As you would expect in these unusual times, some of the relief is in the form of direct government financial assistance and some is from tax benefits that can impact both tax year 2020 and tax year 2021.
Most of the provisions create extra deductions or credits where Uncle Sam puts cash directly into your wallet.
Here are four:
1. Recovery Rebate Payments and Credits
Remember those $1,200 checks many people got earlier in the year?
Well, there’s another round of $600 payments coming, with rules very similar to the first round.
2. Paid Sick and Family Leave Credits
As you may remember from the March 2020 law, Congress provided two ways to give workers paid sick and family leave:
The tax credits require that the self-employed person or the employee was unable to work due to a qualifying situation between April 1, 2020, and December 31, 2020. The maximum non-working days eligible for the tax credits are
Under the new law, you now can claim these tax credits for qualifying days through March 31, 2021. The maximum creditable days did not increase.
3. 100 Percent Business Meal Deduction
The new December 27, 2020, law allows you to deduct 100 percent of your business-related expenses for food and beverages provided by a restaurant for amounts paid or incurred after December 31, 2020, and before January 1, 2023.
4. Charitable Contributions
The CARES Act made three major changes to charitable contribution deductions for tax year 2020:
The new law enacted on December 27, 2020, extends the increased charitable contribution deduction limits for individuals and corporations to tax year 2021. In addition, in tax year 2021, non-itemizers can deduct cash charitable contributions up to $600 on a married-filing-joint return ($300 for singles), but it’s below-the-line.
If you have any questions, please let us know.
Copyright © Gold Standard Tax & Accounting. All Rights Reserved.