Since the American Rescue Plan Act (ARPA) was enacted on March 11, the Internal Revenue Service has distributed approximately 159 million COVID-19 economic impact payments (EIPs). Those deliveries come to more than $376 billion. This third round of coronavirus pandemic payments, worth up to $1,400 per person, has been going out in batches. Recipients include taxpayers who've filed 2020 returns, Social Security recipients, and veterans and their families. Still, there are some folks who aren't on the IRS' EIP delivery list. These are, for the most part, people who haven't file a tax return because they're not legally required to... Read more →
Politics
It's likely to be déjà vu all over again for IRS Commissioner Charles Rettig, testifying here in March before a House tax panel, when he goes before the Senate Finance Committee on Tuesday, April 13. Not to get your tax deadline hopes up too much, but Internal Revenue Service Commissioner Chuck Rettig is testifying tomorrow, April 13, before the Senate Finance Committee (SFC). The The last time he talked to lawmakers, it was in March to Representatives on the Ways and Means (W&M) Oversight Subcommittee. It was then that Rettig put the kibosh on the possibility that the IRS would... Read more →
U.S. Treasury Secretary Janet Yellen elaborated on the Biden Administration's fiscal year 2022 budget request for the IRS. (U.S. Treasury photo via Facebook) The White House last week kicked off the fiscal year 2022 budget process by sending a letter to the House Appropriations Committee chairman and issuing a press release on President Joe Biden's funding priorities. The official 2022 discretionary budget request announcement lists 11 areas that also got attention during the presidential campaign, such as education, medical research, housing, and civil rights. In addition to the information issued by 1600 Pennsylvania Avenue, Treasury Secretary Janet Yellen also elaborated... Read more →
Sometimes it's worth the extra time and effort to file an amended tax return. In its regular email to tax professionals last week, the Internal Revenue Service remined them that their clients who filed 2020 returns before the American Rescue Plan Act (ARPA) excluded a portion of unemployment from tax don't need to file amended returns. The IRS says it will recalculate the tax liability of these filers, taking into account the tax they paid on $10,200 per person in unemployment benefits before ARPA's March 11 enactment date. If the early-filing taxpayers are due a refund, the IRS will automatically... Read more →
Archer Daniels Midland is one of the major corporations cited in a new report of companies that paid no taxes in 2020. The Biden Administration's infrastructure plan has ramped up the perennial tax debate between Democrats and Republicans. The White House wants to increase tax collections on companies to pay for the proposal, dubbed The American Jobs Plan. And that approach is getting some support from a recent Institute on Taxation and Economic Policy (ITEP) report. The Washington, D.C. nonprofit found that 55 of the largest U.S. companies paid nothing in federal income taxes last year. The $0 tax payments... Read more →
New York last week became the latest state to legalize recreational marijuana. New Yorkers now can possess up to 3 ounces of cannabis for recreational use. But don't expect to pick up some of that legal weed any time soon. While using marijuana is legal for adults age 21 or older, the process of approving dispensaries and establishing precise regulations and tax rules for cannabis distribution will take a while. 17 cannabis OK locales: Still, the Empire State's move is a big one. New York is the 17th jurisdiction to join the legal cannabis club. The toking fraternity includes 16... Read more →
You lost your job last year and collected unemployment. You knew that the benefits are taxable income, so when you filed your 2020 tax return earlier this year, your calculations made sure that Uncle Sam got his piece of your unemployment money. Then along came the American Rescue Plan Act (ARPA), signed into law on March 11, and its provision excluding a portion of jobless benefits from tax. How do you get your overpaid unemployment taxes back? This week, the Internal Revenue Service followed up on its earlier announcement that filers shouldn't amend their 2020 returns because of the new... Read more →
You've kept a close eye on your nest egg. If some of it is in tax-deferred accounts, required minimum distributions are back in 2021. If you're an older retirement account owner and freaking out because the April deadline for your first required minimum distribution is almost here, take a breath. The convergence of coronavirus pandemic tax considerations and a major retirement law's changes mean that there's no April 1 required withdrawal in 2021. No fooling. But you'll still have to make your regular 2021 RMD by the end of the year. RMD refresher: Let's start with a quick refresher on... Read more →
Photo: Ketut Subiyanto from Pexels The Paycheck Protection Program (PPP) was created to help small businesses continue to operate in the face of COVID-19 complications. Its execution, however, has been a mixed bag for many businesses and their tax pros, not always working as smoothly as its creators had hoped. Still, the forgivable loan program has its fans. And those worried about its impeding March 31 expiration can rest easier. The Senate last week agreed to the House bill extending the PPP. President Joe Biden is expected to sign it. When that's done, borrowers will be able to apply for... Read more →
IRS Commissioner Chuck Rettig's testifying on March 18, 2021, before the House Ways and Means Subcommittee on Oversight. Watch the full hearing at the Ways and Means' hearings YouTube channel. When large swaths of the world shut down last year in response to COVID-19, it helped make the literal life-or-death medical situation less devastating (relatively speaking). But the coronavirus closures also created damaging economic fallout. Businesses shuttered their doors, some permanently. Associated companies took hits. Employees lost their jobs. In the United States, federal coronavirus relief legislation provided some help. However, it also produced unwelcome side effects. Surprise unemployment taxes:... Read more →
