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...

28 Jan 2021
0

Should you Convert from a C to an S Corporation?

Roger Rossmeisl, CPA
Small Business Tax Briefs
Should Your Convert from a C to an S Corporation?

The best choice of entity can affect your business in several ways, including the amount of your tax bill. In some cases, businesses decide to switch from one entity type to another. Although S corporations can provide substantial tax benefits over C corporations in some circumstances, there are potentially costly tax issues that you should assess before making the decision to convert from a C corporation to an S corporation. Here are four issues to consider: (1) LIFO inventories C corporations that use last-in, first-out (LIFO) inventories must pay tax on the benefits they derived by using LIFO if they convert to S corporations. The tax can be spread over four years. This cost must be weighed against the potential tax gains from converting to S status. (2) Built-in...

26 Jan 2021
0

New 1099-NEC is Due to Recipients Soon

Roger Rossmeisl, CPA
Small Business Tax Briefs
New 1099-NEC is Due to Recipients Soon

There’s a new IRS form for business taxpayers that pay or receive certain types of nonemployee compensation and it must be furnished to most recipients by February 1, 2021. After sending the forms to recipients, taxpayers must file the forms with the IRS by March 1 (March 31 if filing electronically). The requirement begins with forms for tax year 2020. Payers must complete Form 1099-NEC, “Nonemployee Compensation,” to report any payment of $600 or more to a recipient. February 1 is also the deadline for furnishing Form 1099-MISC, “Miscellaneous Income,” to report certain other payments to recipients. If your business is using Form 1099-MISC to report amounts in box 8, “substitute payments in lieu of dividends or interest,” or box 10, “gross proceeds paid to an attorney,” there’s an exception to...

25 Jan 2021
0

PPP Loan Tax Consequences

Roger Rossmeisl, CPA
Small Business Tax Briefs
PPP Loan Tax Consequences

The Small Business Administration (SBA) announced that the Paycheck Protection Program (PPP) reopened the week of January 11. If you’re fortunate to get a PPP loan to help during the COVID-19 crisis (or you received one last year), you may wonder about the PPP loan tax consequences. Background on the loans  In March of 2020, the CARES Act became law. It authorized the SBA to make loans to qualified businesses under certain circumstances. The law established the PPP, which provided up to 24 weeks of cash-flow assistance through 100% federally guaranteed loans to eligible recipients. Taxpayers could apply to have the loans forgiven to the extent their proceeds were used to maintain payroll during the COVID-19 pandemic and to cover certain other expenses. At the end of 2020,...

18 Jan 2021
0

Q1 2021 Tax Deadlines for Businesses

Roger Rossmeisl, CPA
Small Business Tax Briefs
Q1 2021 Tax Deadlines for Businesses

Here are some of the key Q1 2021 tax deadlines affecting businesses and other employers. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you. In addition to the Q1 2021 tax deadlines, contact us to ensure you’re meeting all applicable deadlines and to learn more about the filing requirements. January 15 Pay the final installment of 2020 estimated tax. Farmers and fishermen: Pay estimated tax for 2020.   February 1 (The usual deadline of January 31 is a Sunday) File 2020 Forms W-2, “Wage and Tax Statement,” with the Social Security Administration and provide copies to your employees. Provide copies of 2020 Forms 1099-MISC, “Miscellaneous Income," and/or 1099-NEC, "Non-Employee Compensation” to recipients of income from your business (as applicable) where required. File...

18 Jan 2021
0

Can Your Business Benefit from the Enhanced Employee Retention Tax Credit?

Roger Rossmeisl, CPA
Small Business Tax Briefs
Can Your Business Benefit from the Enhanced Employee Retention Tax Credit?

COVID-19 has shut down many businesses, causing widespread furloughs and layoffs. Fortunately, employers that keep workers on their payrolls are eligible for a refundable Employee Retention Tax Credit (ERTC), which was extended and enhanced in the latest law. Background on the credit  The CARES Act, enacted in March of 2020, created the ERTC. The credit: Equaled 50% of qualified employee wages paid by an eligible employer in an applicable 2020 calendar quarter, Was subject to an overall wage cap of $10,000 per eligible employee, and Was available to eligible large and small employers.   The Consolidated Appropriations Act (CAA), enacted December 27, 2020, extends and greatly enhances the ERTC. Under the CARES Act rules, the credit only covered wages paid between March 13, 2020, and December 31, 2020. The...

