31 Mar 2021
0

COVID-Related Deadline Extensions for Health Care Benefits

Roger Rossmeisl, CPA
Small Business Tax Briefs
COVID-Related Deadline Extensions for Health Care Benefits

The U.S. Department of Labor (DOL) recently issued EBSA Disaster Relief Notice 2021-01, which is of interest to employers. It clarifies the duration of certain COVID-related deadline extensions that apply to health care benefits plans. Extensions to continue The DOL and IRS issued guidance last year specifying that the COVID-19 outbreak period — defined as beginning March 1, 2020, and ending 60 days after the announced end of the COVID-19 national emergency — should be disregarded when calculating various deadlines under COBRA, ERISA and HIPAA’s special enrollment provisions. The original emergency declaration would have expired on March 1, 2021, but it was recently extended. Although the agencies defined the outbreak period solely by reference to the COVID-19 national emergency, they relied on statutes allowing them to specify disregarded periods for a...

25 Mar 2021
0

Tax Considerations When Launching a Sole Proprietorship

Roger Rossmeisl, CPA
Small Business Tax Briefs
Tax Considerations When Launching a Sole Proprietorship

While many businesses have been forced to close due to the COVID-19 pandemic, some entrepreneurs have started new small businesses. Many of these people start out operating as sole proprietors. Here are some tax rules and considerations involved in operating with that entity. The pass-through deduction To the extent your business generates qualified business income (QBI), you’re eligible to claim the pass-through or QBI deduction, subject to limitations. For tax years through 2025, the deduction can be up to 20% of a pass-through entity owner’s QBI. You can take the deduction even if you don’t itemize deductions on your tax return and instead claim the standard deduction. Reporting responsibilities As a sole proprietor, you’ll file Schedule C with your Form 1040. Your business expenses are deductible against gross income....

22 Mar 2021
0

Business Highlights in the new American Rescue Plan Act

Roger Rossmeisl, CPA
Small Business Tax Briefs
Business Highlights in the new American Rescue Plan Act

President Biden signed the $1.9 trillion 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. Here are some of the business tax highlights of ARPA. The Employee Retention Credit (ERC) This valuable tax credit 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. Taking into account the Consolidated Appropriations Act extension and the ARPA extension, this means an employer can potentially have up to $40,000 in qualified wages per employee through 2021. Employer-Provided Dependent Care...

14 Mar 2021
0

Work Opportunity Tax Credit Extended Through 2025

Roger Rossmeisl, CPA
Small Business Tax Briefs
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 a tax credit known as the Work Opportunity Tax Credit (WOTC) that’s worth as much as $2,400 for each eligible employee ($4,800, $5,600 and $9,600 for certain veterans and $9,000 for “long-term family assistance recipients”). The credit is generally limited to eligible employees who began work for the employer before January 1, 2026. Generally, an employer is eligible for the credit only for qualified wages paid to members of a targeted group. These groups are: Qualified members of families receiving assistance under the Temporary Assistance for Needy Families (TANF) program, Qualified veterans, Qualified ex-felons, Designated community residents, ...

12 Mar 2021
0

Payroll Provisions of the American Rescue Plan Act

Roger Rossmeisl, CPA
Automotive, Current Events, Small Business Tax Briefs
Payroll Provisions of the American Rescue Plan Act

The American Rescue Plan, 2021 (ARPA, 2021) was signed by President Biden on March 11, 2021 to address the continuing economic impact on employers and employees the coronavirus (COVID-19) pandemic has posed.  The legislation extends and expands provisions found in the Families First Coronavirus Relief Act (FFCRA), Coronavirus Aid, Relief and Economic Security (CARES) Act, and the Consolidated Appropriations Act, 2021 (CAA, 2021).  This post reviews the payroll provisions of ARPA.   Paid Sick and Family Leave Credits Changes under ARPA apply to amounts paid with respect to calendar quarters beginning after March 31, 2021. ARPA, 2021: Extends the FFCRA paid sick time and paid family leave credits from March 31, 2021 through September 30, 2021.  Provides that paid sick and paid family leave credits may each be...

