Author Topic: Coronavirus Stimulus Aid Package  (Read 73956 times)

Offline cgr

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Re: Coronavirus Stimulus Aid Package
« Reply #1180 on: March 19, 2021, 08:55:57 AM »
It shows up in box 10 meaning you already got a tax deduction for that amount (not counted as income for fica or withholdings). Then you fill out form 2448 and say how much you actually paid to providers. If you've paid more than the amount on your w2 box 10 then you can usually get a credit for the excess. You cant get a credit for the box 10 amount because that's double dipping. Why would that change?
My understanding is that for 2021this would be allowed for employee contributions- going to try to find the source on this.
Note that it's only double dipping on a small portion because an FSA acts as a deduction, while not doing it through an FSA results in a tax credit which is now refundable.

Offline cgr

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Re: Coronavirus Stimulus Aid Package
« Reply #1181 on: March 19, 2021, 08:56:49 AM »
Hearing reports that since NYS income tax is based on Federal AGI there is nothing that needs to be done the 10200 is by default deducted from state income.
@cgr can you confirm?
Accountants?
I doubt it because then the NY Legislature wouldn't have introduced a similar bill.

Offline ericchavez91

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Offline yitzgar

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Re: Coronavirus Stimulus Aid Package
« Reply #1183 on: March 19, 2021, 09:30:30 AM »
It shows up in box 10 meaning you already got a tax deduction for that amount (not counted as income for fica or withholdings). Then you fill out form 2448 and say how much you actually paid to providers. If you've paid more than the amount on your w2 box 10 then you can usually get a credit for the excess. You cant get a credit for the box 10 amount because that's double dipping. Why would that change?
You can get a credit for the excess? Always seemed to me that you can only either use an fsa or get the credit, not both

Offline cgr

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Re: Coronavirus Stimulus Aid Package
« Reply #1184 on: March 19, 2021, 09:56:23 AM »
You can get a credit for the excess? Always seemed to me that you can only either use an fsa or get the credit, not both
Just checked the bill again, and it did not make it into the final version.
So looks like you can get either DC-FSA, or Dependent Care Credits.
Since DC-FSA is limited to $10,500 and the Dependent Care Credit can factor in up to $16,000, you can get up to 50% of the remaining $5,500 as a Dependent Care Credit. Your income bracket will also play a factor into which one is more beneficial.

Offline yos9694

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Re: Coronavirus Stimulus Aid Package
« Reply #1185 on: March 19, 2021, 10:29:10 AM »
You can get a credit for the excess? Always seemed to me that you can only either use an fsa or get the credit, not both

That's what Section 3 of 2448 is for. The credit on excess is capped at DDC spending of $3K for 1 kid, $6k for 2+. So if you only used $2K in an FSA you'd be able to claim a credit on $1K (or $4K for 2+ qualifying kids) but no more.

It can be better or worse than not using an FSA. The tax deduction gets you out of FICA and income tax, whereas the credit is a % rebate on after-tax money spent that might be less than the deduction. Of course, if you're spending a lot more outside the FSA than in it you're probably losing out. This is one of those things that does require advance tax planning

Offline Kobe Bryant

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Re: Coronavirus Stimulus Aid Package
« Reply #1186 on: March 20, 2021, 11:06:32 PM »
The Internal Revenue Service is planning to delay the April 15 tax filing deadline by about one month, giving taxpayers additional time to file returns and pay any outstanding levies. The IRS is still figuring out what the final deadline will be. The agency is considering setting the filing deadline either on May 15 or May 17. (Bloomberg News)
New York, New Jersey and Connecticut on Friday pushed their income tax deadlines back to May 17 to align with the federal government’s recently-announced extension.

The 30-day extension “aligns with the federal government’s and provides New Yorkers still coping with the complications of the COVID-19 pandemic ample time to file their taxes,” Gov. Andrew Cuomo said in a statement released Friday afternoon.

Offline yosefsv

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Re: Coronavirus Stimulus Aid Package
« Reply #1187 on: March 21, 2021, 01:02:28 AM »
Just checked the bill again, and it did not make it into the final version.
So looks like you can get either DC-FSA, or Dependent Care Credits.
Since DC-FSA is limited to $10,500 and the Dependent Care Credit can factor in up to $16,000, you can get up to 50% of the remaining $5,500 as a Dependent Care Credit. Your income bracket will also play a factor into which one is more beneficial.
Thanks for the update.

So i.e. Someone with 2+ kids and $8000 in eligible child care expenses could double dip the full amount.
Have your employer deposit untaxed $8000 in a FSA, the 16k allowed on the dependent care credit will be reduced to $8000, which is just enough to get you the 50% on the full expenses.
If it benefits even just one fellow DDFer, its worth posting it.

Offline yitzgar

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Re: Coronavirus Stimulus Aid Package
« Reply #1188 on: March 21, 2021, 01:05:58 AM »
That's what Section 3 of 2448 is for. The credit on excess is capped at DDC spending of $3K for 1 kid, $6k for 2+. So if you only used $2K in an FSA you'd be able to claim a credit on $1K (or $4K for 2+ qualifying kids) but no more.

It can be better or worse than not using an FSA. The tax deduction gets you out of FICA and income tax, whereas the credit is a % rebate on after-tax money spent that might be less than the deduction. Of course, if you're spending a lot more outside the FSA than in it you're probably losing out. This is one of those things that does require advance tax planning
Ok thanks that makes sense. So if you maxed out your FSA, you wouldn't be able to get the credit on any additional spending

Offline yitzgar

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Re: Coronavirus Stimulus Aid Package
« Reply #1189 on: March 21, 2021, 01:06:55 AM »
Thanks for the update.

