Key Items In The American Rescue Plan Act of 2021

Key Items In The American Rescue Plan Act of 2021

Key Items In The American Rescue Plan Act of 2021

 

On March 11, 2021, President Biden signed into law the American Rescue Plan Act of 2021.

Here are some of the key items: 

 

Retroactive Exclusion of Certain Unemployment Benefits


 

The Act contains a provision that retroactively excludes up to $10,200 of unemployment benefits for the 2020 tax year for taxpayers with adjusted gross income of up to $150,000.  This threshold is the same for all filing statuses, and, on a joint return, each spouse can exclude up to $10,200, to the extent that each spouse separately received unemployment benefits. 

For affected clients, practitioners should put those clients on extension until the IRS updates its systems to reflect this retroactive law change and until states announce whether or not they will conform with the federal treatment. 

If a client has already been filed, you should also plan to amend those returns.

 

 

Third Round of Stimulus Payments


 

The Act provides for a new round of stimulus payments.  The IRS is expected to begin sending these payments over the next few weeks.  The payments represent an advanced payment of a credit for the 2021 tax year, so these payments do not affect the computations or reporting for 2020 income tax returns.

The amount of the stimulus payments will be $1,400 for each taxpayer ($2,800 for married couples) plus an additional $1,400 for each dependent of the taxpayer, including children age 17 or older.  (As a comparison: The first two rounds of stimulus payments included lower amounts for children under age 17, had no payments for children age 17 or older, and had no payments for dependents who are not a child of the taxpayer). 

While the phaseout threshold begins at the same level as for the prior rounds of stimulus payments, full phaseout occurs at much lower levels of income.  The phaseout thresholds begin for taxpayers with adjusted gross income of $75,000 for single, $112,500 for heads of households and $150,000 for married joint returns.  Full phaseout occurs at $80,000 for single, $120,000 for heads of households and $160,000 for married joint.  For taxpayers with adjusted gross income within the phaseout range, the phaseout is based on a ratio of the excess of the taxpayer’s adjusted gross income above the threshold divided by $5,000 for single, $7,500 for heads of households and $10,000 for married joint.

It’s important to note that the timing of when 2020 returns are filed can be an important consideration for taxpayers who have lower income in either 2019 or 2020.  The Act indicates that, for taxpayers who did not file their 2020 returns prior to the IRS sending the third round of stimulus payments, the IRS is supposed to go back and look at the 2020 tax returns of such taxpayer later in the year and send the stimulus payment to taxpayers with lower income in 2020, if such lower income makes them eligible to receive the payments.  

Since the third round of stimulus payments represent an advanced payment of a 2021 credit, and since the IRS is using prior-year returns to estimate each taxpayer’s eligibility, the advanced payments may end up being higher or lower than the amount for which taxpayers are eligible, once their 2021 income is computed.  In this case, and similar to the procedures that applied for the earlier rounds of stimulus payments, taxpayers who did not receive the full amount for which they are eligible will claim the difference as a credit on their 2021 tax returns.  However, taxpayers who received too much will not be required to repay the difference.

 

 

Child Credit Expanded for 2021


 

Beginning in 2021, for taxpayers with modified adjusted gross income below $75,000 for single, $112,500 for heads of households and $150,000 for married joint, the child credit will be increased from $2,000 to $3,000 per child (and will be $3,600 for children under age six).  The age of the children eligible will also increase to include children under the age of 18 (instead of children under age 17 under prior law).  In addition, the refundable portion of the child credit will increase from $1,000 to the full amount of the credit. 

Modified adjusted gross income is defined in the same way as for the current phaseout of the child credit.

Taxpayers with income above these thresholds will have the higher credit phased out.  Once the higher portion of the credit is phased out, taxpayers will continue to receive the current child credit of $2,000 per child, subject to the same phaseout threshold as in recent years, which begins at modified adjusted gross income of $200,000 for all filing statuses except married joint and $400,000 for married joint.

