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What’s Next for a Stimulus Bill?

The Senate Republicans’ slimmed-down stimulus bill recently failed to materialize after receiving less than the 60 votes needed to move forward. The “skinny” stimulus bill, with a price tag of only $650 billion, was intended to be a way to quickly inject stimulus into the economy and bypass both the multi-trillion-dollar Republican HEALS Act and the Democratic HEROES Act. The current stimulus limbo leaves millions of Americans in a position of uncertainty. Four main areas that the Senate bill intended to address but are now up in the air include a second round of stimulus checks and the impact on struggling tenants and homeowners, as well as the long-term unemployed. Next Round of… Read More

3 State Level Tax Hikes That Might Be Coming Due to COVID-19

No surprise, but Americans are consuming and spending less since the coronavirus kicked in.  Retail sales dropped to 8.7 percent in March, the largest month-over-month decline since the Census Bureau started tracking this data. Previously, the sharpest decline was less than half this – at 3.9 percent from October 2008 to November 2008, during the previous economic crisis. The reduction in consumer spending is due in part to lockdowns, spending more time at home for fear of the virus, and the economic impact – whether it’s losing a job, reduced hours, or in anticipation of tougher times ahead. While consumer spending is down at a net level, there appear to… Read More

R&D Tax Credits May be Part of the Next Tax Relief Bill

As the economic impact of COVID-19 lingers and an impending second wave is on everyone’s mind, Congress is already thinking of new legislation to stimulate the economy. One of the ideas on the top of the list is an expansion of the Research and Development (R&D) tax credit as part of the next COVID-19 relief bill. Proposals for the R&D Tax Credit There are numerous proposals for changing the R&D tax credits. It is seen as an investment in the U.S. economy, with some believing the credit is an effective tool to combat offshoring. Some of the main proposals for changes to the R&D tax credit include: Doubling the current… Read More

HEROES ACT Can Combat Economic Downtown

The HEROES Act, otherwise known as the Health and Economic Recovery Omnibus Emergency Solutions Act, can greatly improve the benefits for the earned income tax credit (EITC) for eligible workers who don’t have children. This legislation would also help wage earners in the business-to-consumer and leisure sectors of the economy impacted severely by the coronavirus pandemic. Looking at the HEROES Act legislation and how it would help childless wage earners, we need to examine the rules surrounding the EITC and how many additional filers may qualify. While childless students pursuing formal education are still required to be 25 for EITC eligibility, filers as young as 19 (down from 25 years… Read More

IRS Questions and Answers on COVID-19 IRA and 401(k) Loans & Distributions

The CARES Act stimulus package substantially relaxed the rules around certain retirement account loan and distribution requirements, but with much confusion. As a result, the IRS recently put out a FAQ document to address the COVID-19 rule relaxation around IRA and 401(k) loans and distributions. This important information should come as welcome news for the nearly one percent of all retirement plan holders who have already taken a distribution under the new rules, according to Fidelity Investments. Who’s eligible? If you, a spouse or dependent tested positive for COVID-19, you automatically qualify. You also may qualify under less direct circumstances, such as experiencing economic hardship due to being quarantined, laid… Read More

Be Right About Free Money: Potential Legal Risks of the Paycheck Protection Loan Program

One of the most important provisions of the CARES Act for small businesses is called the Paycheck Protection Program (PPP). The PPP is a $349 billion program designed to assist small businesses (fewer than 500 employees) facing financial difficulties as a result of the COVID-19 pandemic through specifically structured loans. The loan program offers funding to cover payroll for up to eight weeks, with the intent of stemming from unemployment. These loans can be forgiven and essentially become a grant if your business meets certain criteria with no need to repay the money. As the old saying goes, there’s no such thing as a free lunch – or in this… Read More

Should You File an Amended 2018 Return?

During the holiday season in December, Congress passed the Consolidated Budget Appropriations Act of 2020. Included in this Act was a tax package that renewed more than 24 tax provisions through what are known as extenders. An extender makes a tax provision effective retroactively. Some of the extender provisions are rather esoteric, so we’ll only focus on those most applicable to the broader taxpayer base. Extenders in More Detail Among the widely applicable extender provisions, there are the following. It’s best to check with your tax professional to see which of the more than two dozen extenders may apply to your personal situation. Deducting PMI (private mortgage insurance) if you… Read More

Taxes and Tariffs: The U.S. Response to France’s Digital Tax

How it All Started Back in July of 2019, France passed what was dubbed a “digital tax” targeting the largest tech companies. Impacting approximately 30 big companies such as Amazon, Google, Facebook and Apple, the tax applies to revenues earned from digital services of companies that earn more than $830 million in total and at least $27.86 million in France. The tax levy is a 3 percent charge on revenue from digital services. The United States soon responded with threatening 100 percent tariffs on certain classes of French luxury goods, such as wine, champagne, cheese and makeup. These tariffs were estimated to cover more than $2.4 billion in French goods… Read More

When Should You Switch Your Side Hustle to a Business Entity Structure?

Starting a side hustle today is easier than ever. Between the numerous websites that act as marketplaces and project jobs that can be found on the internet, almost anyone can turn a skill or hobby they have into something they can make money off. Many people who do this are just looking to make a little extra money on the side, but this side hustle can turn into something bigger – and this is where the tax and legal questions come in. Sole Proprietorship For someone just starting or looking to make a little extra on the side, there’s nothing special you need to do when it comes to filing… Read More

2020 Tax Brackets, Deductions, Plus More

Beginning on Jan. 1, 2020, the Internal Revenue Service (IRS) has new annual inflation adjustments for tax rates, brackets, deductions and retirement contribution limits. Note, the amounts below do not impact the tax filing you make in 2020 for the tax year 2019. These amounts apply to your 2020 taxes that you will file in 2021. 2020 Tax Rates and 2020 Tax Brackets Below are the new 2020 tables for personal income tax rates. There are separate tables each for individuals, married filing jointly couples and surviving spouses, heads of household and married filing separate; all with seven tax brackets for 2020. Tax Brackets & Rates – Individuals Taxable Income Between… Read More