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New Vehicles Added for Plug-in Vehicle Credit

Five-Minute Tax Briefing® July 13, 2021 No. 2021-13 Item for Wednesday, July 7, 2021 New Vehicles Added for Plug-in Vehicle Credit:   IRC Sec. 30D(a) provides a credit to the purchaser of a qualified plug-in electric drive motor vehicle, including passenger vehicles and light trucks. The credit allowed is limited to $2,500 plus an additional amount, based on battery capacity, that cannot exceed $5,000. The credit phases out over six calendar quarters beginning when a manufacturer has sold at least 200,000 qualifying vehicles in the U.S. Recently, the IRS added the following models to its list of vehicles eligible for the credit: the 2021 Mustang Mach-E GT, 2021 Hyundai Ioniq Plug-In Hybrid Electric Vehicle and Ioniq Electric Battery Vehicle, 2021 Cayenne E-Hybrid and E-Hybrid Coupe, Cayenne Turbo S E-Hybrid and E-Hybrid Coupe, Panamera 4 PHEV which includes the 4 E-Hybrid, 4 E-Hybrid Sport Turismo, 4 S E-Hybrid, 4 S E-Hybrid Sport Turismo, 4 E-Hybrid Executive, Turbo S E-Hybrid, and Turbo S E-Hybrid Sport Turismo. For a full list of vehicles, see www.irs.gov/businesses/irc-30d-new-qualified-plug-in-electric-drive-motor-vehicle-credit

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New Poll Shows Small Businesses Hopeful as Pandemic Recovery Accelerates

The Q2 2021 Met Life and US Chamber of Commerce SBI, released this week, finds that as more Americans received the COVID-19 vaccine, states lift restrictions and businesses continue to reopen, a majority (65%) of small business owners are more optimistic that the worst of the pandemic is over. According to the poll taken April 21 – May 6th, the dominant emotion small business owners are feeling about their current strategy is hopeful. 31% say they are feeling comfortable and 24% say they are concerned. “Small businesses are seeing real reasons for optimism this quarter and we’re seeing that reflected in the data,” said Tom Sullivan, vice President of small business policy at the US Chamber of Commerce. “The easing of capacity restrictions due to increased vaccinations means more small businesses are welcoming more customers. Increased foot traffic equates to economic growth and that is moving our country’s recovery forward. Small businesses are very clear on what will help their businesses thrive: both easing COVID restrictions and more vaccinations. Small businesses say that easing COVID-19 restrictions (29%) and ramping up vaccinations in their area (28%) are the two biggest keys to their success in the remainder of 2021. When it comes to views of the economy, positive outlooks are growing and negative ones are declining. Currently, 27% of small businesses rate the overall US economy as good, up from 21% who said the same in Q1. Driving this uptick is the decreasing number of small businesses seeing the economy as bad. While 46% continue to say the national economy is poor, this is the first time this measure has fallen below 50% during the pandemic. Just last quarter, 60% of small businesses said the economy was poor. Additional Findings Additional survey findings include: COVID habits may be here to stay. 76% of small businesses intend to keep all COVID-19 safety precautions in place until the Coronavirus pandemic ends. In a tight labor market, employers are holding onto the workers they have. Most small businesses anticipate retaining the same staffing level. 32% plan to increase staffing, and around 11% plan to decrease staffing over the next year. Small businesses see revenue improving in the future. About 57% of small businesses anticipate their revenue increasing this year, up 10% compared to last quarter, the most positive outlook of this metric during the pandemic.

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Small Business Expect Revenue to Grow in 2021

Well over half of small businesses expect their revenue to increase over the next 12 months. This compares to fall of 2020, when just 34% of small business owners were confident of increasing revenue. This positive statistic about the outlook of small businesses after the unprecedented disruption of 2020 and early 2021, was unveiled by the Bank of America. Bank of American Small Business Owner Report 2021 Bank of America’s 2021 Small Business Report was based on a survey of nearly 1,000 small business owners. The survey was conducted in March 2021. It reveals that economic confidence and business outlook is witnessing a rebound. 56% of participants say they are confident the local economy will improve, which is a significant rise from 39% last fall. Half of respondents anticipate the national economy will expand, up from 37% in fall 2020. Small Business Planning on Hiring in Forthcoming Months Such is the confidence among small business that 21% plan to hire in coming months, a 7% rise from fall 2020. These heartening figures confirm just how much the small business community is progressing as the nation continues to lift lockdown restrictions. The research also shows what small businesses are doing to help aid recovery. 62% say they have been building a digital strategy, and 30% have been accepting forms of cashless payments. The Bank of America’s report provides important insight into strategies small businesses are adapting to pave the way for a rebound. The Backbone of the US Economy Talking about the resilience of small business and the moves they are taking to secure recovery, Sharon Miller, head of Small Business at the Bank of America commented: “Small business owners have showed time and again during the pandemic that they are the resilient backbone of our economy and of local communities throughout the country. From providing essential services to revamping operating models, I am inspired by the dedication and passion of entrepreneurs across the country and encouraged to see their renewed optimism about the future of their businesses.” “Almost 80% of those surveyed say a widely available vaccine and/or herd immunity in their community will play a pivotal role in bringing business back to pre-pandemic levels,” Miller continued. Leading Concerns The research also looked at the leading concerns small businesses are facing. The political environment and health care costs are among the top concerns, with 71% and 64% reporting such concerns, respectively. These figures are consistent with those reported in the fall of 2020. Worries that have witnessed a drop in prevalence since last fall are those about the pandemic. 55% of those surveyed in the last Bank of America report highlighted such concerns, down from 75% last fall. Fears about consumer spending has also dropped 75% last fall to 55%. Steps to Aid Recovery The report also explores the steps small business owners are taking to help aid recovery. It found that 62% of business owners have adopted new digital tools and strategies to optimize operations in response to the […]

