COVID-19/Coronavirus Tax Relief News

A Second Stimulus Check May Finally be on the Way. Here’s What You Need to Know.

A new stimulus check may finally be underway for millions of Americans. The expectation is that the payments will be $600 per individual, a 50% reduction from the $1,200 that the government provided in their previous stimulus check in the spring.

As of November 28th, more than 20.6 million Americans were receiving unemployment, and that’s not including the 885,000 first-time claims reported between then and December 12th. This is the largest per-week increase since September 5th.

Senator Josh Hawley has plans to go to the Senate Floor in an attempt to convince others to increase the relief payment amount to $1,200 per individual and $2,400 for married couples who file jointly. Like the first checks that taxpayers initially received through the CARES Act, those who earn under $75,000 and couples earning less than $150,000 would receive the full amount.

Americans previously received a stimulus paycheck payment of up to $1,200 per person, or $2,400 per married couple filing jointly, in addition to $500 for every dependent under the age of 17. Taxpayers would receive the full stimulus payment if their income threshold was at or under $75,000 for individuals, $112,500 for head of households or $150,000 for married couples.

Americans are still waiting to see if they will receive a stimulus check by the end of December or if they will have to wait even longer to be provided financial relief in the new year due to COVID-19.

We will continue to update you with new information as this story develops.           

Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.

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McConnell Announces Second COVID-19 Stimulus Deal may be Reached by the End of the Year

Senate Majority Leader Mitch McConnell is hopeful that a coronavirus stimulus deal will be reached by the end of December. Although McConnell’s COVID-19 stimulus deal has yet to be announced, House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer, both agreed to cut their aid demands. A $908 billion bipartisan proposal is now being strongly considered as a starting point for negotiations with McConnell.

Both Democrats and McConnell have outwardly supported a deal that will include Paycheck Protection Program loan funding, money for education and vaccine distribution.

However, Democrats have strongly opposed one part of the deal which provides COVID-19 liability protections for businesses and universities. Although McConnell’s plan does not include it, both Pelosi and Schumer have reportedly supported state and local government aid and supplemental federal unemployment payments.

The current surge in coronavirus cases and the record number of hospitalizations have led to additional economic restrictions as well as fears that the job market may become weakened once again. Protections for unemployed Americans, renters and federal student loan borrowers put into place at the beginning of the pandemic are due to expire at the end of December.

Congress is running out of time and will need to all make a collective decision by December 11th in order to add relief measures to a government funding bill to provide financial assistance to both taxpayers and businesses.

A few republican senators have begun to advocate for little or no new stimulus spending, arguing that the economy has improved enough to the point that Americans are now capable of financially sustaining themselves until most of the population has received a vaccine. Other GOP lawmakers have argued that the federal government should offer additional support to the 20 million Americans who are currently receiving some form of unemployment benefits.

We will continue to update you with new information as this story develops.

Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.

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Pause on Student Loans could End Soon. Here’s what You Need to Know.

Updated on December 7, 2020

  • Betsy Devos has extended the pause on student loan payments through January 31.
  • Devos has also extended the pause of interest accrual and the suspension of collections on defaulted loans.
  • Despite month-long negotiations, Congress has yet to approve additional pandemic aid to both individuals and Americans.  

If you’re one of the 37 million student loan borrowers that has been taking advantage of the pause on student loan payments that was part of the CARES Act, you may need to start preparing for your payments to begin again starting January 1st.

The Department of Education suspended student loan debt payments, paused accruing interest, and stopped collections on defaulted federal loans in March in the midst of the pandemic when unemployment was surging. The idea was to provide financial relief to Americans that were suffering due to the coronavirus outbreak.

It’s not clear yet as to whether or not another extension will be made during President Trump’s presidency since the government has been unable to reach a deal on providing assistance to  individuals by distributing stimulus checks and giving out loans to business  that are struggling to keep their doors open.

