IRS DELAYS START OF TAX FILING
On Friday, January 16th, the Internal Revenue Service announced a delay to the start of the tax filing season until February 12th. Normally, the IRS opens for the season mid-late January. The reason given for the delay is so that the IRS’s systems can be updated to handle tax changes from December 27th and the second round of stimulus payments.
Although February 12th is when the IRS will begin accepting and processing tax returns, returns may still be prepared ahead of this date and queued for transmission when the IRS opens their systems. These changes can be confusing, but it is crucial to arm yourself with this knowledge, especially as a new administration takes office.
BIDEN STIMULUS and TAX PLAN
Joseph R. Biden took the presidential oath on January 20th, 2021, solidifying himself as the 46th president of the United States of America. President Biden and his administration has promised “A presidency for all Americans,” and part of this pledge involves stimulus checks and tax changes for eligible Americans.
Stimulus Plan
Within the first 100 days of taking office, President Biden hopes to accomplish a number of items, including the following:
§ $1,400 stimulus checks
Individuals who were eligible for the $600 second-round stimulus check in early January will receive a third round of financial assistance. These payments will be expanded to adult dependents previously excluded.
§ Increase minimum wage to $15
President Biden will work to protect workers across all industries with a minimum wage increase, beginning with federal employees and contractors.
§ Extend unemployment benefits
As the pandemic continues, the Biden Administration will extend and increase unemployment benefits beyond the current $300/week plan, which ends in March. Continuing through September, underemployed individuals could be eligible for $400 per week. The Pandemic Unemployment Assistance for self-employed individuals will also continue through September.
§ Provide rent and utility assistance for low-income households
The Biden Administration hopes to spend $30 billion to assist low-income households in covering living expenditures such as rent and utilities. Additionally, Biden plans to extend the foreclosure ban until September 2021.
§ Extend emergency paid leave (Families First Coronavirus Response Act) through September
Tax Plan
In addition to the stimulus plan, Biden is looking to temporarily increase the Child Tax Credit and expand the Earned Income Tax Credit. This is a staggering amount of change for the first 100 days in office, and following these ambitions are even more changes that could affect you.
These policy updates may include:
§ Increased top tax bracket from 37% to 39.6% for taxpayers with taxable income over $400,000
§ Implement capital gains tax rate of 39.6% on income over $1 million
§ Limitation on itemized deductions for high income earners
§ Increase Corporate tax rate from 21% to 28%
§ Minimum tax of 15% on Corporations with income of $100 million or more
All of the changes with the new administration may seem overwhelming, but beginning to get your taxes in order before the season officially starts can help you feel prepared.