Federal Income Tax Changes - For the 2021 Tax Year (4 hour version) (Course Id 1839)

Taxes - Taxes for Course Id 1839

Each year, various limits affecting income tax preparation and planning change. Some changes commonly occur each year as a result of inflation indexing, while others occur because of new legislation or the sunsetting of existing law. This course will examine the tax changes that took effect as a result of passage of the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), the Coronavirus Aid, Relief, and Economic Security Act (CARES Act)) and the inflation-changed limits effective for 2021 that are more significant from the perspective of an income tax preparer. Some context will be supplied, as appropriate, to assist readers in understanding the changes. 

NASBA QAS - Text - Technical - NASBA Registry - IRS Enrolled Agents - Registered Tax Return Preparers - 1839

Course Learning Objectives

• List the 2021 changes in various amounts including the –
  o Standard mileage rates,
  o Standard deduction,
  o AMT exemption amount,
  o Limits related to income from U.S. Savings Bonds for taxpayers paying higher education expenses, and
  o Deductions for qualified long-term care insurance premiums;
• Identify the 2021 tax credit changes affecting the –
  o Saver’s credit,
  o Earned income credit, and
  o Adoption credit;
• Recognize the 2021 changes affecting –
  o Health Savings Account (HSA) and Archer Medical Savings Accounts (MSA) requirements and contribution limits,
  o Roth IRA eligibility, and
  o Traditional IRA contribution deductibility for active participants in employer-sponsored qualified plans;
• List the changes effective for 2021 with respect to the –
  o Small business employer premium tax credit, and
  o Applicable large employer mandate;
• Describe the principal CARES Act provisions, including those related to the –
  o Paycheck Protection Program,
  o Pandemic Unemployment Assistance program,
  o Net operating loss (NOL) carryback rules,
  o Health savings account (HSA) rules concerning first-dollar payment for telehealth and COVID-19 testing and treatment,
  o Foreign income exclusion,
  o Section 1031 exchange timing,
  o Correction of the deductible period applicable to qualified improvement property,
  o Modification of limitation on losses for non-corporate taxpayers,
  o Limitation on business interest expense deductions,
  o Employer payments of student loans, and
  o Expansion of economic injury disaster loans (EIDLs); and
• Apply the various CARES Act provisions affecting –
  o Recovery rebate rules,
  o Expanded tax-favored use of retirement funds,
  o Charitable contribution rules, and
  o Qualified improvement property depreciation.

Chapter 1
Changes in Various Limits

• Identify the individual income tax rate changes affecting taxpayers;
• Calculate the standard mileage deductions for –
  o Use of a personal vehicle for business purposes,
  o Use of a personal vehicle to obtain medical care, and
  o Charitable use of a personal vehicle;
• Identify the 2021 standard deduction amounts available to taxpayers;
• Recognize the changes made to the alternative minimum tax exemption amount for 2021;
• Apply the tax-free United States savings bond income limits for taxpayers who paid qualified higher education expenses in 2021; and
• Calculate the tax-deductible premiums for and tax-free benefits received under qualified long-term care insurance contracts;
• Determine the amount of assets that may be passed tax-free at death; and
• Identify the qualified business income (QBI) threshold amount.

Chapter 2
Tax Credit Changes

• Calculate the retirement savings contribution credit available to eligible taxpayers;
• Recognize the rules and income limits applicable to eligibility for the earned income credit;
• Identify the tax credit rules revised under the American Rescue Plan Act, including the –
  o Child tax credit;
  o Child and dependent care tax credit; and
• Apply the adoption credit rules.

Chapter 3
PPACA-Related Tax Changes

• Health flexible spending arrangement contribution limits;
• Small business health care tax credit; and
• Large employer shared responsibility provision.

Chapter 4
Changes in Archer MSAs, HSAs & IRAs

• Recognize the eligibility rules applicable to Archer MSAs and HSAs;
• Calculate the maximum contributions that may be made to an Archer MSA;
• Apply the tax treatment rules to contributions to and distributions from Archer MSAs and HSAs;
• Calculate the traditional IRA tax deduction available to a taxpayer who is an active participant in an employer-sponsored retirement plan; and
• Recognize the MAGI limits that apply to a taxpayer’s eligibility to make a Roth IRA contribution.

Chapter 5
Pandemic-Related Economic Stimulus

• Describe the tax treatment of payments to small businesses under the Paycheck Protection Program;
• Recognize the rules related to unemployment benefits under the American Rescue Plan Act;
• Identify the rules concerning expanded tax-favored use of retirement funds;
• Apply the changes in charitable contribution rules;
• Describe the changes in health savings account (HSA) rules related to first-dollar payment for telehealth and COVID-19 testing and treatment; and
• Recognize the tax-related provisions of the American Rescue Plan Act (ARPA).

Chapter 5 - Pandemic-Related Economic Stimulus

Chapter Learning Objectives

Introduction

Recovery Rebates (Economic Impact Payments)

Paycheck Protection Program

Maximum Loan Amount

Small Business Association Covered Loan Forgiveness

Tax Treatment of Loan Forgiveness

Unemployment Benefits

Tax Treatment of Unemployment Benefits

Charitable Contributions

Qualified Contributions

Partial Above-the-Line Deduction for Charitable Contributions

Relaxation of Retirement Fund Tax Rules

Qualified Plan Loan Maximum Increased

Early Distributions

Taxation of Qualified Plan Distributions Over Three-Year Period

Rollover of Qualified Plan Withdrawals Within Three Years of Distribution

Coronavirus-Related Distribution

Suspension of 2020 Required Minimum Distributions

Modifications for Net Operating Losses (NOLs)

Qualified Medical Expenses

High Deductible Health Plans and COVID-19-Related Expenses

Additional Health Care Related Provisions

Section 911 Foreign Earned Income

Section 1031 Timing Relief

Technical Amendments Regarding Qualified Improvement Property

Limitation on Losses for Non-Corporate Taxpayers

Modifications of Limitation on Business Interest Expense

Special Partnership Rules

Exclusion of Certain Employer Payments of Student Loans

Economic Injury Disaster Loans (EIDL)

Emergency Grants

Taxpayer Relief Act of 2020

Unreimbursed Medical Expense Threshold Lowered

Education Tax Benefits

Tax Treatment of Expenses used for PPP Loan Forgiveness

Qualified Charitable Expenses

Temporary Increase in Business Meal Deductibility

Flexible Spending Arrangements

Summary

Chapter Review

Glossary