5 NEW Tax Credits in New Stimulus Package Signed by President Biden

President Biden signed the new stimulus package that includes many new tax credits and tax provisions that help individuals and businesses get more financial tax help during this Covid-19 pandemic.

Visit our website - https://freedomtaxaccounting.com/

Link to Employee Retention Tax Credit Playlist - https://www.youtube.com/playlist?list=PLVbhq9PTrYO7EDa78eMzq9lEhphfBUKi3

Link to Sick Leave and Family Leave Tax Credits - https://www.youtube.com/playlist?list=PLVbhq9PTrYO4JiBDdoLVwwF4_JBdlZ9Rx

DISCLAIMER
This video is intended for education purposes and should not be taken as legal or tax advice. You should consult with your financial professionals about your unique financial situation before acting on anything discussed in these videos. Freedomtax Accounting and Multiservices Inc. is providing educational content to help small business owners become more aware of certain issues and topics, but we cannot give blanket advice to a broad audience. Freedomtax Accounting and Multiservices Inc. or its members cannot be held liable for any use or misuse of this content.

President Biden signed the new stimulus bill that includes several tax provisions.

2020 tax-free unemployment benefits

Initially the bill didn’t include retroactive tax provisions, but during the Senate’s voting session, a compromise was made on unemployment benefits that will affect 2020 tax returns. The bill provides a $300 weekly federal unemployment benefit through Sept. 6 and also makes the first $10,200 of unemployment payments nontaxable ($20,400 in the case of a joint return, but only $10,200 per spouse) in 2020 for households earning less than $150,000.

NATP understands the burden this puts on you during your busiest time of year. We reached out to our contacts at the IRS to find out if the IRS will process refunds for returns already filed, or if taxpayers will need to amend. The IRS responded, “We do not have any information or guidance to share regarding unemployment and the American Rescue Plan.” When the IRS provides guidance, we’ll immediately pass it along.

Retroactive advanced premium tax credit

An individual can receive an advanced premium tax credit (APTC) to lower their monthly health insurance payment (premium). If at the end of the year they have received more APTC than the credit allowed based on final household income, the taxpayer does not have to pay back the excess when filing their 2020 federal tax return. For those who have already filed their 2020 return, we are waiting for guidance as to how to get the refund.

Recovery rebates to individuals

Single taxpayers with AGI under $75,000 will receive a $1,400 refundable tax credit, while joint filers with AGI under $150,000 will receive $2,800. In addition, taxpayers will receive $1,400 for each qualifying dependent (including adult dependents). The credit will completely phase out at an income threshold of $80,000 for single filers and $160,000 for joint.

The Treasury is directed to issue this credit as an advance payment based on the information on 2019 or 2020 tax returns. This credit will be reconciled on the 2021 tax return. Taxpayers who are married to undocumented residents will be able to receive the stimulus payments. If your client has changes to income, dependencies, or filing status, it may be advantageous to file before/after these payments are issued.
Child tax credit

Special rules for 2021 include an expansion of the credit from $2,000 to $3,000 per eligible child under age 18 ($3,600 per child under age 6). The fully refundable credit, with 50% of the credit issued as advance periodic payments starting in July, will be reconciled on the 2021 tax return. For 2021, the increased credit amount (additional $1,000 or $1,600 per-child in excess of the present-law $2,000 per-child) begins to be phased-out at $75,000 ($150,000 for MFJ and surviving spouse and $112,500 for head of household). Once the increased credit amount is reduced, the credit plateaus at $2,000, and the phaseout begins at $200,000 ($400,000 for MFJ).

Starting in July, the Treasury will issue advance payments of the child tax credit based on 2019 or 2020 tax return information. The Treasury is tasked with establishing an online portal to allow taxpayers to opt out of receiving advanced payments and provide information regarding changes in income, marital status and the number of qualifying children for purposes of determining each taxpayer’s maximum eligible credit.

Earned income credit

For 2021 only, the bill expands the eligibility and the amount of the earned income credit (EIC) for taxpayers with no qualifying children. The maximum credit amount for childless people will increase from $543 to $1,502. For 2021, taxpayers can use their 2019 income if it was higher than 2021.

#newstimuluspackage #bidenstimuluspackage #stimulusbill #covid19taxcredits

Видео 5 NEW Tax Credits in New Stimulus Package Signed by President Biden канала Freedom Group