Frequently Asked Questions

Q. Can I hire my child to work for my business?

A. Yes, you can hire your children as employees to do legitimate work in your business, you may deduct their salaries up to $12,550 from your business income as a business expense.

Q. What is the 2021 standard mileage rate?

A. Standard mileage rate for 2021 is .56 cents a mile. This includes the cost of operating your car, van, pickup, or panel truck for each mile of business use.

Q. Where’s My Refund?

A. Taxpayers who filed their tax returns should know that the easiest way to check on their tax refund is to use "Where’s My Refund?" This tool is available on IRS.gov and through the IRS2Go app

Q. What is the IRA contribution for 2020 & 2021?

A. You can contribute a total of $6,000 or $7,000 if you're age 50 or older.

Q. What are the Standard Deductions for 2021?

A. Single or Married Filing Separately - $12,550

Married Filing Jointly or Qualifying Widow(er) - $25,100

Head of Household - $18,800

Q. Who is a “qualifying child” for purposes of the 2021 Child Tax Credit?

A. A qualifying child is an individual who does not turn 18 before January 1, 2022. The individual is the taxpayer’s son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of any of them (for example, a grandchild, niece, or nephew).

Q. Who was eligible to receive the Advance Child Tax Credit?

A. You were eligible for the Advanced Child Tax Credit if you have a “qualifying child.” Advance Child Tax Credit payments began in July and continued on a monthly basis through December 2021, generally based on the information contained in your 2019 or 2020 federal income tax return. If you are eligible for the Child Tax Credit but did not receive advance Child Tax Credit payments, you can claim the full credit amount when you file your 2021 tax return during the 2022 tax filing season.

Q. Did the credit for the Child and Dependent care increase for 2021?

A. Yes, for 2021, the American Rescue Plan Act of 2021 (the ARP) increases the amount of the credit for child and dependent care expenses. For 2021, you may claim the credit on qualifying employment-related expenses of up to $8,000 (previously $3,000) if you had one qualifying person, or $16,000 (previously $6,000) if you had two or more qualifying persons. The maximum credit in 2021 increases to 50% of your employment-related expenses, which equals a maximum credit of $4,000 if you had one qualifying person (50% of $8,000), or $8,000 (50% of $16,000) if you had two or more qualifying persons.

Q. What is the American Rescue Plan Act 2021 (ARP) and how will it affect individuals as far as tax purposes?

A. The American Rescue Plan Act 2021 (ARP), also called the COVID-19 Stimulus Package or American Rescue Plan, was a trillion-dollar economic package put into law by President Biden. It was enacted to help families, individuals, and businesses during the COVID-19 pandemic.

Q. What were the ARP provisions?

Small businesses received grants in order to keep operations flowing and to be able to pay their employees.
Unemployment benefits were expanded and then it was decided to exclude up to $10,200.
Child and dependent care credit increased. The advanced child tax credit increased, and many families were issued monthly amounts to assist with expenses.
A third stimulus was paid not only to those who qualified previously but was also made available to college students, those who receive SSI or SSDI recipients.
The earned income credit amount increased from $400 to $1502. Also, the age to receive the EITC decreased to age 19 as opposed to age 25.
Reduction of reporting requirement threshold (1099-K) for third party settlement organizations (e.g. PayPal) from over $20,000 and 200 transactions to over $600 and no minimum number of transactions, effective from the tax year 2022. This is expected to impact gig workers, independent contractors, casual eBay sellers, among others

THE MAIN THING TO KEEP IN MIND WITH THESE REVISIONS IS THAT THEY ARE ONLY FOR THE 2021 TAX FILING SEASON. THESE ARE NOT PERMANENT CHANGES.