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%.
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:
Furlough vs. Layoff: What’s the Difference for Your Taxes?When a company chooses to reduce its workforce, it may approach that reduction in a few different ways. How a company makes these staffing changes could result in different implications for you and your taxes. Here’s what you should know about the differences between a furlough and a layoff.
Read MoreBrought to you byTurboTax.comCapital Gains and LossesWhat is a capital asset, and how much tax do you have to pay when you sell one at a profit? Find out how to report your capital gains and losses on your tax return with these tips from TurboTax.
Read MoreBrought to you byTurboTax.comStimulus 2020: Unemployment Insurance for Self-Employed IndividualsDue to the recent coronavirus pandemic, many businesses and individuals are facing challenging times — including those that are self-employed. The government has issued unemployment insurance for self-employed individuals to help them manage their finances.
Read MoreBrought to you byTurboTax.comGreat Ways to Get Charitable Tax DeductionsGenerally, when you give money to a charity, you can use the amount of that donation as an itemized deduction on your tax return. However, not all charities qualify as tax-deductible organizations. While there are many types of charities, they must all meet certain criteria to be classified by the IRS as tax-deductible organizations. There are legitimate tax-deductible organizations in many popular categories, such as those listed below.
Sen. Bernie Sanders, an independent, and Sen. Josh Hawley, a Republican, are looking to modify a $908 billion plan with an amendment that would authorize a second check for up to $1,200. The unamended proposal doesn’t include another direct payment. If Sanders and Hawley’s amendment is successful, the new payment would likely follow the same outlines of the first stimulus check for speed and simplicity, but even minor changes could have a significant impact for millions.
Read on for more information about what may happen to stimulus eligibility now. We update this story often.
How the qualifications could change with a new bill
While many members of Congress agree on the need for more aid, they differ on the specifics, and the two sides continue to discuss who needs assistance and how much to spend. Based on proposals that’ve been on the table this fall, here’s what lawmakers could do (or have already done):
Update the definition of a dependent: The CARES Act capped eligible dependents at kids age 16 and younger. One proposal this summer expanded the definition to any dependent, child or adult, you could claim on federal taxes. That means families with older kids or older adults at home could potentially see $500 more in their check total per individual if that proposal is adopted.
If the definition of a dependent changes, your family could benefit. Angela Lang/CNET
Raise the amount of money per child dependent: One White House proposal from October would’ve kept the definition of a child dependent used in the CARES Act but increased the sum per individual to $1,000 on the final household check. (Based on that, here’s how to estimate your total stimulus money and here’s the IRS’ formula for families.)
The White House’s new Dec. 8 proposal would reportedly raise the sum for each qualifying child to $600, up from $500 in the CARES Act.
Include noncitizens: The CARES Act made a Social Security number a requirement for a payment. Other proposals would’ve expanded the eligibility to those with an ITIN instead of a Social Security number because they’re classified as a resident or nonresident alien. A Republican plan this summer would’ve excluded those with an ITIN.
Who could qualify for a second stimulus check
Qualifying group
Likely to be covered by the final bill
Individuals
An AGI of less than $99,000 (Same as CARES)
Head of household
An AGI of less than $146,500 (Same as CARES)
Couple filing jointly
An AGI less than $198,000 (Same as CARES)
Dependents of any age
No limit (HEALS proposal; up to 3 in Heroes)
US citizens living abroad
Yes, same as CARES
Citizens of US territories
Likely, with payments handled by each territory’s tax authority (CARES)
SSDI and tax nonfilers
Likely, but with an extra step to file (more below)
Uncertain status
Could be set by court ruling or bill
Incarcerated people
Excluded under CARES through IRS interpretation, judge overturned
Undocumented immigrants
Qualifying “alien residents” are currently included under CARES
Disqualified group
Unlikely to be covered by the final bill
Noncitizens who pay taxes (ITIN)
Proposed in Heroes, unlikely to pass in Senate
Spouses, kids of ITIN filers
Excluded under CARES, more below
People who owe child support
Included in Heroes proposal, but excluded under CARES
Would the income limits be similar with another check?
