The Relief Act of 2021
As we told you in our last blog, Governor Hogan recently signed the bipartisan RELIEF Act of 2021, which will provide more than $1 billion in tax relief and economic stimulus funds to Maryland residents, small businesses, and unemployed workers.
We talked about how the Act will help small businesses by allowing them to keep the sales tax they collect during March, April, and May – up to $3000 per month.
In addition, any state or local grants that were received will not be taxable at the state level.
We also touched on the relief for individuals.
For those of you who received unemployment and earned less than $75,000 for a single taxpayer or $100,000 filing jointly, you will be able to subtract your unemployment benefits from your Maryland taxable income.
This is all excellent news, right? So why are we bringing it up again?
As with all changes enacted by the government, nothing is ever simple.
To make these adjustments to income, both businesses and individuals need to report the reduction amounts on new tax forms – the 500LU for business returns and the 502LU for personal returns.
From the Comptroller of Maryland:
“We are urging those taxpayers to PLEASE WAIT to file until we can update our forms and system to match the details of the legislation allowing for unemployment to be non-taxed/subtracted. This is a process that typically takes months given the number of vendors and regulations we must follow, but we are hoping to have them completed within the next few weeks. We appreciate your patience on this. We will alert you when those updated forms are available.
If you have already filed and are eligible for the unemployment tax subtraction, PLEASE WAIT to amend your taxes until our systems & forms are updated.”
In addition to the several weeks it will take the Comptroller’s office to produce the forms, it will take tax software providers a few more weeks to update their software.
This is true whether we prepare your taxes, or you use an H&R Block, or even Turbo Tax(which I don’t recommend, wink, wink.)
Now, hundreds of thousands of Marylanders will have to file an extension on their 2020 returns.
There is little chance that these new forms will be ready before the deadline for business returns on March 15th. It’s too early to predict if they will be ready before tax day on April 15th, either.
Although relief was welcomed, this process puts a burden on taxpayers who are eagerly awaiting their refunds.
It also puts a massive burden on us tax preparers.
Unfortunately, extensions don’t file themselves, just adding to our to-do lists. It might be 2021, but this is so 2020!
Don’t get me wrong; we love servicing our clients. But, we are already spending long hours working on 2nd draw PPP loans and 1st draw forgiveness applications on top of tax season. Not to mention continuing education to keep up on all the latest rules and regulations.
We wish that government officials could have a little more forethought when coming up with “relief” packages.
As always, we will keep you informed as we learn new information.