It’s hard to believe a little over a year ago the COVID 19 pandemic hit everyone. As things slowly turn back to normal, you need to be ready for the normalizing of the tax rules and adjusting to new ones. Here is how you can be prepared.
Covid Tax Relief 2021: Required minimum distributions.
If you are age 72 or older, you must once again plan to take the minimum required distribution from your retirement account in 2021. The one-year waiver of this required distribution is now over.
Covid Tax Relief 2021: Penalty-free distributions from retirement accounts.
While penalty-free distributions from retirement accounts are still available for those in presidentially declared disaster areas, the distribution benefit for pandemic-related reasons is expiring. Remember, if you have to make withdrawals you will need to pay income tax on the distributions unless you repay the funds in a timely manner.
Covid Tax Relief 2021: Unemployment taxation.
Federal unemployment benefits continue to be extended through various federal spending programs. Late breaking rules make $10,200 of last year’s unemployment benefits tax-free on most federal tax returns. But that doesn’t mean you won’t be taxed on these benefits this year. If there are no withholdings from these payments, you may be required to send in estimated tax payments.
Businesses need to stay alert.
While the original PPP loan program is now in forgiveness mode, there are new loans and active programs to help cover the cost of employees affected by the pandemic. The best course of action is to stay aware of the ever-changing federal and state landscape.
Rules and benefit programs relating to the pandemic are not over. But as social distancing rules adjust, so too must you to the changing tax law landscape.
Moskowitz LLP is a tax law and accounting firm that has dedicated over 30 years to representing individuals and businesses with civil and criminal tax problems, cleaning up accounting and tax messes, and providing tax and accounting advisory services. We offer practical and affordable tax and accounting solutions, business services, estate planning, and administration.
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