Tax credits and deductions can mean more money in a taxpayer’s pocket. Here are a few facts about credits and deductions that help taxpayers with their year-round tax planning:
Key tax provisions in the American Rescue Plan Act (ARPA) could affect your tax situation. Here’s what you need to know:
Thanks to the advance payments of the Child Tax Credit, approximately 60 million children received $15 billion in July, according to the Department of Treasury and the IRS. While many of these families will benefit from the extra money deposited into their bank accounts, some families may want to opt out and instead take the credit when they file their tax return next spring.
If you’re looking to sell your home this year, then it may be time to take a closer look at the exclusion rules and cost basis of your home to reduce your taxable gain on the sale of a home.
The IRS home sale exclusion rule allows an exclusion of gain up to $250,000 for a single taxpayer or $500,000 for a married couple filing jointly. This exclusion can be used over and over during your lifetime (but not more frequently than every 24 months), as long as you meet certain ownership and use tests.
The Internal Revenue Service has started sending letters to more than 36 million American families who, based on tax returns filed with the agency, may be eligible to receive monthly Child Tax Credit payments starting July 15, 2021. Here’s what families need to know:
The first monthly payment of the expanded and newly-advanceable Child Tax Credit (CTC) from the American Rescue Plan will be made on July 15. Roughly 39 million households—nearly 90 percent of children in the United States—are slated to begin receiving monthly payments without any further action required.
The federal Rehabilitation Tax Credit, or rehab credit, offers significant financial incentives for owners or leaseholders of historic buildings to renovate those structures.1
What’s the big deal? Why are tax credits so exciting?
Tax credits, unlike deductions, reduce your tax bill dollar-for-dollar. If you spend $100,000 and get a 20 percent tax credit, you reduce your tax bill by $20,000. That’s Uncle Sam putting $20,000 in your pocket. And there’s more.
If you are in business for yourself—say, as a corporation or self-employed—payroll taxes and self-employment taxes are likely two of your biggest tax burdens.
Due to the COVID-19 pandemic, individuals and businesses are suffering. Congress wants to help you individually and also keep small businesses afloat.
To do this, Congress decided that in addition to other measures, it should give you payroll tax and self-employment tax relief, as we describe in this article.
We’ll tell you how the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act will give you payroll and self-employment tax relief.
You report your business income as self-employed on Schedule C of your Form 1040 if you
- receive 1099 income,
- operate your business as a single-member LLC and did not elect corporate status,
- operate a retail establishment or professional practice as a sole proprietor, or
- report your W-2 income on a Schedule C because you are a statutory employee.
In the past, when times were bad, your government made no special effort to help you as a self-employed individual. For example, you had no “safety net” such as existed for employees who lost their jobs. You were just supposed to suck it up until things got better.
But this time, with COVID-19, it’s different.
Some taxpayers who claim the 2020 Recovery Rebate Credit (RRC) on their 2020 tax returns are discovering that they may be getting a different amount than they expected. Let’s take a closer look at why this is happening.