The COVID-19 pandemic has hit the country and tax returns for 2021 will be the most complicated since 1913, according to Mark Steber, chief tax officer of Jackson Hewitt. This slew of changes is affecting everyone, from retirement accounts to tax payers. Here’s what you need to know. Here are some things to know about the tax relief for 2021:
First, it is important to understand the scope of the relief plan. There are many tax breaks and policies to choose from. It can be overwhelming to sort through the available tax breaks. Thankfully, the OECD is working to develop a global digital tax project. The next phase will include tax policy changes to assist small businesses. OECD officials are working on this project full-steam. But the uncertainty continues. In the meantime, lawmakers are drafting legislation that could provide immediate support for small businesses.
The CARES Act passed in March 2020. This new law allows small businesses that employ fewer than 500 employees to provide paid sick leave and family leave. This leave is tax deductible to the business, up to a maximum of $2,000 per employee. Businesses that offer paid leave can claim tax credits for every dollar paid to their employees through 2021. They can claim these tax credits against their payroll taxes quarterly. In addition, businesses with more than 500 employees can claim their tax credits as an expense.