The idea of student loan forgiveness has become increasingly popular and a variety of proposals have been presented in order to help student loan borrowers that struggle to make their monthly payments.

  • House Democrats passed the HEROS Act back in May. The Act would have provided $10,000 in both federal and private student loans forgiveness that are economically distressed.
  • President-elect Joe Biden proposed forgiving all undergraduate federal student loan debt for borrowers who attended public colleges and universities, as well as historically black colleges and universities and private minority-serving institutions. Borrowers earning less than $125,000 per year would be eligible for student loan forgiveness.
  • Senator Elizabeth Warren previously pushed for across-the-board student loan forgiveness of up to $50,000 per borrower for those who earn under $100,000 per year. The benefit would gradually phase out for those earning between $100,000 and $250,000 per year.

Additional proposals have been suggested that would be geared towards certain professions in response to the ongoing COVID-19 pandemic. First responders, medical personnel and teachers were included in the group of people that should be given student loan relief. Although many ideas have been passed around about erasing college debt to assist those who are having difficulty making ends, there has yet to be any student loan reform bills that have passed.

We will continue to update you with new information as this story develops.

Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.

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How Your Taxes could be Impacted by the Coronavirus

Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.

The potential financial implications from the coronavirus outbreak have affected the stock market and your 2020 tax season could be impacted too. Here’s everything you need to know about how your taxes could be affected by the ongoing pandemic.

Here are the top three ways coronavirus could impact your taxes:

1. Claiming unemployment

A high number of Americans have become unemployed due to the pandemic. In addition, a record number of taxpayers have applied for unemployment compared to past years. If this is your first time applying for unemployment, you may not realize that it is considered taxable income.

When it’s tax time, your state will send you Form 1099-G that will reflect the amount of unemployment compensation paid out to you throughout the year.

If you’ve received benefits, you have the option to withhold enough taxes so you don’t have to face any tax time surprises. On the federal level, taxpayers can withhold at a flat rate at 10%. The withholding rate for state taxes will vary state to state.

2. Working at multiple jobs

Many taxpayers are now choosing to work at multiple jobs or taking on a temporary job in order to make up for lost hours to stay financially afloat. Having more jobs means that your tax return will most likely become much more complex as well as your income tax withholding.

All W-4 forms must be submitted to all employers accurately in order to ensure that the proper amount of taxes is being withheld. For those who are doing contract work, taxpayers should make quarterly estimated payments as to keep up with any tax obligations.

3. Relief for student loans

If you pay for student loans, then you know that the CARES Act has provided temporary relief for many Americans who are currently struggling to pay back their loan. For up to six months, the legislation:

  • Allows you to skip principal payments on certain student loans without any negative effects to your credit score or lending report.
  • Interest rates for federally held loans has been reduced to 0% regardless of their status.

Because most taxpayers will be paying less in student loan interest, you can expect a smaller deduction amount, meaning your return won’t be as big as the year prior.

If you need tax help, contact us for a free consultation.

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People Experiencing Financial Hardships May Qualify for an Economic Impact Payment

Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.

For those experiencing homelessness or extreme financial hardship, you may be eligible for a $1,200 Economic Impact payment and an additional $500 for each qualifying child under the age of 17. In order to receive an economic payment, you will need to register with the IRS using the IRS Non-Filers: Enter Payment Info here tool by November 21st, 2020.

If someone’s income is below the income threshold of $12,200 or $24,000 if they’re married, they will most likely need to file a tax return. This most likely means, the IRS may not have enough information to issue their payment.

Taxpayers who don’t typically file their tax return may be eligible for an Economic Income Payment if they:

  • Are a U.S. citizen, permanent resident or qualifying resident alien.
  • Have a work-eligible Social Security number.
  • Cannot be claimed as a dependent of another taxpayer.