So i.e. Someone with 2+ kids and $8000 in eligible child care expenses could double dip the full amount.
Have your employer deposit untaxed $8000 in a FSA, the 16k allowed on the dependent care credit will be reduced to $8000, which is just enough to get you the 50% on the full expenses.
If you have a qualifying event. I assume open enrollment for fsa has passed....

Offline cgr

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Re: Coronavirus Stimulus Aid Package
« Reply #1190 on: March 21, 2021, 10:06:07 AM »
Thanks for the update.

So i.e. Someone with 2+ kids and $8000 in eligible child care expenses could double dip the full amount.
Have your employer deposit untaxed $8000 in a FSA, the 16k allowed on the dependent care credit will be reduced to $8000, which is just enough to get you the 50% on the full expenses.
You can't use the same expenses for both- that's double dipping.

Offline cgr

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Re: Coronavirus Stimulus Aid Package
« Reply #1191 on: March 21, 2021, 10:09:29 AM »
Ok thanks that makes sense. So if you maxed out your FSA, you wouldn't be able to get the credit on any additional spending
In 2021 you can since DC-FSA is $10,500 max, and Dependent Care Credit is $16k in expenses max, so if you have $16k in expenses you can use $5,500 towards the Dependent Care Credit.

I'm wondering though- if I have $30k in expenses can I use $10,500 of that from my DC-FSA and $16k towards Dependent Care Credit? Or it's $16k max combined?

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Re: Coronavirus Stimulus Aid Package
« Reply #1192 on: March 22, 2021, 08:24:42 PM »
Can you really pressure to complete processing? I was missing a document, I faxed it to the irs in August and when I called they say there is nothing to do but wait
It's not a matter of pressuring them. It depends what the issue is but sometimes the refund is just waiting for someone to press a button so it can't hurt to remind them to do that.

Offline TBD

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Re: Coronavirus Stimulus Aid Package
« Reply #1193 on: March 23, 2021, 12:59:14 AM »
It's not a matter of pressuring them. It depends what the issue is but sometimes the refund is just waiting for someone to press a button so it can't hurt to remind them to do that.
Btw, I know someone who received today his refund for a 2018 return he filed 10 months ago.... DUE TO COVID

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Re: Coronavirus Stimulus Aid Package
« Reply #1194 on: March 23, 2021, 09:04:50 AM »
See my 5 step program to your left <--

(Real signature under my location)

Offline cgr

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Re: Coronavirus Stimulus Aid Package
« Reply #1195 on: March 23, 2021, 05:34:03 PM »
https://www.irs.gov/forms-pubs/new-exclusion-of-up-to-10200-of-unemployment-compensation
-IRS will refigure taxable income for those that filed prior to the $10,200 unemployment deduction.
-The $150k MAGI limit applies to MAGI after figuring in the deduction (even though the bill explicitly states otherwise)

Offline AsherO

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Re: Coronavirus Stimulus Aid Package
« Reply #1196 on: March 23, 2021, 06:37:58 PM »
-The $150k MAGI limit applies to MAGI after figuring in the deduction (even though the bill explicitly states otherwise)

Could this qualify some people for the $1,400/person stimulus? That would be huge for some people with large families who are just over the cutoff.

Offline yelped

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Re: Coronavirus Stimulus Aid Package
« Reply #1197 on: March 23, 2021, 07:29:24 PM »
https://www.irs.gov/forms-pubs/new-exclusion-of-up-to-10200-of-unemployment-compensation
-IRS will refigure taxable income for those that filed prior to the $10,200 unemployment deduction.
-The $150k MAGI limit applies to MAGI after figuring in the deduction (even though the bill explicitly states otherwise]

Then what does this mean?

"If your modified AGI is $150,000 or more, you can't exclude any unemployment compensation."

Offline cgr

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Re: Coronavirus Stimulus Aid Package
« Reply #1198 on: March 23, 2021, 11:01:40 PM »
https://www.irs.gov/forms-pubs/new-exclusion-of-up-to-10200-of-unemployment-compensation
-IRS will refigure taxable income for those that filed prior to the $10,200 unemployment deduction.
-The $150k MAGI limit applies to MAGI after figuring in the deduction (even though the bill explicitly states otherwise)
I just stepped through the instructions and it's bigger than I realized- not sure why it's not being widely reported.

The $150k limit is before ALL unemployment income, not just after deducting the $10,200.

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Re: Coronavirus Stimulus Aid Package
« Reply #1199 on: March 23, 2021, 11:18:33 PM »
I just stepped through the instructions and it's bigger than I realized- not sure why it's not being widely reported.

The $150k limit is before ALL unemployment income, not just after deducting the $10,200.
You mean this?

"Note. If your modified adjusted income (AGI) is less than $150,000, the American Rescue Plan enacted on March 11, 2021, excludes from income up to $10,200 of unemployment compensation paid to you in 2020. For married taxpayers, you and your spouse can each exclude up to $10,200 of unemployment compensation. For example, you file jointly with your spouse and your modified AGI is less than $150,000. You were paid $20,000 of unemployment compensation and your spouse was paid $5,000. Report the $25,000 (the total amount of your unemployment compensation) on line 7 and report $15,200 on line 8 as a negative amount (in parentheses). The $15,200 excluded from income is all of the $5,000 unemployment compensation paid to your spouse, plus $10,200 of the $20,000 paid to you. If your modified AGI is $150,000 or more, you can't exclude any unemployment compensation. Use the Unemployment Compensation Exclusion Worksheet to figure your modified AGI and the amount to exclude. If you file Form 1040-NR, you can't exclude any unemployment compensation for your spouse."