IRS announcing that second quarter estimates are extended from June 15 to July 15
IRS extends more tax deadlines to cover individuals, trusts, estates corporations and others IR-2020-66, April 9, 2020 WASHINGTON — To help taxpayers, the Department of Treasury and the Internal Revenue Service announced today that Notice 2020-23 (PDF) extends additional key tax deadlines for individuals and businesses. Last month, the IRS announced that taxpayers generally have until July […]
Relief from not making employment tax deposits due to COVID-19 tax credits
The IRS has issued guidance providing relief from failure to make employment tax deposits for employers entitled to refundable tax credits provided under two laws. The two laws are the Families First Coronavirus Response Act and the Coronavirus Aid, Relief, and Economic Security Act. Under the laws, the penalty for failure to deposit the employer share of Social Security tax is waived in anticipation of the allowance of the refundable tax credits. IRS Notice 2020-22 provides that an employer won’t be penalized for failing to deposit employment taxes related to qualified leave or qualified retention wages in a calendar quarter if certain requirements are met. Contact us for more information.
Just launched: The SBA’s Paycheck Protection Program
To mitigate unemployment caused by the coronavirus (COVID-19), the Small Business Administration has launched the Paycheck Protection Program (PPP). Eligible participants may qualify for loans of up to $10 million determined by eight weeks of previously established average payroll. If the recipient maintains its workforce, up to 100% of the loan is forgivable if the loan proceeds are used to cover the first eight weeks of payroll, rent, mortgage interest or utilities. Eligible recipients are small businesses with fewer than 500 employees, as well as certain other employers. The PPP begins retroactively on Feb. 15, 2020, and ends June 20, 2020. Contact us for more information.
CARES ACT changes retirement plan and charitable contribution rules
The CARES Act contains a range of relief, notably the “economic impact payments” that will be made to people under a certain income threshold. But the law also makes some changes to retirement plan rules. The additional 10% tax on early distributions from IRAs and 401(k) plans is waived for distributions made between Jan. 1 and Dec. 31, 2020 by a person who (or whose family) is infected with COVID-19 or is economically hurt by it. Penalty-free distributions are limited to $100,000, and may, subject to guidelines, be re-contributed to the plan or IRA. Income from the distributions may be spread out over 3 years. Other rules may apply. Contact us with any questions.
Paycheck Protection Program Loan (PPP) Application from Small Business Association (SBA) – Now Open as Updated Guidance Becomes Available
After much discussion the SBA has now opened its application process for SBA lenders to begin enabling small business owners to begin applying for the Paycheck Protection Plan Loan. As this the program opened additional final interim guidance was issued clearing up several key ambiguities in the program and its process.
You should note that most lenders are handling the loan requests prioritizing their current lending relationships first, so that is the best place for you to start.
Economic Injury Disaster Loan (EIDL) Grant Application from SBA Now Open as Updated Guidance Becomes Available
The Economic Injury Disaster grant is now available, and, in most cases, we recommend that qualified businesses apply for this grant. The process is very easy and straightforward and normally takes less than 30 minutes, but you should be prepared before you apply. Here is some quick information that might be useful SBA ECONOMIC INJURY DISASTER (EIDL) ADVANCE […]
Answers to questions about the CARES Act employee retention tax credit
The recently enacted Coronavirus Aid, Relief, and Economic Security (CARES) Act provides a refundable payroll tax credit for 50% of wages paid by eligible employers to certain employees during the COVID-19 pandemic. The employee retention credit is available to employers, including nonprofits, with operations that have been fully or partially suspended as a result of a government order limiting commerce, travel or group meetings. The credit is also provided to employers who have experienced a greater than 50% reduction in quarterly receipts, measured on a year-over-year basis. The IRS released FAQs about the credit. Here’s a link: https://bit.ly/2R8syZx . Contact us if you need assistance.
Using your financial statements during an economic crisis
The coronavirus (COVID-19) pandemic has forced business owners to reevaluate their operations and make difficult decisions. One place to look for information to help keep your business afloat during the crisis is your financial statements. Your cash flow statement can help determine whether your revenue will cover ongoing operating expenses. If not, consider applying for an SBA loan. Your balance sheet can reveal assets that need to be written down and the potential for insolvency, which happens when liabilities exceed assets. And your income statement can provide insight into potential cost-cutting measures. We can help you evaluate your financial statements and update the numbers.
The new COVID-19 law provides businesses with more relief
On March 27, President Trump signed into law another coronavirus (COVID-19) bill, which provides extensive relief for businesses and employers. The new law provides a refundable payroll tax credit for 50% of wages paid by eligible employers to certain employees during the crisis. It also allows eligible taxpayers to defer paying the employer portion of Social Security taxes through Dec. 31, 2020. Instead, employers can pay 50% of the amounts by Dec. 31, 2021 and the remaining 50% by Dec. 31, 2022. In addition, there are changes to net operating losses, the business interest expense deduction and more. Other rules and limits may apply. Contact us if you have questions about your situation.