Beginning in July 2021, the IRS is supposed to begin making advanced payments of up to half of the credit, and such advanced payments will be reconciled with the child credit for which taxpayers are eligible when taxpayers file their income tax returns.  Overpayments of advanced payments will be required to be repaid by taxpayers, and underpayments will be treated as an additional credit on taxpayers’ income tax returns.  To facilitate this reconciliation, the Act requires the IRS to report all advanced payments of the child credit made to each taxpayer on a summary to be sent to taxpayers by January 31 of the following tax year. 

 

 

Other Notable Provisions


 

  • Beginning in 2021, the credit for child and dependent care will be increased and made refundable for certain taxpayers. 
  • Beginning in 2021, the earned income tax credit will also be increased and expanded. 
  • Beginning in 2021 and scheduled to expire after 2025, the Act provides that any discharge of federal student loans will be excluded from gross income.
  • The Act creates a new refundable credit for employer payroll tax to offset the requirement that employers reduce the cost of COBRA continuation coverage for former employees from April 1, 2021 through September 30, 2021.
  • The Act extends the expiration date of the employee retention credit from June 30, 2021 to December 31, 2021.
  • The Act extends the expiration date of the paid sick and family leave credit from March 31, 2021 to September 30, 2021 and it expands the amount of applicable wages used for the credit from $10,000 to $12,000, effective on April 1, 2021. 
  • The Act lowers the threshold for filing Form 1099-K, Payment Card and Third Party Transactions, to apply when processed transactions exceed $600 for the year.  (The current threshold for filing the form is when processed transactions are more than 200 and the amount of such transactions exceeds $20,000.)  This change is effective for tax years beginning after December 31, 2021. 

 

Who We Are And Who We Serve

Who We Are And Who We Serve

 

If this is your first introduction to CPA MOMS, welcome!  This blog will hopefully help you to learn a little more about who we are, what we do, and who we serve. 

 

Here’s a quick index:

    • Who we are and who we serve
    • How we serve business owners
    • How we serve accountant moms
    • The franchise opportunity
    • To find out more

  

 

Who we are and who we serve


CPA MOMS was founded about 12 years ago by Mayumi Young, a CPA and entrepreneur.  She saw first hand the need that businesses had for talented accounting professionals and knew there had to be a better way to meet those needs as well as a way to serve the underserved community of talented accountant moms that she got to know and work with. To fulfill the need on both ends, she founded CPA MOMS.

CPA MOMS is a national company servicing business owners who are looking for talented accountants for their accounting and tax work AND we also service talented accountants who are looking to work virtually and who want to build their own practices; something that so many accountant moms are looking for during these unprecedented times.

As you know, every successful company needs a mission and at CPA MOMS our mission is to bring families together.  We support business owners and entrepreneurs as they grow their businesses and more importantly, we support accountant moms trying to have both a career and a family.

 

 

How we serve business owners


It doesn’t matter whether your business is just starting and you want an accounting professional to help you to set it up properly, your business is in early stages and cash flow is tight, or you are a fast growing venture that needs financial systems to help grow exponentially, CPA MOMS® professionals are equipped to serve business owners at all stages.

A NY Times article from February 2020 discussed why you need to be careful when choosing an accountant.  The article explained that each year, the I.R.S. compiles a “Dirty Dozen” list of tax scams. Although the scams are wide-ranging, many of them include actions taken by shady tax preparers, such as promising inflated refunds, falsely claiming deductions and credits, or encouraging clients to avoid their tax obligations.

Unfortunately, just about anyone can become a paid tax preparer. Most states frankly have few to no requirements for certification, training, or even competency testing.  We get all the concerns you might have with choosing an accounting and tax professional which is why we take the guesswork out of it for you.

We do the vetting process for you, because we will only assign you to an official CPA MOMS Franchisee.  This means that the CPA you are speaking with for your initial 30 minute free consultation has chosen to grow their CPA firm with the support of CPA MOMS.  

