How Biden’s Rescue Plan Might Impact Your Taxes
President Biden released his “American Rescue Plan” on January 14. It is a wish list of proposals he wants Congress to enact to address the COVID-19 pandemic and associated economic crisis. While some of the proposals are intended to be in effect for just one year, it isn’t too great a stretch of the imagination that these could later be extended or made permanent, as many of them have been on the Democrats’ agenda for some time. The anticipated cost of the American Rescue Plan, if all of the proposals are agreed to by Congress, is $1.9 trillion. None of Biden’s proposals are revenue raisers, and according to a January 15, 2021 Wall Street Journal report, he intends to use government borrowing to pay for his plan. Following are some of the tax-related proposals.
Congress passed, and President Trump signed, the Consolidated Appropriations Act, 2021. Included in its approximately 5,600 pages is a second draw of forgivable Paycheck Protection Program (PPP) loans. The first round allowed loans to businesses with 500 or fewer employees and to certain businesses with multiple locations, for which each location could not have more than 500 employees. Unfortunately, this opened the door to some large businesses gobbling up the allocated funding and shutting out the smaller businesses that the loans were intended to help until additional funding was authorized.
As a means to stimulate charitable contributions during the COVID crisis, Congress made two notable changes for 2020—one allowing taxpayers that don’t itemize their deductions an above-the-line deduction for cash contributions of up to $300 and another for those itemizing their deductions to increase the maximum deduction for cash contributions to 100% of their adjusted gross income (AGI).
Housing is a big expense for everyone. The choice generally involves either renting or purchasing – and financing that purchase with a home loan. As of November 2020, the nationwide average for a 30-year fixed-rate mortgage was just under 3%, the lowest it has been in the last 50 years or even longer. Many individuals are taking advantage of the historically low rates to buy their first home, sell their existing home to move up to a more expensive one, or refinance their existing mortgage. Some who currently own their homes free and clear are even taking out loans to lock in the low interest rates. This article looks at the tax benefits and drawbacks of buying, financing, and owning a home.
After several months of the Republicans and Democrats not being able to agree on additional COVID-related tax relief and other matters, as 2020 was coming to an end, horses were traded, and deals were made so that Congress could put together the much-needed legislation. The result is a nearly 5,600-page omnibus bill, the Consolidated Appropriations Act, 2021, Included in that legislation are the “COVID-Related Tax Relief Act of 2020” (COVIDTRA) and the “Taxpayer Certainty and Disaster Tax Relief Act of 2020”. The bill was signed by the President on December 27.
Advance planning can, in many cases, minimize or even avoid taxes on IRA distributions and other qualified plan distributions. When contemplating future retirement and when to begin tapping taxable IRA and other qualified retirement accounts, taxpayers need to consider a number of important issues.
It seems hard to believe, but the holiday season is upon us, and that means that the 2020 tax preparation season will soon follow. With the end of the tax year just weeks away, it may be appropriate (especially this year, in light of the financial havoc created by COVID-19) to review some year-end tax issues that might reduce your tax bite for 2020 or provide long-term tax benefits.
The holiday season is customarily a time of giving gifts, whether to your favorite charity, family members or others. Some gifts even provide a variety of tax benefits.
If you are a small business owner, every penny of your income counts. This means that you not only want to optimize your revenue, but also minimize your expenses and your tax liability. Unfortunately, far too many entrepreneurs are not well-versed on the tricks and tools available to them and end up paying far more than they need to.