Need a new business vehicle? Consider a heavy SUV
Are you considering buying a vehicle that you’ll use in your business? If you choose a heavy sport utility vehicle (SUV), you may be able to benefit from lucrative tax rules for those vehicles. New and used heavy SUVs, pickups and vans acquired and put to business use in 2021 are eligible for 100% first-year bonus depreciation. However, you must use the vehicle more than 50% for business. If your business use is between 51% and 99%, you can deduct that percentage of the cost in the first year the vehicle is placed in service. This tax break is available only if the manufacturer’s gross vehicle weight rating is above 6,000 pounds. Consult with us to help evaluate if this is the right move for your business.
How to ensure life insurance isn’t part of your taxable estate
If you have a life insurance policy, you may want to ensure that the benefits your family will receive after your death won’t be included in your estate. That way, the benefits won’t be subject to federal estate tax. For 2021, the federal estate and gift tax exemption is $11.7 million ($23.4 million for married couples). But in 2026, the exemption is scheduled to fall. Under the estate tax rules, insurance on your life will be included in your taxable estate if your estate is the beneficiary of the insurance proceeds, or you possessed certain economic ownership rights in the policy at your death (or within 3 years of your death). Contact us for assistance with estate planning and taxes.
COBRA provisions play critical role in COVID-19 relief law
If your business is required to offer COBRA coverage to employees who have lost group health plan coverage, the recently passed American Rescue Plan Act includes some critical provisions to be aware of. To wit, assistance-eligible individuals (AEIs) may receive a 100% subsidy for COBRA premiums during the period beginning April 1, 2021, and ending on September 30, 2021. An AEI is generally any eligible beneficiary who elects COBRA coverage because of a qualifying event (typically involuntary termination or reduction of hours) between those dates. The law’s COBRA provisions also address matters such as voluntarily offering other coverage and issuing notices. Contact us for more information.
EIDL loans, restaurant grants offer relief to struggling small businesses
Many provisions of the recently signed American Rescue Plan Act (ARPA) target small businesses adversely affected by the COVID-19 pandemic. If you own a small company, you may want to explore funding via the Small Business Administration’s Economic Injury Disaster Loan (EIDL) program. Eligible small businesses may receive targeted EIDL advances and the amounts received will be excluded from the recipient’s gross income. If you happen to own a qualifying restaurant or similar enterprise, the ARPA has created restaurant revitalization grants that work much the same way. The provisions are effective as of the ARPA’s date of enactment: March 11, 2021. Contact us for further details.
New law tax break may make child care less expensive
The new American Rescue Plan Act provides eligible families with an enhanced child and dependent care credit for 2021. This is the credit for expenses paid for the care of qualifying children under the age 13 so the taxpayer can be gainfully employed. For 2021, the first $8,000 of care expenses generally qualifies for the credit if you have 1 qualifying individual, or $16,000 if you have 2 or more. (These amounts were $3,000 and $6,000, respectively.) If AGI is $125,000 or less, the maximum credit is $4,000 with 1 qualifying individual and $8,000 with 2 or more. The refundable credit phases out and for taxpayers with an AGI greater than $440,000, it’s phased out completely.
Is an S corporation the best choice of entity for your business?
Are you thinking about launching a business with some partners and wondering what type of entity to form? An S corporation may be the most suitable form of business. A big advantage of an S corp over a partnership is that as an S corp shareholder, you won’t be personally liable for corporate debts. If you expect the business to incur losses in its early years, an S corp is preferable to a C corp from a tax standpoint. C corp shareholders generally get no tax benefit from such losses but S corp shareholders can deduct their percentage share of the losses on their personal tax returns to the extent of their basis in the stock and in any loans made to the entity. Contact us to learn more.
IRS and State of Michigan Extend Time to File and Pay 2020 individual Income Tax Returns and Payments to May 17, 2021
2021 1st Quarter Estimated Payments Still Due 4/15/21 Since these extensions are limited to 2020 taxes only, first quarter estimated payments for tax year 2021 shall remain due on April 15, 2021. We are actively observing the taxing authorities regarding city income tax filing deadlines and as of Friday afternoon (3/19/2021) the Michigan Legislature was […]
New COVID-19 relief law extends employee retention credit
The recent signing of the American Rescue Plan Act (ARPA) brings potentially good news for many business owners: the employee retention credit (ERC) has been extended again. The ERC was originally introduced under the CARES Act to provide tax relief to companies that retain employees during the COVID-19 pandemic. It was then extended and enhanced under the Consolidated Appropriations Act. The ARPA further extends the ERC from June 30, 2021, until December 31, 2021. It also extends the higher percentage of 70% of qualified wages, as well as the allowance for up to $10,000 in eligible wages for any calendar quarter. We can explain further and help you determine whether your business qualifies.
New law: Parents and other eligible Americans to receive direct payments
President Biden has signed the American Rescue Plan Act into law. Among the many relief provisions are direct payments that will be made to eligible individuals. The full amount for eligible individuals is $1,400 ($2,800 for eligible married couples filing joint tax returns) plus $1,400 for each dependent. Most eligible taxpayers will receive direct bank deposits or paper checks in the mail. The full payments are available to those with adjusted gross incomes (AGIs) of less than $75,000 ($150,000 for married couples filing jointly and $112,500 for heads of households). There is also an increased Child Tax Credit for eligible taxpayers, part of which will be paid out monthly later this year.
Business highlights in the new American Rescue Plan Act
President Biden signed the American Rescue Plan Act (ARPA) on March 11. While the new law is best known for the provisions providing relief to individuals, there are also several tax breaks and financial benefits for businesses. For example, the Employee Retention Credit (ERC) is extended from June 30 until December’31, 2021. The ARPA continues the ERC rate of credit at 70% for this extended period of time. It also continues to allow for up to $10,000 in qualified wages for any calendar quarter. This means an employer can potentially have up to $40,000 in qualified wages per employee through 2021. This is only one of the ARPA provisions. Contact us for more information about your situation.