IRS Delivers Covid-19 Surprise To Workers:  A Chance To Redo Their 2021 Health Plan And FSA Choices

If your employer lets you make changes to your workplace healthcare elections for 2021 under new Treasury guidance, it could cut your tax bill.

 

Wish you could change your health plan for 2021? In newly released guidance on new flexible rules for healthcare and dependent care FSAs, the Internal Revenue Service has included a new Covid-19-relief surprise: Employers can allow employees to make changes prospectively to health care coverage for 2021.

“The guidance is very employer and employee friendly; it really gives a lot of flexibility,” says Jake Mattinson, an employee benefits lawyer with McDermott Will & Emery in Chicago.

Notice 2021-15 allows for mid-year changes to employer-sponsored health care coverage, healthcare flexible spending accounts and dependent care accounts. It will help employees whose medical and caregiving situations have changed because of the coronavirus pandemic. That is, if your employer is on board.

Usually healthcare elections are set in stone on a calendar year basis. Last May, the Treasury Department came up with a partial mid-year fix for 2020, allowing prospective changes and extending grace periods and carryovers through year-end (IRS Notice 2020-29). But employees still cried foul: they had socked away more money than they could spend in these workplace tax-favored accounts, and would be subject to forfeiture rules.

In December, in the tax provisions tied onto the year-end spending package, Congress passed new special rules allowing rollovers and more for leftover 2020 and 2021 FSA money for employees and ex-employees. Notice 2021-15 answers a lot of the open questions about how to implement the new rules.

For 2021, you can revoke an existing healthcare plan election and make a new election, or revoke an existing election and attest that you’re getting coverage elsewhere. Say you picked an HMO plan, but really want to be in a PPO plan. Or say you decide you’d be better off under a spouse’s plan. This gives you the chance to make a mid-year change. That allowance is not in the December law, so it was a surprise, Mattinson says.

For healthcare and dependent care FSAs, the guidance says employers can allow employees to carryover unused amounts they’ve stashed in these accounts from the 2020 and 2021 plan years. It wasn’t clear before, but the IRS says that any plan can implement a 100% carryover or extended grace period, no matter what feature the plan had before, Mattinson says. That means employees might be able to carry over their whole balance (instead of just $550 under current law) from one year to the next.

The extended grace period could go out 12 months, instead of just 2.5 months. as of January 1, 2022, everything would shift back to the regular rules. Under the regular rules, you can stash up to $5,000 pretax per year in a dependent care FSA, but if you don’t use the money for the specified year, you lose it. You can put up to $2,750 in a healthcare FSA, and if you don’t use it, you may be able to either use it up during a grace period or carry over $550.

Don’t get your hopes up just yet: Employers have to adopt these changes, and while some have already been working on amendments to their plans based on the December law even before today’s guidance, others have decided to do nothing. “The reaction among employers is mixed; everyone has their own ideas of what to implement. It’s all optional,” says Mattinson. One client said they would implement it all, while another client said they wouldn’t make any of the changes, for example.

Some of the nitty-gritty guidance surrounds COBRA and health savings accounts. For COBRA, the guidance makes clear that if an employer lets terminated workers seek reimbursement from an FSA, that won’t hurt their qualification for COBRA. For health savings accounts, the guidance clarifies that for employees who want to make a midyear change into a high deductible health plan with an HSA, they could convert a general purpose FSA to a limited purpose FSA so as not to be disqualified from contributing to the HSA.

Notice 2021-15 is 34 pages long and includes detailed examples, suggesting this is an area of the tax code that could be simplified! Here’s a bullet point summary of the law changes addressed in the IRS guidance; employers can:

 

  • allow employees to carry over unused money up to the full annual amount from the plan year 2020 to 2021, and also from the plan year 2021 to 2022 for healthcare and dependent care FSAs
  • allow up to a 12-month grace period for employees to incur new expenses and submit claims against unused accumulated funds for plan years ending in 2020 or 2021 for healthcare and dependent care FSAs
  • allow midyear election changes on a prospective basis without a change in status event for plan years ending in 2021 for healthcare and dependent care FSAs
  • allow dependent care reimbursement up to age 14 in cases where an employee’s dependent turned 13 in 2020 and the employee had leftover funds from 2020 (this special carry forward rule helps employees whose dependents “aged out” during the pandemic) for dependent care FSAs
  • allow health FSA participants who stop participating in the plan (ex-employees) during calendar year 2020 or 2021 to continue to receive reimbursements through the end of the year, including grace periods (this post-termination benefit applies to healthcare FSAs, not dependent care FSAs)

 

Further reading: Healthcare And Childcare FSA Fix For 2021, Finally: Special Carry Over Rules And More

Follow me on Twitter or LinkedIn.

