by Pete McAllister | Accounting News, CARES Act, COVID-19, News, Relief Bill, Stimulus, Stimulus Package, Tax
President Trump recently signed a second stimulus package—called the Consolidated Appropriations Act, 2021 (Act)—into law. The legislation includes over $300 billion in aid for small businesses. Below is a breakdown of some of the business tax changes and extenders in the new COVID-19 relief bill.
Payroll Tax Credit for Paid Sick and Family Leave
The refundable payroll tax credit for paid and sick family leave, established in the Families First Coronavirus Response Act, is extended until March 31, 2021. The tax credits are modified so that they now apply to practically any payments made to workers for these purposes.
Payroll Tax Repayment
The time frame for employees to repay deferred employment taxes under the President’s executive order, which was issued in August 2020, has been extended from April 2021 to December 31, 2021.
Employee Retention Credit
The Employee Retention Credit (ERC) under the CARES Act has extended to July 1, 2021. Further, the refundable tax credit has increased from 50% to 70%, the per-employee wages limitation has increased from $10,000 per year to $10,000 per quarter, and the determination of a large employer for purposes of the ERC has increased from 100 to 500 employees.
30-Year Depreciation of Certain Residential Rental Property
The new law determines that the recovery period relevant to residential rental property placed in service before Jan. 1, 2018, and held by an electing real property trade or business, is 30 years.
Business Meal Deduction
Rather than the current 50% business expense deduction for meals, the bill temporarily allows a 100% expense deduction for meals provided by restaurants in 2021 and 2022.
Deduction for Energy Efficient Commercial Buildings
The deduction for energy-efficient improvements to commercial buildings, such as lighting, heating, cooling, ventilation, and hot water systems was made permanent. The amount will be inflation-adjusted after 2020.
Changes to the Work Opportunity Tax Credit
If employers hire workers who are members of one of more of ten targeted groups under the Work Opportunity Tax Credit (WOTC) program, they are permitted to use an elective general business tax credit. Previously applicable to hires before 1/1/2021, the TCDTR extends the credit through 2025.
Employer Payments of Student Loans
Section 127, which permits employers to provide certain educational assistance to employees on a tax-free basis, was modified under the CARES Act to authorize the payment by an employer of principal or interest on specific employee qualified education loans through December 31, 2020. The Consolidated Appropriations Act expands this through December 30, 2025. As the pandemic subsides, employers may want to consider this valuable tax-free benefit.
Health and Dependent Care Flexible Spending Arrangements
The bill allows taxpayers to roll over unused funds in their health and dependent care flexible spending accounts from 2020 to 2021 and from 2021 to 2022. This arrangement also permits employers to grant employees a 2021 midyear prospective adjustment in contribution amounts.
by Pete McAllister | Accounting News, IRS, News, Tax, Tax Planning - Individual
While it can be difficult to live debt-free in today’s world, many American adults attribute a majority of their debt to educational loans. In fact, recent statistics show that Americans owe approximately 1.48 trillion in student loan debt and about 44 million Americans are currently paying on their student loans.
The recent conversations around tax reform had many students and those still paying their loans concerned about what the tax changes would mean for their debt-to-income ratio. Early proposals suggested the repeal of student loan interest and educational assistance deductions, as well as tax-free tuition waivers, which certainly left many feeling uneasy. The proposed changes would have removed around $2,500 in deductions and would have considered tuition waivers and employer-assisted tuition as taxable income, effectively bumping many into higher tax brackets.
Luckily, when the final legislation was passed in December of 2017, none of these changes were included. But, what changes were in the final bill that could affect your education and how you save for it?
One significant amendment is the expanded usage allowed under Section 529 accounts, which are tax-advantaged savings and prepaid tuition plans intended to encourage taxpayers to save for college sponsored by educational institutions, states or state agencies under Section 529 of the IRS code. As of 2018, qualifying distributions from Section 529 accounts include tuition for elementary and secondary schools as well as tuition for private, public or religious college institutions. At the federal level, funds are limited to $10,000 per student during a taxable year, however, states have the option to enact a different approach at a state income tax level.
While Section 529 accounts saw expanded usage, Coverdell Education Savings Accounts, which allowed taxpayers to set aside up to $2000 a year in tax-free money for college education, will be phased out under the new tax laws. Since employer-assisted tuition was left unchanged under the new code, employers can still contribute up to $5,250 a year to an employee’s qualified continuing education. The student loan interest deduction of up to $2,500 was also left intact, however, if you make more than $80,000 as a single filer or $165,000 as joint filers, you no longer qualify for this deduction.