We put our name on their firm because we’ve certified their ability to provide only the highest service to their clients.  We’ve already done full background checks and tested their accounting and tax knowledge.  We have also provided them with technology and operation support services so that they can stay focused on performing their accounting and tax services for their clients and not be sidetracked working on their business growth and operations.

As business owners, we know your time is limited and that you want to get back to the business of running your business.  That’s why we’ve done the background checks, the competency tests and offer a unique advantage for you to hire a CPA with the strengths of a large CPA firm but without the high service fees.

All of our accounting professionals work virtually, making it incredibly easy and efficient to provide you with any level of service that you need.  From bookkeepers, to CFO’s, to tax preparers, we can support you, your company, and the legacy that you want to leave your family and future generations to come.

We have accounting and tax professionals with experience across a wide range of industries ranging from real estate, eCommerce, service professions, franchising, construction, manufacturing, retail, restaurants, interior design firms, and 501(c)3 organizations, to name just a few.

Let’s face it, your business is probably like your baby, therefore trust is a huge factor when choosing an accounting professional.  We completely understand that, which is why our talented CPA MOMS franchise owners are such a great and affordable option. 

 

 

How we serve accountant moms


When founder Mayumi Young, CPA saw the need to provide the ability to work virtually for the highly intelligent, hard working and underserved community of accountant moms that she came in contact with, she knew there had to be a better way to help accountant moms not have to choose between having a career OR a family.

She wanted to provide a place for talented accountants who wanted flexibility and independence, yet still wanted to be a part of a community and have peer to peer support.

At CPA MOMS we are a mission-driven organization that invests heavily in creating flexible, virtual work environments so accountant moms can raise their kids and have a career.

We are incredibly proud of the social impact we have had with so many families and look forward to empowering more accountants and their families.

The way we serve accountant moms is by offering different paths whether you are looking for virtual, flexible work, whether you are looking to go out on your own and need someone to mentor and guide you through the process, or whether you already have a firm and want to grow by building a team and putting systems and processes in place in order for you to have the business and the legacy you desire.

No matter how far down the path you are, or how far you want to grow, CPA MOMS has resources to support you along the way.

We also have an incredibly supportive community that you can join for free.  As part of our community you’ll receive an informative weekly newsletter, you’ll have access to our private Facebook community providing peer to peer support, you’ll have networking and training opportunities with other accountant moms and much more. 

The most important way we serve accountant moms is offering a “done with you” ability to have your own accounting practice while also being able to be there for your family.  The opportunity to franchise with CPA MOMS is something we’re passionate about in order to help accountant moms have both an accounting career and a family.

 

 

The franchise opportunity


Over the years CPA MOMS founder, Mayumi Young, CPA saw the struggle that so many accountant moms had, trying to find jobs that offered flexibility, that allowed for career advancement, and that supported them balancing an accounting career with having a family.  So many of these moms experienced gut wrenching mom guilt as they tried to have both a career and a family.

These hard working, intelligent women either wanted to go out on their own and didn’t know how, or already had their own small practice and wanted to grow but didn’t have the support they needed. 

For this reason, CPA MOMS launched a “done with you” opportunity for accountant moms to create their own practice or grow the practice they already have so they don’t have to do it alone.

This enables CPA MOMS to help build CPA practices, allowing the CPA to retain ownership of the practice.

A few years ago Mayumi started what she called the “agency” within CPA MOMS.  This is where CPAs and CPA firms could receive leads, training, technology support, as well as additional coaching.  This proven concept is really what’s behind CPA MOMS franchise model.  So although we only started offering franchise opportunities in 2020, we’ve actually been perfecting our unique, successful model for many years.

You may already know a little about other franchise businesses, but here’s how the CPA MOMS franchise stands out:

 

  • Our technology advanced and extremely comprehensive franchise model offers a year of training where most franchises offer 1 day to 1 week of training.
  • We offer a turnkey franchise, which includes lead generation for our franchisees, where most franchisors do not offer leads.
  • We have custom built technology (created by accountants for accountants). Most franchises do not offer technology.
  • We have real world applied learning and ongoing “on-the-job” training, where most franchisors provide only a help desk after the initial training, which means you are never alone.
  • Lastly, we have a recognizable brand and leverage that brand to create national partnerships, and more!

