2021 Tax Updates - You Need To Know

CHILD TAX CREDIT

Many filers received the advanced child tax credit. Here's the gag - some of you may have to pay some of that money back. It's critical that filers stay organized with received advanced payments. The IRS has provided a great tool to assist you with keeping track of advanced credits- Child Tax Credit Update Portal

RETIREMENT

If you have older adults (70+) in your household ensure that they take their minimum required distribution by December 31, 2021. The required distribution was waived in 202, however, it has been reinstated in 2021. The SECURE Act requires the entire balance of the participant's account be distributed within ten years. Failure to take their distribution could result in a very stiff penalty. For further information on Required Minimum Distributions.

The CARES Act provided individuals affected by COVID-19 to withdraw up to $100,000 from retirement funds without the customary 10% early withdrawal penalty.

BUSINESS RELATED

Any amount of Paycheck Protection Program (PPP) funds that were received AND forgiven will not be included in gross income.

Expenses paid for with forgiven PPP funds will be fully deductible.

Certain business meals will be 100% deductible.

You should anticipate a delay in IRS services much like last year's tax season. Get started early-connect with your tax professional and get your documents organized as soon as possible so that you are ready to file when the IRS begins accepting tax returns.

If you need assistance with a federal or state tax matter let Lessington Law assist you.

This blog is for general information and education purposes only.

It is not offered as legal advice or legal opinion.

To the extent this message contains tax advice, the U.S. Treasury Department requires us to inform you that any advice in this letter is not intended or written by our firm to be used, and cannot be used by any taxpayer, for the purpose of avoiding any penalties that may be imposed under the Internal Revenue Code. Advice from our firm relating to Federal tax matters may not be used in promoting, marketing or recommending any entity, investment plan or arrangement to any taxpayer.