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Paycheck Protection Program 2021 – New Loans and Loan Forgiveness

Posted on January 19th, 2021

A new round of Paycheck Protection Program loans is now being offered. To qualify, your business must have a 25% reduction in gross sales for any quarter in 2020 compared to the same quarter in 2019. Businesses in the hospitality industry will qualify for loan amounts equivalent to 3.5 months of average payroll. All other businesses will qualify for 2.5 months average payroll.

Loan forgiveness requirements for these new loans are the same as for the first round of loans: at least 60% of the funds must be used for payroll, and your employee count may not decrease by more than 25%. 40% of the funds can be used for rent, mortgage interest and utilities, worker protection related to COVID-19, and certain other expenses.

The SBA began accepting applications for the new loans as of January 11. Some banks are also accepting applications now, while others have not started accepting them yet. Contact your lender for specific information. (more…)


Can You Itemize Deductions for 2020?

Posted on December 17th, 2020

As tax season approaches again, you may be wondering whether or not you should itemize deductions on your tax returns this year, or take the Standard Deduction.

Standard Deduction

The Standard Deduction was effectively doubled by changes in the 2017 Tax Cuts and Jobs Act (TCJA). The Standard Deduction for single taxpayers increased from $6,350 to $12,400; and for married filing jointly, it increased from $12,700 to $24,800.

The standard deduction makes your tax preparation much simpler, because you do not have to gather documents and add up potential deductions; you just have to claim that flat amount. It also makes your return less subject to an IRS challenge, because you aren’t giving the IRS anything to question.

Itemized Deductions

If you plan to itemize deductions, you will probably have to gather many more documents and organize more information so that you can support these deductions if the IRS challenges them. Many popular deductions are likely to be scrutinized closely by the IRS, including Charitable Donations. You may be more likely to have your returns examined if you claim these deductions. (more…)


Beware of Tax Debt Resolution Scams

Posted on November 13th, 2020

If you have a large tax debt, you may be targeted by a predatory “tax debt resolution” firm. These companies advertise heavily on TV and the internet, promising they can settle tax debts for “pennies on the dollar” through an Offer in Compromise (“OIC”). Their claims are nearly always exaggerated, and they may charge thousands of dollars up front for their services. This scam has become so common that the IRS now includes them in its  annual Dirty Dozen list of tax scams.

How predatory Tax Resolution companies operate:

Many predatory tax resolution companies will monitor public records for tax lien information, then target the affected taxpayers with misleading letters that warn of drastic consequences such as garnishment of wages or Social Security benefits, unless the taxpayer calls an 800 phone number right away. These letters are often designed to look like an official notice from the IRS or some other government agency. Once the taxpayer makes contact, the tax resolution company tries to pressure them into paying a high fee up front to complete an Offer In Compromise application on the taxpayer’s behalf, which the taxpayer may not qualify for, or which may not even apply to their situation. (more…)


Can You Take the Home Office Deduction?

Posted on November 4th, 2020

With more people working from home than ever before, you may be wondering if you can claim a home office deduction when you file your 2020 tax return next year. The short answer is that if you are an employee working remotely in your home office, you are NOT eligible to take the home office deduction.  (You are an employee if you receive a salary for your work, and get a W-2 form for your tax return.)

However, self-employed taxpayers who use their home for business may be able to deduct expenses for the business use of it whether they rent or own their home. If you are self-employed, here is what you need to keep in mind:

Regular and Exclusive Use. Generally, you must use a part of your home regularly and exclusively for business purposes. The part of a home used for business must also be:

  • A principal place of business, or
  • A place where you meet clients or customers in the normal course of business, or
  • A separate structure not attached to the home, such as a garage, barn, greenhouse, or studio.

(more…)


Pay Taxes on Your Unemployment Benefits

Posted on October 28th, 2020

If you have received unemployment compensation this year, or are still receiving it, you should know that unemployment compensation is taxable and must be reported on a 2020 federal income tax return. This includes all of the special unemployment compensation authorized under the CARES Act (Coronavirus Aid, Relief, and Economic Security Act), enacted this spring.

To avoid an unexpected tax bill next spring, you should have tax withheld starting as soon as possible on your benefits.  Withholding is voluntary; however, federal law allows any recipient to choose to have a flat 10% withheld from their benefits to cover part or all of their tax liability. To do that, fill out Form W-4V, Voluntary Withholding Request (PDF), and give it to the agency paying the benefits. Do not send it to the IRS. If the payor has its own withholding request form, use that form instead. This 10% is most likely not enough withholding for most taxpayers.