In order to use the tool, you will need the following:

  • Your name must appear as it is on your social security card.
  • You must have a work-eligible SSN for self and spouse.
  • For every qualifying child, you must have their name, relationship, and SSN or Adoption Tax Identification Number.
  • A mailing address where you can receive both your payment and confirmation letter. The IRS will typically mail out this letter within 15 days after issuing their payment.
  • An Identity Protection Personal Identification Number.

The non-filers tool will also ask qualifying taxpayers for their license or state ID number to digitally sign the document.

For those who prefer their payment to be direct deposit but don’t have a bank account, can visit the FDIC website for assistance.

If you need tax help, contact us for a free consultation.

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IRS Extends Economic Impact Payment for Non-Filers to November 21st

Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.

The IRS has extended the deadline to register for an Economic Impact Payment utilizing the Non-Filers tool that can be found of the IRS website. The IRS has extended the deadline until November 21, 2020.

Taxpayers who typically don’t file their tax returns and haven’t received their stimulus checks, are urged to register as quickly as possible before their Economic Impact Payment expires. To register, you can use the Non-Filers: Enter Info Here tool on IRS.gov. Taxpayers should provide their information as soon as possible because the tool will not be available after November 21st.

The extension is only for those who have yet to register or receive the payment and don’t normally file a tax return. Taxpayers who requested an extension because they needed additional time to file their 2019 tax return should do so as soon as possible.

Most eligible U.S. taxpayers already received their Economic Impact Payment. If you don’t have a tax filing obligation, it’s recommended to use the Non-Filers tool to register with the IRS in order to get up to $1,200. This usually includes those who receive little to no income.

This tool is designed for those who have an income below $24,400 for married couples, and $12,200 for singles who could not be claimed as a dependent by someone else. This also includes couples and individuals that have experienced homelessness.

The Non-Filers tool is accessible to anyone that requires it and can speed up the arrival of their payment by opting in for direct deposit. Those who opt out of direct deposit will receive a check.

If you need tax help, contact us for a free consultation.

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Will a Covid-19 Relief Deal Be Struck Soon?

Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.

As election time creeps closer and closer, more pressure is being placed on Democrats and Republicans to reach a COVID-19 deal in order to provide mass relief for many Americans and businesses that have been financially struggling since the beginning of the pandemic.

Both parties have struggled to make a deal just a days before the election, and both Democrats and Republicans are billions of dollars apart in their proposals and have yet to come to an agreement on any deal that has been presented. Many of the bills brought to the table contained many differences on COVID-19 testing, child tax credit provisions and funding for state and local governments.

Congress previously passed a comprehensive aid package back in March. Since then, many of the provisions that were previously passed have already expired. The increase in unemployment benefits back in July and airline assistance expired in October.

Democrats are requesting about $2.2 trillion in funding while the White House proposed about $1.8 trillion. President Trump has also made it known that he wants more funding than the Democrats and his own negotiators offered.

Many plans have been proposed by both parties but the question is, do any of the proposals include relief checks? Democrats have been strongly advocating to provide additional relief to both taxpayers and businesses; one of the main points presented in their plan includes another round of $1,200 stimulus checks. The White House has yet to release their proposal although President Trump supports another round of $1,200 stimulus checks. Senate Republicans have proposed a $500 billion plan that does not include more individual payments.

No plan has been passed yet and with more time passing, more and more taxpayers and businesses are finding it more difficult to stay financially afloat. The hope is that both parties will come together and agree on a relief package that will benefit all Americans.

If you need tax help, contact us for a free consultation.

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Businesses Might have to Pay for Higher Unemployment Taxes

Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.

States are currently in position to raise taxes on businesses starting next year and decrease jobless benefits for workers as the pandemic continues and the economy takes a downturn due to the increasing amount of businesses closing down and many Americans still out of a job.

Industries such as bars and restaurants were impacted the most by the employment crisis and may also have to deal with the largest tax hikes.

Millions of Americans received government aid during the past six months in order to make ends meet, and hundreds of thousands file new unemployment applications for aid each week.

