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 →
Shout Out
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 →
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 →
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 →
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 →
The news is good if you're eligible for the third coronavirus financial relief payment. The Senate today, Saturday, March 6, approved the Biden Administration's American Rescue Plan. UPDATE, Thursday, March 11, 2021: Biden signed the bill into law early in the afternoon today. He originally been scheduled to sign the bill on Friday, after it had been reviewed again and printed. However, the White House decided to move up Biden penning his enactment signature to the enrolled bill after it arrived at the White House on the night of Wednesday, March 10, so that its help provisions could begin. The... Read more →
While GameStop's valuations captured a lot of attention because so-called ordinary investors were taking down the Wall Street pros, another investing sector also has been exploding. Cryptocurrency is riding a new wave of popularity, with a not-so-ordinary guy helping here, too. Elon Musk, who threw his social media support behind the video game retailer with his Gamestonk!! Tweet last month, now has helped push bitcoin's price sharply higher with pro-crypto tweets. That his electric car company Tesla adding $1.5 billion worth of bitcoin to its balance sheet also didn't hurt its value. Bitcoin's price rose last week to almost $60,000.... Read more →
I'm not sure if Luisa Madrid is a tax professional, but her winning caption for the New Yorker magazine contest sure hits home at filing season. One of the oldest tales of pushing the tax return envelope is taxpayers who try to claim pets as dependents. Children. They're a challenge. They're a joy. They cost a lot. A whole lot, if you ask parents. They also provide some tax breaks. And if the Biden Administration and some in Congress have their way, children could be worth even more in the proposed next round of COVID-19 relief. Things are still in... Read more →
Patrick Mahomes, a possible future GOAT, and his Kansas City Chiefs look to win a second consecutive Super Bowl. To do so, they'll have to control GOAT Tom Brady and the Tampa Bay Buccaneers. (CBS promotional photo) It's Super Bowl LV weekend. A very subdued one, in keeping with the continuing COVID-19 pandemic. The National Football League and CBS Sports are doing what they can to gin up excitement. And for the millions of us who'll watch on TV, that's probably enough. Heck, the match-up of Patrick Mahomes and Tom Brady is probably enough. But cities across the country, even... Read more →
The Internal Revenue Service has delivered two rounds of COVID-19 economic impact payments (EIPs). The first was the $1,200 per person approved in late March 2020 under the Coronavirus Aid, Relief and Economic Security (CARES) Act. The second EIP for $600 per person was authorized at the end of last December as part of the Consolidated Appropriations Act (CAA), with payments distributed through the first two weeks of January 2021. By now, folks know that if they didn't get the full amounts, which included additional payments for eligible dependents, they need to claim the Recovery Rebate Credit (RRC). You'll do... Read more →
Small businesses are adapting their operations to make it through the COVID-19 pandemic. Some tax breaks in the relief bill enacted at the end of 2020 could help. (Photo by Norma Mortenson via Pexels) Most COVID-19 relief focus has been on the added financial help to individuals. That's understandable. Millions of folks have been struggling to make ends meet as the pandemic has ravaged the economy. But they are facing fiscal woes in large part because their employers are in trouble, too. When companies get their footing back, they can start to rehire laid off staff and things should pick... Read more →
Soon after Joseph R. Biden trades in his former Vice President honorific for President on Jan. 20, the now-Democratic led Congress will take up the 46th Commander in Chief's COVID-19 relief plan. Millions of Americans, even those who didn't vote for Biden and VP-Elect Kamala Harris, are hoping it passes soon. The key appeal of the plan is more coronavirus relief money. Last year, some House and Senate Republicans joined their Democratic colleagues in calling for the second economic relief payment of $2,000 per person. That was trimmed to $600 per person in the final bill that became law on... Read more →