15 Jan 2021
0

SBA Re-Opening PPP for All Lenders by 1/19/2021

Roger Rossmeisl, CPA
Automotive, Small Business Tax Briefs
SBA Re-Opening PPP for All Lenders by 1/19/2021

A 1/13/2021 U.S. Treasury Department Press Release reported that the SBA is re-opening the Paycheck Protection Program (PPP) loan portal: to small lenders on 1/15/2021, and to all lenders on 1/19/2021.   Background On 12/27/2020, the Consolidated Appropriations Act, 2021 (CAA 2021) was signed into law. Containing extensions and expansions of the PPP, it provides additional funding for what has been a popular provision with many small businesses included in the Coronavirus Aid, Relief and Economic Security (CARES) Act . . . allowing eligible employers to obtain forgivable loans for certain payroll and non-payroll purposes. Important changes from the CAA include: authorizing an additional $284 billion towards the PPP, extending the PPP to 3/31/2021, and allowing for Second Draw loans for certain smaller businesses that initially received...

15 Jan 2021
0

SBA Announces Opening of PPP First Draw Loan Increases

Roger Rossmeisl, CPA
Automotive, Small Business Tax Briefs
SBA Announces Opening of PPP First Draw Loan Increases

A Procedural Notice has been released by the SBA to it's employees, as well as PPP lenders related to First Draw PPP Loan increases. Under the Economic Aid Act (EAA) in the Consolidated Apportionment Act (CAA 2021), certain borrowers may request an increase under certain conditions: First Draw Paycheck Protection Program Loan Increases After Enactment of the Economic Aid Act, 1/13/2021  SBA Procedural Notice Control No. 5000-20076 Increase to a First Draw PPP Loan The Economic Aid Act (EAA) permitted certain borrowers to re-apply or request an increase to a First Draw PPP Loan approved on or before 8/8/2020. In general, increases in the loan amount: may not exceed the maximum loan amount the borrower is entitled to under PPP rules, and may not exceed a total of...

14 Jan 2021
0

California 1099-NEC Filing Requirements

Roger Rossmeisl, CPA
Small Business Tax Briefs
California 1099-NEC Filing Requirements

In IRS Tax Tip 2020-80, the IRS explained new Form 1099-NEC, Nonemployee Compensation for business taxpayers who pay or receive nonemployee compensation.  Starting in tax year 2020, payers must complete this form to report any payment of $600 or more to a payee. Generally, payers must file Form 1099-NEC by January 31. For 2020 tax returns, the due date is February 1, 2021. There is no automatic 30-day extension to file Form 1099-NEC. However, an extension to file may be available under certain hardship conditions. Nonemployee compensation may be subject to backup withholding if a payee has not provided a taxpayer identification number to the payer or the IRS notifies the payer that the TIN provided was incorrect PDF. A TIN can be one of the following numbers: Social Security Employer identification Individual...

12 Jan 2021
0

SBA Releases Top Line Overview of First and Second Draw PPP Loans

Roger Rossmeisl, CPA
Automotive, Small Business Tax Briefs
SBA Releases Top Line Overview of First and Second Draw PPP Loans

In a Treasury Department Press Release dated 1/8/2021, the Treasury Department and Small Business Administration (SBA) have announced that the Paycheck Protection Program (PPP) will reopen the week of January 11. To promote access to capital: initially, only community financial institutions will be able to make First Draw PPP Loans on 1/11/2021, and Second Draw PPP Loans on 1/13/2021. All participating lenders will be able to participate in the PPP shortly thereafter.  Interim Final Rules The SBA and Treasury Department recently released Interim Final Rules and other guidance. See the following related posts: SBA Releases Guidance on PPP Extension and Expansion SBA Releases Interim Final Rules Regarding PPP Second Draw Loans Additional Guidance: Top-Line Overviews The SBA also released a Top-line Overview of First Draw PPP and a Top-line Overview of Second Draw PPP. The Top-line Overview...

ROGER ROSSMEISL, CPA

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

(714) 325-0442
roger@khopatel.com

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