I cover personal finance, with a focus on retirement planning, trusts and estates strategies, and taxwise charitable giving. I’ve written for Forbes since 1997. Follow me on Twitter: @ashleaebeling and contact me by email: ashleaebeling — at — gmail — dot — com

Source: IRS Delivers Covid-19 Surprise To Workers:  A Chance To Redo Their 2021 Health Plan And FSA Choices

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Tax Refund Chart Can Help You Guess When You’ll Receive Your Money In 2021

Hear that? It’s the sound of millions of taxpayers cheering across the country: the Internal Revenue Service (IRS) has announced the open of the tax filing season. That date is February 12, 2021.

If you want to get your refund as fast as possible, the IRS recommends that you e-file your tax return and use direct deposit (be sure to double-check those account numbers before you send your return). If you file by paper, it will take longer. According to the IRS, eight out of 10 taxpayers get their refunds by using direct deposit.

Assuming no delays, here are my best guesses for expected tax refunds based on filing dates and information from the IRS. I can’t stress enough that these are simply educated guesses. I like math and charts as much as the next girl, but there are a number of factors that could affect your tax refund (keep reading)

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refund chart
KPE

* No matter when you filed your tax return, if you claimed the EITC or the ACTC, don’t forget to take into consideration that hold date.

My numbers are based on an expected IRS receipt date beginning on the open of tax season, February 12, 2021, through the close of tax season on April 15, 2021. To keep the chart manageable, I’ve assumed the IRS received your e-filed tax return on the first business day of the week; that’s usually a Monday, but if there’s a holiday (like President’s Day), I’ve skipped ahead until Tuesday. The same logic holds true for issuing refunds. In reality, the IRS issues tax refunds throughout the week, so the date could move forward or backward depending on the day your return was received.

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Other sites may have different numbers but remember they’re just guessing, too: The IRS no longer makes their tax refund processing chart public.

Do not rely on any tax refund chart—this one included—for date-specific planning like a large purchase or a paying back a loan. 

Remember that if you claim the earned-income tax credit (EITC) and the additional child tax credit (ACTC), the IRS must wait until February 15 to begin issuing refunds to taxpayers who claim the EITC or the ACTC (that’s pretty close to the start date). Don’t forget to consider regular processing times for banks and factor in weekends and the President’s Day holiday. The IRS expects to see tax refunds begin reaching those claiming EITC and ACTC during the first week of March for those who file electronically with direct deposit and there are no issues with their tax returns.

If you want to get your tax refund as fast as possible, the IRS recommends that you e-file your tax return and use direct deposit. Keep in mind that if you e-file, the day that the IRS accepts your return may not be the day that you hit send or give the green light to your preparer. Check your e-filing confirmation for the actual date that the IRS accepts your return.

If you file by paper, it will take longer. Processing times can take more than four to six weeks in the best of times (and these are not the best of times) since the IRS has to manually input data. Don’t forget about postal holidays, too, when counting on the mail. There’s just one official postal holiday during tax season, Monday, February 15 (President’s Day), and one that follows just after tax season, Monday, May 31 (Memorial Day).

Even if you request direct deposit, you may still receive a paper check. Since 2014, the IRS has limited the number of refunds that can be deposited into a single account or applied to a prepaid debit card to three. Taxpayers who exceed the limit will instead receive a paper check. Additionally, the IRS will only issue a refund by direct deposit into an account in your own name, your spouse’s name or both if it’s a joint account. If there’s an issue with the account, the IRS will send a paper check.

If you’re looking for more information about the timing of your tax refund, don’t reach out to your tax professional. Instead, the IRS encourages you to use the “Get Refund Status” tool. Have your Social security number or ITIN, filing status and exact refund amount handy. Refund updates should appear 24 hours after your e-filing has been accepted or four weeks after you mailed your paper return. The IRS expect that the refund tool will be updated for those claiming EITC and ACTC, beginning on February 22, 2021. Otherwise, the IRS updates the site once per day, usually overnight, so there’s no need to check more than once during the day.