Under the CARES Act, here are the income limits based on your adjusted gross income for the previous year that would qualify you for a stimulus check, assuming you met all the other requirements. (More below for people who don’t normally file taxes.) With the amendment proposed by Sanders and Hawley on Dec. 10, the requirements guidelines would follow those set out in the CARES Act.
You’re a single tax filer and earn less than $99,000.
You file as the head of a household and earn under $146,500.
You file jointly with a spouse and earn less than $198,000 combined.
What role do my taxes play in how much I could get? What if I don’t file taxes?
For most people, taxes and stimulus checks are tightly connected. For example, the most important factor in setting income limits is adjusted gross income, or AGI, which determines how much of the total amount you could receive, be it $600 or $1,200 for individuals and $1,200 or $2,400 for married couples (excluding children for now).
Our stimulus check calculator can show you how much money you could potentially expect from a second check, based on your most recent tax filing and a $1,200 per person cap. Read below for your eligibility if you don’t typically file taxes.
How much stimulus money you could get depends on who you are. Angela Lang/CNET
What should retired and older adults know?
Many older adults, including retirees over age 65, received a first stimulus check under the CARES Act, and would likely be eligible for a second one. For older adults and retired people, factors like your tax filings, your AGI, your pension, if you’re part of the SSDI program (more below) and whether the IRS considers you a dependent would likely affect your chances of receiving a second payment.
If I share custody or owe child support, how does that affect eligibility?
2020 is over, and for many of you, it can’t end soon enough. There will be plenty of time to celebrate the end of one year and to hope for better days in the one ahead. But before we get to that, take these steps to get financially ready for 2021.
1) Review your goals: The end of the year is a great time to review the goals you made at the beginning of the year and set new ones for 2021. How did you do this year? Is there anything you’re proud of accomplishing? I like to start with bright spots because they can guide you toward success as you set new goals. But let’s be realistic, too; 2020 threw us a lot of curveballs.
Was there anything you wish you could have done better? You can also learn from any potential stumbling blocks and figure out how to use them as stepping-stones next year. You may also want to take time now to review your net worth. That’s one way to gauge the progress you’ve made in your financial health this year.
2) Update your budget: Did you save the money that you wanted to? Pay off the debt that you needed to? The end of the year gives you a solid end point to assess whether met the goals you set at the outset of 2020. What if you didn’t have a budget or financial goals? You’ve got a blank slate ahead. Why not create a budget that works?
3) Create a holiday bucket: Holidays can be budget breakers, so why not incorporate them into your spending goals right from the start? Christmas may look a lot different this year. But you can still create a separate bucket for holiday spending and when that money is gone, stop spending. You’ll thank yourself in January when you don’t have an unusually large credit card bill.
5) Make any last charitable contributions: December 31st is the last day your charitable contributions can be deducted on your 2020 tax return. If giving to charity is a part of your spending plan, you can use these questions to help make the most of your charitable giving.
6)Pump up your 529: Just like charitable contributions, contributions to your 529 college savings plan must be made by December 31st to count for this tax year. Find out if your state is one of over 30 that allow you to deduct your contribution. You can find the specific deduction here. If your state is one of the four that allow an unlimited deduction, keep in mind the yearly gift-tax and super-funding rules.
7)Max out your 401k: While you have until April to make contributions to your traditional IRA, Roth IRA and HSA, you can only contribute to your 401k through December 31st. So, if you have extra cash and are looking to boost your savings, consider contributing your last couple of checks entirely to your 401k. Business owners can do the same with the employee portion of your Solo 401k contributions.
8)Find your tax return: You’ll be doing your taxes before you know it, so use this time to get prepared. Review last year’s return and make a mental list of records you’ll need to assemble. Year-end is also a good time to decide whether a Roth conversion makes sense for you.
9) Review your business structure: Evaluate your business structure and the QBI deduction to identify any changes you need to make to your business. You might want to set up a solo 401k, for instance, and if so, you’ll have to act before December 31st (although you can make employer/profit sharing contributions up to the business tax filing deadline).
