20 or so Tax Preparation Challenges for 2021 Filings
So as we end 2021 it is not too early to start planning for the upcoming tax-filing season. We’ve all been pretty much kicked in the teeth over the last few years with all the tax legislation changes – not to mention the plannedemic that that has thwarted the world economy as the powers that be pull us dragging and kicking into a “new world order.” Nevertheless, no matter how we characterize recent events we still have the daunting tax season rushing towards us just after the holiday break. This article will launch a series of articles that are briefly addressed in this piece that will each be expounded on in the weeks to come. The best prevention for Tax Resolution needs is Tax Planning for Tax Preparation. This article will highlight the 20 or so tax topic challenges we face this coming year.
1. COVID-19 Tax Relief. I think this one is going to affect us for years to come. I see at least 13 provisions, benefits and actions that families, retirees and businesses need to consider regarding these provisions. We have the American Rescue Plan Act, Employer Provisions in American Rescue Plan Act, Child-Related Provisions, in that act. There’s, Extension of Additional Unemployment Compensations. And don’t forget the Recovery Rebate Tax Credit Credits – you know – STIMULOUS CHECKS. I can easily see 13 more articles addressing each of these to consider so please stay tuned to this bat station as we churn and burn more articles in this regard so you are thoroughly prepared for this tax preparation season.
2. Disaster Area Relief. If you lived in Florida in 2018 and suffered during Hurricane Florence or experienced Hurricanes Maria, Irma & Harvey, you’ll want to check with your tax pros on further relief.
3. There are general provisions for the Infrastructure and Jobs Act to be aware of this year. Yes… more tax legislation.
4. Ah yes… the Affordable Cares Act. Things to still be mindful this year are the requesting relief notice particulars, Waivers of estimated tax penalties – there’s about three of these for which we need to be mindful.
5. There are a bunch regarding Patient Protection and Affordable Care Act (PPACA): This act concerns provisions for individuals & businesses, employed and self-employed. There’s legislation regarding the Expanded Medicare Contribution Tax and mandates for employers and small employer health insurance considerations.
6. Back-up Withholding, Tax Liabilities, and Tax Payments issues. These areas concern employer-provided free meal; Innocent Spouse changes; Individual Income Tax Installment Agreement changes; Offers in Compromise and Withholdings for gambling winnings. Has anyone discussed these issues for starting your tax preparation?
7. Business Related Deductions. I can think of 11 different provisions we need to be mindful here from At-Risk Rules LLC Member and Passive Activity Loss Rules and Deduction for Certain Local Transportation Expense. No business should turn over their records for tax preparation without knowing these issues will be addressed. Business really need to pick a business specialist for their tax filing this year.
8. C Corporations. You big corp guys have four areas that you should pay attention to I think: capitalization versus your deductible repairs; domestic production activities deductions; Charitable contribution rule changes and dividends-received deductions. Most corporate execs know they are double tax during tax preparation season.
9. Compensation and Fringe Benefits – seems to be an area of focus for the thousands of IRS recruit the government is recruiting. They really want to squeeze everything they can out of us. So pay attention to disability coverage, stock purchase plans, incentives, and restricted stock awards. Make sure you understand the Special Timing and Accounting Rule for Noncash Fringe Benefits.
10. Employment Tax – here we have changes in worker classification, 1099 filing requirements FICA on service charges and responsible person penalties. Yeah – more fun. As an aside if you are a sole prop you are paying taxes twice during tax preparation season. You don't have to as an S-Corp, but currently you are.
11. Estates, Gifts, and Trusts. Only 13 changes here to be aware of; everything from medical expenses of a decedent to inclusion of jointly held property in gross estate.
12. You Expats have foreign earned income exclusions to be mindful of this year, but you need to pay attention to the information reporting for large gifts received from foreign persons.
13. For the rest of us mere mortals – we have 33 Individual Income Tax topics to address this year. Be careful – NOT AFRAID – but careful in filing this year. We will right articles for each area of concern in the coming weeks.
14. Partnerships. You need to make sure you tax professional is aware of the Post-2017 Partnership Audit Rules. And make sure you know the rules regarding health insurance deductions for the self-employed and everything concerning interest in limited and passive activity losses. Another one of those unpleasant rules that many do not realize until Tax Preparation times roll around - you are double taxed as a partner.
15. Real Estate and other property related issues. I’ll just list 10 areas that should concern you: Like-Kind exchanges, Deduction for Personal Property Taxes, Constructive Sales of appreciated financial positions, passive loss rules, disallowance on losses on sales of property between related persons, rental real estate loss rules, installment sales, allocating real estate taxes between buyers and sellers, deferred like-kind exchanges & related party like-kind exchange rules.
16. Retirement Planning. Retiree hopefuls should make sure they understand Qualified Plans. Do you know how to set up a SEP retirement plan? Has anyone filtered the types of 401 (k) Plans for you. What are 401 (k) Plan Hardship Distributions? There are at least 11 areas I’d like to address on this topic.
17. There are nine professions or industries in particular that should pay attention to their tax filing rules this year: Architects, Lawyers, Fishing Operations, Art Galleries, Ministers, Horse Breeders, Business Consultants, Child Care Providers & Home Construction Professionals.
18. Tax Credits – TAX CREDITS. We all love tax credits. Our gracious government has pulled and twisted the tax credit provision in the most interesting fashions this year. They concern: Alternative Minimum Tax Credits for Individuals, Education Credit and Deductions, Child Care Credits, Retirement Savings Credit, Earned Income Tax Credits, Low-income Housing Credits, Employer Social Security Tax on Tips. Make sure your tax preparation provider is fluent in all of these credits.
19. We’ll address these in the next few weeks, but there are at least 13 areas regarding the Tax Cut and Jobs Act we need to pay attention to and we’ll address.
I did write 20 or so… and well the 20th is the horrible Build Back Bullshit Socialist changes congress has just pulled through. Some of it has been made public and most has been hiding from us. But one thing is for sure… we are entering the socialist nightmare; the same nightmare that murdered 200 million people and displaced over 1 billion in the twentieth century.
As the IRS begins to implement their newly acquired app that will actually spy on your bank accounts, expect that in the near future they will empty them willy-nilly in the name of “the greater good.” This is real folks. But for this year, we just need to make sure we get the 2021 returns filed correctly.
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