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New Law: Parents and Other Eligible Americans to Receive Direct Payments

The American Rescue Plan Act, signed into law on March 11, provides a variety of tax and financial relief to help mitigate the effects of the COVID-19 pandemic. Among the many initiatives are direct payments that will be made to eligible individuals. And parents under certain income thresholds will also receive additional payments in the coming months through a greatly revised Child Tax Credit.

Here are some answers to questions about these payments.

What are the two types of payments?

Under the new law, eligible individuals will receive advance direct payments of a tax credit. The law calls these payments “recovery rebates.” The law also includes advance Child Tax Credit payments to eligible parents later this year.

How much are the recovery rebates?

An eligible individual is allowed a 2021 income tax credit, which will generally be paid in advance through direct bank deposit or a paper check. The […]

By Linkenheimer LLP|2021-03-16T17:19:14+00:00March 16th, 2021|child, credit, New Tax Laws, tax credit, tax deductions|0 Comments

New Things Taxpayers Should Consider As They Get Ready To File Taxes In 2021

When people get ready to file their federal tax return there are new things to consider when it comes to which credits to claim and what deductions to take. These things can affect the size of any refund the taxpayer may receive.

Here are some new key things people should consider when filing their 2020 tax return.

Recovery rebate credit
Taxpayers may be able to claim the recovery rebate credit if they met the eligibility requirements in 2020 and one of the following applies to them:
• They didn’t receive an Economic Impact Payment in 2020.
• They are single and their payment was less than $1,200.
• They are married, filed jointly for 2018 or 2019 and their payment was less than $2,400.
• They didn’t receive $500 for each qualifying child.

Refund interest payment
People who received a federal tax refund in 2020 may have been paid interest. The IRS sent interest payments to individual taxpayers who timely filed their 2019 federal income tax returns and received refunds. Most interest payments were received separately from tax refunds. Interest payments are taxable and must be reported on 2020 federal income tax returns. In January 2021, the […]

By Linkenheimer LLP|2020-12-17T21:48:38+00:00December 17th, 2020|irs, tax, tax planning|0 Comments

California Tax Updates for 10/2

Post 1:

California expands its professional exemption. Effective Sept. 9, 2020, this exemption is expanded to include employees who provide instruction for a course or laboratory at colleges and universities in CA. To qualify, an individual must satisfy the duties test and salaries test. Employees must earn the monthly equivalent to no less than twice the state minimum wage in which the employee is employed for at least 40 hours per week, or a minimum salary in 2020 of $117 per classroom hour. In 2021, this hourly rate rises to $126 and in 2022 to $135. Beginning in 2023 the rate will be adjusted based on the state minimum wage. Contact your Linkenheimer CPA with questions.

Post 2:

The California Franchise Tax Board (FTB) is hoping to increase the number of Californians who receive the CA earned income tax credit. The FTB is required to analyze and develop a plan to increase the number of claims of the CA earned income tax credit, […]

By Linkenheimer LLP|2020-10-02T17:27:26+00:00October 2nd, 2020|ca, CA tax, california, credit, ftb, income tax, state income|0 Comments

What Are The Key Distinctions Between Layoffs And Furloughs?

As businesses across the country grapple with the economic fallout from the novel coronavirus (COVID-19) pandemic, many must decide whether to downsize their workforces to lower payroll costs and stabilize cash flow. If your company is contemplating such a move, you’ll likely want to consider the choice within the choice: that is, should you lay off workers or furlough them?

Basic difference

The basic difference between the two is simple. Layoffs are the ostensibly permanent termination of employees from their positions, though you can rehire some of these individuals when business improves. Meanwhile, a furlough is a mandatory or voluntary suspension from work without pay for a specified period.

In most states, furloughed workers are still considered employees and, therefore, don’t receive a “final” paycheck. Check with an employment or labor attorney, however, to make sure your state’s furlough laws don’t trigger final pay requirements.

Employee benefits are another issue to explore. Reach […]

By Linkenheimer LLP|2020-09-03T20:03:06+00:00April 15th, 2020|business, New Tax Laws, tax deadlines, tax implications|0 Comments

Answers to Questions About the CARES Act Employee Retention Tax Credit

The recently enacted Coronavirus Aid, Relief, and Economic Security (CARES) Act provides a refundable payroll tax credit for 50% of wages paid by eligible employers to certain employees during the COVID-19 pandemic. The employee retention credit is available to employers, including nonprofit organizations, with operations that have been fully or partially suspended as a result of a government order limiting commerce, travel or group meetings.

The credit is also provided to employers who have experienced a greater than 50% reduction in quarterly receipts, measured on a year-over-year basis.

IRS issues FAQs

The IRS has now released FAQs about the credit. Here are some highlights.

How is the credit calculated? The credit is 50% of qualifying wages paid up to $10,000 in total. So the maximum credit for an eligible employer for qualified wages paid to any employee is $5,000.

Wages paid after March 12, 2020, and before Jan. 1, 2021, are eligible for the credit. Therefore, an employer may be able to claim it for qualified wages paid as early as March 13, 2020. Wages aren’t limited to cash payments, but also include part of the cost of employer-provided health care.

When is the operation of a […]

By Linkenheimer LLP|2020-09-03T20:03:10+00:00April 6th, 2020|business, credit, employer, New Tax Laws, relief, small business, tax credit, tax planning|0 Comments