 

In essence the franchise offers you the opportunity to learn the “business of accounting” so you can add more value to your clients and spend more time with your family.

It provides you with the technology and operation support services you need so you can stay focused on servicing your clients rather than being sidetracked on working on your business growth and operations.

We also provide continuous mentoring and support to ensure that you are focused on growing yourself, both professionally and personally, while maintaining your firm and providing the high quality service that business owners expect from the CPA MOMS brand.

So if you are a business owner, there is an affordable option for getting your accounting needs met AND if you are an accountant mom, there is a way for you to be there for your family while you grow your accounting career.

 

 

To find out more


If you are a business owner, you can find out more HERE

If you are an accountant mom, you can find out more HERE

If you have any questions, you can always contact us directly at community@cpa-moms.com

 

The CPA MOMS Podcast Roadmap

The CPA MOMS Podcast Roadmap

Welcome to an introduction to The CPA MOMS Podcast!  We’re so glad you’re here.

 

One of our greatest resources in helping you balance being an accountant and a mom, dealing with mom guilt, or how to handle burnout is The CPA MOMS Podcast

 

Whether someone has recommended the podcast to you or you stumbled upon this page while searching for ways to juggle motherhood and your career, we’re so glad you’re here.

 

With over 70,000 downloads of the podcast, we know we’ve got some powerful information to share with accountant moms just like you.

 

We also understand that with over 100 episodes to choose from, it can be overwhelming to know where to begin. You are welcome to start anyplace you want, but it’s not necessary to go back to the beginning.

 

We created this roadmap to help onboard you to the podcast. We selected the episodes that would best get you up to speed and ready to tune in each Sunday when new episodes are released.

 

Since there are so many challenges that accountant moms face, we’ve created a mini-directory of the most commonly requested topics and a handful of episodes that addresses each one. This page will also highlight our all-time most popular episodes.

 

 

 

What Listeners Are Saying About The CPA MOMS Podcast

 

The CPA MOMS Podcast is the place where busy female accountants, who also happen to be moms, get practical support and solutions you need to have it all – a successful career and a happy family.

 

The CPA MOMS Podcast host, Dawn Goldberg, CPA, has been in public accounting for over 30 years and a mom for over 28 years. She has worked for firms like Deloitte & Touche and Ernst & Young, as well as smaller firms. She knows what it takes to be a CPA and a mom, and shares the powerful ways to have a successful career while also raising a family.

 

Here are what some of our listeners have said about the podcast:

 

“I am so grateful for this podcast. It’s not easy being a CPA and a mom but this podcast has really opened my eyes to how to balance it all. thank you for all that you do to help CPA moms!” – kg0819

 

“Love this supportive and inspiring podcast, thank you for sharing your insights and wisdom. I look forward to it every week!” – Jen Gale Bastian

 

“As a CPA and a mom it can be difficult to get support that isn’t just “technical”; the support that helps me balance both of my roles. This podcast is exactly what I’ve been looking for!! Great topics that give me what I’ve been wanting personally and professionally.” – JS CPA

 

“Love Dawn’s void of truth-telling about how we make stuff up in our minds and then live by those “truths”. It’s great content for any CPA who wants to increase her own clarity and power” – GeraldineDcarter

 

“Dawn Goldberg shares practical, useful information while still being vulnerable and open. i listen to her podcast after I drop off my kids and am on the way to work. As a working mom with a demanding finance career, almost every episode has something I can relate to and inspires me. I wish I worked with her! – APSolutions, LLC

 

The CPA MOMS Podcast Mini-Directory By Episode

 

 

 

If you like what you hear on the podcast, we would be so grateful if you would share it with other accountant moms who could use support as well.