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2021 individual taxes: Answers to your questions about limits

  Many people are more concerned about their 2020 tax bills right now than they are about their 2021 tax situations. That’s understandable because your 2020 individual tax return is due to be filed in less than three months (unless you file an extension). However, it’s a good idea to acquaint yourself with tax amounts that may have changed for 2021. Below are some Q&As about tax amounts for this year. Be aware that not all tax figures are adjusted annually for inflation and even if they are, they may be unchanged or change only slightly due to low inflation. In addition, some amounts only change with new legislation. How much can I contribute to an IRA for 2021? If you’re eligible, you can contribute $6,000 a year to a traditional or Roth IRA, up to 100% of your earned income. If you’re 50 or older, you can make another $1,000 “catch up” contribution. (These amounts were the same for 2020.) I have a 401(k) plan through my job. How much can I contribute to it? For 2021, you can contribute up to $19,500 (unchanged from 2020) to a 401(k) or 403(b) plan. You can make an additional $6,500 catch-up contribution if you’re age 50 or older. I sometimes hire a babysitter and a cleaning person. Do I have to withhold and pay FICA tax on the amounts I pay them? In 2021, the threshold when a domestic employer must withhold and pay FICA for babysitters, house cleaners, etc., is $2,300 (up from $2,200 in 2020). How much do I have to earn in 2021 before I can stop paying Social Security on my salary? The Social Security tax wage base is $142,800 for this year (up from $137,700 last year). That means that you don’t owe Social Security tax on amounts earned above that. (You must pay Medicare tax on all amounts that you earn.) I didn’t qualify to itemize deductions on my last tax return. Will I qualify for 2021? A 2017 tax law eliminated the tax benefit of itemizing deductions for many people by increasing the standard deduction and reducing or eliminating various deductions. For 2021, the standard deduction amount is $25,100 for married couples filing jointly (up from $24,800). For single filers, the amount is $12,550 (up from $12,400) and for heads of households, it’s $18,800 (up from $18,650). If the amount of your itemized deductions (such as mortgage interest) are less than the applicable standard deduction amount, you won’t itemize for 2021. If I don’t itemize, can I claim charitable deductions on my 2021 return? Generally, taxpayers who claim the standard deduction on their federal tax returns can’t deduct charitable donations. But thanks to the CARES Act that was enacted last year, single and married joint filing taxpayers can deduct up to $300 in donations to qualified charities on their 2020 federal returns, even if they claim the standard deduction. The Consolidated Appropriations Act extended this tax break into 2021 and increased the amount that […]

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2021 individual taxes: Answers to your questions about limits

  Many people are more concerned about their 2020 tax bills right now than they are about their 2021 tax situations. That’s understandable because your 2020 individual tax return is due to be filed in less than three months (unless you file an extension). However, it’s a good idea to acquaint yourself with tax amounts that may have changed for 2021. Below are some Q&As about tax amounts for this year. Be aware that not all tax figures are adjusted annually for inflation and even if they are, they may be unchanged or change only slightly due to low inflation. In addition, some amounts only change with new legislation. How much can I contribute to an IRA for 2021? If you’re eligible, you can contribute $6,000 a year to a traditional or Roth IRA, up to 100% of your earned income. If you’re 50 or older, you can make another $1,000 “catch up” contribution. (These amounts were the same for 2020.) I have a 401(k) plan through my job. How much can I contribute to it? For 2021, you can contribute up to $19,500 (unchanged from 2020) to a 401(k) or 403(b) plan. You can make an additional $6,500 catch-up contribution if you’re age 50 or older. I sometimes hire a babysitter and a cleaning person. Do I have to withhold and pay FICA tax on the amounts I pay them? In 2021, the threshold when a domestic employer must withhold and pay FICA for babysitters, house cleaners, etc., is $2,300 (up from $2,200 in 2020). How much do I have to earn in 2021 before I can stop paying Social Security on my salary? The Social Security tax wage base is $142,800 for this year (up from $137,700 last year). That means that you don’t owe Social Security tax on amounts earned above that. (You must pay Medicare tax on all amounts that you earn.) I didn’t qualify to itemize deductions on my last tax return. Will I qualify for 2021? A 2017 tax law eliminated the tax benefit of itemizing deductions for many people by increasing the standard deduction and reducing or eliminating various deductions. For 2021, the standard deduction amount is $25,100 for married couples filing jointly (up from $24,800). For single filers, the amount is $12,550 (up from $12,400) and for heads of households, it’s $18,800 (up from $18,650). If the amount of your itemized deductions (such as mortgage interest) are less than the applicable standard deduction amount, you won’t itemize for 2021. If I don’t itemize, can I claim charitable deductions on my 2021 return? Generally, taxpayers who claim the standard deduction on their federal tax returns can’t deduct charitable donations. But thanks to the CARES Act that was enacted last year, single and married joint filing taxpayers can deduct up to $300 in donations to qualified charities on their 2020 federal returns, even if they claim the standard deduction. The Consolidated Appropriations Act extended this tax break into 2021 and increased the amount that […]

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