Highlights of the American Rescue Plan Act

Highlights of the American Rescue Plan Act

Signed into law on March 11, 2021, the American Rescue Plan Act (ARPA) contains several tax provisions affecting individuals and families. Let's take a look: Economic Impact Payments (EIP3). A third round of economic impact payments (EIP3) will be sent to qualifying taxpayers; individuals will receive $1,400 ($2,800 for married taxpayers filing jointly) plus $1,400 for each dependent, which includes college students and relatives who can be claimed as dependents. These payments are sent out as advance payments of the recovery rebate credit. Anyone not receiving EIP3 will be able to claim the recovery rebate credit when they file a 2021 tax return next year. There are specific income phaseouts, and eligibility is determined using a taxpayer's 2019 adjusted gross income unless the taxpayer...

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Federal Tax Deadline Extended To May 17

Federal Tax Deadline Extended To May 17

The federal income tax filing due date for individual taxpayers, including individuals who pay self-employment tax, has been extended to Monday, May 17, 2021, for the 2020 tax year. There is no need to file any forms to qualify for this automatic federal tax filing and payment relief. Individual taxpayers will automatically avoid interest and penalties on the taxes paid by May 17; however, penalties, interest, and additions to tax will begin to accrue on any remaining unpaid balances as of May 17, 2021. The extended tax return due date applies to any individual who files a federal individual income tax return - or has a federal tax payment reported on one of these forms that would otherwise be due April 15, 2021 - using the Form 1040 series, including Form 1040, 1040-SR, and 1040-PR....

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Integra International Audit & Accounting Alert – March 2021 (Issue 3)

ESG Affects CPAs as Well as Their Clients. New reports explore the issues. The last several years appear to have brought more changes in weather, society, and the regulatory atmosphere than I can recall when I began to write the Audit & Accounting Alert nearly ten years ago. There are differing levels of agreement on some of the issues, such as the cause and impact of climate change. Nevertheless, the increased attention during this time frame to the environmental, social and governmental (ESG) aspects of financial reporting should not be a surprise. When first covering the topic in September 2012, the focus was on general concepts and seeking input for developing a framework.

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Capital Gains Tax on Sale of Stocks

Capital Gains Tax on Sale of Stocks

Apps like Robinhood make it easy for everyone to play the stock market. If you're a retail investor who made money last year buying and selling stocks, you may owe capital gains tax when you file your tax return this year. If you lost money, you may be able to deduct that loss and reduce your income. Here's what you need to know about capital gains tax: Capital Gains and Losses Defined A capital gain or loss is the difference between your basis - the amount you paid for the asset - and the amount you receive when you sell an asset. All capital gains (or losses) must be reported on your tax return. Losses Limited to $3,000 If your capital losses are more than your capital gains, you can deduct the difference as a loss on your tax return to reduce other income, such as wages. This loss is...

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Small Business Tax Roundup

Small Business Tax Roundup

Tax changes due to recent legislation such as the Tax Cuts and Jobs Act and the CARES Act affect both individual taxpayers and small businesses. In 2020, the IRS issued several guidance documents and final rules and regulations that clarified several tax provisions affecting businesses. Here are five of them: PPP Expenses Now Deductible Deductions for the payments of eligible expenses are now allowed when such payments would result (or be expected to result) in the forgiveness of a loan (covered loan) under the Paycheck Protection Program (PPP). Previous IRS guidance disallowed deductions for the payment of eligible expenses when the payments resulted (or could be expected to result) in forgiveness of a covered loan. The COVID-related Tax Relief Act of 2020 amended the Coronavirus Aid,...

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Tax Breaks for Families With Children

Tax Breaks for Families With Children

If you have children, one or more of these tax credits and deductions could help your family reduce the amount of tax owed when you file your 2020 tax return. Let's take a look: 1. Child Tax Credit Generally, taxpayers can claim the Child Tax Credit for each qualifying child under the age of 17. The maximum credit is $2,000 per child. Taxpayers who get less than the full amount of the credit may qualify for the Additional Child Tax Credit (see below). The refundable portion of the credit is $1,400 so that even if taxpayers do not owe any tax, they can still claim the credit. A $500 nonrefundable credit is also available for dependents who do not qualify for the Child Tax Credit (e.g., dependents age 17 and older). 2. Child and Dependent Care Credit If you pay someone to take care of your...

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Renting Out a Second Home

Renting Out a Second Home

In general, income from renting a vacation home for 15 days or longer must be reported on your tax return on Schedule E, Supplemental Income and Loss. You should also keep in mind that the definition of a "vacation home" is not limited to a house. Apartments, condominiums, mobile homes, and boats are also considered vacation homes in the eyes of the IRS. Tax rules on rental income from second homes can be confusing, especially if you rent the home out for several months of the year and use the home yourself. Minimal Rental Use However, There is one provision that is not complicated; homeowners who rent out their property for 14 or fewer days a year can pocket the rental income tax-free. In other words, if you live close to a vacation destination such as the beach or mountains, you may be...

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Avoiding an IRS Tax Audit

Avoiding an IRS Tax Audit

Just 0.45 percent of taxpayers were audited in fiscal year 2019. Still, with taxes becoming more complicated every year, there is an even greater possibility of confusion turning into a tax mistake and an IRS audit. Avoiding "red flags" like the ones listed below could help. Red Flags That Trigger IRS Audits Claiming Business Losses Year After Year When you operate a business and file Schedule C, the IRS assumes you operate that business to make a profit. Claiming losses year after year without any profit raises a red flag with the IRS. Failing to Report Form 1099 Income Resist the temptation to underreport your income if you are self-employed or have a second job. The IRS receives the same 1099 forms that you do, and even if you didn’t receive a Form 1099 when you think you should have,...

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Tax Tips for March 2021

Tax Tips for February 2021

Click on the links below to jump to each section in this article: Do You Need To File a 2020 Tax Return? Relief for Taxpayers Struggling With Tax Debts Five Tax Tips for Older Americans New Year, New Withholding? Who Qualifies for the Earned Income Credit   Do You Need To File a 2020 Tax Return? Most people file a tax return because they have to, but even if you don't, there are times when you should - because you might be eligible for a tax refund and not know it. The tax tips below should help you determine whether you're one of them. General Filing Rules Whether you need to file a tax return this year depends on several factors. In most cases, the amount of your income, your filing status, and your age determine whether you must file a tax return. For example, if you're single...

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