I will add items here as the season develops and issues present themselves....Stacy

This Page Last Updated 11-20-2021

 

10-31-21 - An insightful long-term perspective on the new, expanded child tax credit - click here.

 

1) The IRS has just announced automatic processing of refunds due to the retroactive $10,200 exclusion of unemployment compensation - see below announcement....

 

The IRS plans to automatically process refunds for taxpayers who had unemployment income in 2020 and filed their tax returns before legislation passed that made those benefits tax-free. The American Rescue Plan passed on March 11th, 2021, made the first $10,200 of unemployment income tax-free for people with adjusted gross income of less than $150,000 in 2020. (The break is $20,400 for two workers in a married couple filing taxes jointly. 

 

2) Regarding the tax package that just passes 03-12 regarding unemployment - here is the latest direct from my tax software provider - We, Sure-Fire and the Development Team for the software, have absolutely no idea what to expect with these new law changes that recently happened. American Rescue Plan Act passed 3/10/21and is expected to be signed into law shortly. The most notable change for tax purposes makes the first $10,200 of unemployment relief received in 2020 exempt from tax for households with up to $150,000 of income. For this, we are all going to strongly encourage that you completely hold off on all amended tax returns regarding the new tax law changes until IRS completely says how they are going to handle everything because right now, no one knows anything. We don't know if amended returns will be required, or if they will just cut a rebate check to everyone. We don't know.

 

 

2)Low Income 2019 / No income 2020 - if you qualified for the Earned Income Credit in 2019 but have little or no wage (earned) income for 2020, you can still claim the credit based on your 2019 income levels.  Great news if you were on unemployment or disability for 2020 and had minimal wages but (mostly) worked during 2019.

 

3) If you have a child ages 18 to 23 who worked and (maybe) went to college and you can claim them as a dependent...this may be the one year (tax year 2020, calendar year 2021) you should NOT do so.  I will explain when we prepare your tax return(s)....