You might have heard that the Infrastructure Investment and Jobs Act passed the House earlier this month and is set to be signed by President Biden this week. There has been a lot of chatter about potential tax law changes, and with bills covering a broad range of (sometimes random) topics, you might be concerned about what did/did not pass as a part of this legislation.
Do not panic. There were very few tax provisions included in the infrastructure bill, and the issues you likely care most about – changes to capital gains and estate taxes and the overall tax rates – were not included. The primary tax-related provisions of the infrastructure bill dealt with the end of the employee retention credit and instated enhanced reporting for cryptocurrency.
Here are some lesser-known implications of the new law.
Employee Retention Credit
- The employee retention credit was established during the pandemic to help businesses with the financial burden of retaining employees while business slowed. As a part of the infrastructure bill, it is scheduled to end a quarter earlier than originally set.
- Reportedly, the credit is ending early because an insufficient number of businesses were taking advantage of it. However, official guidance was only released in August, which means some people might have been waiting until recently to claim their credits.
- The credit now applies to wages through Sept. 30, 2021, but you don’t have to apply for the credit by that date. You can apply as long as you’re within the window to amend your income tax return – because it will affect your tax situation.
- Finally, the employee retention credit is available through fourth quarter for start-up businesses. These companies were unable to apply for a Paycheck Protection Program loan, so the extended timeframe could afford them much-needed extra financial support.
- The infrastructure bill imposes new crypto asset information reporting requirements on brokers. However, even if you purchase and manage your own “digital assets,” you will have more documentation required for us to prepare your tax return.
- If you do not work through a broker for cryptocurrency, you’ll need to gather and export forms from your relevant platform/software to comply with the enhanced reporting requirements.
More extensive tax law changes are expected to come as a part of the 2022 fiscal budget reconciliation bill that’s under consideration by Congress. So, as has been the case much of this year, we’re unfortunately still in a wait-and-see period. We’ll be sure to keep you informed when that changes!
Category: Tax and Accounting Team, Uncategorized