Student Loan Moratorium
The Biden Administration has announced that they extending the moratorium for Student Loan payments, again! The latest extension is set to carry through May of 2022, 5 months later than the already extended deadline which was previously January 31, 2022. The most recent extension stems from the added stress of the Omicron Variant, and the number of borrowers continuing to grow to about 43 million debtors.
This news comes as a relief to most as the pressures of an approaching deadline, and the additional financial stress of the pandemic has been a lot to handle. Even though the deadline has been extended yet again, student debt likely will not be forgiven. The Biden Administration has been ensuring that the Department of Education is being fair to borrowers, giving them the support they need to “smoothly transition back into repayment”.
Here is what Student Loan Borrowers Should be Aware of:
- Be on the Lookout for a billing statement in the months of March and April
- Borrowers should receive a notice at least 21 days before the payment is due
- This Moratorium does not include loans for private institutions, as those still have to be paid
IRS Warns of Slow & Messy Tax Season
With complications from the ongoing pandemic and the continuous stream of problems starting in 2020, the IRS is already warning of a “Slow & Messy” filing season. The IRS stated it will begin accepting returns for the 2021 filing season on January 24th, wrapping up on April 18th. Additionally, the IRS says that taxpayers should expect to see a continuance of long wait times for phone calls with a lower level of assistance. During the 2020 filing season, the IRS had one employee to answer every 15,000 phone calls, and while this ratio may improve for the upcoming season, the backlog for 2020 tax returns will likely contribute to another logjam.
In an attempt to alleviate any potential frustration and increase tax revenue, the Biden Administration has asked for $80 Billion in additional IRS funding to be distributed over the next 10 years. This is certainly a step in the right direction, but this will not help with the struggles of this season as the Build Back Better plan is still stalled in Congress.
There are a few easy things that can be done to help streamline your 2021 tax year process:
- Organize your tax information and financial reports
- Beware of any big changes from your 2021 return
- Get information to CPA early
Bumps in the road while dealing with the IRS may not be new, so it is increasingly important to be timely and organized with your accountant to mitigate risk when dealing with the IRS. By doing this filers can expect better tax return results.
Crypto in Question this Year?
Cryptocurrency is becoming increasingly popular as time passes, with the relatively new currency paving its way as a legitimate form of money in many economies. This can be seen as some companies such as Tesla are accept Bitcoin(a popular form of Crypto) as payment for their vehicles. It doesn’t stop there. We are now even seeing famous athletes asking to be paid in different forms of Cryptocurrency. As cryptocurrency has become more mainstream, tax collectors have shifted more focus towards it, increasing the likelihood it will be subject to steeper federal tax implications.
Just like they started doing last year, the IRS will ask you to indicate if you sold, received, exchanged, or purchased any type of cryptocurrency. Those who fit this description will need to indicate so, which will be seen on page one of your tax return this year along specifically, directly below your personal information such as your address and name.
When it comes to accounting for Crypto on your 2021 Return, full transparency and less leniency can be expected. It is important to mention any exchanges of cryptocurrency into US currency, or the purchase of a good or service with Crypto. Reporting all of this on your 1040 return will save stress for the filer, and their accountant.
Additionally, with increased activity related to cryptocurrency, we will likely see changes to the tax code surrounding it in the near future. Until then we will keep a close eye on this and monitor for changes related to digital currency.