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MARCH | APRIL 2021

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6. IRS, "Deferral of Employment Tax Deposits and Payments through December 31, 2020," updated November 27, 2020, accessed January 2021, www.irs.gov/newsroom/ deferral-of-employment-tax-deposits-and- payments-through-december-31-2020. 7. Society for Human Resource Management, "Fiscal 2021 Omnibus and Covid-19 Relief," accessed January 2021, https://advocacy.shrm. org/issue/fiscal-2021-omnibus-and-covid-19- relief/?_ga=2.250935749.219299692.1609269655- 936848421.1609174529. 8. IRS, "Deferral of Employment Tax Deposits and Payments through December 31, 2020." 9. IRS, "Notice 2020-32," accessed January 2021, www.irs.gov/pub/irs-drop/n-20-32.pdf. 10. Society for Human Resource Management, "Fiscal 2021 Omnibus and Covid-19 Relief." 11. IRS, "COVID-19-Related Employee Retention Credits: Special Issues for Employers FAQs," updated December 3, 2020, accessed January 2021, www.irs.gov/newsroom/covid- 19-related-employee-retention-credits- special-issues-for-employers-faqs#special- issues-employers-income-and-deduction. 12. Society for Human Resource Management, "Fiscal 2021 Omnibus and Covid-19 Relief." 13. Society for Human Resource Management, "Fiscal 2021 Omnibus and Covid-19 Relief." 14. IRS, "Special $300 Tax Deduction Helps Most People Give to Charity This Year—Even If They Don't Itemize," www.irs.gov/newsroom/special- 300-tax-deduction-helps-most-people-give- to-charity-this-year-even-if-they-dont-itemize. 15. Society for Human Resource Management, "Fiscal 2021 Omnibus and Covid-19 Relief." 16. IRS, "IRS Provides Tax Inflation Adjustments for Tax Year 2020," updated December 17, 2020, accessed January 2021, www.irs. gov/newsroom/irs-provides-tax-inflation- adjustments-for-tax-year-2020. Lisa Bakewell is a full-time freelance writer, editor, perpetual learner, and lover of life in Chicagoland. Her areas of writing expertise span a multitude of topics that include health and wellness, travel, parenting, personal/ company profiles, a plethora of "how-to" articles (her favorite!), and technology. She can be reached at lbakewell@att.net. in health and dependent care flexible savings accounts from 2020 to 2021 and 2021 to 2022. This change also allows employees to make a 2021 midyear change in contribution amounts. 13 ARE THERE ANY OTHER COVID† RELATED TAX CHANGES? Yes. Two that you may not be aware of are deductions for charitable donations and business meals. For charitable deductions, taxpayers (who take the standard deduction) can claim a cash donation of up to $300. 14 Also, the business meal deduction has been increased to 100 percent (up from 50 percent) for food and beverage expenses provided by a restaurant that are paid or incurred in 2021 and 2022. 15 NOTES 1. IRS, "Economic Impact Payment Information Center—Topic J: Reconciling on Your 2020 Tax Return," updated December 8, 2020, accessed January 2021, www. irs.gov/newsroom/economic-impact- payment-information-center-topic-j- reconciling-on-your-2020-tax-return. 2. IRS, "Economic Impact Payment Information Center—Topic J: Reconciling on Your 2020 Tax Return." 3. IRS, "Recovery Rebate Credit," updated November 27, 2020, accessed January 2021, www.irs.gov/newsroom/recovery-rebate-credit. 4. IRS, "IRS: Unemployment Compensation is Taxable; Have Tax Withheld Now and Avoid a Tax-Time Surprise," last reviewed November 25, 2020, accessed January 2021, www.irs.gov/ newsroom/irs-unemployment-compensation- is-taxable-have-tax-withheld-now-and- avoid-a-tax-time-surprise#:~:text=By%20 law%2C%20unemployment%20 compensation%20is,2020%20federal%20 income%20tax%20return. 5. IRS, "Self-Employment Tax (Social Security and Medicare Taxes)," accessed January 2021, www.irs.gov/businesses/small-businesses- self-employed/self-employment-tax- social-security-and-medicare-taxes. taxes. Neither the portion of the credit that reduces the employer's applicable employment taxes nor the refundable portion of the credit is considered income. 11 As of December 21, 2020, the Fiscal 2021 Omnibus and COVID-19 Relief Bill extended the Employee Retention Credit through June 30, 2021, and the credit rate was increased from 50 percent to 70 percent of qualified wages. It also expands eligibility for the credit by reducing the required year-over-year gross receipts decline from 50 percent to 20 percent and provides a safe harbor allowing employers to use prior quarter gross receipts to determine eligibility. The new bill also allows businesses with PPP loans to qualify, which was not allowed previously. 12 WHAT IF I USED MONEY FROM MY RETIREMENT ACCOUNT TO KEEP MYSELF AFLOAT? If you took money out of your retirement account in 2020 specifically due to COVID- related issues, you were not charged the 10 percent penalty tax for early distributions up to $100,000. The IRS also allowed borrowing up to an additional $100,000 from 401(k) plans. According to the IRS, these coronavirus-related withdrawals: • May be included in taxable income either over a three-year period (one-third each year) or in the year taken, at the individual's option • Are not subject to the 10 percent additional tax on early distributions that would otherwise apply to most withdrawals before age 59½ • Are not subject to mandatory tax withholding • May be repaid to an IRA or workplace retirement plan within three years WHAT ABOUT MY FLEXIBLE SPENDING ACCOUNT? The Fiscal 2021 Omnibus and COVID-19 Relief Bill, passed on December 21, 2020, allows a rollover of unused amounts L i s te n to T h e A B M P Po d c a s t a t a b m p.co m /p o d c a s t s o r w h e reve r yo u a cce s s yo u r favo r i te p o d c a s t s 67

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