Tax Provisions for Individuals Included in the Consolidated Appropriations Act
by: Smith and Howard Wealth Management
The Consolidated Appropriations Act, 2021 (CAA) extended several provisions for tax relief for individuals. Most of these provisions were introduced by the CARES Act in March 2020 to help both individuals and businesses affected by the COVID-19 pandemic.
Two provisions from the CARES Act affecting charitable deductions were extended and modified through 2021 by the CAA:
Flexible Spending Accounts (FSAs)
If you have an FSA for health or dependent care that carried a balance at the end of 2020, the CAA allows those funds to be rolled over into 2021. Likewise, FSA holders who have unused benefits at the end of 2021 will be allowed to roll that money over into 2022. That carryover amount is currently limited to $550.
The Families First Coronavirus Response Act (FFCRA) provided paid sick and family medical leave in 2020. The CAA extends those benefits until March 31, 2021.
Section 163(j) Election
An error in the Tax Cuts and Jobs Act of 2017 meant that taxpayers who owned residential property that was rented out before 2018 had to apply a 40-year alternative depreciation system recovery period to that property. The CAA corrected this provision by applying a 30-year depreciation to all residential rental property.
If you have any questions related to these tax provisions, please contact your advisor by calling 404-874-6244 or complete our contact form. We would be glad to discuss how these provisions may impact your personal financial situation.
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