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Taxpayers have a choice between taking the standard deduction or claiming itemized deductions when filling out their federal income tax return. And, of course, you ll always want to pick whichever one is higher. As predicted, the number of American taxpayers claiming the standard deduction on their tax return shot up significantly after the 2017 tax reform law. Why? Because that law nearly doubled the standard deduction amount.
Before the tax reform law, about two-thirds of all taxpayers claimed the standard deduction. That jumped to almost 90% for the 2018 tax year, which was the first year for the enhanced standard deduction. Since then, the vast majority of American taxpayers have continued to claim the standard deduction on their tax return.
Tuesday, March 16, 2021
In response to last year’s devastating hurricane season and other natural disasters, the Taxpayer Certainty and Disaster Tax Relief Act, which is a part of the Consolidated Appropriations Act, 2021 (the Act), included various relief provisions (similar to those under the Coronavirus Aid, Relief, and Economic Security Act of 2021 (CARES Act)), designed to assist individuals who suffered an economic loss as a result of these disasters. The Act, signed by former President Trump on December 27, 2020, provides individuals with increased access to their retirement plan accounts as well as plan loan and hardship distribution-related relief as described in more detail below. The relief under the Act generally expires on June 25, 2021.
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On December 27, 2020, President Trump signed the Consolidated Appropriations Act of 2021 (the “Stimulus Act”), which not only gives taxpayers another stimulus payment but changes to retirement plans, including qualified disaster distributions.
A Qualified Disaster includes any disaster that occurred between December 28, 2019, and December 27, 2020, and which was declared a disaster by the President during the period beginning January 1, 2020, and ending February 25, 2021. Further, a Qualified Individual is someone: (1) whose principal home is located in a “Qualified Disaster Area”; and (2) who suffered an economic loss as a result of the Qualified Disaster. A Qualified Disaster Area is any area in which a Qualified Disaster was declared but doesn’t include an area that is a disaster area solely due to the COVID-19 pandemic (since relief was provided under the CARES Act).
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Recently enacted H.R. 133, the Consolidated Appropriations Act, 2021 (“the Act”), is a massive, 5,593-page piece of legislation that includes appropriations for the U.S. government for the upcoming fiscal year and funding for coronavirus emergency response and relief, among many other things. While the Act will be best remembered for making some $900 billion in COVID-19 relief stimulus payments to individuals, for extending unemployment benefits, and for providing relief to small businesses, the new law also includes a series of important benefits-related provisions that are the subject of this post.
Monday, January 11, 2021
Besides the COVID-19 pandemic, 2020 has also had its share of other disasters, including hurricanes, floods and fires.
The Consolidated Appropriations Act, 2021 (the “CAA”) has provisions that are designed to provide tax relief for individuals and employers who have been adversely affected by one of the numerous federally declared “Qualified Disasters”.
These provisions of the CAA are found in Sections 301 through 306 of Title III, of Division EE, which is called “The Taxpayer Certainty and Disaster Relief Act of 2020” (the “2020 Tax Relief Act”).
In this blogpost, we will focus on Sections 301 through 303 of the 2020 Tax Relief Act, which address (i) tax-qualified retirement plans, and (ii) employee retention tax credits for employers.