More Government Monetary Relief — for Individuals and Companies

1040 tax form with calculator and note lying on wooden desk with place for text

{6 minutes to read} The act of forgiveness is becoming more popular within certain branches of government. One of the most recent acts of forgiveness was extended by the Biden–Harris Administration, however, forgiveness may not be extended to all.

In this article, you will find information related to the following:

  • Penalty abatement for individuals and companies (not much time left)
  • Student Debt Relief Plan
  • Energy Efficiency Credits (Residential Clean Energy Credit)
  • Energy Efficient Home Improvement Credit (previously known as Residential Energy Efficient Property Credit)

The last two are generally available to homeowners.

Penalty Relief for Certain Taxpayers (Individuals and Companies)

As you may already know, the IRS continues to be behind in processing tax returns. One reason is the effect of the pandemic on its operation and personnel. As a result, penalties for late filing of certain tax returns continue to mount. The IRS is extending a penalty waiver if you filed your returns late — that is, failure to timely file a tax return. Tax years 2019 and 2020 are eligible.

What tax forms are eligible for the penalty waiver?

1. For individuals – Forms 1040, 1040NR, etc.

2. For businesses – Forms 1120, 1120-H, 1065, and 1120-S. (The latter two forms are for pass-through entities.)

3. Foreign reporting such as information returns.

The above are some of the returns that are eligible to receive this penalty waiver. 

To be able to take advantage of the waiver, the returns are to be filed by September 30, 2022. (It is important to note that the penalty waiver does not apply to the failure to pay tax liability due, but only to the failure to timely file penalty). This means if the taxes owed are not paid in full, late payment penalties & interest will accumulate until the balance is fully paid. There is no grace extended by the IRS for such a penalty.

Student Debt Relief Plan

On August 24, 2022, President Biden announced the Student Debt Relief Plan for qualified individuals with existing federal student loans with the U.S. Department of Education. This is a one-time debt relief. The relief amount is up to $20,000 in student loans for Pell Grants and $10,000 in relief for those who did not receive Pell Grants.

•Who qualifies for this debt relief?

According to the Federal Student Aid, an office of the US Dept. of Education (DoE):

 “… you’re eligible for student loan debt relief if your annual federal income was below $125,000 (single individual or married filing separately) or $250,000 (married, filing jointly or head of household) in 2021 or 2020.”

As with most federal government types of debt relief or credit, your tax returns are a required document in the application process. If you feel you meet the income threshold and have not yet filed your 2020 or 2021 tax returns, I encourage you to file them if you would like to take advantage of this benefit.

•I may qualify, when may I submit my application?

The DoE website notes that “applications will be available online by early October 2022.” Please click here to see the details.

 Energy Efficiency Credits for Homeowners

A cause worth acting upon. With the continued increase in environmental sensitivity, there is a greater awareness of its impact on communities and the world at large. Local, federal & global governments have been encouraging us to do our part. They, too, are doing their part to help people. 

In the final topic of this article, I will be discussing two ways the federal government is reimbursing (“tax credit towards your tax liability”) a portion of the cost spent on certain energy-efficient improvements to your home. The credits are the Energy Efficient Home Improvement Credit & the Residential Clean Energy Credit (previously known as the Residential Energy Efficient Property Credit). Some credits have been resuscitated under the Inflation Reduction Act signed by President Biden on August 16, 2022. Most of these credits were set to expire in 2023, however, under the Act, they are now extended through 2034.

Residential Clean Energy Credit (previously known as the Residential Energy Efficient Property Credit)

This credit is not necessarily new, however, the credit amount varies from year to year. This year the amount for installing clean household energy such as solar, wind, or geothermal has been raised from 26% to 30% through 2032, however, for 2033 & 2034 the credit drops back to 26%. 

Visit the IRS website for FAQs related to the Residential Clean Energy Credit.

*At the time this article was sent, the dates had not yet been updated on the IRS website * 

Energy Efficient Home Improvement Credit (previously known as the Nonbusiness Energy Property Credit)

Under this credit, homeowners could claim a lifetime credit of 10% of the costs (not to exceed $500) of qualified improvements such as energy-efficient installation of windows, doors, etc.

Under the Act, the credit is 30% of the cost of qualified improvements and now includes new items such as biomass stoves and boilers, electric panels, etc.  For the tax year 2022, the present credit of 10% remains. The new 30% credit begins in 2023, so if you are planning to make any of the above improvements, waiting until 2023 may be more lucrative. 

Rocky Mengle, an editor at Kiplinger did a great article on these credits – read more here

Energy efficiency is more than simply finding ways to lower our bills. According to the U.S. Environmental Protection Agency (EPA), it offers various benefits such as lower greenhouse gas (GHG) emissions and other pollutants, and decreased water use, among others.

In closing – while we are on the topic of the environment, multiple states in the US have experienced natural disasters that are uncommon in such regions. Just one year ago, the remnants of Hurricane Ida caused massive flooding through the tri-states. In some areas, the flooding was partially due to the lack of maintenance of the local storm drains. This is a call to action on our part. September is National Preparedness Month. Consider calling your local government office and requesting that they come out and clean the drains. Here in NYC, you can call 311. The agency is the NYC Department of Environmental Protection. 

Thank you for reading, I hope you find this information useful.

With gratitude,


Nadine Riley, CPA
Founder, Masterpiece Accounting Group
Phone: (212) 966-9301

The Masterpiece Accounting Group web, blogs, and articles are not rendering legal, accounting, or other professional advice. Tax strategies and techniques depend on your specific facts and circumstances. You should implement the information in this newsletter only with the advice of your tax and legal advisors.