In this issue:
  • Tax Corner: Rebates for IL Taxpayers, Student Loan Debt Relief Taxability, and Changes to the Clean Vehicle Credit
  • Tax News: Statute of Limitations on PPP and EIDL Fraud Extended
  • Client FAQs: ERCs
  • New CPA Client
  • Check This Out
  • Important Tax Dates
Goodbye 2021 Taxes, Hello 2022!
We are about to say adios to the 2021 tax filing season with the final 10/17 filing deadline! But there’s not much downtime, since we now turn our attention to Fall Tax Projections. Be on the lookout for an email from your accounting team member to schedule your Fall Tax Planning Session.
There’s a lot going on in the tax world these days, and we have included some important updates and info on rebates, student loan forgiveness, EV credits, and IRS penalties below.
This month, we also have a staff update to share. Aaron is leaving CPA to take a tax position with a Houston-based CPA firm. We have very much enjoyed him as a team member for the past 4 years and wish him much success in his new endeavors.
And we are pleased to announce that Shawntelle Taylor, CPA, will be joining our firm in the role of Sr. Accounting Manager. She has extensive experience working with small businesses from an accounting and tax perspective. She will work remotely from Pittsburgh, PA. We are excited to have her on board!
Please let us know if there’s anything we can do for you as we head toward the end of the year!
Susan Clarke & The CPA Team
Tax Corner: Important Updates
Property Tax and Income Tax Rebates for Illinois Individual Taxpayers – What you need to know
The Illinois Family Relief Plan (Public Act 102-0700) provides for one-time individual income and property tax rebates to be issued to taxpayers who meet certain requirements. You may be eligible to receive one or both of these rebates:
  • Property Tax Rebate – For taxpayers with an adjusted gross income for the 2021 taxable year below $250,000 (or $500,000 for returns with a federal filing status of married filing jointly), the state of Illinois is providing a property tax rebate in an amount equal to the property tax credit you qualified for on your 2021 return, up to a maximum of $300.00.
  • Individual Tax Rebate – Illinois residents with an adjusted gross income on the 2021 Form IL-1040 under $200,000 (if filing as a single person) or $400,000 (if filing jointly), may be eligible to receive an income tax rebate of $50.00 per person ($100.00 per couple for married filing jointly) and $100.00 per dependent (limit of three dependents).
No action is required to receive these rebates if you have already filed your Illinois income tax return for 2021 (IL-1040) and if you claimed a property tax credit on your Illinois income tax return for  2021 (IL-1040) using Schedule ICR.
Rebate payments will be combined and sent automatically using the same method that original refunds were transmitted if they were sent directly to the taxpayer by the State of Illinois.
Forms & additional information, including the status of your rebates, available at tax.illinois.gov/rebates >>
Student Loan Forgiveness May Be Subject to State Tax (but not in Illinois)
The Student Debt Relief Plan includes one-time student loan debt relief of up to $20,000 to Federal Pell Grant recipients and up to $10,000 in debt relief to non-Pell Grant recipients. Borrowers with loans held by the U.S. Department of Education are eligible for this relief if their individual income is less than $125,000 (or $250,000 for households).
How does this impact taxes? Usually, a discharge of indebtedness counts as income and is considered taxable in the year it is received. However, the American Rescue Plan Act (ARPA) stipulates that the forgiveness of student loan debt between 2021 and 2025 does not count toward federal taxable income. Most states conform to the Federal treatment and will not be taxing student debt relief.
However, there are a few states that do not conform to the Internal Revenue Code (IRC) and may tax the amount discharged. They are Arkansas, Indiana, Minnesota, Mississippi, North Carolina, and Wisconsin. California’s stance is still unclear. In the coming weeks, these states may issue guidance around the taxability of student debt relief, but currently, it is still a moving target.
To read more about the state taxation of student debt relief, click here >>
To learn more about Student Loan Debt Relief, click here >>
Changes to the Tax Credit for Electric Vehicles
The IRS currently provides a tax credit of up to $7,500 for purchasing certain new electric vehicles. The Inflation Reduction Act of 2022 (the Act) makes several changes to the credit, which has been renamed the Clean Vehicle credit. Some are favorable, but some may make it harder to get a tax credit. Here’s what you need to know about the upcoming changes.
