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The Step-Up Loophole and the STEP Act

On April 28th President Biden pitched his American Families Plan to select group of members of Congress. Near the end of the proposal was a section entitled “End capital income tax breaks and other loopholes for the very top.” The first part of this section covered changes to capital gains tax rates that we covered in a previous blog article. The second part covered closing the “step-up” loophole (see text below) which is what we’re going to cover in this week’s blog.

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Making Kids a Little Less Expensive - Big Changes to the Child Tax Credit in 2021

Kids aren't cheap. Between providing for their food, clothes, childcare, activities, toys, possibly college, and countless other things, the financial cost of raising children can be quite high. However, most parents will admit that the joys and wonders of having children far outweigh the financial costs (at least until their adolescent years). Luckily for those who have qualifying children, many will receive an expanded tax benefit in the form of a tax credit from the recently passed American Rescue Plan. This credit is in addition to the enhancements of the Child and Dependent Care Tax Credit that was discussed in a previous blog. Here's what you should know about the Child Tax Credit, and what expanded benefits may apply to you.

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The American Families Plan and the potential increase in Capital Gains Tax rates

President Biden is planning on previewing his American Families Plan (AFP) at his first address to a joint session of Congress on April 28th. Some of the expected parts of the plan include extending the enhanced child tax credit, 12 weeks of family leave paid for by the federal government, free community college, access to free childcare, and universal pre-K. To pay for all of these new programs, the President is expected to propose tax increases in various forms. One of the most talked-about changes is with long-term capital gains rates, reportedly increasing dramatically for those Americans with more than $1 million in taxable income.

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Big Changes to the Child and Dependent Care Tax Credits & FSAs in 2021

The American Recovery Plan Act (ARPA) has temporarily expanded two key provisions of the tax code that affect families with children 18 or under along with other types of dependents. Not that anything in the tax code is simple, but the new Child Tax Credit and Child & Dependent Care Tax Credit have now become super complicated to understand for 2021. For now, these rules only apply to 2021 and then revert to the old rules in 2022 (pending permanent changes in future tax legislation). In this week’s blog we are going to look at the Child and Dependent Care Tax Credit. We will analyze the Child tax Credit in a future blog.

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Don't File Your 2020 Tax Return Yet! - More Tax Law Changes Coming From The American Rescue Plan Act (ARP)

Just this week, both the House and Senate passed new legislation called the American Rescue Plan Act of 2021, or ARP for short, and was signed by the President. Within this bill, there are significant changes to the tax code that will apply to 2021 and beyond. In this post we will review the changes that apply to 2020 returns. In this instance, maybe the early bird does not get the worm, and if you have not filed your return yet it may make sense to hold off until some of these changes are implemented or you may need to amend your taxes later. Here's what you should know about the new tax law and how it may impact your 2020 taxes.

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Don't Forget to Report This on Your 2020 Tax Return - You May Be Leaving Money on the Table!

As we close out February and enter March, individuals and CPAs around the US are getting into the thick of tax season. By this time most tax forms should be available, and CPAs are anxiously awaiting to frantically prepare this information before the ominous April 15th deadline. No one expected last year to upend our daily lives as much as it did. Along with life changes also came government assistance, much of which came in the form of tax changes. While there are numerous differences with how 2020 taxes will be prepared, one of the most noteworthy is how to report any direct payments received (or not received) from the government. Here's what you should know about how to report these payments.

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