tax credit - Linkenheimer LLP CPAs & Advisors

California Tax Updates from 8/20

Update 1:

Three southern California grocery stores will pay fines of $447,836, for violations of certain COVID-19-related employee benefits. The CA Labor Commissioner’s Office has cited three El Super stores for failing to inform employees of their rights to supplemental paid sick leave (SPSL). In addition, employees who had COVID-19 symptoms were forced to work while sick or were told to file for unemployment while under quarantine or isolation. Others waited months to be paid. The violations affected 95 El Super workers. Employers having more than 25 workers must provide those affected by COVID-19 with up two weeks of SPSL. This law remains in effect until Sept. 30, 2021.

Update 2:

New information is available regarding the California Competes Tax Credits. The CA Governor’s Office of Business and Economic Development (GO-Biz) has revised its announcement about the allocation of these credits for fiscal year 2021-2022. The total amount to be allocated is now $394,707,469 (up from $284,707,469). The allocation dates haven’t changed and […]

By Linkenheimer LLP|2021-08-20T18:10:01+00:00August 20th, 2021|ca, CA tax, california, covid-19, tax credit|0 Comments

2021 Child Tax Credit and Advance Child Tax Credit Portal Opens

IRS announces two new online tools to help families manage Child Tax Credit payments

Child Tax Credit Eligibility Assistant helps families determine whether they qualify for Child Tax Credit payments
Update Portal helps families monitor and manage Child Tax Credit payments

The Internal Revenue Service launched two new online tools designed to help families manage and monitor the advance monthly payments of Child Tax Credits under the American Rescue Plan. These two new tools are in addition to the Non-filer Sign-up Tool, announced last week, which helps families not normally required to file an income tax return to quickly register for the Child Tax Credit.

The new Child Tax Credit Eligibility Assistant allows families to answer a series of questions to quickly determine whether they qualify for the advance credit.

The Child Tax Credit Update Portal allows families to verify their eligibility for the payments and if they choose to, unenroll, or opt out from receiving the monthly payments so they can receive a lump sum when they file their tax return next year. This secure, password-protected tool is available to any eligible family with internet access and a smart phone or computer. […]

By Linkenheimer LLP|2021-07-08T19:58:44+00:00July 8th, 2021|child, covid-19, tax credit|0 Comments

Eligible Businesses: Claim the Employee Retention Tax Credit

The Employee Retention Tax Credit (ERTC) is a valuable tax break that was extended and modified by the American Rescue Plan Act (ARPA), enacted in March of 2021. Here’s a rundown of the rules.

Background

Back in March of 2020, Congress originally enacted the ERTC in the CARES Act to encourage employers to hire and retain employees during the pandemic. At that time, the ERTC applied to wages paid after March 12, 2020, and before January 1, 2021. However, Congress later modified and extended the ERTC to apply to wages paid before July 1, 2021.

The ARPA again extended and modified the ERTC to apply to wages paid after June 30, 2021, and before January 1, 2022. Thus, an eligible employer can claim the refundable ERTC against “applicable employment taxes” equal to 70% of the qualified wages it pays to employees in the third and fourth quarters of 2021. Except as discussed below, qualified wages are generally limited to $10,000 per employee per 2021 calendar quarter. Thus, the maximum ERTC amount available is generally $7,000 per employee per calendar quarter or $28,000 per employee in 2021.

For purposes of the ERTC, a qualified employer is eligible if it experiences a significant […]

By Linkenheimer LLP|2021-07-02T18:31:52+00:00July 2nd, 2021|business, covid-19, tax credit|0 Comments

Tax-Favored Ways to Build up a College Fund

If you’re a parent with a college-bound child, you may be concerned about being able to fund future tuition and other higher education costs. You want to take maximum advantage of tax benefits to minimize your expenses. Here are some possible options.

Savings bonds

Series EE U.S. savings bonds offer two tax-saving opportunities for eligible families when used to finance college:

You don’t have to report the interest on the bonds for federal tax purposes until the bonds are cashed in, and
Interest on “qualified” Series EE (and Series I) bonds may be exempt from federal tax if the bond proceeds are used for qualified education expenses.

To qualify for the tax exemption for college use, you must purchase the bonds in your name (not the child’s) or jointly with your spouse. The proceeds must be used for tuition, fees and certain other expenses — not room and board. If only part of the proceeds is used for qualified expenses, only that part of the interest is exempt.

The exemption is phased out if your adjusted gross income (AGI) exceeds certain amounts.

529 plans

A qualified tuition program (also known as a 529 plan) allows you to buy […]

By Linkenheimer LLP|2021-06-30T19:54:28+00:00June 30th, 2021|college tax credit, credit, education credit, tax credit|0 Comments

Many Parents will Receive Advance Tax Credit Payments Beginning July 15

Eligible parents will soon begin receiving payments from the federal government. The IRS announced that the 2021 advance child tax credit (CTC) payments, which were created in the American Rescue Plan Act (ARPA), will begin being made on July 15, 2021.

How have child tax credits changed?

The ARPA temporarily expanded and made CTCs refundable for 2021. The law increased the maximum CTC — for 2021 only — to $3,600 for each qualifying child under age 6 and to $3,000 per child for children ages 6 to 17, provided their parents’ income is below a certain threshold.

Advance payments will receive up to $300 monthly for each child under 6, and up to $250 monthly for each child 6 and older. The increased credit amount will be reduced or phased out, for households with modified adjusted gross income above the following thresholds:

$150,000 for married taxpayers filing jointly and qualifying widows and widowers;
$112,500 for heads of household; and
$75,000 for other taxpayers.

Under prior law, the maximum annual CTC for 2018 through 2025 was $2,000 per qualifying child but the income thresholds were higher and some of the qualification rules were different.

Important: If your income is […]

By Linkenheimer LLP|2021-06-15T16:20:59+00:00June 15th, 2021|credit, tax credit|0 Comments