Good morning and have a nice spring. We hope you can enjoy another Sunday ignoring your tax returns (or, if you’ve already done so, feeling complacent). But first, here’s what you need to know about the business and technical news for the week ahead. – Charlotte Cowles
What’s happening? (March 14th to 20th)
More time for taxes
Good news for procrastinators like me or anyone whose taxes have been hampered by the pandemic: The Internal Revenue Service has extended the deadline for filing taxes by one month to May 17th, the passage of the American rescue plan. The law stipulated that the first $ 10,200 in unemployment benefits would be tax-free for those who earned less than $ 150,000 in the previous year. This is a significant benefit for many people whose jobs have been disrupted. But if you’ve already filed, don’t worry – the IRS said it would automatically send these refunds to qualified people.
Well that was awkward
Relations between China and the Biden government got off to a rocky start with the first face-to-face meeting between diplomats last week. On the eve of the talks, the United States took a confrontational tone by imposing sanctions on 24 Chinese officials for undermining democracy in Hong Kong. In return, China’s top diplomat accused his American colleagues of being “condescending” among other things. According to President Biden’s team, the aim of the three-day meeting was to find common ground for climate change and the fight against the pandemic, and to dispel US concerns about Chinese trade and military interference. The tension is not a good sign of moving forward in future negotiations.
The case against Disney
Ten women suing the Walt Disney Company for “widespread gender pay discrimination” added another charge to their list: Disney “has a strict policy of pay secrecy.” A new section of the lawsuit relates to an episode in which a Disney employee was “disciplined for passing her wages on to employees.” Pay transparency is seen as an important part of closing racial and gender pay gaps, and retaliation for discussing your own pay is in violation of California law and the National Labor Relations Act. Disney has denied the claims and vowed to defend itself.
What’s next? (March 21-27)
Come to a Walmart near you
Walmart jumps on the vaccination record and says they will provide standardized digital vaccination cards to anyone who gets vaccinated in any of their stores or at Sam’s Club. The retailer will develop a health passport app that will allow people to check their status at airports, schools, sports arenas and other potentially crowded places. Walmart joins an existing push by major health centers and tech companies like Microsoft, Oracle, Salesforce, and the Mayo Clinic, as well as a European Union proposal that would require vaccine reviews for travel in specific areas.
How has the pandemic changed your taxes?
Are business stimulus payments taxed?
No The so-called economic impact payments are not treated as income. In fact, it’s technically an advance on a tax credit known as a Recovery Rebate Credit. The payments could indirectly affect state income tax payments in a handful of states where federal tax is deductible from taxable state income, as our colleague Ann Carrns wrote. Continue reading.
Are my unemployment benefits taxable?
Most of time. Unemployment insurance is usually subject to both federal and state income tax, although there are exceptions (nine states do not levy their own income taxes, another six are exempt from taxation according to the tax foundation). However, they do not owe so-called wage taxes, which are paid for Social Security and Medicare. With the new relief bill, the first $ 10,200 in benefits will be tax-free if your income is less than $ 150,000. This applies to 2020 only. (If you’ve already filed your taxes, see IRS guidelines.) Unlike employer’s paychecks, unemployment taxes aren’t automatically withheld. Recipients have to register – and even if they do, federal taxes are only withheld at a flat rate of 10 percent of the benefits. While the new tax break will provide a cushion, some people might still owe money to the IRS or certain states. Continue reading.
I worked from home this year. Can I make the home office deduction?
Probably not, unless you are self-employed, an independent contractor, or a gig worker. The revision of the tax law at the end of 2019 removed the home office allowance for employees from 2018 to 2025. “Employees who receive a paycheck or W-2 solely from one employer are not entitled to the allowance, even if they are currently working from home. Said the IRS. Continue reading.
How does the family leave the credit work?
The self-employed can take paid foster leave if their child’s school is closed or their usual childcare provider is unavailable because of the outbreak. This works similarly to the smaller sick pay – 67 percent of average daily earnings (for either 2020 or 2019), up to $ 200 a day. However, the care leave can last 50 days. Continue reading.
Have the rules for donating to charity changed?
Yes. This year, you can deduct up to $ 300 for charitable donations even using the standard deduction. Previously, only those who made a breakdown could claim these deductions. Donations must be made in cash (such as checks, credit cards, or debit cards) and must not contain any securities, household items, or other property. For 2021, the withdrawal limit for joint applicants will double to $ 600. Itemizer rules have also become more generous. The charity donation limit has been removed so individuals can contribute up to 100 percent of their 60 percent gross adjusted income. However, these donations must go to charitable organizations in cash. The old rules apply, for example, to contributions to funds advised by donors. Both provisions are available until 2021. Read more.
Back in the hot seat
Facebook, Google, and Twitter executives are grilled in Congress this Thursday, this time for their failure to tackle the spread of misinformation. Technical executives were last summoned by lawmakers in November 2020 when Facebook’s Mark Zuckerberg and Twitter’s Jack Dorsey faced a firestorm of content moderation questions, largely because of their attempts to prevent a wave of falsehoods in the presidential election. This time around, they will be asked about misinformation about coronavirus vaccines and the electoral fraud conspiracy theories that continue to spread on their platforms.
Elsewhere in Washington
The two biggest names in economic policy – Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen – will appear together for the first time this week as they testify to the House Financial Services Committee on the progress of pandemic relief efforts. The hearing comes a week after the Fed revised the economic outlook to forecast stronger growth and more reassuring that interest rates would stay near zero for years to come.
Education has ditched Trump-era policies that restricted debt relief for students defrauded by nonprofit educational institutions. Newly hired Teen Vogue editor Alexi McCammond stepped down over racist and homophobic tweets she posted a decade ago. Retail sales fell 3 percent in February as consumers struggled with declining stimulus effects and devastating winter storms.