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.
The latest on COVID-related deadline extensions for health care benefits
The U.S. Department of Labor recently clarified the duration of certain COVID-19-related deadline extensions that apply to health care benefits plans. The original emergency declaration would have expired on March 1, 2021, but was extended. The notice provides that the extensions will continue and be measured on a case-by-case basis. Specifically, applicable deadlines for individuals and plans that fall within the outbreak period will be extended until the earlier of one year from the date the plan or individual was first eligible for relief or the end of the outbreak period. Plan sponsors should be ready to communicate with participants regarding the rules. Contact us for more information.
New Benefits Available to More Employers with the Revised Employee Retention Credit
We wanted to pass along to you some news in the form of an expansion of the Employee Retention Credit with the signing of the Consolidated Appropriations Act of 2021 on 12/27/20. Employers that carry on a trade or business that either were fully or partially suspended due to orders from the federal or state […]
5 ways to streamline and energize your sales process
As vaccination efforts ramp up, many experts expect more robust economic activity in the months ahead. The last thing you want is a sales department hamstrung by overly complicated procedures as they strive to seize opportunities in the presumably brighter near-future. To streamline and energize your sales process: 1) Reassess and, if prudent, realign sales territories, 2) If necessary, focus on winning back or retaining top-tier customers, 3) Re-evaluate your sales software to ensure it’s not slowing down momentum, 4) Issue a carefully chosen challenge to incentivize your salespeople, and 5) Align sales commissions with your company’s financial objectives. Contact us for more info.
Estimated tax payments: The deadline for the first 2021 installment is coming ups
April 15 is not only the deadline for filing your 2020 tax return, it’s also the deadline for the first estimated tax payment for 2021. You may have to make estimated payments if you receive interest, dividends, self-employment income, capital gains or other income. If you don’t pay enough tax during the year through withholding and estimated payments, you may be liable for a tax penalty on top of the tax that’s due. Individuals must generally pay 25% of their required annual tax by April 15, June 15, Sept. 15, and Jan. 15 of the following year, to avoid an underpayment penalty. If a deadline falls on a weekend or holiday, the payment is due the next business day.
Launching a small business? Here are some tax considerations
While many businesses have been forced to close due to the COVID-19 pandemic, some entrepreneurs have started new small businesses. They may start out as sole proprietors. There are many tax considerations involved in operating that way. For example, you may qualify for a deduction on qualified business income. You must pay self-employment taxes and make estimated tax payments on income earned. If you hire employees, you need a taxpayer ID number and must withhold and pay employment taxes. Keep complete records of income and expenses. Also, consider setting up a qualified retirement plan. Contact us if you want more information about the tax aspects of your business.
PPP adjusted to prioritize very small businesses
The Small Business Administration, in cooperation with the Biden administration, recently announced adjustments to the Paycheck Protection Program (PPP). The revisions seek to better reach very small businesses, as well as low- and moderate-income companies. Among the changes are an exclusive 2-week application period for businesses with fewer than 20 employees, which began on February 24. The changes also include a revision of the loan calculation formula to focus on gross (rather than net) profits, elimination of the non-fraud felony exclusion, eventual removal of the student loan exclusion and more. We can explain further and keep you updated on the PPP as the year goes along.
Retiring soon? Recent law changes may have an impact on your retirement savings
If you’re approaching retirement, you probably want to ensure the money you’ve saved in retirement plans lasts as long as possible. If so, be aware that a law was enacted in late 2019 that made significant changes to retirement accounts. For example, the SECURE Act repealed the maximum age for making traditional IRA contributions. Before 2020, traditional IRA contributions weren’t allowed once you reached age 70 1/2. An individual of any age can now make contributions, as long as he or she has compensation and is otherwise eligible. The required minimum distribution age was also raised from 70 1/2 to 72. These are only some of the changes. Feel free to contact us with any questions.
Work Opportunity Tax Credit extended through 2025
Are you a business owner thinking about hiring? Be aware that a recent law extended a credit for hiring individuals from one or more targeted groups. Employers can qualify for the Work Opportunity Tax Credit (WOTC), which is worth as much as $2,400 for each eligible employee, including ex-felons and from other groups. The maximum credit amounts are different for some employees ($4,800, $5,600 and $9,600 for certain veterans; $9,000 for long-term family assistance recipients; and $1,200 for summer youth employees). The WOTC was set to expire on Dec. 31, 2020. But a law passed late last year extends it through Dec. 31, 2025. Contact us with questions or information about your situation.
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