June 14, 2021 - Douglas Myser

American rescue plan part two. The plan put forth by the Biden Administration has multiple benefits for the American people. One of those benefits is the suspension of tax on a portion of Unemployment Compensation. The IRS has issued instructions for the process to report the exclude portion of the unemployment compensation for those returns not yet filed. The guidance will be forthcoming and the IRS stated that any returns filed without the guidance can amend their returns to reflect the changes. The Act also eliminates the recapture provisions applicable to 2020 for taxpayers receiving excess premium tax credits. For tax years beginning in 2021 or 2022, the premium tax credit may be available for a taxpayer who purchases coverage through a health exchange, even if their household income for the year is 400% or more of the poverty line for their family size. Unemployment compensation is generally included in the calculation for gross income, and in determining the household income. If unemployment compensation is received for any week beginning in 2021. the individual is treated as being eligible for the premium tax credit. American rescue plan part two.

Section 9041: Extension of limitation on excess Business Losses of Non-corporate Taxpayers. Effective with the Tax Cuts and Jobs Act, taxpayers with losses exceeding $250,000 (single) or $500,000 (joint) were limited on the deductibility of those losses. For those with losses and tax issues that cannot be deducted Tax Resolution Services may be needed. For non-corporate taxpayers (individuals, estates, trusts, and exempt organizations filing Form 990-T), business losses in excess of the loss limitation threshold generally cannot be claimed in the year of the loss, but must be carried forward as a NOL. Farming loss are an exception, which are either carried back two years or can be carried forward if elected. The excess business loss is calculated on Form 461, Limitation on Business Losses. Underlying the form is the definition of a trade or business which generally has two aspects, the activity is engaged for a profit motive and the activity is engaged on a regular and continuous basis.