President Biden recently proposed the American Families Plan which calls for an increased audit rate and higher income taxes. The proposed changes could require proactive tax planning now to determine the best timing of income recognition. The Plan includes several new spending initiatives in the areas of education, childcare, paid leave, nutrition, unemployment insurance, and tax credits.
Legislation that would significantly change the Estate, Gift, and Generation-Skipping Tax landscape has recently been proposed. While it is hard to predict whether any of the proposals will be enacted, we feel it is wise to plan for the worst and hope for the best.
The Internal Revenue Service announced that the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021. The IRS will be providing formal guidance in the coming days.
April 15th is not just Tax Day. It is also the deadline to file a protective refund claim for timely-filed 2017 tax returns. Currently there is litigation pending in the Supreme Court challenging the constitutionality of the tax provisions of the Affordable Care Act (“ACA”). This litigation may not be decided until the summer. In the event the Court determines the ACA tax provisions are unconstitutional, taxpayers may preserve their right to a refund by filing a protective refund claim for taxes paid in tax years where the statute of limitations remains open, generally 2017 and after.
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