The CPA MOMS Podcast can be found in iTunes, Stitcher, Apple Music, iHeart Radio, or you can go to cpa-moms.com/podcast

Navigating Stimulus Payments and the Recovery Rebate Credit

Navigating Stimulus Payments and the Recovery Rebate Credit

Determining The Economic Impact Payments Received

 

With many taxpayers receiving both economic impact payments starting in April 2020 and then again in December 2020, taxpayers and practitioners are understandably confused about whether they’re entitled to the Recovery Rebate Credit on the 2020 Form 1040, line 30.

In order to determine whether a taxpayer is eligible for the Recovery Rebate Credit, taxpayers and practitioners must know the amount of economic impact payments received in/around April 2020 and again beginning in January 2021.

If the client retained IRS Notice 1444 for the first economic impact payment and Notice 1444-B for the second, they would show the amounts received, making this very simple.  However, since most taxpayers did not retain these notices, practitioners must use some other method to determine the amounts received.

These other methods could be asking the client to look for the amount of direct deposits or checks deposited or the practitioner can compute the amount of the economic impact payment that the IRS should have sent based on the client’s prior year return.

The IRS has also indicated that taxpayers who create an individual online account can now view the amount of economic impact payments sent to them by the IRS.  This online account can be created by the taxpayer, not by the tax preparer.  It should take about 15 minutes to create an account due to the identity verification required.  To find out more about setting up an account you can go to https://www.irs.gov/payments/view-your-tax-account

Note: The IRS has indicated in its frequently asked questions that it will not compute the recovery rebate credit for taxpayers who do not put anything on line 30 of Form 1040, but it will correct this credit if it is computed incorrectly.  The IRS frequently asked questions are available at: https://www.irs.gov/coronavirus/economic-impact-payment-information-center

Source: M + O = CPE

Tax Tips For The 2021 Filing Season

Tax Tips For The 2021 Filing Season

Tax Tips For The 2021 Filing Season

If 2020 wasn’t confusing and scary enough, now accountants have to deal with the aftermath of all the changes and programs implemented due to Covid-19, in order to prepare their clients tax returns.   As the dust has settled on the changes to various bills, it’s now time to make sense of it all and make sure you and your clients are taking advantage of, and complying with, all these changes.

So with that in mind here are a few things you might want to consider:

 

Employee Retention Credit

The Consolidated Appropriations Act of 2021 states that a company that received a PPP loan can now claim an ERC.  The only exception is for wages paid with the proceeds of a PPP loan that was forgiven.

 

Second draw PPP loans

A second round of PPP loans with the same general terms as the first loan is something for business owners to consider.

 

Unemployment benefits taxability

While many more taxpayers may have received unemployment benefits than in the past, it’s important to make sure they’ve received or downloaded their 1099-G forms.  If taxes weren’t withheld, those taxes will need to be paid with their 2020 returns.

 

Recovery Rebate Credit

While most taxpayers received the special one-time benefit in the form of an Economic Stimulus Payment, there are still those who did not receive the maximum amount.  This offers the opportunity for the taxpayer to take advantage of the recovery rebate credit on their 2020 return.

 

NOL 5-year carryback

Depending on the taxpayer’s financial situation and the possibility of higher tax rates ahead, the 5-year carryback of NOLs might be better off waived and carried forward from 2020.

 

Discharge of indebtedness on principal residence

Although there is a phase out based on a taxpayer’s adjusted gross income, the exclusion from income for the discharge of indebtedness on a principal residence is important to consider.  This exclusion has also been extended through 2025.

 

RMDs

While required minimum distributions are important to discuss with retired taxpayers, the stimulus package passed in early 2020 suspended the RMDs for all of 2020.  Therefore a lack of 1099-R forms should still be considered.

 

Withdrawals from retirement accounts

For those taxpayers who took early withdrawals from their retirement accounts for coronavirus-related issues and don’t intend to repay it within 3 years, then one-third of the tax should be paid with their 2020 return.

 

Earned Income Tax Credit and Child Tax Credit

The Taxpayer Certainty and Disaster Tax Relief Act of 2020 has provided temporary relief for taxpayers eligible for the EITC and CTC.  According to the IRS, If your earned income was higher in 2019 than in 2020, you can use the 2019 amount to figure your EITC for 2020.