While many deductions and educational credits were kept under the new legislation, taxpayers should still be wary of the implications of long-term loan repayment options and deferring loans. Determining the best strategy for repaying loans quickly and educating yourself on ways to reduce the tax implications on current loans will likely leave your credit and your taxes intact and manageable in the future.
by Jean Miller | Accounting News, Uncategorized
RS Announces 2012 Standard Mileage Rates, Most Rates Are the Same as in July
IR-2011-116, Dec. 9, 2011
WASHINGTON — The Internal Revenue Service today issued the 2012 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
Beginning on Jan. 1, 2012, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
- 55.5 cents per mile for business miles driven
- 23 cents per mile driven for medical or moving purposes
- 14 cents per mile driven in service of charitable organizations
The rate for business miles driven is unchanged from the mid-year adjustment that became effective on July 1, 2011. The medical and moving rate has been reduced by 0.5 cents per mile.
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.
These and other requirements for a taxpayer to use a standard mileage rate to calculate the amount of a deductible business, moving, medical or charitable expense are in Rev. Proc. 2010-51.
Notice 2012-01 contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.
by Pete McAllister | Accounting News, IRS, QuickBooks, Tax, Uncategorized
By Eric Zeman InformationWeek
July 25, 2011 05:20 PM
Intuit on Monday launched QuickBooks Mobile for Android smartphones. This new mobile software allows small and midsize businesses to more effectively control and manage their invoicing processes.
With QuickBooks installed on their Android smartphone, business owners can perform a wide range of actions right from their device without the need to find a PC. QuickBooks Mobile for Android can be used to create estimates, manage invoices, and view customer details. Further, the application syncs in the background with QuickBooks, which gives mobile professionals the most up-to-date information no matter where they happen to be.
Intuit says that QuickBooks Mobile was designed with SMBs in mind, as they often need as much flexibility as possible when it comes to performing work functions out of the office. With QuickBooks Mobile for Android, SMBs can stay connected to their business with quick access to customer and sales information, save time by checking customer balances and creating estimates on-the-go, and be more productive by invoicing at the job site without having to go back to the office.
“The majority of small and medium-sized business owners feel that staying connected through wireless devices is critical to the success of their business,” said Dan Wernikoff, vice president and general manager, in a statement. “As the demand for mobile access continues to accelerate, we’re working to give customers the solutions they need most so they can save time and make money wherever their business takes them.”
QuickBooks Mobile for Android is available for free to current QuickBooks Online subscribers. It also is available via subscription to QuickBooks Pro and Premier 2011 customers. QuickBooks Mobile is already available to Apple’s iPhone.
QuickBooks isn’t the first piece of software that Intuit has offered to the Android platform. In June, Intuit Financial Services introduced a mobile banking application that makes it easier for Android smartphone users to manage finances from their mobile devices. The application, which is targeted at consumers, lets users view account balances and transaction history, transfer funds, pay bills, and locate nearby ATMs and bank branches.
Intuit’s GoPayment, available to both the iPhone and Android platforms, allows SMBs to accept credit card payments anywhere, anytime. With it, Intuit offers a free card reader. Intuit charges a small fee per swipe, but there are no set-up or monthly fees, and no contracts.
One last SMB tool available for smartphones from Intuit is Online PayRoll. This application allows employers to pay employees with direct deposit or check, preview paychecks before approving, and view employee information and last payroll run report from their iPhone. Intuit hasn’t said if Online PayRoll will be made available to the Android platform.
With Monday’s release of QuickBooks Mobile, Intuit now has a whole suite of applications available to the SMB on Google’s Android platform.
At the 2011 InformationWeek 500 Conference, C-level executives from leading global companies will gather to discuss how their organizations are turbo-charging business execution and growth–how their accelerated enterprises manage cash more effectively, invest more wisely, delight customers more consistently, manage risk more profitably. The conference will feature a range of keynote, panel, and workshop sessions. St. Regis Monarch Beach, Calif., Sept. 11-13.
by Brenda Eoff | Accounting News, Uncategorized
The IRS plans to start processing returns that were delayed, due to the December tax law changes, on February 14, 2011.  Although the IRS may be delayed, we are ready to process your return so do not delay in submitting your material to us.  Our goal is to get them processed by the  due date, so if you are waiting to bring your material  in please don’t.