10)Defer income and incur expenses: If you’re a business owner, you may also want to look at ways to defer income into 2021 or pay for business expenses you anticipate for early next year. This is any easy way to reduce your tax liability for 2020. However, remember not to spend money on business expenses that you wouldn’t otherwise incur just for a tax deduction. Spending a $1 to save 24 cents still costs you 76 cents.
11)Will and trust review: The end of the year is a good time to take stock of changes in your life—like getting married or divorced, having children, starting a business or retiring. Your estate plan should reflect these changes. Get out your will, documentation for trusts you’ve established and powers of attorney and make sure they match your current situation.
12)Insurance documents: Insurance documents also need to cover your current situation. Take a look at your life and disability insurance policies to make sure they protect your current income and those dependent on it. Your renters or homeowners insurance should cover any additional big purchases you made during the year. And lastly, you should review your health insurance policy for any upcoming changes for 2020. For those of you enrolling in the Market Place, you have until December 15th to pick your plan.
My last bonus task is to enjoy this holiday season. I love the holidays because you can reflect and appreciate what you have. We’ve been tested a lot this year, living our lives through a pandemic, racial unrest and a contentious election. I hope the end of the year brings you comfort and peace. Follow me on Twitter or LinkedIn. Check out my website.
As both a tax attorney and a CERTIFIED FINANCIAL PLANNER™, I provide comprehensive financial planning to LGBTQ entrepreneurs who run mission-driven businesses. I hold a special place in my heart for small-business owners. I spent a decade defending them against the IRS as a tax attorney and have become one as a financial advisor. It’s a position filled with hope and opportunity. It gives you the most flexibility to create the life that you want. I also understand the added stresses of running a business while being a person of color and a part of the LGBTQ community. You may feel like you don’t have access to the knowledge that others do. I’m here to help lift some of that weight from your shoulders.
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Critics:
A personal budget or home budget is a finance plan that allocates future personal income towards expenses, savings and debt repayment. Past spending and personal debt are considered when creating a personal budget. There are several methods and tools available for creating, using and adjusting a personal budget. For example, jobs are an income source, while bills and rent payments are expenses.
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.
Visits from cruise ships unload hundreds of tourists at one time into tiny settlements including … [+]
dpa/picture alliance via Getty Images
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.
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.
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.
Tax and legal professionals today face increasing complexity, risk, and ambiguity as technology, regulatory and business transformation converge. It’s easy to feel overwhelmed by the change and the infinite number of strategic options. But embracing this change is manageable with the right tools and the right partner.
Deloitte is helping clients navigate this increasingly complex, digital world by leveraging the combined strength of our technology capabilities from our Consulting and Tax & Legal practices, and by placing a continued emphasis on technology investment and skills development to prepare talent to meet the evolving needs of the business.
Harnessing Technology to Adapt to Change
Businesses in all sectors and regions are experiencing the opportunities and challenges that come with the immense changes of the Fourth Industrial Revolution. Even the most traditional business areas, such as tax and legal, are not immune. Technologies are disrupting business as we know it and in response, global tax and legal systems must transform and adapt to keep pace with these new business concepts and models. And organizations need to invest in their tax and legal departments to ensure they can operate confidently and effectively while minimizing risk.
Tax departments are tasked with executing flawlessly at a fundamental level: Ensure compliance, know the regulations and their implications, be precise, account for all the data, stay ahead of risk, and predict outcomes. And they are asked to do it all in an environment of exponential increases in data, added responsibility within the business, and new mandates from regulators.
As a result, tax professionals are moving to automate and apply analytics to help account for more data and to achieve greater precision. Technologies such as robotic process automation (RPA), natural language processing (NLP) and artificial intelligence (AI) give tax professionals the ability to work with all the information available in massive data sets.
To not only see what has happened, but to more confidently predict what will happen. To be insightful and focus on implications and outcomes rather than being consumed by ensuring the accuracy of the numbers and on-time filing. And to do all this while meeting the increased transparency demands of regulators – who themselves are likely to use robotics and AI to collect and analyze companies’ tax data.
