Happy Holidays!!
It’s in the spirit of the holiday season that we extend our thank you to all of those that have supported us. We hope you have a wonderful holiday and look forward to serving you in the New Year.
Important Year-End Updates
Reminder!!! 4th quarter Federal estimated income tax payments are due January 15, 2021. The due dates for states vary between December 31, 2020 and January 20, 2021.
Second Relief Package
On December 20, 2020, Congress finally reached an agreement for a second relief package in the amount of $900B due to the ongoing COVID-19 pandemic. Although additional guidance will be required in the coming weeks, here are some of the highlights that you should be aware of.
$600 stimulus checks to individuals and $600 additional for each child. The payments start phasing out for individuals with adjusted gross incomes of more than $75,000, and those making more than $99,000 would not receive anything. The income thresholds would be doubled for couples. The amounts will be based on 2019 incomes.
Unemployment recipients would receive a $300 weekly federal enhancement in benefits for 11 weeks, from the end of December through March 14.
The Pandemic Unemployment Assistance program, which was set to expire at the end of this week, expands unemployment benefits to gig workers, freelancers, independent contractors, the self-employed and certain people affected by the coronavirus.
The Pandemic Emergency Unemployment Compensation program, which was also set to expire at the end of this week, expands benefits to provide an additional 13 weeks of payments to those who exhaust their regular state benefits.
The bill provides a federally funded $100 per week additional benefit to those who have at least $5,000 in annual self-employment income but are disqualified from receiving Pandemic Unemployment Assistance because they are eligible for regular state unemployment benefits.
Eviction protection has been extended to January 31, 2021 instead of December 31, 2020 as stated in the CARES Act.
Rental assistance will be made available for individuals who lost their sources of income during the pandemic.
Employers who are deferring their workers' payroll taxes under Trump's executive action from August now have until the end of 2021 to increase their employees' withholding to pay back the taxes owed. Originally, the deferred amount had to be repaid by April 30.
Additional PPP Loan funding has been made available for small businesses continuing to struggle during the pandemic (limited to those with fewer than 300 employees that have seen drops of at least 25% of their revenue during the first, second or third quarter of 2020)
The bill creates a simplified forgiveness application for businesses that took PPP loans under $150,000.
Businesses that received a cash advance through the Economic Injury Disaster Loan (EIDL) program also will no longer have to deduct the advance from their PPP loan forgiveness amount.
Last, but certainly not least, the hottest topic.....The bill WILL include a provision that specifically states that business owners CAN deduct expenses covered with PPP loan proceeds, which was confirmed today by Treasury Secretary Steven Mnuchin. As of right now, this is without limitation, however, we will keep an eye out for actual IRS guidance in the next few weeks for more information. This was a major concern in that non-deductibility would result in an increase in taxable income on the backend and the potential requirement to amend one or more tax filings due to the timing difference in tax return due dates and the SBA response time on a taxpayers' forgiveness application.
Upcoming 2020 Tax Filing Season
The end of the calendar year is approaching fast and serves as the last date to complete many tax transactions for inclusion on your 2020 tax returns. Check in with us to see if there are any last minute things that can be done to assist you. We are happy to assist with any questions or concerns you may have. How are we preparing for the 2020 filing season?
Upgrading our tax software & testing the system
Implementing a new client portal
Incorporating a new payments system
Preparing resources for clients (i.e. organizers, checklists, etc.)
Participating in training & continuing education
Developing our annual due dates and consultation calendar
There is still a lot of planning and preparations to be done, especially with the pending legislation, but we are ready to be of service to you. Please be on the lookout for additional communications from us with more information regarding the upcoming tax season and other hot topics.