Some people got less COVID-19 relief money because the IRS took some to pay other debts. Every year, some taxpayers find the tax refunds the Internal Revenue Service sends them are less than they expected. The usual reason for the shortfall is that the federal refund amounts were offset by other debts, such as unpaid taxes, student loans or delinquent child support. That situation cropped up last year when the Recovery Rebate Credit was created as part of COVID-19 relief legislation. The rebates were paid in advance to millions of taxpayers. And in some, but not all, instances, economic impact... Read more →
This year's annual federal tax return filing deadline has been moved from April 15 to May 17. Yep, for the second consecutive year, our 1040 forms won't have to be in or on their way to Uncle Sam's tax collector until after the traditional deadline. And yes, COVID-19 is the reason, largely because of tax law changes and backlogs related to the pandemic. But many of those who had urged an automatic delay for Tax Day 2021 are not impressed by the IRS action. Sure, we now have a bit more time to file our personal returns, but little more.... Read more →
DonkeyHotey via Flickr Around 90 million COVID-19 economic impact payments have been distributed in less than a week since the bill authorizing them was enacted. Those payments total more than $242 billion, according to the Internal Revenue Service. In announcing the relief payment data today, the IRS also noted that more payments per the American Rescue Plan Act (ARPA) will be going out in the coming weeks. All funds available today: Most of this first batch of payments, dubbed EIP3 since they are the third such pandemic financial relief effort, were sent by direct deposit. While some of these deposits... Read more →
Updated on March 21, 2021, to reflect that the IRS plans to automatically calculate any tax refunds due unemployment recipients who already filed their 2020 returns and paid taxes on their full benefits amount before the $10,200 tax exclusion was included in the American Rescue Plan Act (ARPA) enacted on March 11. Updated on March 23, 2021, to reflect revised IRS changes to filing instructions in connection with ARPA's partial unemployment tax exclusion. The good news here is that the IRS now says those says jobless benefits you collected don't count toward the $150,000 income threshold that determines eligibility for... Read more →
A scene from "Judas and the Black Messiah," which today received six Oscar nominations. The filmmakers also took advantage of state tax breaks to make the movie. (Photo courtesy Warner Bros. Pictures) The 2021 Oscar nominees were announced today. Let the arguing begin. I'm generally happy with the nominations, especially since two of my favorite and (I believe) overlooked performers were nominated in the Best Actor in a Leading Role. Oh, you want names? Sure: Riz Ahmed for "Sound of Metal" and Steven Yeun for "Minari." However, disagreements about the nominees and the ultimate winners in all Academy of Motion... Read more →
U.S. Treasury check image courtesy frankieleon via Flickr Some people have already received the third economic impact payment (EIP), which is $1,400 per person, as authorized under the just enacted American Rescue Plan. Of course, we're already hearing some grumbling. That's to be expected any time the Internal Revenue Service, which once again is tasked with distributing the relief money, is involved. But at least initially the IRS seems to have the system down after having done this two previous times. So now we wait. Hopefully we don't have to wait too long. And while we wait, today's Saturday Shout... Read more →
Last March, parents were frantically searching for day camps to enroll their kiddos once school let out for the summer. Then COVID-19 arrived. Most camps shut down or dramatically pared back operations and parents added teacher and summer activity director to their already long list of de facto titles. We're still not sure whether or how many summer day camps will resume this year, but things are looking better thanks to expanding coronavirus vaccinations across the country. That means that parents might be able to once again take advantage of the child and dependent care credit in connection with certain... Read more →
The American Rescue Plan is now on its way to President Joe Biden. As soon as Biden signs it, millions of taxpayers can look forward to the third COVID-19 economic relief payment. And taxpayers who've already filed their 2020 returns and paid tax on unemployment benefits they received last year also can get ready to file amended returns. That's because during its consideration of the bill last week, the Senate included a provision that made the first $10,200 in unemployment benefits tax-free. UPDATE, Thursday, March 11, 2021: Biden signed the bill into law early in the afternoon today. He originally... Read more →
The Internal Revenue Service is still working its way through millions of pieces of correspondence delivered last year, so the last thing it needs is more. But it's getting it. Federal lawmakers and organizations representing members of the tax community have mailed letters over the last week to the U.S. Treasury and IRS urging the delay this year of April's usual Tax Day. April 15 is still THE day: Tax returns so far are still due on April 15, the traditional filing deadline. And the IRS Commissioner Charles Rettig is holding to that date. For now. During a March 3... Read more →
Happy International Women's Day (IWD), the global commemoration and celebration of women's successes. But it's also recognition that more work is needed before gender equality is achieved. Organized efforts to focus on women's accomplishments and goals have been conducted globally since 1911, with the official March 8 date set in 1914. This year, the IWD theme chosen by the United Nations is, not surprisingly, Women in leadership: Achieving an equal future in a COVID-19 world. The official IWD website is highlighting the #ChooseToChallenge on social media. #HappyInternationalWomensDay We can choose to challenge & call out gender bias & inequality. We... Read more →