope all is well and you are staying safe during this COVID-19 pandemic. Thank you for allowing us the opportunity to discuss some matters regarding loan documentation for small business owners applying for Paycheck Protection Program (PPP) loans.

I think the loan program was a great example of creative approaches to help small businesses have access to affordable funding as a form of economic stimulus by keeping their employees on the payroll. I have assisted and consulted several clients that are small business owners along with some not-for-profits in and around the Buffalo Niagara Region all of which have obtained PPP loans.

The application process is pretty straight forward provided all required loan documentation was available. I would start by collecting all 4 quarterly Federal Forms 941 for the calendar year 2019 along with the 1st quarter Form 941 for the calendar year 2020. These forms report wages paid by quarter. I would also consider including Federal Form W-3 for 2019, which details and should agree with the total wages reported on the previous quarterly Federal Forms 941. The purpose for this is to substantiate wages paid to employees and are a factor in the legible amount of the loan.

If a business or not-for-profit has independent contractors in place rather than employees and documents payments through a Federal Form 1099 MISC, they should collect all such federal 1099 forms paid in 2019 along with their Federal Form 1096 filing for 2019 to include as the basis to calculate the aggregate payroll costs for the past 12 months for employees whose principal place of business is within the United States. If a sole proprietor were to apply for a PPP loan, the best source of income data would be their Federal Schedule C filing pertaining to the Federal Form 1040 filing.

Once that financial ‘payroll’ data has been collected you must aggregate any compensation paid to an employee or independent contractor/sole proprietor in excess of $100,000 paid over the last 12 months as these are a subtraction from the payroll calculation for eligibility amounts. After compiling the total eligible payroll factor, you would need to divide this amount by 12 for a monthly average and multiple this average by 2.5 to determine the eligible PPP loan amount that could be requested.

Also, it is especially important to substantiate the business applying for the PPP loan. This would include a proper taxpayer identification number, address of the business, type of business industry, employee headcount, and ownership of the business. Ownership could be a single owner or multiple partners and a drivers’ license is needed to confirm and validate identity. As a side note, multiple partners (those with greater than 20% ownership) are of particular consideration.

Lastly, make sure a bank account is included on the application so money can be directly deposited into an account. We hope this helps in answering some PPP calculations and loan documentation topics. Please advise any questions that you may have and thanks again for the opportunity to share our views and thoughts on this subject matter.

In a subsequent email, I explained my interpretation of the $100,000 cap components:

My interpretation of the definition of the $100,000 cap or excluded from the payroll costs aggregator is strictly compensation, health care and retirement benefits. I would define compensation to be these components: salary, wages, overtime wages, commissions, tips, paid time off and bonus pay. Stock options could also be an ingredient in the definition of compensation but I would not think this would be applicable as the PPP was initiated for small businesses.

The payment and not the accrual of health care benefits including insurance premiums along with the payment/funding of retirement benefits would also be applicable within this calculation of the $100,000 cap excluded. I have applied my interpretation for compensation for the eligible total amount and the cap excluded to a combination of my clients, as well as some not-for-profits that reached out to me. Fourteen of these organizations have received PPP funding prior to the fund being exhausted.

I believe and have heard that some banks might be taking an alternate approach and defining payroll costs to include not only the above items listed but also FICA taxes, however, this is a tax and not what I would define as compensation paid to an employee. The best bet is to check with your bank to make sure what their interpretation of payroll costs is under their lending calculations.

Furthermore, I cannot stress enough the importance of small businesses having up-to-date bookkeeping and accounting records. It is critical for not only timely financial reporting, income tax matters, and banking processes but when opportunities for assistance arise a small business owner should not have to stress and scramble to complete such vital financial processes.

If you have any questions regarding the points mentioned above, or assistance preparing the PPP loan documentation, please don’t hesitate to reach out! Our small business accountants would be happy to help with any of your needs. We serve Buffalo, NY, and the surrounding areas. Contact us today.

Resources for Small Business Owners Amidst CARES Act

Due to the feedback I received from clients, I decided to turn an email I sent into a blog post, to allow for easy access and updates, as the situation evolves and information is made available. I will keep this post updated with the most current guidance available. Most (state) resources mentioned are specific to New York, so be sure to look into your specific state guidelines.


