by sreamercpa | Mar 18, 2021 | accounting-tax, COVID Relief Bill
Today many taxpayers woke up to find they had more money in their bank accounts thanks to the Third Round of Stimulus checks.
On March 11 President Biden signed the American Rescue Act (ARA) into law. The ARA provides up to $1,400 for eligible taxpayers ($2,800 per married couple) and an additional $1,400 per adult dependent children.
The stimulus payment is tied to your 2020 federal adjusted gross income (AGI) if you have already filed your 2020 return; or your 2019 AGI if you have not filed your 2020 return yet. The stimulus payment will phase out for single taxpayers with income between $75,000 and $80,000, heads of household with incomes between$112,500 and $120,000 and couples filing jointly with income between $150,000 and $160,000.
So if the Treasury Department has your bank account information on file, you should keep checking your bank account for your direct deposit. If your bank information is not on record, you will receive payment in the form of a paper check or debit card so keep an eye on your mail. And double check anything that looks like a credit or debit card.
by sreamercpa | Mar 9, 2021 | COVID Relief Bill
On Saturday 03/06/21 the US Senate passed their own version of the 2021 COVID relief bill, for a cost of $1.9 Trillion, which is expected to be passed by the House as soon as Tuesday 03/09/21.
Here are some key provisions:
- Direct payments of up to $1,400 per individual.
- Extension of $300 federal subsidy of weekly unemployment benefits to September 6, 2021.
- Up to $10,200 of unemployment benefits exempt from federal income tax.
- If you received unemployment benefits in 2020, you may want to hold off filing your tax returns until the bill is passed and the IRS (and software vendors) have the opportunity to incorporate the new law into the tax software.
- If you have already filed your return, or do not want to wait for the new changes, you will need to file an amended tax return to receive any additional refund you may be due as a result of the new law.
- Expansion of child tax credit, up to $3,600 for children under 6, and $3,000 for children up to 17.
- Expansion of the Earned Income Tax Credit.
- $14 Billion payroll support for U.S. Airlines as long as they do not furlough or cut employee’s pay rates through 09/30/21.
- Additional funding for Covid-19 vaccine distribution.
by sreamercpa | Mar 2, 2021 | accounting-tax, Cares Act
On February 27, 2021 the House of Representatives passed their $1.9 trillion stimulus plan. The bill was sent to the Senate and a vote is expected as early as Wednesday, March 3, 2021.
Here are some of the key provisions in the House bill:
Recovery rebates
The House bill provides individuals with a $1,400 recovery rebate credit ($2,800 for married taxpayers filing jointly) plus $1,400 for each dependent for 2021. As with the two recovery rebates enacted in 2020, the IRS will make advance payments, which the Service has been calling economic impact payments. The recovery rebate credit phases out for taxpayers with adjusted gross income (AGI) over $75,000 ($150,000 for married filing jointly) and uses 2019 AGI to determine eligibility unless you have already filed your 2020 return.
Child tax credit
The bill increases the amount of the credit to $3,000 per child ($3,600 for children under 6). The increased credit amount phases out for taxpayers with incomes over $150,000 for married taxpayers filing jointly, $112,500 for heads of household, and $75,000 for others.
Child and dependent care credit
The bill makes changes to the Sec. 21 child and dependent care credit, including making it refundable for 2021. The bill also increases the exclusion for employer-provided dependent care assistance to $10,500 for 2021.
Unemployment Compensation
One item not included was the Durbin/Axne proposal to exempt unemployment compensation benefits received from taxable income. It is unlikely that this proposal will be included by the Senate. However, as mentioned 2 weeks ago, Maryland passed SB496 providing a subtraction from Maryland income for certain unemployment insurance benefits.
If you have/are receiving unemployment benefits for 2020, we strongly recommend that you hold off in filing your 2020 tax returns until the Maryland changes can be implemented in your tax preparation software. If you have already filed your 2020 return, you may need to file an amended tax return to recover any Maryland state and local income tax paid on your benefits.
by sreamercpa | Feb 22, 2021 | accounting-tax
Last Monday (02/15/21) Governor Hogan signed THE RELIEF ACT. Here are a few key highlights:
1) Direct payments to Marylanders who filed for the earned income credit in 2019.
2) Payments of $1,000 to individuals with unsettled unemployment claims.
3) Repeal state and local income tax on unemployment benefits received.
4) Businesses can keep sales tax collected up to $3,000 per month for three months.
by sreamercpa | Jan 25, 2021 | IRS
One new provision of the CARES Act passed this past April allows taxpayers to claim a deduction for up to $300 for charitable donations, even if they are taking the standard deduction. However, the requirement for contemporaneous acknowledgement from the donee organization is still required if you donated more than $250 in total during the year to a single organization.
