Denver Tax Attorney

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Former President Trump passed the Coronavirus Aid, Relief and Economic Security (CARES) Act on March 27, 2020. It has since been amended several times, including via the current American Rescue Act.  Below you find information regarding tax deductions, tax credits and delayed tax liabilities under the American Rescue Act, as they currently relate to 2020 and 2021, as well as other tax tips. 

 

Loans for businesses and forbearances for mortgages under the CARES Acts can be found on our Business and Real Estate Law page, and forbearances for Student Loans may be found under our Credit Page.  

 

This information will be updated as it is amended.    

 

Tax Law Tips, Generally: 

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• April 15 Tax Return Deadline extended for 2021 tax returns. The new tax return deadline is May 17th, 2021.

• The CARES Act waives the 10% early withdrawal penalty on up to $100,000 of 401k or IRA distributions in 2020.

• The CARES Act expanded deductions for charitable contributions  for non-itemizers.

• We recommend to contest and appeal property taxes for 2021, as the value of properties will likely sharply decline following COVID. Property taxes are assessed every two years in Colorado, on odd numbered years, with a 1-month deadline to appeal (May 1-June 1).

 

Tax Law Tips for Individuals:

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• Unemployment checks/income under $10,200 are not taxable, excluding households with an AGI of $150,00.00 or more. Unemployment over $10,200 are considered taxable income. 

• Student loan forgiveness will not be treated as taxable income. This applies to most student loans, including federal loans and some qualifying private loans. The student loan must have been forgiven between the dates of January 1, 2021 and January 1, 2026 to qualify as non-taxable. 

• Many individuals will be able to take the maximum deduction for child care. If you worked from home and had to pay a tutor or other child care services while your child was homeschooled, you should be able to maximum this deduction. This credit also applies to individuals who had to pay someone else to care for their child while they looked for work and to individuals who did not have to work remotely. The American Rescue Plan Act offers an enhanced Child and Dependent Care Credit for 2021. The credit applies to any child under the age of 13. The credit is calculated at 35% of your adjusted gross income (AGI) if your income is $15,000. It is then adjusted by increasing income: by every $2,000 over $15,000 AGI, the credit is reduced by 1%, until it is capped at 20%. The maximum credit for 2020 is $1,050.00 for 1 child and  $2,100 for more than one child.

• The above credit is also available for those individuals who took care of a dependant, under the American Rescue Act.  

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Tax Law Tips for Businesses:

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• "3 Martini Lunch" Tax Credit:

  • Under the Consolidated Appropriations Act of 2021, a full deduction for business meals is allowed if that business meal includes "food or beverage provided by a restaurant, before January 1, 2023."​ Entertainment is not an allowable deduction, so make sure your food and beverage expenses are separate if entertainment is included. 

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• ​PPP Loans Are Not Taxable:

  • PPP Loans are not considered taxable income. 

  • However, expenses paid with PPP loans, such as payroll, can not be used as taxable deductions.

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• EID Loans Are Not Taxable:

  • EID loans are not considered taxable income.

  • Expenses paid with EID loans may be used as taxable deductions. This includes expenses such as payroll.

  • EID loans must be paid back.

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• Employee Retention Credit:

  • Available for businesses impacted by COVID 19.

  • Under the CARES act, it is a refundable tax credit against certain employment taxes equal to 50% of the qualified wages an eligible employer pays to employees.

  • Extended for the 1st and 2nd calendar quarters under the Taxpayer Certainty and Disaster Tax Relief Act of 2020.

  • New employers who were not in existence for all or part of 2019 are also to claim the credit.​

 

• Paid Sick and Family Leave Credits:

  • Can take credits for qualifying leaves. Qualifying leaves include:​

    • COVID 19 immunization​

    • Any COVID 19-related injury, illness, disability or condition

  • Expanded family leaves and $12,000 wages per employee credit. Qualifying family leaves includes:

    • child care related situations​

    • employees need to care for sick family members

    • any employee COVID 19 -related leave

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• Rental property depreciation:

  • Rental property depreciation for properties entering service before January 2018, held by a business or trade, is now calculated using a 30-year depreciation value.

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These sweeping changes in tax law will affect many deductions, credits and delays available to both individuals and businesses.  It will be crucial to many people to take as many of these credits and deductions as possible- to maximize every single credit and deduction and lower your tax liability to the absolute lowest extent possible. Americans are suffering from staggering business losses and job losses- and the reduction of taxes and your tax liability is critical. Tax deductions and credits are available through the CARES Act, the Consolidated Appropriations Act of 2021, the American Rescue Act and more. These changes are vast and can be confusing, so it is best to consult with an experienced tax attorney in order to maximize all available options.

 

If you have questions regarding tax planning for 2021 and beyond, contact our Denver tax attorneys immediately. Our tax attorneys are knowledgeable about the tax reform, the CARES Act and its many changes and are ready to assist you and your business with planning for, and complying with, the new tax changes. Our tax attorneys have their L.L.M in Tax law- the highest degree possible in taxation. Gantenbein Law Firm also has its own staff accounting manager- available only for its tax clients. Our staff accounting member has her L.L.M. and worked as the staff accounting manager for many large corporations, including large, national airline and real estate corporations.