 

Mortgage insurance premiums

The mortgage insurance premium deduction is still available through tax year 2020, however, starting in 2021 the deduction will not be available unless this deduction is extended by Congress.

 

Charitable deduction for non-itemizers

The CARES act allows eligible taxpayers who do not itemize deductions to deduct $300 of qualified charitable contributions as an “above the line” deduction for tax years beginning in 2020.  For those taxpayers affected by SALT, this offers a little extra help. Meal expenses
In order to help the hard-hit restaurant industry, starting in 2021 through the end of 2022, business meals are 100% deductible if the meals are from a restaurant.

 

Source: Accounting Today

 

6 Trends in Accounting In the Coming Year

6 Trends in Accounting In the Coming Year

6 Trends in Accounting In the Coming Year

Watch Out for These 6 Trends in Accounting In the Coming Year

With all the challenges brought about by COVID-19, we are all still adapting to this new normal. However, with all those major changes, there are some bright sides. And we can look forward to the opportunities created through change.

That being said, here are 6 trends for 2021 to watch and take advantage of. The good part, is that these trends are not necessarily new, so you may already be familiar with them. Yet, with all the workplace changes this past year, these trends will likely grow in importance due to organizations steps to maintain some order in all the chaos.

So here are the 6 trends to take advantage of:

 

  • An increasing amount of automation; 
  • Remote work becoming the norm for finance teams; 
  • Environmental, social and governance reporting growing in importance; 
  • Finance professionals being held accountable for enterprise risk management; 
  • Diversity, equity and inclusion becoming more of a competitive differentiator, in addition to being the right thing to do; and, 
  • Increasing demand for upskilling and continuing education for professionals.

 

We all saw how quickly everyones work life balance shifted with the onset of COVD-19. In the wake of everything, we’ve seen remote work rapidly grow as a way to cope. Some offices have gone as far moving to entirely remote businesses, while others have maintained more of a hybrid model allowing both in office and at home work. These changes have lead to difficulties in quite a few areas. Implementing technology, facing climate, and diverse work places has been one of those challenges.

Staying with the times is important for organizations. In order to survive they require the automation and team cooperation tools, while making sure employees understand the protocols in place. CFOs and their organizations are required to maintain, and even continue to build, their balance sheets and their teams. All of these necessities are dependent on the company investing in the future, and meeting those investment goals which of course include accounting.

As more companies try to demonstrate how they are responding to climate change and social issues in response to investor demands for greater accountability, we’ve seen ESG reporting grow in popularity. With some of the standard-setters in this area, like the Sustainability Accounting Standards Board and the International Integrated Reporting Council, merging together into a single organization that will be called the Value Reporting Foundation, Thomson sees value there. “There were so many organizations overlapping and overstepping each other, so that could bring some more clarity and consolidation to this,” said Thomson. “IMA has been calling for that for quite a long time.”

Accountants will also be dealing with enterprise risk management, along with ESG issues, as they cope with challenges like the impact of COVID-19 and other disasters on their organizations. This risk management helps organizations be more anticipatory of disasters going forward. While no one could have predicted the massive impact COVID-19 would have on the world, businesses can still take some proactive steps, such as building continuity plans, disaster recovery, and remote work policies.

More than ever, organizations are looking to expand their diversity, equity, and inclusion. These are extremely important characteristics that are essential for relevance. Along those lines, with the exponential growth of technology, we are seeing (and will continue to see) more of the lower-end jobs be automated away. But just like COVID, there are opportunities that arise from this change. We have to make sure to retrain, upskill, and diversify workers. All this actually provides leverage with the trend of automation and remote work in the ever changing market.

Looking forward to 2021, I hope we all can see opportunity and growth in the year ahead. Now is the time for the accounting profession to really grow and show its strength and resilience even through the most unexpected of events.

 

Source: Accounting Today