Blog - Helpful Hints

Keep up to date on the latest tax and accounting news and updates on the business.

 

Spring Cleaning - April 2020

I just recently sold my business of over 15 years and I am anxious to go through my files and get rid of years and years of files and documents I have been holding onto.  And, being that this is Tax month, I felt this would be a good time to do a little research and figure out what I need to keep and what I can toss or shred.  Spring time is a good time of year to get your house organized and with these helpful tips you can make the office clean up quickly and efficient.  If you’re like me and you have several years of file cabinets and boxes full of old files, I can help you sort through, organize and set up a new clean and efficient filing system in no time.  Please contact me and we can get started right away.  In the meantime, this handy guide from the book, "1001 Timely Tips for Clutter Control", by Frank Cawood and Associates, "will help you know how long you should keep certain personal documents - and when it's OK to toss them."  Happy Cleaning!

Keep Forever

January 2021

Happy New Year!

The new year begins with more stimulus payments and other financial assistance courtesy of the latest COVID relief legislation. Read about how the new bill affects your tax and financial outlook.

Also in this month's edition is good news for business owners regarding the tax deductibility of expenses paid for using PPP loan funds that are forgiven. You can also determine how much to contribute to your retirement fund in 2021 and see what Uncle Sam came up with for his New Year’s resolutions.

Please call if you would like to discuss how this information could impact your situation. If you know someone who can benefit from this newsletter, feel free to send it to them.

Contents

More Stimulus Payments on the Way

What you need to know NOW!

You could soon see another stimulus payment in your bank account with the recent passage of the Emergency Coronavirus Relief Act of 2020, which means more direct relief to you and your family. Here are some of the major points you need to know that are buried inside this $900 billion piece of legislation.

More Stimulus Payments on the Way imageDirect stimulus payments to you. The legislation includes a $600 payment per person, including adults and dependent children who are under age 17. Payments are based on your 2019 income and should start being distributed shortly, per Treasury Secretary Mnuchin. The payment amount phases out for adjusted gross incomes over $75,000 for single taxpayers and $150,000 for married couples.

Things to consider:

Extension of unemployment benefits. Federal unemployment benefits of up to $300 per week are extended through March 14. Benefits for self-employed workers, set to expire at the end of 2020, are also extended.

Things to consider:

New PPP loan funds. There is additional money available from the Small Business Administration (SBA) for a new round of PPP loans. The new loan program is targeted to businesses that need the funds. To qualify, your business must have 300 or fewer employees and have seen a drop in revenue of 25% or more during any quarter in 2020. Some of the money is earmarked for very small borrowers, underserved communities, and small lenders. There are even simplified requirements for forgiveness if the loan amount being applied for is less than $150,000.

Eviction moratoriums and rent assistance. The bill extends until January 31, 2021 a moratorium on evictions that was scheduled to expire at the end of 2020. The bill also includes $25 billion in emergency assistance to renters.

There is much more in this huge bill, including relief for hard-hit industries, education, student loans, and vaccine assistance. Please keep up-to-date as more is learned after a full review of the bill is made available.


PPP Loan Expenses Are Now Tax Deductible

If you or your business received funds from the Paycheck Protection Program (PPP), the recently passed Emergency Coronavirus Relief Act of 2020 will help to dramatically cut your tax bill. Here’s what you need to know.

PPP Loan Expenses Are Now Tax Deductible imageBackground

The PPP program was created by the CARES Act in March 2020 to help businesses which were adversely affected by the COVID-19 pandemic. Qualified businesses could apply for and receive loans of up to $10 million. Loan proceeds could be used to pay for certain expenses incurred by a business, including salaries and wages, other employee benefits, rent and utilities.

If the business used at least 60% of loan proceeds towards payroll expenses, the entire amount of the loan would be forgiven.

The Dilemma

While the CARES Act spelled out that a business’s forgiven PPP loan would not be considered taxable income, the legislation was silent about how to treat expenses paid for using PPP loan proceeds if the loan was ultimately forgiven.

Congress intended for these expenses to be deductible for federal tax purposes. But since the legislation was silent on this issue, the IRS swooped in and deemed these expenses to be nondeductible.

There was considerable debate over the latter half of 2020, with Congressional politicians explaining that their intent was that the expenses be deductible and the IRS responding “Too bad, they’re nondeductible.”

The Solution

Congress overruled the IRS’s position in the Emergency Coronavirus Relief Act of 2020. The legislation officially makes deductible for federal tax purposes all expenses paid for using proceeds from a forgiven PPP loan.

Stay tuned for updates as to how this new legislation affects your business.


2021 Retirement Plan Limits

As part of your 2021 tax planning, now is the time to review funding your retirement accounts. By establishing your contribution goals at the beginning of each year, the financial impact of saving for your future should be more manageable. Here are annual contribution limits for 2021:

2021 Retirement Fund Limits image

Take action

If you have not already done so, please consider:


Uncle Sam's New Year's Resolutions

New Years Resolutions Youd Like to See imageAs new year's celebrations are in the rearview mirror, it's nice to continue celebrating the resolutions that we are definitely going to achieve! So we asked Uncle Sam - yes that Uncle Sam - what his new year's resolutions were.

This is what he told us...

Thanks, Uncle Sam! With all the hardships last year, it's always nice to find a way to smile, even if for a brief moment.



Newsletter Archive

Please note: Some material may be time-sensitive and may no longer apply.
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  1. Posted on: 2021-02-02
  2. Posted on: 2020-12-01
  3. Posted on: 2020-11-03
  4. Posted on: 2020-10-06
  5. Posted on: 2020-09-01
  6. Posted on: 2020-08-04
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  8. Posted on: 2020-06-02
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  10. Posted on: 2020-03-31
  11. Posted on: 2020-03-03