  • Vehicles sold after 8/16/22 only qualify for the Clean Vehicle credit if their final assembly occurs in North America. This has drastically reduced the number of vehicles that qualify. You can check if your vehicle meets the final assembly requirement by entering the VIN at the U.S. Department of Transportation’s VIN decoder.
  • If you entered into a written binding contract to buy a new qualifying vehicle before 8/16/22, but don’t take possession of it until on or after 8/16/22, you can claim the credit based on the rules that were in effect before the Act. The final assembly requirement does not apply.
  • If you buy and take possession of a qualifying vehicle after 8/16/22 and before 2023, the final assembly requirement applies, but the additional limits and requirements for the credit (discussed below) don’t apply.
For vehicles purchased and placed in service after 2022:
In addition to meeting the final assembly requirement, the amount of the Clean Vehicle Credit received will be based on meeting one or both of two new requirements:
  • Battery Life Requirement: Vehicles that have a minimum battery capacity of seven-kilowatt hours (increased from four under previous rules) will be eligible for a $3,750 credit.
  • Critical Minerals Requirement: If at least 40% of the value of the battery’s applicable critical minerals have been extracted or processed in the U.S. or in a country with which the U.S. has a free trade agreement, or recycled in North America, the vehicle will qualify for a $3,750 credit.
Vehicles that meet both requirements will qualify for the full $7,500 credit.
Two new limits to the Clean Vehicle Credit will also be applied starting Jan. 1, 2023:
  • The credit is not allowed for vehicles with a Manufacturer’s Suggested Retail Price (MSRP) over $55,000 ($80,000 for vans, sport utility vehicles, and pickups).
  • The credit is not allowed for taxpayers with Modified Adjusted Gross Incomes (MAGI) over $300,000 (married filing jointly or surviving spouses), over $225,000 (for heads of household), or over $150,000 (for other taxpayers).
A used electric vehicle bought after 2022 can now qualify for a $4,000 credit if it meets these requirements:
  • Your MAGI for the year of purchase is under $150,000 for a joint return or surviving spouse, $112,500 for a head of household, or $75,000 for others;
  • The used vehicle’s model year is at least two years earlier than the calendar year in which you buy it;
  • It generally meets the requirements for the Clean Vehicle credit for new vehicles.
  • It is sold by a dealer for $25,000 or less;
  • The sale is the first transfer since 8/16/22 to a qualified buyer other than the vehicle’s original owner;
  • And if the taxpayer has not been allowed a credit for a previously-owned clean vehicle during the three-year period ending on the sale date.
The bottom line? It might be better to buy an electric vehicle before the end of the year and you may benefit from checking the list of qualified electric vehicles before you buy one.


Client FAQs
The Employee Retention Credit (ERC) is a refundable tax credit against the employer’s share of certain payroll taxes for qualified wages paid to employees in 2020 and 2021. Businesses can still apply for the ERC by filing an amended Form 941X (Quarterly Federal Payroll Tax Return) for the quarters during which the company was an Eligible Employer.
How long do I have to claim the ERC credits? 
3 years from the due date of the original Form 941
How long does IRS have to audit 941s with ERC claims?
5 years from the date of the employer claiming the ERC
Say Hello to CPA’s New Client
Chrissy Collins Hair – As a hairdresser, barber, colorist, and curl educator for over 10 years, Chrissy is passionate about empowering humans and creating shapes through the art of hair. She works out of REM Salon in Logan Square.
Interesting Reads
Important Tax Dates & Deadlines
October 17, 2022
Extended Individual Tax Returns Due
December 15, 2022
C-corp Estimated Tax Payment Due
IL Entity Estimated Tax Payment Due
January 16, 2023
4th quarter 2022 Estimated Tax Payment Due
January 31, 2023
Deadline to send out W2s and 1099-NECs
Clarke Public Accounting | Website