12 Mar 2021
0

How to Qualify for Home Office Deductions

Roger Rossmeisl, CPA
Small Business Tax Briefs
How to Qualify for Home Office Deductions

During the COVID-19 pandemic, many people are working from home. If you’re self-employed and run your business from your home or perform certain functions there, you might qualify for home office deductions and be able to claim to expenses against your business income. There are two methods for claiming this tax break: the actual expenses method and the simplified method. Who qualifies? In general, you qualify for home office deductions if part of your home is used “regularly and exclusively” as your principal place of business. If your home isn’t your principal place of business, you may still be able to deduct home office expenses if 1) you physically meet with patients, clients or customers on your premises, or 2) you use a storage area in your home...

28 Feb 2021
0

Tax Implications of Buying or Selling a Business

Roger Rossmeisl, CPA
Small Business Tax Briefs
Tax Implications of Buying or Selling a Business

Merger and acquisition activity in many industries slowed during 2020 due to COVID-19. But analysts expect it to improve in 2021 as the country comes out of the pandemic. If you are considering such a transaction, it's important to understand the tax implications of buying or selling a business. Two ways to arrange a deal Under current tax law, a transaction can basically be structured in two ways: (1)  Stock (or ownership interest) A buyer can directly purchase a seller’s ownership interest if the target business is operated as a C or S corporation, a partnership, or a limited liability company (LLC) that’s treated as a partnership for tax purposes. The current 21% corporate federal income tax rate makes buying the stock of a C corporation somewhat more attractive. Reasons:...

23 Feb 2021
0

Many Tax-Related Limits Affecting Businesses Have Increased for 2021

Roger Rossmeisl, CPA
Small Business Tax Briefs
Many Tax-Related Limits Affecting Businesses Have Increased for 2021

A number of tax-related limits that affect businesses are annually indexed for inflation, and many have increased for 2021. Some stayed the same due to low inflation. And the deduction for business meals has doubled for this year after a new law was enacted at the end of 2020. Here’s a rundown of those that may be important to you and your business. Social Security tax The amount of employees’ earnings that are subject to Social Security tax is capped for 2021 at $142,800 (up from $137,700 for 2020). Deductions Section 179 expensing: Limit: $1.05 million (up from $1.04 million for 2020) Phaseout: $2.62 million (up from $2.59 million) Income-based phase-out for certain limits on the Sec. 199A qualified business income deduction begins at: Married filing jointly: $329,800...

03 Feb 2021
0

Business Mileage Rate Decreases in 2021

Roger Rossmeisl, CPA
Small Business Tax Briefs
Business Mileage Rate Decreases in 2021

This year, the optional standard mileage rate used to calculate the deductible costs of operating an automobile for business decreased by one-and-one-half cents, to 56 cents per mile. As a result, you might claim a lower deduction for vehicle-related expenses for 2021 than you could for 2020 or 2019. This is the second year in a row that the cents-per-mile business mileage rate decreases year-over-year. Deducting actual expenses vs. cents-per-mile  In general, businesses can deduct the actual expenses attributable to business use of vehicles. This includes gas, oil, tires, insurance, repairs, licenses and vehicle registration fees. In addition, you can claim a depreciation allowance for the vehicle. However, in many cases, certain limits apply to depreciation write-offs on vehicles that don’t apply to other types of business...

31 Jan 2021
0

Employee Retention Credit Expanded Under CAA 2021

Roger Rossmeisl, CPA
Small Business Tax Briefs
Employee Retention Credit Expanded under CAA 2021

The Consolidated Appropriations Act, 2021 (CAA 2021), signed into law by President Trump on 12/27/20, includes the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (TCDTRA) which extends and expands upon the Employee Retention Credit (ERC) provided by the CARES Act.  Well, that's a mouthful!  But whereas most of the COVID-19 related payroll tax provisions have yielded cash flow enhancing mechanisms that were just timing differences (i.e. no actual reduction in taxes due), there's some real money on the table with the newly modified, expanded, and extended Employee Retention Credit. INTERACTION WITH PPP LOANS Previously under the CARES Act New law under TCDTRA PPP loan recipients were not eligible to claim the ERC PPP loan recipients are now eligible to claim the ERC PPP Loan Forgiven? No Double Benefit PPP Loan...

ROGER ROSSMEISL, CPA

Kho & Patel CPAs
160 E. Arrow Highway
San Dimas, CA 91773

(714) 325-0442
roger@khopatel.com

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