We keep you up to date on the latest tax changes and news in the industry.
Article Highlights:
Under Biden’s plan, the exemptions for businesses with over 500 employees and those with fewer than 50 employees would be eliminated, making the program mandatory for all sizes of businesses. The government will reimburse employers with fewer than 500 employees for 100% of the cost.
Increase the Child Care Tax Credit: Currently, a nonrefundable tax credit is available to some taxpayers for the expenses they incur for the care of a child, spouse, or other dependent while the taxpayer is gainfully employed (or is seeking a job). The maximum expenses that can be used to determine the credit are $3,000 for one child and $6,000 for two or more children. The credit rate ranges from 20% to 35% depending on income (the higher the income, the lower the credit rate).
Biden’s plan requests Congress to authorize an increase in the child care credit and make it refundable for one year. The credit would be a full 50% of the expenses, with maximum expenses of $4,000 for one child under age 13 and $8,000 for two or more children. The credit would be phased out when income ranges from $125,000 to $400,000.
Child Tax Credit: For years 2018 through 2025, the child tax credit is a maximum of $2,000 per dependent child under the age of 17. In some cases, up to $1,400 of the credit is refundable. The credit phases out when the taxpayer’s modified adjusted gross income exceeds $200,000 ($400,000 for married joint filers). Biden is asking Congress, for a period of one year, to include children through age 17 in the credit and increase the Child Tax Credit to $3,000 ($3,600 for children under the age of 6).
Earned Income Tax Credit (EITC): Childless adults are eligible for a lesser earned income tax credit amount than if they had a qualifying child. Biden’s plan requests that Congress make a one-year increase in the EITC for childless adults from roughly $530 to $1,500 and increase these individuals’ income limit for the credit from roughly $16,000 to $21,000. Biden also would also like Congress to eliminate the age cap so that older workers without a qualifying child can claim the credit (currently, a childless individual cannot claim the credit after reaching age 65).
Healthcare Coverage: Individuals who purchase their health insurance through the government marketplace may be eligible for a premium tax credit, with an advance premium tax credit (APTC) used to reduce monthly premiums, and the advance and actual credits reconciled on their income tax return each year. Biden’s plan asks Congress to increase the premium tax credit so that workers will pay no more than 8.5% of their income for coverage.
Although not tax-related, other issues in the plan affecting individuals include:
Evictions and Foreclosures: President-Elect Biden is calling on Congress to extend the eviction and foreclosure moratoriums and continue applications for forbearance on federally guaranteed mortgages until September 30, 2021, as well as to provide funds for legal assistance for households facing eviction or foreclosure.
Homelessness: The plan requests that Congress provide $5 billion to help secure housing for the approximately 200,000 individuals and families.
Remember, these are only Biden’s proposed changes; quite often, what Congress ends up passing is not the same as the originally proposed legislation. If you need assistance or have questions related to other tax issues, please give this office a call.
Each month, we will send you a roundup of our latest blog content covering the tax and accounting tips & insights you need to know.
We care about the protection of your data.
Personal Income Tax Services
In addition to our normal tax preparation service, we also offer the Tax Assurance Packages for those clients who want more than just a tax preparation. These packages are annual packages which provide superior tax preparation, tax planning and access to a tax expert via e-mail. All of these additional services are free of charge to those clients who select on of our Tax Assurance Packages.
Annual Tax Preparation
Audit Assistance - We respond to audit inquiries
E-Mail Access for questions (72 Hour Response)
Annual Tax Preparation
2 Tax Planning Meetings per year
Audit Assistance - We respond to audit inquiries
E-Mail Access for questions (24 Hour Response)
Annual Tax Preparation
Annual Tax Planning Meeting
Audit Assistance - We respond to audit inquiries and E-Mail Access for questions (36 Hour Response)
Business Income Tax Services
In addition to our normal tax preparation service, we also offer the Tax Assurance Packages for those clients who want more than just a tax preparation. These packages are annual packages which provide superior tax preparation, tax planning and access to a tax expert via e-mail. All of these additional services are free of charge to those clients who select on of our Tax Assurance Packages. These packages include both the business and personal tax related preparation services.
Annual Tax Preparation (Business and Personal)
Audit Assistance - We respond to audit inquiries
E-Mail Access for questions (72 Hour Response)
Annual Tax Preparation (Business and Personal)
2 Tax Planning Meetings per year
Audit Assistance - We respond to audit inquiries
E-Mail Access for questions (24 Hour Response)
Annual Tax Preparation (Business and Personal)
Annual Tax Planning Meeting
Audit Assistance - We respond to audit inquiries and E-Mail access for questions (48 Hour Response)