With the Consolidated Appropriations Act, 2021, millions of small-business owners like you now qualify for the employee retention credit (ERC), thanks to three big changes: You can now obtain the ERC and the Paycheck Protection Program loan, but not on the same wages.This new rule applies retroactively to 2020.The new law adds an enhanced ERC for 2021. And thanks to the latest new law, the American Rescue Plan Act of 2021 (ARPA), the already enhanced 2021 ERC is extended for an additional...

With the passage of the American Rescue Plan Act of 2021 (ARPA), Congress has temporarily abolished the health insurance premium tax credit “subsidy cliff.” For 2020 and 2021, self-employed and small-business owners and other individuals who must purchase individual health insurance may qualify for premium tax credit health insurance subsidies even if their income far exceeds the old limit of 400 percent of the federal poverty level (FPL). To take advantage of the government subsidy, go...

If you are married, most likely you’ve always filed a joint tax return with your spouse. Most of the time, a joint return shows less overall tax than two separate tax returns do, because the married-filing-separately status has many tax disadvantages. Fast-forward to the 2020 tax filing season, however—and nothing is as it was. This year, four tax provisions will be key to determining whether you’ll be better off filing a joint tax return or separate tax returns for tax year 2020: Tax-free...

For the 2021 tax year only, the American Rescue Plan Act of 2021 (ARPA) makes big, taxpayer-friendly changes to the federal income tax child tax credit (CTC). Here’s what you need to know, starting with some necessary background information. CTC Basics For 2018-2020 and 2022-2025, the maximum annual CTC is $2,000 per qualifying child. A qualifying child is an under-age-17 child who could be claimed as your dependent for the year. Basically, that means the child lived with you for...

The American Rescue Plan Act of 2021 (ARPA) makes major, but temporary, changes to the federal income tax child and dependent care credit (CDCC). Except for when it comes to high-income taxpayers, the changes are all favorable. To understand the changes, let’s first review the basics. Here goes. CDCC Basics If you have one or more qualifying individuals (usually your children) under your wing, you’re eligible for the CDCC. The credit covers eligible expenses that you pay to care...

For tax year 2021, Congress is giving away billions of dollars in additional tax credits on your Form 1040 individual tax return. These temporarily expanded tax credits include the child tax credit, the dependent care credit, and the health insurance premium tax credit. With good planning on your end—which you have more control over than most do because you are in business for yourself—the various credits could easily put an additional $5,000 or more in your pocket for tax year 2021. Child...

The earned income tax credit (EITC) has been around for years. But for some folks, it’s never been worth as much as it will be for 2021. That’s thanks to liberalizations included in the American Rescue Plan Act of 2021 (ARPA). Some of the favorable changes are only for the 2021 tax year. Others are permanent. EITC Basics The EITC is targeted at low-income and moderate-income individual taxpayers. Perhaps most important, it’s a refundable credit. That means you can collect it even...

Unclaimed income tax refunds worth more than $1.3 billion await an estimated 1.3 million taxpayers who did not file a 2017 Form 1040 federal income tax return, according to the Internal Revenue Service. “The IRS wants to help taxpayers who are due refunds but haven’t filed their 2017 tax returns yet,” said IRS Commissioner Chuck Rettig. “Time is quickly running out for these taxpayers. There’s only a three-year window to claim these refunds, and the window...

The Internal Revenue Service today issued guidance for employers claiming the Employee Retention Credit under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) modified by the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (Relief Act). Notice 2021-23 explains the changes to the Employee Retention Credit for the first two calendar quarters of 2021, including: the increase in the maximum credit amount,the expansion of the category of employers...

The Internal Revenue Service today announced it is seeking civic-minded volunteers to serve on the Taxpayer Advocacy Panel (TAP). The TAP is a federal advisory committee that listens to taxpayers, identifies major taxpayer concerns and makes recommendations for improving IRS service and customer satisfaction. Taxpayers interested in serving on the panel may apply between April 5 and May 14. National Taxpayer Advocate Erin Collins recently expressed her appreciation...