If you’re looking for tax information on the go, you can check your refund status with IRS2Go, the official mobile app of the IRS. The app includes a tax refund status tracker.

Remember that the IRS will not contact you by phone or by email regarding your refund. If you receive a call from someone claiming to be from the IRS or a debt collection agency regarding your tax refund, hang up immediately: it is a scam. Follow me on Twitter or LinkedIn. Check out my website

Kelly Phillips Erb

Kelly Phillips Erb Years ago, I found myself sitting in law school in Moot Court wearing an oversized itchy blue suit. It was a horrible experience. In a desperate attempt to avoid anything like that in the future, I enrolled in a tax course. I loved it. I signed up for another. Before I knew it, in addition to my JD, I earned an LL.M Taxation. While at law school, I interned at the estates attorney division of the IRS. At IRS, I participated in the review and audit of federal estate tax returns. At one such audit, opposing counsel read my report, looked at his file and said, “Gentlemen, she’s exactly right.” I nearly fainted. It was a short jump from there to practicing, teaching, writing and breathing tax. Just like that, Taxgirl® was born.

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Gregg Learning

Once the tax liability has been determined, we must consider the final three items in income tax preparation: tax credits, other taxes, and payments. When an overpayment occurs, the taxpayer has the option of receiving a refund or applying the amount of the overpayment to next year’s estimated tax.

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What Is Really The Tax Filing Season

The 2020 tax filing season is delayed until February 12, so the Internal Revenue Service can do additional programming and testing following the December tax law changes.

“If filing season were opened without the correct programming in place, then there could be a delay in issuing refunds to taxpayers,” the Internal Revenue Service said in a press release. “These changes ensure that eligible people will receive any remaining stimulus money as a Recovery Rebate Credit when they file their 2020 tax return.”

The filing season usually opens in late January when the IRS begins accepting and processing returns. Last year, the season started on January 27.“While I am disappointed that this year’s filing season will begin later than usual, I recognize that the IRS has faced extraordinary challenges throughout the COVID crisis,” Ways and Means Committee Chairman Richard E. Neal (D-MA) said in a statement on Friday.

The $900 billion stimulus deal and government-funding bill that passed together at the end of December included some key tax changes for the 2020 tax year.

Eligible taxpayers who didn’t receive the second round of stimulus payments included in the latest stimulus bill or didn’t receive the full amount they were entitled to can claim them on their 2020 tax returns. They can also claim the first round of payments. How the Child Tax Credit and the Earned Income Tax Credit are calculated for the 2020 tax year also changed under the stimulus deal.

Under the government-funding bill, medical expenses now must exceed only 7.5% of adjusted gross income to be taken as an itemized deduction. Before, that threshold was 10%.

Read more: Here’s what to do if you haven’t gotten your stimulus check

The IRS urges taxpayers to file electronically and use direct deposit as a payment method as soon as possible. The agency anticipates 9 out of 10 taxpayers will. receive their refund within 21 days if they file their returns electronically, used direct deposit, and no issues popped up with their return.

People eligible for free tax filing can begin their taxes now and the returns will be transmitted to the IRS on February 12. These are providers participating in the IRS Free File for 2021:

  • 1040Now
  • ezTaxReturn.com
  • FreeTaxReturn.com
  • FileYourTaxes.com
  • Intuit (TurboTax)
  • On-Line Taxes (OLT.com)
  • TaxAct
  • TaxHawk (FreeTaxUSA)
  • TaxSlayer

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By: Denitsa Tsekova

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Could A Tourist Tax Be The Answer To Norway’s Overtourism Problem?

The number of tourists coming to Norway continues to increase. In 2019, several natural attractions including the trail to the Pulpit Rock and hiking trails in Lofoten received record numbers of international visitors.

Locals are frustrated with congested roads and inconsiderate parking, while small municipalities complain that they can’t afford the necessary improvements to cope with the number of visitors, which more often than not far outnumber local residents. Calls have never been louder for a tourist tax.

A study by Innovation Norway of the highest profile Norwegian destinations found that discontent is high among a clear majority of the local population. These areas include the cities Bergen, Stavanger and Ålesund, along with more remote areas including Geiranger, Lofoten, Aurland and Svalbard. Almost two-thirds of those surveyed supported the introduction of a tourist tax.

