New law tax break may make child care less expensive
The new American Rescue Plan Act provides eligible families with an enhanced child and dependent care credit for 2021. This is the credit for expenses paid for the care of qualifying children under the age 13 so the taxpayer can be gainfully employed. For 2021, the first $8,000 of care expenses generally qualifies for the credit if you have 1 qualifying individual, or $16,000 if you have 2 or more. (These amounts were $3,000 and $6,000, respectively.) If AGI is $125,000 or less, the maximum credit is $4,000 with 1 qualifying individual and $8,000 with 2 or more. The refundable credit phases out and for taxpayers with an AGI greater than $440,000, it’s phased out completely.
Is an S corporation the best choice of entity for your business?
Are you thinking about launching a business with some partners and wondering what type of entity to form? An S corporation may be the most suitable form of business. A big advantage of an S corp over a partnership is that as an S corp shareholder, you won’t be personally liable for corporate debts. If you expect the business to incur losses in its early years, an S corp is preferable to a C corp from a tax standpoint. C corp shareholders generally get no tax benefit from such losses but S corp shareholders can deduct their percentage share of the losses on their personal tax returns to the extent of their basis in the stock and in any loans made to the entity. Contact us to learn more.
IRS and State of Michigan Extend Time to File and Pay 2020 individual Income Tax Returns and Payments to May 17, 2021
2021 1st Quarter Estimated Payments Still Due 4/15/21 Since these extensions are limited to 2020 taxes only, first quarter estimated payments for tax year 2021 shall remain due on April 15, 2021. We are actively observing the taxing authorities regarding city income tax filing deadlines and as of Friday afternoon (3/19/2021) the Michigan Legislature was […]
New COVID-19 relief law extends employee retention credit
The recent signing of the American Rescue Plan Act (ARPA) brings potentially good news for many business owners: the employee retention credit (ERC) has been extended again. The ERC was originally introduced under the CARES Act to provide tax relief to companies that retain employees during the COVID-19 pandemic. It was then extended and enhanced under the Consolidated Appropriations Act. The ARPA further extends the ERC from June 30, 2021, until December 31, 2021. It also extends the higher percentage of 70% of qualified wages, as well as the allowance for up to $10,000 in eligible wages for any calendar quarter. We can explain further and help you determine whether your business qualifies.
New law: Parents and other eligible Americans to receive direct payments
President Biden has signed the American Rescue Plan Act into law. Among the many relief provisions are direct payments that will be made to eligible individuals. The full amount for eligible individuals is $1,400 ($2,800 for eligible married couples filing joint tax returns) plus $1,400 for each dependent. Most eligible taxpayers will receive direct bank deposits or paper checks in the mail. The full payments are available to those with adjusted gross incomes (AGIs) of less than $75,000 ($150,000 for married couples filing jointly and $112,500 for heads of households). There is also an increased Child Tax Credit for eligible taxpayers, part of which will be paid out monthly later this year.
Business highlights in the new American Rescue Plan Act
President Biden signed the American Rescue Plan Act (ARPA) on March 11. While the new law is best known for the provisions providing relief to individuals, there are also several tax breaks and financial benefits for businesses. For example, the Employee Retention Credit (ERC) is extended from June 30 until December’31, 2021. The ARPA continues the ERC rate of credit at 70% for this extended period of time. It also continues to allow for up to $10,000 in qualified wages for any calendar quarter. This means an employer can potentially have up to $40,000 in qualified wages per employee through 2021. This is only one of the ARPA provisions. Contact us for more information about your situation.
The latest on COVID-related deadline extensions for health care benefits
The U.S. Department of Labor recently clarified the duration of certain COVID-19-related deadline extensions that apply to health care benefits plans. The original emergency declaration would have expired on March 1, 2021, but was extended. The notice provides that the extensions will continue and be measured on a case-by-case basis. Specifically, applicable deadlines for individuals and plans that fall within the outbreak period will be extended until the earlier of one year from the date the plan or individual was first eligible for relief or the end of the outbreak period. Plan sponsors should be ready to communicate with participants regarding the rules. Contact us for more information.
New Benefits Available to More Employers with the Revised Employee Retention Credit
We wanted to pass along to you some news in the form of an expansion of the Employee Retention Credit with the signing of the Consolidated Appropriations Act of 2021 on 12/27/20. Employers that carry on a trade or business that either were fully or partially suspended due to orders from the federal or state […]
5 ways to streamline and energize your sales process
As vaccination efforts ramp up, many experts expect more robust economic activity in the months ahead. The last thing you want is a sales department hamstrung by overly complicated procedures as they strive to seize opportunities in the presumably brighter near-future. To streamline and energize your sales process: 1) Reassess and, if prudent, realign sales territories, 2) If necessary, focus on winning back or retaining top-tier customers, 3) Re-evaluate your sales software to ensure it’s not slowing down momentum, 4) Issue a carefully chosen challenge to incentivize your salespeople, and 5) Align sales commissions with your company’s financial objectives. Contact us for more info.
Estimated tax payments: The deadline for the first 2021 installment is coming ups
April 15 is not only the deadline for filing your 2020 tax return, it’s also the deadline for the first estimated tax payment for 2021. You may have to make estimated payments if you receive interest, dividends, self-employment income, capital gains or other income. If you don’t pay enough tax during the year through withholding and estimated payments, you may be liable for a tax penalty on top of the tax that’s due. Individuals must generally pay 25% of their required annual tax by April 15, June 15, Sept. 15, and Jan. 15 of the following year, to avoid an underpayment penalty. If a deadline falls on a weekend or holiday, the payment is due the next business day.
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