Likewise, technology has become a critical tool to help legal departments support rapidly evolving demands from the business and manage regulatory change.
Using Deloitte Tax and Legal professionals as an example, when the European Union’s General Data Protection Regulation (“GDPR”) came into force in 2018 along with the UK Data Protection Act, Deloitte UK’s Tax group engaged Deloitte Legal to assess the scope, and remediate where necessary, approximately 45,000 engagement contracts.
In the past this would have required a very lengthy manual assessment which would have been inefficient and prone to error as contract negotiations are typically buried in emails and hard to track. Instead Deloitte exercised a combined approach using dTrax, a proprietary artificial intelligence-enabled contract lifecycle management technology, with the support of skilled Deloitte Legal resources to simplify, automate, and streamline the contracting process.
The tool allowed Deloitte Tax client relationship owners to provide details about their engagements, which were then assessed by dTrax to determine whether the corresponding engagement contract required remediation. Where remediation was required, dTrax automatically generated a letter varying the Data Protection clause, which was sent directly to the client.
If negotiation of the Data Protection clause wording was required, Deloitte Legal resources were able to negotiate by reference to playbooks built into dTrax. This approach drove consistency while keeping contract negotiations managed and recorded within a single platform.
By combining technology with skilled resources, Deloitte UK’s Tax team was able to alter the business model, allowing for up to a 50 percent reduction in the number of required legal resources, a 40 percent reduction in the delivery turnaround time per variation letter, and an up to 60 percent reduction in the overall costs. Ultimately, the team gained greater visibility and insights into their contract terms and conditions, which increased their overall compliance and reduced risk.
Fueling Talent with Technology
While digital transformation is a tech-enabled shift, it requires a collaborative effort to change mindsets and embrace and advance transformation. A successful digital transformation demands a cultural change with a focus on continuous learning and embedding technology into the way we work.
Tax professionals have traditionally been tied up with compliance and the technical side of tax. Yet in this digital age, a robot can now do the data checking and digital tools can classify line items. So, today’s, and tomorrow’s, tax professional needs to understand the processes behind tax, be able to code, interpret data and make decisions. They have the opportunity to provide far more valuable and strategic input to their organizations, but they must be more adaptable to work with technology to enhance and reinforce their advice.
From the legal perspective, lawyers will need to have a broader range of skills to be ready for the legal landscape of tomorrow. Tomorrow’s digital lawyers will need to think and operate in a different way and they will need significant management, business strategy, technology and consulting capabilities to be able to deliver real value to clients. Adoption of the right tools, such as AI and data analytics, will enable legal teams to maximize efficiencies across multiple functions, standardize and adopt best practices, and help gather insights to support better decision making for the business.
Inspiring Confidence Today and Into Tomorrow with Technology
Deloitte has invested heavily in technology and we are accelerating our efforts in order to help both our own professionals and clients stay ahead. With more than 200 technology solutions in place, including robotics, AI, and machine learning capabilities, Deloitte Tax & Legal is helping clients manage compliance, bridge gaps between countries’ accounting principles, and manage research and development incentives claims. As we navigate the Fourth Industrial Revolution, having a tech-savvy foundation in our people and our processes will help set ourselves and our clients up for success and ensure our ability to work confidently now and far into the future.
Based in London, Philip Mills is the Global Tax & Legal leader at Deloitte. Prior to this, he led the Global Business Tax practice for two years and the UK Business Tax practice for seven years, amongst other roles. Philip also leads the Global Tax & Legal Executive and is a member of the Global Executive Committee. He has a Physics Bachelor of Science degree from Liverpool University, is a member of the Institute of Chartered Accountants in England and Wales and is a member of the Institute of Tax.
For nearly 20 years, Philip focused on M&A tax, particularly on Private Equity, Real Estate and Hedge Funds. He has worked on some of the more significant, large and complex European transactions in recent years as well as supporting the Fund advisers. Most recently, he took on advisory roles to some of Deloitte’s largest multinational corporate clients.
Points Pointers
