MEDIA ALERT – With the tax filing deadline in the rearview mirror for many taxpayers, there is plenty still to consider for the remainder of the year

Wolters Kluwer Tax & Accounting:

What: With the May 17 tax filing deadline now behind us, there are some new tax issues and proposed tax law changes that should remain in focus, even for those who filed for an extension. The American Rescue Plan Act enacted earlier this year included changes that will affect 2021 tax returns and If enacted, the proposed American Jobs Plan and the American Families Plan could both contain provisions that will impact 2021 tax returns. Additionally, the Internal Revenue Service (IRS) also continues to issue guidance on new tax provisions. Learn more about some of the changes in this recently published 2021 Post-Filing Season Update from Wolters Kluwer Tax & Accounting.

Why: As is often the case, some of the new changes impacting 2021 tax returns may require immediate action to take maximum advantage of new tax breaks. Even tax breaks that are only proposed and not yet enacted could warrant conversations between taxpayers and their tax advisors to prepare for possible impacts and planning opportunities.

Provisions enacted that impact 2021 tax returns

• A third round of Economic Impact Payments of up to $1,400 per person that, if not paid out earlier, will be a refundable credit on the 2021 tax return
• An expanded Child Tax Credit that is fully refundable and includes an advance monthly payment for 2021 of up to $300 per child beginning July 15, 2021
• Expanded Earned Income Tax Credit, Dependent Care Assistance Credit, and Premium Tax Credit for 2021
• Safe harbor for deduction of Paycheck Protection Program expenses incurred in 2020 and 2021
• Guidance on the 100 percent business meals deduction for 2021 and 2022 covering meals provided by a restaurant
• Additional guidance on the paid sick and family leave credits for the periods of January 1 through March 31, 2021 and of April 1 through September 30, 2021
• Additional guidance on the employee retention credit for the periods of January 1 through June 30, 2021 and of July 1 through December 31, 2021
• Additional guidance on COBRA continuation coverage for the period of April 1 through September 30, 2021

Proposed provisions that, if enacted, could impact 2021 tax returns and future planning

• Increase in individual tax rates for higher income taxpayers
• Increase in capital gains tax rates for higher income taxpayers
• Increase in corporate tax rates
• Elimination of step-up basis
• Extending the expanded tax credits enacted under the American Rescue Plan Act
• Increase in IRS funding to expand audits and improve customer service
• Regulation of tax return preparers
• New financial institution reporting on inflows and outflows of customer accounts
• A significant package of international tax reforms

Wolters Kluwer Tax Briefing: Wolters Kluwer Tax & Accounting published the 2021 Post-Filing Season Update expert tax briefing that looks back at the tax season and provides additional insights into upcoming legislation and latest tax developments impacting business and individual taxpayers.

Who: Tax expert Mark Luscombe, JD, LL.M, CPA, Principal Federal Tax Analyst at Wolters Kluwer Tax & Accounting, can help discuss the tax issues in preparing for enacted tax changes and potential tax changes impacting 2021 tax returns and beyond.

PLEASE NOTE: The content of this alert has been prepared by Wolters Kluwer Tax & Accounting for general informational purposes only. The information is provided with the understanding that Wolters Kluwer Tax & Accounting is not engaged in rendering legal, accounting, or other professional services.

Contact: To arrange an interview with Mark Luscombe or other federal and state tax experts from Wolters Kluwer Tax & Accounting on this or any other tax-related topics, please contact Bart Lipinski.

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