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One thing nobody's mentioned yet - make sure you have SOLID documentation about those 4-5 weeks you were shut down. My accountant said the IRS is really scrutinizing the "full or partial suspension" eligibility lately. You should have copies of: 1. The actual government orders that forced you to close 2. Any communications to employees/customers about the closure 3. Financial records showing the impact during that period 4. Documentation of when/how you reopened and any restrictions Don't just rely on your memory of being closed - the IRS wants to see the actual orders that mandated it. This has been a huge issue for some businesses that claimed ERC but can't produce the documentation to back it up.
Thanks for this advice. I definitely have the county health department order that forced us to close completely except for takeout. We kept all our communications too since we were sending weekly updates to our staff. Would bank statements showing the revenue drop be helpful too, or should I focus more on the government orders themselves?
Bank statements showing the revenue drop would definitely be helpful as supporting evidence, but the government orders are the primary documentation you need for the "full or partial suspension" test. Keep both! The revenue drop actually relates more to the other qualifying test (the gross receipts test), which requires a 50% reduction in quarterly gross receipts for 2020 compared to the same quarter in 2019. But even if you don't meet that test, the suspension of operations from the health department order should qualify you on its own. Make sure you also document any capacity restrictions or operating limitations you faced after reopening. Things like reduced seating capacity, mask requirements, social distancing requirements, etc. can qualify as a "partial suspension" even after you were allowed to reopen. This documentation could potentially help you qualify for additional quarters beyond just the complete shutdown period.
Just be careful with these ERC claims! My brother's company filed for ERC after PPP and got hit with an audit. The IRS is really cracking down on this area lately. Not saying you shouldn't claim it if legitimate, but definitely get professional guidance before filing.
Just wanted to add that AMTI is one of those things that becomes relevant in very specific situations. The main triggers that cause regular people to suddenly have to deal with AMT: 1. Exercising incentive stock options (ISOs) 2. Large long-term capital gains in certain brackets 3. Having multiple children AND a high income 4. Claiming certain business depreciation methods For most W-2 employees with standard deductions, you'll never have to worry about this. TaxAct and other software calculate it automatically for you anyway.
Is AMTI the same as AMT? Or is one a calculation used to determine the other? So confusing...
AMTI (Alternative Minimum Tax Income) is what's used to calculate your AMT (Alternative Minimum Tax). AMTI is your income figure after certain adjustments and with fewer deductions allowed than in the regular tax system. The software uses your AMTI figure to determine if you need to pay AMT. First it applies your exemption amount (the number OP mentioned), then calculates the tax on what remains. If that tax amount is higher than your regular tax calculation, you pay the AMT instead. Think of it as two parallel tax systems running side by side, and you pay whichever results in the higher amount.
I had this exact issue last year! The way my accountant explained it to me was: imagine there are two different ways to calculate your taxes. The normal way with all the standard deductions, and the AMT way which allows fewer deductions. The government makes you calculate both and pay whichever is HIGHER. AMTI is just what your income looks like under that second calculation method. The "exclusion" is similar to a standard deduction for the AMT calculation.
22 Don't sleep on community colleges! My local CC offers a basic tax preparation course for like $175. I took it last year and learned so much practical info. The instructor was a retired IRS agent and gave us real-world scenarios to work through. Way more hands-on than just reading stuff online.
1 That sounds perfect! Did the course cover self-employment taxes too? Also, was it a one-day thing or spread out over weeks?
22 The course definitely covered self-employment taxes! That was actually a whole module where we learned about Schedule C, business deductions, home office rules, and self-employment tax calculations. It was really thorough. It was spread over 6 weeks with one 3-hour class per week, which was perfect for absorbing the information gradually. We'd learn concepts one week and then apply them with practice scenarios the next week. Much better than trying to cram everything into a weekend workshop. Most community colleges offer similar programs, especially between September and January before tax season starts.
9 For free resources, don't forget YouTube! I learned tons from "The Taxable Talk" channel. The guy breaks down complicated tax topics into simple 5-10 minute videos. Way less boring than reading IRS publications.
11 If you're stuck and don't want to use those services, here's a direct way to find it: In TurboTax Free, after entering your income info, go to: 1) Federal Taxes 2) Deductions & Credits 3) Look for "Recover Rebate Credit" or "Stimulus Payment" If you still don't see it, check if you accidentally told TurboTax you already received the payments. You might need to go back and change your answer to the question "Did you receive Economic Impact Payments in 2020?
17 I found it! It wasn't under Deductions & Credits for me though. It was under "Other Tax Situations" on my version. Thanks for pointing me in the right direction!
3 Anyone else having an issue where TurboTax keeps saying I'm not eligible for the stimulus money even though I know I am? I was claimed as a dependent in 2019 but not in 2020, and I've checked all the requirements.
NebulaNinja
Your brother should know that even if the IRS doesn't immediately come after him for not filing, it can cause problems later in life. I didn't file for two years during college because I thought my income was too low to matter. Fast forward five years, and I couldn't get approved for a mortgage because the lender required tax transcripts for the past seven years. Had to file those returns retroactively and it delayed our home purchase by months. The IRS eventually creates a substitute return for non-filers, but they don't include any deductions or credits you might be eligible for. They basically assume worst-case scenario for your taxes. Tell your brother it's much easier to deal with this now than years down the road.
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Luca Russo
ā¢Did you get penalized when you finally filed those old returns? Was it complicated to do the back filing?
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NebulaNinja
ā¢I didn't get penalized because I was actually owed refunds for both years - turns out I had way too much withheld from my paychecks. There's generally no penalty when the IRS owes you money, but you only have 3 years to claim those refunds. Back filing wasn't too complicated, but it was annoying having to track down old documents and W-2s from employers I no longer worked for. I had to contact the IRS for wage transcripts since one employer had gone out of business. The whole process took about a month to gather everything and file. If I'd owed money, I would have faced failure-to-file penalties plus interest for those years.
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Nia Wilson
Has anyone mentioned to this kid that if he's due a refund, he's literally leaving his own money on the table? When I was 18, the only reason I filed taxes was because I got back almost all the federal taxes that had been withheld from my part-time job. It was like a bonus check!
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Mateo Sanchez
ā¢This is such an important point! My first job I made about $4000 over a summer and got back almost $300 in federal taxes. For an 18 year old that's a nice chunk of change just for filing a simple tax return.
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