When the Tax Cuts and Jobs Act (TJCA) was enacted in 2017, it limited the amount of state and local taxes (SALT) that individuals can deduct for federal income tax purposes to $10,000 (or $5,000 for a married individual filing separately). This “SALT cap” has brought on a flurry of legislative action as states enact Pass-Through Entity (PTE) tax elections that allow owners of PTEs such as S-Corporations and Partnerships to bypass the SALT cap by allowing their share of taxes to be paid by the entity at the entity level, and therefore lowering the owner’s federal income tax liability.
Are employees at your business traveling again after months of virtual meetings? In Notice 2021-52, the IRS announced the fiscal 2022 “per diem” rates that became effective October 1, 2021. Taxpayers can use these rates to substantiate the amount of expenses for lodging, meals and incidental expenses when traveling away from home. (Taxpayers in the transportation industry can use a special transportation industry rate.)
The Commonwealth of Massachusetts has a new temporary sick leave program related to COVID-19. Under Chapter 16 of the Acts of 2021 (An Act Providing for Massachusetts COVID-19 Emergency Paid Sick Leave), employers are now required to make paid leave time available to employees for COVID-related illnesses, quarantine, and vaccinations. Employers may then apply for reimbursement from the state.
Many employee benefit plan sponsors have faced logistical challenges during the pandemic, such as office closures and remote work environments, which have made it difficult to remit participant 401(k) contribution deposits on time. In response to these challenges, the Department of Labor (DOL)'s Employee Benefit Security Administration (EBSA) has issued Disaster Relief Notice (2020-01), which provides flexibility and relief to sponsors struggling with remittance delays due to the pandemic.
In 2018, Massachusetts passed a landmark bill requiring all employers in the state to provide workers with paid family and medical leave (PFML), giving Massachusetts one of the most generous paid family and medical leave programs in the country. At the time of the legislature, the state outlined a three-year approach, with deadlines for employer and employee contributions into the Family and Employment Security Trust Fund, through which the program will be funded.
The IRS and the Treasury department began issuing a second round of Economic Impact Payments last week as part of the Consolidated Appropriations Act. Most individuals making up to $75,000 per year will receive a direct payment of $600; married couples making up to $150,000 per year will receive $1,200; and eligible individuals with children will receive $600 for each qualifying child dependent. Dependents who are 17 and older are not eligible for the child payment.