Tax News & Views Stimulus Checks, Childcare, and No Namaste Roundup

March 15, 2021

IRS starts sending $1,400 direct payments – Naomi Jagoda, The Hill. “The Biden administration has said that people will start to see the payments in their bank accounts as early as this weekend. The IRS said Friday that some people may see the payments in their accounts as pending or provisional in the coming days, ahead of the official payment date of March 17.”

“Treasury and the IRS will automatically be issuing payments to people based on their 2019 tax returns or their 2020 returns when those have already been processed. Additionally, people who aren't required to file tax returns and receive Social Security, railroad retirement benefits, Supplemental Security Income and veterans benefits will get payments automatically.”

IRS elaborates on delivery of $1,400 COVID relief payments – Kay Bell, Don’t Mess with Taxes. “The main thing the IRS is trying to get across to anxious taxpayers eager for their $1,400 (or more if they're married and have families) is that they don't have to do anything but wait.”

Child-Care Providers Get Billions in Covid-19 Relief Law – Richard Rubin, Wall Street Journal ($). “Child-care providers will get about $40 billion for operating expenses and tuition assistance for the children of essential workers, and families will get roughly $8 billion from a temporary expansion of tax breaks subsidizing dependent care.”

The relief law also impacts taxpayer childcare expenses:

“The bill expands the maximum size of flexible spending accounts—pretax savings vehicles—to $10,500 from $5,000.

It increases the child and dependent-care tax credit. For 2020, the credit covered 35% of expenses for low-income families; the maximum benefit was $1,050 for one child and $2,100 for two or more children. It wasn’t refundable, so low-income families benefited only if they owed income tax.

The expanded, fully refundable credit now covers up to 50% of costs, with higher maximum benefits of $4,000 for one child and $8,000 for two or more children. The expanded credit doesn’t start phasing down until household income reaches $125,000, so many more families will get larger benefits.”

Federal Stimulus Bill Has Huge Tax Change For Gig Workers – Liz Farmer, Forbes. “Tucked inside the American Rescue Act is a tax change that has big implications for tax revenue and the gig economy. Starting for tax year 2022, many contractors with gig economy companies like Uber, DoorDash and Lyft will be getting 1099 forms when they previously wouldn't have.”

Connecticut Enacts COVID-19 Remote Work Bill – Lauren Loricchio, Tax Notes($). “Connecticut has enacted legislation designed to protect employers and residents from facing higher tax liabilities because of remote work during the COVID-19 pandemic.”


Top Republican: IRS should 'seriously consider' extending tax-filing deadline – Naomi Jagoda, The Hill. “Rep. Kevin Brady (Texas), the top Republican on the House Ways and Means Committee, said Friday that the IRS should "seriously consider" extending the tax-filing deadline.”

Lawmakers Look for Bipartisan Solution on R&D Expensing – Jad Chamseddine, Taxnotes($). “House taxwriters are hoping to find a way before the end of the year to extend or make permanent the immediate full deduction for research and development expenses.”


Measuring Disparate Racial Tax Outcomes Before and After the TCJA – Martin Sullivan, Tax Notes($). “Our preliminary analysis of 2017 and 2018 tax return data indicates that, on average, effective tax rates were lower for ZIP codes where most of the population identified as white than for ZIP codes with more racial diversity. Also, the analysis indicates that after passage of the Tax Cuts and Jobs Act, larger percentage point reductions are seen in ZIP codes with predominantly white populations.”


Alabama House Votes to Overturn Ban on Yoga in Schools – But ‘Namaste’ Is Still Forbidden – Kim Chandler, TIME. “A decades-old ban on yoga in Alabama public schools could be coming to an end. The Alabama House of Representatives voted 73-25 to approve a bill that will authorize school systems to decide if they want yoga to be allowed in K-12 schools. The bill now moves to the Alabama Senate.”

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