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Are More Stimulus Payments on the Horizon?
May 11, 2021
In the past month, the IRS has delivered more than $379 billion in direct stimulus payments. Based on income and phased out at higher levels, the payments were intended to help struggling households to catch up on bills and purchase necessities like food. But polls show that most recipients say the money won’t even last three months, sparking discussion of a fourth wave of checks in the near future.
But how true are those rumors? Currently, a group of 21 senators have indeed proposed the idea of a fourth stimulus to President Biden. And it looks as though a majority of Americans - 65 percent according to one poll - support the idea of recurring $2,000 monthly payments.
However, there is no bill currently set to pass Congress, so discussion of more stimulus is currently just talk and nothing more. As the old adage goes, it would be wise not to count your chickens before they hatch.
But let’s take a look at what we do know, regarding current aid efforts and those coming up in the near future. The $300 weekly unemployment “bonus”, which is paid on top of state benefits, is set to continue through September 6. Hopefully that will give everyone time to find adequate employment, but it is always possible that Congress will vote to extend those benefits in a future bill.
Also, the expanded Child Tax Credit payments are set to drop beginning in July. The American Rescue Plan increased the annual child tax credit to $3,000 for children aged 6-17, and $3,600 for those under 6, while also making the credit fully refundable. Half of that amount is set to be disbursed via regular payments (perhaps monthly) beginning in July. Parents will then claim the rest of the credit on their 2021 tax return.
Those are the two provisions we will continue to see roll out this year. As for a fourth stimulus check of some type, the idea does look popular but we can’t predict anything concrete at this point.
If you need help adjusting your financial plan during these uncertain times, call our office to schedule an appointment. We can assess your current situation and then help you to make a plan for both the near and distant future.
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Receiving a notice from the IRS for an audit can be a nerve-wracking experience. The time, effort, and potential financial consequences make it a situation you'd rather avoid. Fortunately, many audits stem from avoidable errors. Here's how you can avoid the five most common audit triggers and keep your tax returns in the clear. Ensure You Report All Income Income discrepancies are a major red flag for the IRS. While taxes are typically withheld from regular wages, other sources of income, like business earnings or capital gains, may not have taxes automatically deducted. Be vigilant in accurately reporting all sources of income, whether you receive a 1099 form or not. Document and report any non-wage income meticulously to prevent underreporting. Explain Significant Income Fluctuations Significant fluctuations in income from year to year can draw the IRS's attention. If your income varies widely, provide explanations or notes with your tax filings. Whether it's due to changes in business circumstances or other factors, clarifying these fluctuations can help prevent misunderstandings. Document Business Losses Carefully While it's common for businesses to experience losses, chronic or substantial losses can raise eyebrows at the IRS. Keep detailed records of your business finances, especially in the early years. Additionally, if you operate a sole proprietorship, ensure your business activities are distinguishable from hobbies to justify loss deductions. Support Your Deductions Certain deductions, such as large charitable contributions or home office expenses, may attract scrutiny. Be prepared to provide supporting documentation for all deductions claimed on your tax return. Thorough records can help substantiate your deductions and alleviate concerns during an audit. Accurately Value Assets For estate tax returns, undervalued assets are a common trigger for audits. When valuing assets without a public market price, seek multiple appraisals from qualified professionals. Having multiple valuations can strengthen your position and minimize the risk of an audit. Remember, even if you enlist professional help for your taxes, the responsibility for accuracy ultimately lies with you. Review your tax returns carefully before signing them to ensure everything is in order. Understanding the Different Types of Audits IRS audits come in three main varieties, each with its own level of intensity. Correspondence Audit. Conducted through the mail, this audit is often triggered by missing information or minor discrepancies. Office Audit. Requires a visit to an IRS office, typically for more complex tax returns or multiple disputed items. Field Audit. The most comprehensive type, conducted in person at your home or business, involves a thorough examination of your return. Regardless of the type, the IRS will provide a written request for specific documents beforehand. By being proactive and thorough in your tax reporting, you can minimize the risk of an audit and ensure a smoother process if one does occur.
