Do you know all tax changes due to COVID-19? We do! If you need advisory services during these challenging times, please give us a call. https://www.accountantcolumbiatnsuccentrix.com/ We would love a chance to speak to you about all that has changed recently. Here are some of the provisions:
Above the line Charitable Contribution: Individuals: if you don’t itemize your deductions, no matter what your AGI is, you can deduct up to $300 cash contribution as long as it isn’t made to a private foundation or to an existing donor-advised fund. This is effective for 2020, but any carryover amount goes forward five years. Corporations: qualified contributions cannot exceed 25% of taxable income. So go ahead, make that charitable contribution!
There are a couple of types of loans made available, but funding is limited. There is the Economic Injury Disaster Loans (EIDL) and the Paycheck Protection Loans (PPP). There are different provisions within each loan. The first set of funding for the PPP loans were exhausted quickly. The replenished funds are likely to be taken up by the applications already in the queue at several banks. EIDL information can be found here: https://www.sba.gov/sites/default/files/resource_files/how_to_disaster_app_March_2020.pdf and PPP loan information is here: https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program. We recommend you apply quickly if you need either of these loans. However, there are special considerations if you receive the PPP loan. Our office has the capability to track your records for you to substantiate the portion of the loan that may be forgiven if the right criteria are met. And of course, we’d be happy to provide you with our expertise. https://www.accountantcolumbiatnsuccentrix.com/services/small-businesses-accounting/
There are also certain provisions that have been made available. The Net Operating Loss (NOL) determination has been modified. There are certain forms that must be filled out, and the rules have slightly changed. If you had a loss in 2018, 2019, or will have one for 2020, rely on a tax professional like us to help get you the quickest refund for any NOL that has been carried back. https://www.irs.gov/pub/irs-pdf/f1045.pdf or for corporations https://www.irs.gov/pub/irs-pdf/f1139.pdf.
Another provision is for the Deferral of Employer Payroll Taxes. Taxpayers can defer the employer portion of certain payroll taxes through the end of 2020. Self-employed taxpayers can take the deferral as well. Now, as you know, deferral just means later. So here is the repayment. Payment #1 is 50% by the end of 2021, and Payment #2 is the balance by the end of 2022. This applies to the 6.2% employer portion of the Social Security payroll tax. It applies to wages between March 27, 2020, and December 31, 2020. This payroll tax deferral is not available to those who received the SBA loans that cover wages for up to eight weeks.
A third provision is the Employee Retention Credit. There are a lot of moving pieces to this one. If you’d like to hear more, please set up an appointment, and we can discuss the details. https://calendly.com/succentrix/30mins Again, if you have received an SBA loan, you are not eligible for the retention credit. The credit is a refundable payroll tax credit and is 50% of qualified wages, up to a maximum wage of $10,000 per retained employee.
In addition to the items listed above, there are other things too such as The Family First Coronavirus Response Act; Filing, Payment & Action Deadlines; and the IRS People First Initiative, 2020 Economic Impact Payments for Individuals (Stimulus Checks); Retirement Plan Distributions and Loan modifications; and Pandemic Unemployment Assistance. As you can see, there are many changes, modifications, and provisions that have been implemented. What does that mean for you? It means we are just a phone call away. Stay safe and healthy, everyone.