News and Updates
The American Rescue Plan Act
On March 11,2021, the president signed into law the American Rescue Plan Act. This bill includes provisions that have major tax impacts for the 2020 and 2021 tax returns.
2021 recovery rebates for individuals
A 2021 advance recovery rebate or a third economic impact payment (EIP3) of $1,400 ($2,800 MFJ) will be issued to each eligible individual plus $1,400 to each dependent (including adult dependents). Children born in 2021 will receive the additional economic impact payment as a recovery rebate credit on the 2021 return as long as the taxpayers were eligible to receive the EIP!
Maryland RELIEF Act
The RELIEF Act of 2021 is an emergency economic impact and tax relief package that will provide more than $1 billion for Maryland working families, small businesses, and those who have lost their jobs as a result of the COVID-19 pandemic.
RELIEF Act Economic Impact Payments
The RELIEF Act includes direct economic impact payments for low to moderate income Maryland taxpayers who filed for and received the Earned Income Tax Credit (EITC) on their 2019 Maryland State Tax Return. These economic impact payments will be issued by the Maryland Comptroller to all qualified taxpayers. No application is necessary to receive this relief.
Relief payments will be made to Maryland residents who claimed and received the EITC on their 2019 Maryland state tax return. Maryland taxpayers who claimed and received the Earned Income Tax Credit had the following annual earnings:
- $50,954 ($56,844 married filing jointly) with three or more qualifying children;
- $47,440 ($53,330 married filing jointly) with two qualifying children;
- $41,756 ($47,646 married filing jointly) with one qualifying child;
- $15,820 ($21,710 married filing jointly) with no qualifying children
Updates for Individuals
COVID-19 Relief Law Boosts Temporary Tax Deductions and Credits
Embedded in the COVID-19 relief law is $900 billion for financial assistance.
As you would expect in these unusual times, some of the relief is in the form of direct government financial assistance and some is from tax benefits that can impact both tax year 2020 and tax year 2021.
Most of the provisions create extra deductions or credits where Uncle Sam puts cash directly into your wallet.
Business Updates
Who Qualifies for First-Draw PPP Money Today?
Two things to know about the Paycheck Protection Program (PPP) first draw enacted on December 27, 2020:
- The first draw is for those who missed getting in on the original PPP, which expired on August 8, 2020.
- Don’t think of a PPP draw as a loan. It’s not a loan. It’s a cash infusion. You have to repay a loan. You don’t have to repay the PPP funds.
Who qualifies for first-draw PPP money today? You, most likely—if you file a business tax return and have not yet received any PPP monies.
Economic Stimulus Payments, Round 2
At the end of 2020, the new $900 billion coronavirus relief package became law. This relief expanded the existing “Economic Impact Payment” program with an additional $600 stimulus payment to taxpayers provided that they had previously filed a 2019 tax return. Unlike the first economic impact payment released in April of 2020 where the IRS determined the amount of the payment based on either a taxpayer’s 2018 OR 2019 tax return, this payment is again only based on the taxpayer’s 2019 tax return.
So that we can help you avoid getting costly repayment letters from the IRS, it is imperative that we know the exact amount of stimulus payments you receive in both the first round and second round payments. Please save proof of payment and provide it with your tax documents this year for verification.
New Client Portal Has Arrived
We are super excited to be rolling out a brand new client portal system this month to replace our current client portal. Our new portal system is from a company called Canopy, and just like our current portal, it will be the most secure gateway for you to send us important documents and for us to send you important documents.
Virtual Tax Year 2020
Hi Friends, what a crazy year it’s been!
In January 2020, I thought my largest challenge would be running the practice my mother founded, with her now in retirement. Turns out I was wrong. I could not have predicted the challenges that have faced us all. While we met with many of you in person this year, we did close the office to the public starting in March 2020 for a virtual tax year and it worked out well for everyone.
As I think about this past year and all of the people that I’m so lucky to have as a part of my life (my family, my staff, my clients), I can’t help but think of their safety and well being. It’s become an inescapable fact that we will continue to deal with this pandemic for a while longer. Most experts say that the soonest the general population will have had the chance to be effectively vaccinated will be April or May of next year. So after much thought and discussion with staff, we have made the decision to keep the office closed to the public (and continue to have virtual tax appointments) until at least May 2021 so that we can keep our staff, clients, and families as safe as possible.