L&F Tax & Bookkeeping Services

The question of the day... what's the status on unemployment taxation? In short, it's changing daily in favor of taxpayers. Here's the current status and when you might expect to be able to exempt some or all of it.

Mayor Michael Victorino announced today that applications are now being accepted for financial assistance though the Hawaii Emergency Laulima Partnership (H.E.L.P.) program. The County of Maui allocated $2 million in general funds to the program to assist families with members who have lost jobs due to the COVID-19 pandemic.

The IRS released an IRS Statement on the American Rescue Plan Act of 2021. They're working on getting things implemented for the changes in taxation of unemployment and the new 2021 advance of a higher child tax credit allowance. Until they are ready, we are encouraged not to amend tax returns yet. See the statement below for more information.

Apply for Unemployment Benefits

Great news! The governor has signed the unemployment tax bill. Employers will not receive the 2x increase in unemployment insurance rate we were expecting. Mahalo Nui Loa!!!!!!!!

This has been an interesting year with ever-evolving changes that will likely have many unexpected tax implications. Here are a few changes that will affect most people and/or businesses: 1. There is a new $300 above the line deduction for cash charitable contributions. Itemizing deductions is not required, so save your receipts! Everyone can claim this..... 2. The Economic Impact Payments (EIP) were an advance against the Recovery Rebate Credit. If you did not receive some or all of your EIP, you will be able to apply for the credit on your 2020 tax return. Save the letter you received with your EIP. 3. Unemployment compensation is fully taxable income. If you did not have taxes withheld, this may impact the outcome of your taxes. 4. Most grants and COVID assistance is not taxable. Check to be sure! 5. If you took a COVID-related withdrawal from a 401(k) and/or IRA you will have the option to repay it within three years or pay the tax ratably over a three-year period. 6. Businesses who received an SBA Grant will be subject to tax on it, though SBA Loans are not subject to tax. 7. Forgiven PPP loan expenses are currently not deductible, though that may change when the next stimulus package is signed into law. Things are still changing so stay tuned for more updates or give our office a call if you have any questions.