FILE - This April 13, 2014, file photo shows the Internal Revenue Service (IRS) headquarters building in Washington. 2019 was another tough year for the IRS, according to a new federal report. Burdened with years of budget cuts and a recent increase in workload to implement a new tax law, the IRS struggled to deliver on its mission in the past fiscal year. The annual report from the Office of Taxpayer Advocate found that in the 2019 fiscal year, among other problems, the agency failed to collect billions in unpaid taxes. (AP Photo/J. David Ake, File)
The IRS issued clarification this week that pandemic-related emergency aid is not taxable income, and should not be included in tax returns.
In the last year, some colleges provided aid for students affected by the pandemic.
This aid is intended for food, housing, course materials, technology, health care, and child care, the IRS said.
At large, public universities, the total dollar amounts going to students are in the millions. Much of this funding was made available through the Higher Education Emergency Relief Fund.
At The Ohio State University in Columbus, the institution is awarding grants of $500 to $1,000 to students, totaling up to $17.7 million. The University of Central Florida is awarding up to $25 million in grants.
“The pandemic has been difficult for so many families, and Ohio State is pleased to support students who may be facing financial challenges,” President Kristina M. Johnson said. “We thank our federal partners for helping to ensure that students are not derailed from their career and life goals.”
Taxpayers with questions on these grants can click here to visit the IRS website.
If you’re wondering how you’re affected, not to worry, we have your back. We’re doing the work to make sure our products are up to date and that you can use them to file your taxes with complete confidence.
That said, many folks are wondering what’s in the bill and how it might affect them. Here’s a recap of some of the major tax provisions in the new tax bill and how they may impact you.
Increased Standard Deduction: The new tax law nearly doubles the standard deduction amount. Single taxpayers will see their standard deductions jump from $6,350 for 2017 taxes to $12,000 for 2018 taxes (the ones you file in 2019). Married couples filing jointly see an increase from $12,700 to $24,000. These increases mean that fewer people will have to itemize. Today, roughly 30% of taxpayers itemize. Under the new law, this percentage is expected to decrease.
Increased Child Tax Credit: For, families with children the Child Tax Credit is doubled from $1,000 per child to $2,000. In addition, the amount that is refundable grows from $1,100 to $1,400. The bill also adds a new, non-refundable credit of $500 for dependents other than children. Finally, it raises the income threshold at which these benefits phase out from $110,000 for a married couple to $400,000.
Personal and Dependent Exemptions: The bill eliminates the personal and dependent exemptions which were $4,050 for 2017 and increased to $4,150 in 2018. State and local taxes/Home mortgages: The bill limits the amount of state and local property, income, and sales taxes that can be deducted to $10,000. In the past, these taxes have generally been fully tax deductible. The bill also caps the amount of mortgage indebtedness on new home purchases on which interest can be deducted at $750,000 down from $1,000,000 in current law.
Health Care: The bill eliminates the tax penalty for not having health insurance after December 31, 2018. It also temporarily lowers the floor above which out-of-pocket medical expenses can be deducted from the current law floor of 10% to 7.5% for 2017 and 2018. So for 2018, you can deduct medical expenses that are more than 7.5% of your adjusted gross income as opposed to the higher 10%.
Don’t worry about memorizing these tax changes the majority of which are for 2018 taxes that you file in 2019. Fastax has you covered and will be up to date with the latest tax laws. Call us for tax help at 661 493-8512