There have been important changes to the Child Tax Credit that will help many families this summer. The American Rescue Plan ACT of 2021 expands the Child Tax Credit for tax year 2021 only, the legislation not only temporarily increases the amount each parent will receive, from $2,000 to $3,600 for children under 6 and $3,000 for children 6 and up, it also made the credit fully refundable and turned half of the credit into the advanced payments. The monthly direct payments will begin starting this upcoming July 15. These payments are not an extra monthly payment, but rather a reduction of how much child tax credit parents will receive when they file their 2021 tax return. This monthly payment is simply an “advance” on what you would Read More...
Daycare Tax Savings
Are You Making the Right Election? While many parents are still shoring up their 2020 tax filing, they are probably passing up major savings in 2021 that will need a decision now before it's too late. Not only did the pre-tax maximum Dependent Care Flex amount increase from $5,000 to $10,500 for 2021 (if employers choose to participate), but as of this March's tax reform, there's an adjusted Dependent Care Credit that might outweigh flexing this year. By potentially forgoing the pre-tax flex option, families could qualify for up to an $8,000 refundable credit on their tax return. But you cannot do both. There are a variety of factors that go into the calculation, which will be unique to each taxpayer, including income level and Read More...
Federal Tax Deadline Extended
Breaking News: The Internal Revenue Service (IRS) said Wednesday that the 2021 Federal tax-filing deadline would be extended from April 15 to May 17. With the challenges of the pandemic, and the multiple COVID relief bills, an extra month is being provided to help taxpayers have the time necessary to file an accurate tax return. The extended deadline applies only to federal income returns and taxes, meaning that taxpayers will need to check to see if due dates for state taxes have been changed. Not all states follow the same filing deadline as the federal government. Estimated quarterly payments are still due on April 15. At this time, Minnesota state taxes have not extended, and are still due April 15th. For this reason we encourage Read More...
2020 Tax Planning Considerations for Businesses
There has been a lot of changes when it comes to your taxes this year – How will you take advantage? These are some things you may want to consider as you schedule your 2020 business tax planning meeting: Like Kind exchange treatment no longer applies to any property except real property. Trades are taxable in the year of exchange. 20% 199A Business Deduction - Owners of sole proprietorships, S corporations, or partnerships can deduct up to 20% of net income (excluding investment income and wages/guaranteed payments paid to owners). The 20% deduction is in effect for tax years beginning after December 31, 2017 and before January 1, 2026 CARES Act and Paycheck Protection Payments Did your business sign-up for an Read More...
2020 Tax Planning Considerations for Individuals
How will you take advantage of all of your options during tax time this year? These are some things you may want to consider as you schedule your 2020 individual tax planning meeting: The IRS has launched an improved tool to help taxpayers check their withholding by doing a “Paycheck Checkup.” You will need your most recent paystubs and your most recent income tax return. Visit the IRS website to learn more. Maximize contributions to Health Savings Accounts. 2020 contribution limits are $3,550 for individuals and $7,100 for families. 2021 limits will be $3,600 for individuals and $7,200 for families. Individuals 55 and older can make an additional $1,000 catch up contribution. You can maximize your HSA contributions even if you did Read More...
Guidance for PPP Loans and Expense Deductions
11/19/2020: U.S. Treasury and IRS issue Guidance for PPP Loans and Expense Deductions The U.S. Treasury and the Internal Revenue Service (IRS) released guidance yesterday, November 18th clarifying the deductibility of expenses where a Paycheck Protection Program (PPP) loan has not been forgiven by the end of the year. PPP loan forgiveness will not be considered taxable income, so any expenses paid with PPP loan funds will not be deductible. The result is neither a tax benefit nor tax harm because the taxpayer has not paid the expenses out of pocket. If a business reasonably believes that a PPP loan will be forgiven (even if the forgiveness takes place in the next tax year and/or the business has not filed for loan forgiveness) the Read More...
IRS Rules on Business Meals and Entertainment
10/7/2020 - Our experts here at Christianson know how important it is to be on top of the latest news that may impact your business. We want you to be aware that late last week, the Internal Revenue Service (IRS) announced updated guidance on the business expense deduction for meals and entertainment following law changes in the Tax Cuts and Jobs Act (TCJA). In 2017, when the TCJA was released, these expenses which were incurred for events that could be considered entertainment, amusement, or recreation would no longer be deductible. The latest regulations from the IRS outline the following: Taxpayers may continue to deduct 50 percent of the cost of business meals if the taxpayer (or an employee of the taxpayer) is present and the Read More...
Making Tax Season 2020 Easier – What to Consider
Rapidly approaching tax filing deadlines inspire many to vow that we’re finally going to organize that bottomless shoe box of receipts and documents that we will "get to later". One of the many questions we've been getting this year is what documentation should I retain and how can I prepare for next year's taxes? Tax planning is always important, but with the financial impact that this year’s pandemic may have imposed, you should prepare now to minimize your tax liability and/or maximize your savings from the new tax rules? With the extension being moved to July 15th, we now have less time to prepare for next tax season. We want to make it easier for you by helping you understand what should be kept, in what format and for how long. Read More...
Congress Reinstates OSLT for 2020
What is the OSLT? The oil spill liability tax (OSLT) expired on December 31, 2018, and therefore was not required for the 2019 calendar year. Effective January 1, 2020, the law reinstated the oil spill excise tax imposed on crude oil and imported petroleum products. The cost of the OSLT is calculated at a rate of $0.09 per barrel (approximately $0.00214 per gallon) of crude oil products (including natural gasoline used as denaturant). How is the OSLT usually filed? This excise tax is filed quarterly with IRS Forms 6627 and 720, but deposits are required for each semimonthly period in which the tax liability is incurred. The amount of this deposit must not be less than 95% of the amount of net tax liability incurred during the Read More...
Refundable Biodiesel Blender Credits Extended
Under the Further Consolidated Appropriations Act of 2020, the refundable biodiesel blender credits were extended. How is the refundable biodiesel blender credit usually filed? A one-time claim can be made for the $1.00/gallon refund on biodiesel mixture gallons for 2018 and 2019. Total gallons for these two years need to be combined and reported on one Form 8849, Claim for Refund of Excise Taxes. Form 8849 Schedule 3, Certain Fuel Mixtures and the Alternative Fuel Credit, must be included with the submission with appropriate gallons reported on Line 2. It should be noted that the refund received from these credits is not-taxable. You can find additional rules and information on the IRS website here. Now What? The 180-day claim period Read More...
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