Image: IRS "A Closer Look" In looking back at 2020, the Internal Revenue Service thinks it did a pretty good job, all things considered. That's the assessment from IRS Commissioner Chuck Rettig as his agency released its annual progress report, Internal Revenue Service Progress Update/Fiscal Year 2020 – Putting Taxpayers First. "The COVID-19 pandemic presented some of the greatest challenges to the IRS in its history, both in terms of being able to carry out our mission and in protecting the health and safety of taxpayers and our own workforce," wrote Rettig wrote in the report's opening message. "IRS employees... Read more →
A new year is time for reassessment and resetting of priorities. That's true in the tax world, too. But to know what needs to be fixed or at least rejiggered, you also have to look back at what went wrong. Again, that applies in to taxes. Not surprisingly, the horrid 2020 offers us plenty, in our personal and professional lives, to re-evaluate. One more time, also a tax world truth. That's why today's Saturday Shout Out — the first of 2021 in this continuing feature; you can read 2020's if you want to reminisce — goes to Howard Gleckman's 2020... Read more →
Happy Day After Christmas, or as it's known in many parts of the world, Boxing Day. As a lover of cats, be they large (like these in an earlier Tumbling Taxes item), small or domesticated (as much as cats can be), I certainly understand the feline interpretation of Boxing Day. But I also appreciate the other ways, taxes included, to celebrate Boxing Day. Boxing Day's evolution: Boxing Day got its name in the 1800s when Queen Victoria was on the throne. Since then, it's been celebrated in Great Britain and many of its former colonies, notably Canada, Australia and New... Read more →
OK, I can't confirm that the Greek dramatist Sophocles said this. But it's on the internet, so…. What is irrefutable is that bad advice is too often given and worse followed, especially when it comes to taxes. (Image by Quote Coyote) That cheering you hear is, well, everyone as 2020 finally is winding down. This mess of a year can't end too soon for most of us. But in our enthusiastic anticipation of the Year of COVID-19, we still must get ready for the upcoming tax season. At the start of the month, I offered some year-end tax moves that... Read more →
Update, December 30, 2020: When the Consolidated Appropriations Act, 2021, finally was signed into law on Dec. 27, the new law OK'ed the $600 COVID-19 economic relief payments now going out and meant the federal government would stay open through Sept. 30, 2021. But it also included the No Surprises Act, a measure that should help end the unexpected medical bills many patients receive even though they have insurance. The new health care law will take effect in 2022. Also, the $1.4 trillion CAA included another welcome medical tax break. The threshold for claiming eligible health care costs now is... Read more →
This year's fresh greenery component to our otherwise fake fir Christmas decorations. (Photo by Kay Bell) It's the first weekend of December. That means millions of folks are untangling light strings, digging out cherished family holiday tchotchkes and making their homes merry and bright. In many homes, a Christmas tree is the center of the celebration. Fake fir, real celebration: For all but one Christmas over our decades of marriage, the hubby and I have had an artificial tree. Our lone live tree December was our first in Florida because I was missing the season's traditional chill. I soon got... Read more →
We don't have an image of D.B. Cooper parachuting from a hijacked jetliner Thanksgiving week 1971, but he did jump out over some dense Oregon woods that likely looked a lot like these. (Photo by ankiyay via Pexels) Last week was the weirdest Thanksgiving holiday ever for many of us. In addition to dealing with possible family confrontations in the wake of the most contentious post-election period in modern memory, we had to adjust to pandemic complicated get-togethers. That's why an anniversary probably slipped by you. During Thanksgiving week 49 years ago, a tall thin man, dressed in a business... Read more →
It's no secret that COVID-19 wreaked havoc on the 2020 tax filing season. In addition to law changes and a delayed mid-summer filing deadline, previously implemented Internal Revenue Service precautions like shutting down offices are continuing to cause problems. Those closures likely helped prevent coronavirus infections among IRS personnel, but they also produced a massive mail backlog, estimated at one point by none other than the agency's commissioner at more than 12 million pieces of U.S. Postal Service material. Those snail mail envelopes included tax payments. But since they weren't opened, the IRS didn't account for them and its automated... Read more →