The unemployment insurance system was created in 1930 and has already depleted the trust funds states use to pay benefits. Multiple states have already needed to borrow money after these trust funds had been drained. It is expected that many other states will need to do so by the end of the recession, according to unemployment experts. 

Because trust funds are funded solely by payroll taxes that are levied on employers, it is almost certain that levies alone will not recover all the money used to assist with unemployment. States will need to increases taxes in order to replenish the money that has already been lost.

Although a state tax increase is inevitable, tax rates will depend on the balance in state unemployment trust funds. In many states, low balances will automatically trigger higher tax rates, and vice versa. 

We will continue to update you with new information as this story develops.

If you need tax help, contact us for a free consultation.

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The IRS to Contact Taxpayers Who are Eligible for a Stimulus Check

Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.

The IRS has started to reach out to over 9 million Americans who may be eligible for a federal stimulus check but have yet to claim their coronavirus relief payment. 

Those who qualified for the past stimulus check but didn’t receive it will be sent a letter from the agency regarding the money they are owed on September 24th. The letter will inform recipients that they are eligible for the payment if they meet the certain criteria. Taxpayers must be a citizen or a resident alien and also have a valid social security number.

Currently, Washington, D.C., has the largest share of Americans who are entitled to a check, based off the state data issued by the IRS. Alaska is currently in second, with about 4.2% of the state’s residents who are expected to receive a letter from the IRS notifying them about claiming their money.

California has the most residents, at 1.2 million, which could be eligible for claiming their check but still have yet to. Texas currently has 796,000 pending, Florida has 567,000, followed by New York with 538,000 and Georgia with 349,000 unclaimed stimulus checks.

The relief payments are meant to target middle to low income households by providing $1,200 for single taxpayers, $2,400 for married couples and $500 per child under 17 years old. In order to deliver the first round of stimulus checks as quickly as possible, the IRS relied on taxpayer’s most recent tax returns which included either their banking information or home addresses for paper checks.

If you need tax help, contact us for a free consultation.

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Taking a CARES Act Retirement Withdrawal could Lead to a Tax Liability

Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.

With taxpayers still dealing with the financial fallout from the COVID-19 outbreak, many are falling on hard times and needing to get cash quick. The Coronavirus Aid, Relief and Economic Security Act, also known as the CARES Act, has a provision that can aid Americans that are financially strapped.

The CARES Act makes it easier for taxpayers to withdraw funds from their retirement accounts like 401(k)s and traditional Individual Retirement Accounts (IRAs). The temporary changes made to retirement accounts allows taxpayers to make early withdrawals without worrying about tax penalties as well as relaxed rules on loans you take out from your retirement.

Here is everything you need to know about the CARES Act.

Eligibility on early withdrawals from retirement accounts with the CARES Act

Some tax-advantaged retirement account holders may not qualify for some of the CARES Act’s relaxed early distribution and loan provisions. Legislation restricts relief to certain participants with a valid COVID-19 related reason in order to receive early access to funds. This includes:

  • If you have been diagnosed with COVID-19.
  • If your spouse or dependent is diagnosed with COVID-19.
  • Experiencing a layoff, furlough, reduction in hours, or inability to work due to COVID-19.
  • Lack of childcare because of COVID-19.
  • Closing or reducing hours of a business due owned or operated by an individual or spouse due to COVID-19.

Additional rules for early distribution

Eligible participants in tax-advantaged retirement plans typically have 401(k)s, 403(b)s,457s, and Traditional IRAs. This includes taking an early distribution of up to $100,000 during the calendar year 2020 without having to pay the 10% penalty tax that is typically imposed on most retirement account withdrawals before an account owner is 59 ½.

The act also suspends the mandatory 20% tax withholding requirement that is typically applied to early distributions from a 401(k) or other workplace retirement plan. The CARES Act allows taxpayers up to three years to redeposit the withdrawn money back into their retirement account or pay it all back in 2020 if your income is much lower this year. 

If you need tax help, contact us for a free consultation.

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