On December 21, 2019 President Trump signed into law a spending bill that included good news for taxpayers in Southeastern NC. The spending bill included retroactive major disaster related tax relief that we know will put more money back into taxpayers’ pockets. The legislation also included some retroactive implementations of previous expired tax deductions and credits as well as changes to retirement plans. With retroactive tax changes on income tax years already filed, amended returns will be required.
We are going to walk through some of the changes, starting with those we think will have the biggest dollar impact on our client base. This is an early analysis and as the dust settles and the tax code is implemented some of the specific details may change, but the legislation looks favorable for taxpayers.
There are several Disaster Tax Relief retroactive changes passed that will lead to large refunds, especially for business owners.
Business Owners – Disaster Relief
This one is HUGE. There is a credit for employers for retaining employees in an area impacted by major federal disasters, such as Hurricane Florence in 2018 or even Hurricane Dorian in 2019. We expect that this will bring significant refunds for businesses with employees.
Here is how the credit generally works: it is a credit of 40 percent of wages from the first day inoperable to the date at which the trade or business resumed significant operations. The wages for the credit are capped at $6,000 per employee. This credit will be significant for many companies with employees.
Individuals – Disaster Relief
There are also some retroactive individual changes that will result in found money. They have made it easier to deduct casualty theft and losses from 2018 and 2019 federally declared major disasters. Since they’ve made it easier, taxpayers will typically receive more money back than they would have without this change. This is one of the big ones that taxpayers were waiting on prior to filing their 2018 income tax returns.
There were several retroactive tax changes which are known as tax extenders. These portions of the tax code are typically extended at the last minute, hence the name. However, they were not extended for 2018 but now have been done so retroactively through 2018. Here is a list of them:
Jessica Maurer - Nov 25, 2020
Cece Nunn - Nov 25, 2020
Christina Haley O'Neal - Nov 25, 2020
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