Income Tax Preparation & Small Business Accounting

Past Years Tax News

Consolidated Appropriations Act (CAA)

100-Percent Deduction for Business Meals
The Consolidated Appropriations Act, 2021, added IRC section 274(n)(2)(D) to the Internal Revenue Code which provides a temporary exception to the 50% limitation for business meals that are provided by a restaurant. Effective for expenses paid or incurred after December 31, 2020, and before January 1, 2023, food or beverages provided by a restaurant are 100% deductible provided the meal is otherwise deductible as a business meal.

No Surprise Act
The No Surprise Act expanded the patient protections related to emergency services under the ACA by providing additional consumer protections related to balance billing.

Dependent Care Benefits
Under the Consolidated Appropriations Act, 2021, unused benefits from a plan year ending in 2020 may be carried over to a plan year ending in 2021, and unused benefits from a plan year ending in 20201 may be carried over to a plan year ending in 2022. Alternatively, the new law allows a DCAP to extend its claims period for a plan year ending in 2020 or 2021 to 12 months after the end of the plan year with respect to unused benefits remaining win the DACP.

Infrastructure Investment and Jobs Act (IIJA)

  • Retroactively terminates the employee retention credit (ERC) after Sept. 30, 23021, for most businesses other than a recovery startup business.

  • Adds new information reporting requirements for brokers and digital assets (including cryptocurrency), which takes effect after Dec. 30, 2023.

Employee Retention Credit
The Consolidated Appropriations Act, 2021 extended the credit for qualified wages to July 1, 2021 and increased the credit rate to 70% for calendar quarters beginning after December 31, 2020. The credit is limited to $10,000 of qualified wages per employee per calendar quarter ($7,000 credit limit per employee per quarter). The American Rescue Plan Act of 2021 extended this provision to wages paid before January 1, 2022. However, the new law repeals the Employee Retention Credit for wages paid after September 30, 2021, with the exception of a recovery startup business. Wages paid before January 1, 2022 still qualify for the credit if the eligible employer is a recovery startup business.

Broadband Projects
The new law adds qualified broadband projects to the list of exempt facility bonds under IRC section 142(a).

Carbon Dioxide Capture Facilities
Similar to the provision for qualified broadband projects, the new law adds qualified carbon dioxide capture facilities to the list of exempt facility bonds under IRC section 142(a).

Heavy Vehicle Excise Tax
The heavy vehicle excise tax expiration date under IRC section 4051 is extended from October 1, 2022 to October 1, 2028.

American Rescue Plan Act (ARPA)

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 SS 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).

Earned Income Credit
For 2021, the minimum age to claim the EIC for taxpayers without children (childless EIC) generally is reduced from age 25 to age 19 (except full-time students). The maximum age limit of 65 for claiming the childless EIC has been eliminated. The credit and phaseout percentage increases from 7.65% to 15.3% for an individual with no qualifying children. Taxpayers may use their earned income from the 2019 tax year to determine their EIC for the 2021 tax year if the 2021 earned income was less than the 2019 earned income. The disqualified investment income limit also increases from $3,650 (2020) to $10,000.

Dependent Care Assistance
For 2021, the credit is fully refundable and the dollar limit for eligible expenses increases from $3,000 to $8,000 for one eligible child, and from $6,000 to $16,000 for two or more eligible children. The maximum credit rate increased from 35% to 50% and the AGI limitation increases from $15,000 to $125,000. Taxpayers with an AGI of $125,000 to $400,000 will receive a partial credit. The exclusion for employer-provided dependent care assistance increases from $5,000 to $10,500 ($5,250 for MFS).

Congressional Budget Office Shows 2017 Tax Law reduced Tax Rates Across the Board in 2018

New reports show that the Tax Cuts and Jobs Act (TCJA), enacted in 2017, reduced the average federal tax rate from 20.8 percent to 19.3 percent for all filers. The bottom 20 percent of earners saw their average federal tax rate fall from 1.2 percent to nearly 0 percent.

Read more:

2020 Tax Acts:

Taxpayer First Act of 2019
Revises requirements regarding the IRS' organizational structure, customer service, enforcement procedures, cyber security and identity protection, management of information technology, and use of electronic systems.

Consolidated Appropriations Act 2020
Includes a number of different extenders as well as the Taxpayer Certainty and Disaster Tax Relief Act of 2019 and the SECURE Act.

  • SECURE Act
    The Setting Every Community Up for Retirement Enhancement (SECURE) Act made reforms to retirement planning and security in a number of areas, including IRAs, 401(k) plans, plan administration, and employer funding.

  • Taxpayer Certainty and Disaster Tax Relief Act of 2019
    Disaster tax relief for federally declared disaster areas during 2018 and 2019. Includes the forgiveness of early-withdrawal penalties for qualified disaster distributions, the recontribution of amounts withdrawn for home purchases, and an increase in the amount of loans from qualified plans, as well as other special casualty loss rules for affected individuals and employee retention credit for employers.

    Individuals can take personal disaster losses even if they don't itemize. They're able to deduct uninsured personal losses in excess of a threshold without regard to the 10% of AGI offset which generally applies. The net loss is treated as an additional standard deduction for nonitemizers.
Tax Cuts & Jobs Act (H.R.1)

The Tax Cuts & Jobs Act (H.R.1) has most of its provisions starting in 2018. This tax act impacts the ACA, the PATH act, the FAST / Highway act and other tax laws.

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