According to the European Tourism Association, the concept of a visitor tax is not yet popular in northern Europe. Denmark, Sweden, Estonia and Latvia are among the countries not to have implemented the concept. The most visited countries in Europe—France, Spain and Italy—have all introduced charges.

Tourist tax under discussion by Norway’s MPs

For the second time in two years, the Norwegian Parliament is discussing the concept of a tourist tax. Last time the proposals were voted down, but given the recent changes in the coalition government, things could well be different this time around. Both the Labour party and Center party appear to now be in favor of allowing select municipalities to introduce some kind of local visitor fee.

One person who is hoping for an agreement is Jan Ove Tryggestad, the Mayor of Stranda municipality, which includes the tourist magnet Geiranger. “Today, there are a number of tourist destinations in Norway that are struggling. We cannot take any responsibility for what mass tourism imposes on us,” he told NRK.

Tryggestad also said he believes “tourist tax” is a loaded term and prefers to call the proposal “joint fundraising.” He also proposed alternatives to the typical accommodation-based way tourist taxes are collected at locations across Europe, presumably because so many visitors to Geiranger are day-trippers from cruise ships.

He suggested mobile payments, toll stations or a simple levy on goods and services in the specified zone could all be potential solutions.

How authorities elsewhere in Norway are tackling overtourism

Elsewhere in Norway, other measures are being introduced ahead of what is expected to be another record-breaking summer season.

The Foundation responsible for the facilities at Pulpit Rock are implementing limits on the number of tour buses allowed at the parking lot at any one time. While they are not limiting numbers taking the hike, they hope to better spread those numbers across the day.

City bosses in Bergen have extended the summer ban on passenger vehicles using Bryggen and Torget in the historic center to tourist buses. Such buses will also be banned from Øvregaten, an important access road to Bryggen. While many in the city are pleased with the news, owners of local tourism companies have spoken out against the proposals. There are several hotels in the restricted zone, which could cause problems for those traveling to and from cruise ships.

Finally, the Norwegian government is also considering imposing a size limitation on cruise ships around Svalbard. They are also considering extended the current ban on the use of heavy fuel oil (HFO) to cover the entire archipelago.

Follow me on Twitter. Check out my website.

I was born in the U.K. but moved to Norway in 2011 and haven’t looked back. I run a website and podcast for fellow expats, authored the Moon Norway travel guidebook, help Norwegian companies with their English, and spend my free time touring the country to discover more about the people and places of this unique corner of the world. I write for Forbes with an outsider’s inside perspective on Norway & Scandinavia.

Source: Could A Tourist Tax Be The Answer To Norway’s Overtourism Problem?

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Cities and attractions across the globe are experiencing severe overcrowding and other stresses brought on by too many tourists. According to the United Nations’ World Tourism Organization, there were around 70 million international tourist arrivals back in 1960. Today, that number has hit more than 1.4 billion. Erin Florio, travel news director for Conde Nast Traveler, joins “CBS This Morning” to discuss the impact of all that tourist traffic. Watch “CBS This Morning” HERE: http://bit.ly/1T88yAR Download the CBS News app on iOS HERE: https://apple.co/1tRNnUy Download the CBS News app on Android HERE: https://bit.ly/1IcphuX Like “CBS This Morning” on Facebook HERE: http://on.fb.me/1LhtdvI Follow “CBS This Morning” on Twitter HERE: http://bit.ly/1Xj5W3p Follow “CBS This Morning” on Instagram HERE: http://bit.ly/1Q7NGnY Get new episodes of shows you love across devices the next day, stream local news live, and watch full seasons of CBS fan favorites anytime, anywhere with CBS All Access. Try it free! http://bit.ly/1OQA29B Each weekday morning, “CBS This Morning” co-hosts Gayle King, Anthony Mason and Tony Dokoupil deliver two hours of original reporting, breaking news and top-level newsmaker interviews in an engaging and informative format that challenges the norm in network morning news programs. The broadcast has earned a prestigious Peabody Award, a Polk Award, four News & Documentary Emmys, three Daytime Emmys and the 2017 Edward R. Murrow Award for Best Newscast. The broadcast was also honored with an Alfred I. duPont-Columbia Award as part of CBS News division-wide coverage of the shootings at Sandy Hook Elementary School in Newtown, Connecticut. Check local listings for “CBS This Morning” broadcast times.

