High Level View of the American Rescue Plan Act

High Level View of the American Rescue Plan Act from Blumer CPAs on Vimeo.

Transcript:

Hey, hey, we wanted to tell you about the American Rescue Plan Act of 2021. There’s a lot of information out there and firms giving information, but we wanted to make a video about it as well. Just a quick video. And really our clients benefit from these videos, but maybe somebody else can too. So when that bill passed, it was huge. It threw a monkey wrench really into this tax season that accountants are trying to file right now. And we’ll get to that in a minute, but really the provisions in the bill, there’s not a lot of business related changes for the year 2020. That is the year everybody’s filing, but there were a lot of changes for individuals on their individual tax returns for the year 2020. Lots of credits, stimulus payments. And if you’re not getting your stimulus payment, you’ll want to check with your accountant because there might be reasons why you’re not getting the stimulus payment you thought you were supposed to. But either way, that stimulus payment is something you’re going to get, and it’s kind of a pre-payment on a credit you get when you file your 2020 return.

Now, there were some things in that bill that made unemployment up to a certain level not taxable. And before that bill came out, some people had filed their returns already, and maybe some people that has unemployment on their return, which is normally taxable to some point. And so people are now wanting to amend because the bill came out and said, unemployment is not taxable. So they want to go amend their return and get their money back. So what the IRS is doing, of course, the IRS responds to the Congress. It’s required to make changes to its tax systems when the Congress makes changes on bills like this. So the IRS is responding and they’re saying, “Basically, we’re going to come up with a plan.” And they’re saying, “Don’t amend yet.”

So if you’re somebody that’s filed a return and you may have taxed your unemployment and this bill says you shouldn’t have done that and you want to amend, the IRS is saying, just hold off. As of the date of this video, it’s really important. These things are changing on a daily basis. So just hold off on amending and make sure you’re talking to your accountant about that or your CPA and make sure they help you know whether you should amend or not. We don’t have a lot of clients that were affected by the unemployment. We just serve entrepreneurs in our firm, and so none of them got unemployment. And so there’s not a lot of changes we need to work with on our clients, but we wanted to let you know, just hold off on amending.

Some other things in the way the IRS has responded to is they’ve changed the tax filing deadline for individuals trying to file their 2020 returns. Normally due April 15th. It’s now a month out, May 17th. Now, you don’t have to file an extension. That is normally you’d file an extension to get more time to file. You don’t have to do that. The date is now May 17th, but you still do have to make your first quarter estimated payment for 2021. That’s still due April 15. So keep that in mind. And you also can go ahead and file. If you think it’s appropriate to file your individual return, go ahead and do that as well. If you’re getting a refund for example, but you don’t have to file till May 17th.

Now, one other tricky thing that accountants know about is that states either adopt or don’t adopt the federal rules. So when the IRS extends the deadline, a state may or may not. So now all the states have to go vote and see if they want to extend the deadline too. So check on that to make sure you don’t get thrown off because maybe what if your state still requires you to file by April 15th? So just make sure you don’t get thrown off on that and get some penalties and interest if you don’t file. So those are just a few provisions on the American Rescue Plan. It’s huge. So you want to make sure you check in with your firm and hope some of that clarifies things for you. Just reach out to us if you need help, [email protected] We’ll see you.

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