The Week in Business: Go Ahead, Put Off Your Taxes – The New York Times
Good morning and happy spring. Here’s hoping you can enjoy another Sunday spent ignoring your tax returns (or, if you’ve already done them, feeling smug about it). But first, here’s what you need to know in business and tech news for the week ahead. — Charlotte Cowles
What’s Up? (March 14 to 20)
More Time for Taxes
Good news for procrastinators like me, or anyone whose taxes were complicated by the pandemic: The Internal Revenue Service has extended the deadline to file taxes by one month, to May 17. The extra time will help people navigate new tax rules that took effect with the passage of the American Rescue Plan. The law made the first $10,200 of unemployment benefits tax-free for people who earned less than $150,000 last year, a significant benefit for many people whose jobs were disrupted. But if you’ve already filed, don’t worry — the I.R.S. said it would automatically send those refunds to people who qualify.
Well, That Was Awkward
Relations between China and the Biden administration got off to a rocky start last week at the first face-to-face meeting between diplomats. The United States set a confrontational tone on the eve of the talks by imposing sanctions on 24 Chinese officials for undermining democracy in Hong Kong. In turn, China’s top diplomat accused his American counterparts of being “condescending,” among other claims. The purpose of the three-day meeting, according to President Biden’s team, was to find common ground on climate change and on controlling the pandemic, and to address U.S. concerns about Chinese trade and military encroachments. The tension does not bode well for making headway in future negotiations.
The Case Against Disney
Ten women who are suing the Walt Disney Company for what they call “rampant gender pay discrimination” have added another accusation to their list: that Disney “maintains a strict policy of pay secrecy.” A new section of the lawsuit refers to an episode in which one female Disney employee was “disciplined for disclosing her pay to co-workers.” Pay transparency is considered an important part of closing racial and gender wage gaps, and retaliation for discussing your own salary violates California law as well as the National Labor Relations Act. Disney has denied the claims and vowed to defend itself.
What’s Next? (March 21 to 27)
Coming to a Walmart Near You
Walmart is jumping on the vaccine passport bandwagon, saying it will provide standardized digital vaccination credentials to anyone who gets vaccinated at one of its stores or at Sam’s Club. The retailer will develop a health passport app that people can use to verify their status at airports, schools, sports arenas and other potentially crowded places. Walmart joins an existing push by major health centers and tech companies, including Microsoft, Oracle, Salesforce and the Mayo Clinic, as well as a proposal from the European Union, which would require vaccine verification for travel in certain areas.
How Has the Pandemic Changed Your Taxes?
Nope. The so-called economic impact payments are not treated as income. In fact, they’re technically an advance on a tax credit, known as the Recovery Rebate Credit. The payments could indirectly affect what you pay in state income taxes in a handful of states, where federal tax is deductible against state taxable income, as our colleague Ann Carrns wrote. Read more.
Mostly. Unemployment insurance is generally subject to federal as well as state income tax, though there are exceptions (Nine states don’t impose their own income taxes, and another six exempt unemployment payments from taxation, according to the Tax Foundation). But you won’t owe so-called payroll taxes, which pay for Social Security and Medicare. The new relief bill will make the first $10,200 of benefits tax-free if your income is less than $150,000. This applies to 2020 only. (If you’ve already filed your taxes, watch for I.R.S. guidance.) Unlike paychecks from an employer, taxes for unemployment aren’t automatically withheld. Recipients must opt in — and even when they do, federal taxes are withheld only at a flat rate of 10 percent of benefits. While the new tax break will provide a cushion, some people could still owe the I.R.S. or certain states money. Read more.
Probably not, unless you’re self-employed, an independent contractor or a gig worker. The tax law overhaul of late 2019 eliminated the home office deduction for employees from 2018 through 2025. “Employees who receive a paycheck or a W-2 exclusively from an employer are not eligible for the deduction, even if they are currently working from home,” the I.R.S. said. Read more.
Self-employed people can take paid caregiving leave if their child’s school is closed or their usual child care provider is unavailable because of the outbreak. This works similarly to the smaller sick leave credit — 67 percent of average daily earnings (for either 2020 or 2019), up to $200 a day. But the caregiving leave can be taken for 50 days. Read more.
Yes. This year, you can deduct up to $300 for charitable contributions, even if you use the standard deduction. Previously, only people who itemized could claim these deductions. Donations must be made in cash (for these purposes, this includes check, credit card or debit card), and can’t include securities, household items or other property. For 2021, the deduction limit will double to $600 for joint filers. Rules for itemizers became more generous as well. The limit on charitable donations has been suspended, so individuals can contribute up to 100 percent of their adjusted gross income, up from 60 percent. But these donations must be made to public charities in cash; the old rules apply to contributions made to donor-advised funds, for example. Both provisions are available through 2021. Read more.
Back in the Hot Seat
Chief executives from Facebook, Google and Twitter will be grilled in Congress this Thursday, this time over their failure to crack down on the spread of misinformation. Tech executives were last summoned by lawmakers in November 2020, when Mark Zuckerberg of Facebook and Jack Dorsey of Twitter faced a firestorm of questioning about content moderation, mostly regarding their attempts to prevent a wave of falsehoods about the presidential election. This time, they will be asked about coronavirus vaccine misinformation and about the election fraud conspiracy theories that continue to spread on their platforms.
Elsewhere in Washington
The two biggest names in economic policy — the Federal Reserve chair, Jerome Powell, and Treasury Secretary Janet Yellen — will make their first joint appearance this week when they testify before the House Financial Services Committee on the progress of pandemic relief efforts. The hearing comes one week after the Fed revised its economic outlook to project stronger growth and offered more reassurances that it would keep interest rates near zero for the coming years.
The Education Department jettisoned a Trump-era policy that limited debt relief for students who were defrauded by for-profit educational institutions. The newly hired Teen Vogue editor, Alexi McCammond, resigned over racist and homophobic tweets that she posted a decade ago. And retail sales dropped 3 percent in February as consumers grappled with declining stimulus effects and devastating winter storms.