Man Loses Home After Failing To Pay $8.41 In Property Taxes

$8.41. That was how much 83-year-old Uri Rafaeli, a retired engineer, in Michigan underpaid his property taxes by in 2014. That was all it took for him to lose his house.

Rafaeli bought a 1,500-square-foot Southfield home in 2011. He paid $60,000 for the property, and the deed was recorded by the Oakland County Register of Deeds on January 6, 2012. He put additional money into the home, too, as he intended to use the rental income from the property to fund his retirement.

Rafaeli believed that he was paying his property taxes on time and in full, but in 2012, he received notice that he had underpaid his 2011 tax bill by $496. He paid up in 2013 but made a mistake figuring the interest (interest also accrued while his check was in the mail): He was short by $8.41.

In response, Oakland County seized his property and put it up for sale. The home netted just $24,500 at auction; according to Zillow, the property is now estimated to be worth nearly $130,000.

The County kept the overage from the auction: $24,215 in profits, or 8,496% of the actual tax, penalties, and interest due (the debt had grown to $285 with penalties, interest, and fees).

It was all legal.

Under Act 123 of 1999, Michigan allows its county treasurers a great deal of authority to handle unpaid taxes, including rushing the tax foreclosure process. Under the Act, the property is considered delinquent if taxes aren’t paid in the previous year. If the outstanding taxes, fees and penalties remain unpaid after two years, the County can foreclose on the property; that’s much more quickly than before, when the average timeframe to move a foreclosure was five to seven years. Shortly after foreclosure, the former owner loses the right to buy back the property, and the County becomes the owner. At sale, the funds belong to the County. There’s no requirement to refund any of the proceeds to the owner even if the overage far exceeds the amount owed.

Rafaeli—and his lawyers—think that’s wrong. They took the matter to the U.S. District Court for the Eastern District of Michigan. The court found that Rafaeli—and a similarly situated plaintiff—suffered “a manifest injustice that should find redress under the law” but dismissed the claim for lack of jurisdiction.

Rafaeli tried again. He didn’t argue that he didn’t owe tax, penalties, interest and fees. But he did object to the County taking the excess. The County argued that Rafaeli had no rights to the equity because the General Property Tax Act does not expressly protect it. And that’s the reason that Rafaeli keeps losing: The courts have sympathy for his plight but have found that the law does not prevent the County from keeping it.

He’s not alone. Tens of thousands of properties in Detroit have been subject to the same kind of treatment. Many of those who owe taxes understand that they have a debt, but they don’t necessarily understand how to navigate the process or what the failure to pay on time can mean. As with Rafaeli, even something as simple as miscalculating the interest due, can have serious consequences.

Today, Rafaeli is represented by the Pacific Legal Foundation (PLF). PLF was founded in 1973 by members of then-governor Ronald Reagan’s staff as the first public interest law firm dedicated to the principles of individual rights and limited government. PLF is taking the case to the Michigan Supreme Court, arguing that keeping the funds is an unjust taking. If he wins, Rafaeli—and other landowners in similar situations—may be entitled to compensation.

According to PLF, the entire process, as it is happening now, is nothing more than government-sanctioned theft. “Predatory government foreclosure particularly threatens the elderly, sick, and people in economic distress,” PLF argued on its website. “It could happen to your grandparents. It could happen to you.”

Follow me on Twitter or LinkedIn. Check out my website.

Years ago, I found myself sitting in law school in Moot Court wearing an oversized itchy blue suit. It was a horrible experience. In a desperate attempt to avoid anything like that in the future, I enrolled in a tax course. I loved it. I signed up for another. Before I knew it, in addition to my JD, I earned an LL.M Taxation. While at law school, I interned at the estates attorney division of the IRS. At IRS, I participated in the review and audit of federal estate tax returns. At one such audit, opposing counsel read my report, looked at his file and said, “Gentlemen, she’s exactly right.” I nearly fainted. It was a short jump from there to practicing, teaching, writing and breathing tax. Just like that, Taxgirl® was born.

Source: Man Loses Home After Failing To Pay $8.41 In Property Taxes

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A short video explaining your property taxes and the role of the Assessor’s Office.
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