Federal Tax News
What’s a “restaurant” for tax deduction purposes? A recent tax law provides a 100% business deduction (up from 50%) for food and beverage expenses in 2021 and 2022 as long as they’re “provided by a restaurant.” The IRS has now defined the term “restaurant” for purposes of the deduction.
According to the IRS, the term “restaurant” means a business that prepares and sells food or beverages to retail customers for immediate consumption, regardless of whether the food or beverages are consumed on the restaurant’s premises. However, a restaurant doesn’t include a business that primarily sells pre-packaged food or beverages not for immediate consumption, such as a grocery store. For more information: https://bit.ly/3dQAdGq
U.S. Secretary of the Treasury Janet Yellen has called for a global corporate minimum tax rate. “We’re working with G20 nations to agree to a global minimum corporate tax rate that can stop the race to the bottom,” said Yellen. “Together, we can use [the minimum tax rate] to make sure that the global economy thrives based on a more leveled playing field in the taxation of multinational corporations, and spurs innovation, growth and prosperity.”
Yellen made the remarks in an April 5 speech to the Chicago Council on Global Affairs. Also that day on a related topic, three Democratic Senate Finance Committee members published “Overhauling International Taxation” (https://bit.ly/3rTlWxB).
Budget deficit increases significantly. The Congressional Budget Office (CBO) has reported a federal budget deficit of $1.7 trillion for the first six months of fiscal year 2021. Outlays were 45% higher and revenues were 6% higher from October 2020 through March 2021 than during the same period in fiscal year 2020.
The CBO attributed most of the outlay difference to spending for three purposes, largely in response to the COVID-19 pandemic:
· Refundable tax credits,
· Unemployment compensation, and
· The Paycheck Protection Program.
Tax receipts totaled $1.7 billion, an increase of $100 billion over last year. Individual income and payroll taxes jointly rose by $78 billion (6%). Read the CBO report here: https://bit.ly/3gmeAAJ
Not everyone working from home can claim home office tax write-offs. With many taxpayers working from home due to COVID-19, you may be wondering about the possibility of claiming home office deductions on your tax return. Unfortunately, employees aren’t currently eligible. However, self-employed homeowners and renters who are otherwise eligible can claim deductions for working from home.
Deductible expenses include mortgage interest, insurance, utilities, repairs, maintenance, depreciation and rent. Taxpayers must meet certain requirements to deduct home expenses, and the deductions may be limited. Recordkeeping is important. If you think you may qualify, we can discuss it when we prepare your tax return.