The Consolidated Appropriations Act, 2021 amended and extended important and popular provisions of the CARES Act. It also provided additional benefits for a wide variety of taxpayers. Because the 2021 tax season is upon us, now is the time to inform clients of recent COVID-related legislation. For example, those who claim charitable contributions or take advantage of the Paycheck Protection Program may qualify for additional deductions. Your clients are looking to you to guide them on additional opportunities to lower their tax liability.
Below are details concerning two of the CARES Act’s more popular amended provisions. Find out which of these provisions may affect your clients, and how you can streamline the client advisory process to ensure your clients stay up to date on how recent COVID-related legislation affects them.
Increased Charitable Contribution Threshold Extended
The Consolidated Appropriations Act, 2021 extended the charitable contribution incentives included in the CARES Act into 2021.
Individuals can now take advantage of the suspension of the percentage limitation on the charitable donation contribution base while the same percentage limitation for corporations is increased by 10%, from 15% to 25%.
This provision is an excellent opportunity to inform your clients of the enhanced tax incentives for claiming charitable contributions. Specific qualifications, waivers, and rules apply. As a result, your clients may be looking for additional guidance to make the best decisions for their situation.
Employee Retention Credit Extension and Expansion
Under the CARES Act, the Employee Retention Credit applied to qualified wages paid between 3/21/20 and 12/31/20. Subsequently, the same credit has been extended to wages paid between 12/31/20 and 7/1/21.
This provision encourages businesses to keep workers on their payroll. It also offers support to small businesses and not-for-profits by allowing 70% of qualified wages to be refundable. That’s a 20% increase (from 50%) in the previous provision. Employers will immediately benefit from this credit by reducing employment tax deposits they would have made. Reach out to clients who may be affected by the threshold change. Make sure to have some basic information about prior year’s charitable contribution deductions as a starting point.
To achieve the greatest credit for your clients, you’ll need to consider things such as employer eligibility and qualified wages. Other specific limitations and rules apply, so your clients may be looking for additional guidance in these matters. Be prepared to discuss the eligibility requirements and how they can maximize the credit’s benefits for their business.
How to help your clients
For progressive tax professionals, these provisions highlight the need to establish an advisory services workflow that leverages process automation, content-rich subject matter expertise, and deep insight into your customer base. CCH Axcess provides a single platform to unite content, data, and automation into a single seamless process.
Specifically, CCH Axcess iQ can become an integral component of your advisory services workflow. It presents insightful reporting on current tax regulations and legislation while identifying clients who would likely be affected.
Each iQ event comes with an associated client letter. This additional tool can streamline your messaging and encourage your clients to engage by educating them on the importance of the event and how it may impact their bottom line. More frequent communication leads to stronger relationships, more word-of-mouth marketing, and increased revenue for your firm.
Save time and assist as many clients as possible who have been impacted by recent COVID-related legislation. New technology tools offer you actionable data and deep insight into the issues at hand. Register for a demonstration of CCH Axcess iQ to take the first step in upgrading your advisory services workflow.