If you are no longer receiving benefits, and did not have any tax withheld on the benefits you received, there are still 2 ways you can catch up: (more…)


The Paycheck Protection Loan program is now accepting applications

Posted on April 2nd, 2020

The Paycheck Protection Loan and Forgiveness Program is an SBA loan intended to help small businesses keep employees on the payroll for up to 10 weeks during the coronavirus emergency, even if the business is not operating during this time.

Small businesses can now apply for this loan, starting April 1.

If you would like us to complete the application for you, or need help in filling it out yourself, please give us a call.

Who is Eligible?

All businesses with 500 or fewer employees* including non-profits, Veterans organizations, tribal concerns, sole proprietorships, self-employed individuals, and independent contractors.

*(In certain industries, some businesses may have more than 500 employees, if they meet SBA’s size standards for the industry. Read more about federal small business size standards here.)

(more…)


The CARES Act: Economic Stimulus for You and Your Business

Posted on March 30th, 2020

“The Coronavirus Aid, Relief and Economic Security Act” (CARES Act), is an economic stimulus enacted into law on March 27, 2020, to addresses the perceived needs of individuals, and small and large businesses during the coronavirus pandemic. This post is intended to provide an overview of the provisions for individuals and small businesses; and is not intended to be an in-depth analysis of the Act.

Also, please know that not all guidance for the stimulus has been issued yet. This information is as of March 26, 2020 and it is evolving daily. We will keep you informed as more information is released over the coming days and weeks.

Individuals

In approximately 3 weeks, the US Treasury will begin sending out rebate checks to individual taxpayers. If you have asked for refunds to be electronically deposited in either 2018 or 2019, the US Treasury will direct deposit your rebate as well. If your bank information has changed, you may need to contact the bank or call the IRS. If you do not have current direct deposit set up, your check will be mailed.

To receive a rebate, your 2019 Adjusted Gross Income (AGI) must fall below the income cap for your filing status. Single filers‘ 2019 AGI must be $75,ooo  or less to receive a rebate of $1,200. For married filing jointly, the AGI must be $150,000 or less to receive a $2,400 rebate. For a Head of Household (unmarried with children or dependents, and pays more than half of the household expenses), your AGI must be $112,000 or less to receive a rebate of $1,200.

Married couples and heads of household who meet the income cap will also receive a rebate of $500 per qualifying child (under the age of 17). (more…)


4 Reasons to File Taxes Even if You Don’t Have To

Posted on March 4th, 2020

 

Even if you are not required to file a tax return (because of age, income level, or other factors), it is sometimes a good idea to file one anyway. The most important reason to file when you don’t have to is that you are eligible for a refund. You must file a tax return in order to get a refund. 

Here are some common reasons taxpayers can get tax refunds even if they don’t have enough income to make filing a requirement:

Tax Withheld or Paid.  If your employer withheld federal income tax from your pay; or if you made estimated tax payments; or if you overpaid last year and had it applied to this year’s tax, you could be entitled to a refund. (more…)


6 Reasons to File Your Taxes Early in 2020

Posted on February 18th, 2020

If you put off getting your tax documents ready every year, here are a few reasons why you should plan to file your return early this year, instead.

1. Get your return completed and filed faster. By having your return prepared and filed early in tax season, you avoid the April rush. This means that your return can be prepared more quickly, and the tax agencies can process it more quickly as well.

2. Get your refund sooner. The April rush can also affect how quickly tax refunds are paid. So the earlier you file, the sooner you’ll get your money.

3. More time to plan for payments due. Taxes owed are due April 15, no matter when you file. So you can file at the start of tax season and still wait until April to pay. Filing early gives you more time to set aside the payment, so you’re not faced with coming up with cash for an unexpected tax bill right before deadline. (more…)


The SECURE Act: New Rules for Retirement Accounts

Posted on February 6th, 2020

A new law, the SECURE Act, which takes effect in 2020, makes some important changes to some retirement account rules. These changes affect retirement account distributions, contributions and withdrawals, as well as some rules about small business retirement plans. Here are the basics:

The required minimum distribution (RMD) age increases to 72 from 70 1/2. You are no longer required to start taking required minimum distributions when you turn 70 1/2. Now you can delay the RMD until you turn 72. If you reach 70 1/2 this year, you may want to consult with your financial planner to decide whether you want to start taking your RMD’s or delay until you reach the required age.

The maximum age of 70 1/2 for traditional IRA contributions is repealed. Previously, you could not contribute to a traditional IRA after age 70 1/2. Under the new law, if you are still working at that age, you can continue to make contributions to your IRA as long as you continue to work. This change begins with 2020 contributions, it does not apply to tax year 2019. (more…)




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