The CARES Act just passed, rolled out several initiatives. Among these, it extended unemployment to business owners.  I’m not sure of the specifics regarding what information you’ll need to file, but I believe it is based on previous income. I would expect them to ask for Profit & Loss Statements (P&Ls) or previous year tax returns. Here is the link to the NY DOL site that you can use:


The NY DOL released some helpful hints for self-employed individuals when filling out the online application for Unemployment:


Additional Information has just been rolled out addressing the influx of business owners, independent contractors, and sole proprietors. Here’s a PDF document that distinguishes who is eligible for Pandemic Unemployment Assistance (PUI)


Finally, here’s a flowchart showing how all the programs interact:

UI Flowchart.png


There are also a few loan programs available through the US Small Business Administration (SBA).  The first, and more widely known of these programs is the SBA’s Economic Injury Disaster Loans (EIDLs).  This application can be found at the following link:


There is an SBA Economic Bridge Loan that could be available for qualifying small businesses while the above-mentioned EIDL is processing.  A guide to these bridge loans can be downloaded at this site:


Another loan (and the highlight of the CARES Act) is the Paycheck Protection Program (PPP) that can provide forgive-able loans to businesses that maintain (or hire back) their employees during this emergency.  Some details can be found on the flyer attached to the following link:


The SBA says, “You can apply for this loan through any SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. The regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating in the program.”

Here is the link to the PPP Sample Application Form:



I also found an informative article published by the NY Times that answers a long list of FAQs about the Stimulus Package, including relief checks for individuals and benefit eligibility.


The US Chamber of Commerce also published a great article highlighting more specifics on the programs mentioned above, as well as some of the tax changes/implications for businesses:



During this time, I recommend negotiating with creditors/vendors to get reduced or deferred payments on critical bills. Here is a link to an email template that I have used successfully with my vendors:


I hope this helps navigate the crowded waters of relief programs and funding.  There will certainly be tough times ahead, making it critical to stay in touch and take advantage of the resources out there.

Don’t hesitate to reach out if you need anything! We provide a variety of services for your business in the Buffalo area. Count on us for financial advice, tax returns, bookkeeping, and more.

Pandemic Vendor Forgiveness Template

This is an effective email template for small businesses in New York State (or any other declared disaster area) to use when requesting relief from certain vendor payments. I used it successfully when requesting rent deferment at one of my businesses, and thought others could use it as well. (Be sure to change the Governor name for use outside of NY).

In light of recent events surrounding the COVID-19 virus, as well as the executive order by Governor Cuomo, the [INSERT BUSINESS NAME] has decided to temporarily close its doors to the public.  During this time, we are working diligently to control operational overhead expenses and would like to request to defer payment and finance charges during this time period.  This will play a critical role in ensuring the continuity of this organization, and safeguarding the livelihood of the (nearly [INSERT # EMPLOYEES) employees that rely on this business.  We hope to continue to have a positive relationship, and will always be transparent with our intentions.



Sales Tax in New York State

When I was running my first business, I always forgot about the sales tax deadlines.  First of all, I was really busy working non-stop in my business, I didn’t have any office staff, and the quarterly deadlines didn’t even start at the beginning of the calendar year (making it hard to forget).

Sales tax was the furthest thing from my mind and I paid countless late fees ($50 bucks a quarter, plus I lost my vendor credit)!

So to help other business owners avoid this same pitfall, I thought I’d list some general information to keep things straight.

1.  How do I know when to file? 

Generally, you are a Quarterly filer if:

  • You have not been notified that you are an annual filer

  • your taxable receipts, purchases subject to use tax, rents, and amusement charges are less than $300,000 during the previous quarter.

  • (Most vendors file quarterly when they first register to collect sales tax.)

You file Annually if:

  • You owe $3,000 or less in tax during an annual filing period

You file part-quarterly (Monthly) if:

  • you file an annual or quarterly sales tax return and:

    • your combined total of taxable receipts, purchases subject to tax, rents, and amusement charges is $300,000 or more in a quarter, or

    • you are a distributor as defined under Article 12-A of the Tax Law and you have sold a total of 100,000 gallons or more of petroleum products (taxable or nontaxable).

I’m sure that most of you reading this land in the Quarterly Filer category.  For more information on this, don’t hesitate to contact us!

2.  What are the filing deadlines?

For Quarterly filers:

  • Q1: March 1 through May 31 DUE June 20

  • Q2: June 1 through August 31 DUE September 20

  • Q3: September 1 through November 30 DUE December 20

  • Q4: December 1 through February 28/29 DUE March 20

For Annual filers:

  • March 1 through February 28/29 DUE March 20

3.  How do I file?

When I was in business, everyone was still paper filing.  Since then, times have changed.  Filers are now required to file electronically if they meet these conditions:

  1. Prepare tax documents themselves, without the assistance of a tax professional;

  2. Use a computer to prepare, document, or calculate the required filings, or are subject to the corporation tax e-file mandate; and

  3. Have broadband internet access.

This is just a quick reference guide, but for more information, or to have Buffalo Tax Strategies prepare your NYS sales tax filing for you, contact us!