Dogra CPA LLC

Tax Alert: 2021 YEAR-END TAX PLANNING FOR BUSINESSES

As we start to wrap up 2021, now is the time to take a closer look at your current tax strategies to make sure they are still meeting your business needs and take any last-minute steps that could save you money.

Here’s a look at some issues to consider as we approach year-end:

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2021 YEAR-END TAX PLANNING FOR BUSINESSES - DOGRA CPA LLC Now is the time to take a closer look at your current tax strategies to make sure they are still meeting your needs and take any last-minute steps that could save you money.

Tax Alert: 2021 YEAR-END TAX PLANNING FOR INDIVIDUALS

As we wrap up 2021, it’s important to take a closer look at your tax and financial plans. This year likely brought challenges and disruptions that significantly impacted your personal and financial situation.

Here’s a look at some issues to consider as we approach year-end:
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Small Business Relief Alert: Forgivable PPP Loan Reopens Today

The SBA is reopening today its forgivable PPP loan program for new borrowers and second round for certain existing borrowers.

Initially, only community financial institutions will make First Draw of PPP Loans today, January 11, and Second Draw of PPP Loans on Wednesday, January 13. The PPP will open to all participating lenders shortly thereafter.

Eligibility criteria for borrower:

The borrower has no more than 300 employees and experiencing at least a 25% reduction in gross receipts in a quarter between 2019 and 2020.

Also, the borrower, who previously received a First Draw of PPP Loan, will or has used the full amount only for authorized uses.

The maximum amount that can be borrowed this time will be $2 million. The deadline to apply is March 31.

The SBA will forgive the loan if all employee retention criteria are met, and the funds are used for eligible expenses.

Tax Alert: Changes to the Employee Retention Credit (ERC)– PPP Loan Recipients Now Eligible for the Credit

The (COVID-19) stimulus package signed into law by President Trump on Dec. 27 contains significant enhancements to the employee retention tax credit enacted under the CARES Act. The stimulus package clarifies that wages paid with PPP loans that are not forgiven may be qualified wages for ERC purposes retroactively. Previously, PPP loan recipients were not eligible for the employee retention credit (ERC).

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Tax Alert: Changes to the Employee Retention Credit (ERC)- PPP Loan Recipients Now Eligible for the Credit - DOGRA CPA LLC Tax Alert: Changes to the Employee Retention Credit – PPP Loan Recipients Now Eligible The (COVID-19) stimulus package signed into law by President Trump on Dec. 27 contains significant enhancements to the employee retention tax credit enacted under the CARES Act. The stimulus package clarifies th...

Federal Stimulus Alert: New PPP Loan Package Is Highly Expected Next Week

The congress is considering passing a new stimulus bill QUICK.

Timing: It will not be happening any earlier than Dec 9-11th. There is a potential to slip to Dec 18th. Things can always change!

Once the bill passes, Treasury & SBA will move very quickly to implement it.

It’s expected to have the same framework to calculate the loan qualification amount as previously used in PPP Round One. There may be an additional criteria: Small businesses with 25%-35% decline in revenue in 2020 with less than 300 employees.

The intent is survivability of small businesses. More details to follow soon!

Tax Alert: 2020 Year-End Tax Planning for Businesses

We can all agree that 2020 is unlike any other year. As we consider tax-planning strategies for the year end, major uncertainty continues concerning the severity of the pandemic and length of the economic recovery. Although Congress passed two major pieces of legislation in response to the health and economic impact of the coronavirus pandemic, it remains unclear if additional relief is forthcoming.

As such, each business should consider the unique challenges and possible opportunities that this year presents. Let’s find out what they are.

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𝐈𝐑𝐒 𝐂𝐨𝐧𝐟𝐢𝐫𝐦𝐬 𝐏𝐏𝐏 𝐋𝐨𝐚𝐧 𝐅𝐨𝐫𝐠𝐢𝐯𝐞𝐧𝐞𝐬𝐬 𝐢𝐬 𝐓𝐚𝐱𝐚𝐛𝐥𝐞 𝐢𝐧 𝟐𝟎𝟐𝟎

Earlier this year, the IRS issued Notice 2020-32 which stated that expenses funded with a Paycheck Protection Program (PPP) loan that is forgiven are not deductible for tax purposes under rules designed to prevent a double tax benefit. A much-debated question since the issuance of that notice is whether a taxpayer that received a PPP loan and paid otherwise deductible expenses can deduct those expenses in the tax year in which the expenses were paid or incurred if, at the end of that tax year, the taxpayer has not received a determination of forgiveness of the loan or not yet applied for forgiveness.

On November 18, the IRS issued Rev. Rul. 2020-27 answering that question: A taxpayer that receives a PPP loan and paid or incurred otherwise deductible expenses related to that loan may not deduct those expenses in the tax year those expenses were paid or incurred if, at the end of that tax year, the taxpayer reasonably expects to receive forgiveness of the PPP loan, even if the taxpayer has not submitted an application for forgiveness of the loan by the end of such tax year.

The IRS presented two scenarios in the revenue ruling as examples. In both scenarios, the borrower pays expenses such as payroll and mortgage interest that would qualify under the CARES Act as eligible PPP expenditures and the borrower satisfies all of the requirements for the loan to be forgiven. In the first scenario, the borrower applies for forgiveness in November 2020 but has not received notice of forgiveness by year-end. In the second scenario, the borrower does not plan to apply for forgiveness until 2021. In both cases, the IRS explained that the taxpayers could not deduct expenses funded with the PPP loans because there was a reasonable expectation of forgiveness.

The IRS also released Rev. Proc. 2020-51 to provide a safe harbor rule for PPP loan borrowers where the forgiveness has been denied in full or in part. In such case, the taxpayer would be permitted (pursuant to the provisions in the Rev. Proc.) to take a tax deduction for those otherwise eligible expenses on an original return, an amended return, or an administrative adjustment request.

Rev. Rul. 2020-27 provides much-needed guidance to taxpayers that were considering delaying the filing of forgiveness applications in order to secure deductions in a current-year tax return or taxpayers that had filed a forgiveness application but were uncertain about how to file their tax returns.

Note: The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.

COVID-19 Alert: Federal Reserve Begins Main Street Lending Program

The long-awaited Main Street Lending Program (MSLP) is now underway. The Federal Reserve opened lender registration on June 15 and encouraged lenders to begin making Main Street program loans as soon as possible upon registration. Businesses may receive a MSLP loan in addition to their PPP loan. However, unlike PPP loans, MSLP loans are full-recourse loans, and no amount of the loans are forgivable.

The MSLP is generally comprised of three types of loans:

1. Main Street New Loan Facility (MSNLF) Min: $250,000, Max: Lesser of 4 times EBITA of 2019 or $35 million

2. Main Street Priority Loan Facility (MSPLF) Min: $250.000, Max: Lesser of 6 times EBITA of 2019 or $50 million

3. Main Street Expanded Loan Facility (MSELF) Min: $10 million, Max: Lesser of 6 times EBITA of 2019 or $300 million

Terms:
• Five-year maturity
• Principal payments deferred for two years and interest payments deferred for one year
• Adjustable rate of LIBOR (one- or three-month) plus 300 basis points)

Disclaimer: This post contains no tax, legal, or financial advice.

COVID 19 Update: This new bill would allow small businesses to get second PPP loan

Certain small-business owners may be able to apply for a second Paycheck Protection Program loan if a new bill introduced on June 18 becomes law.

The legislation, called the Prioritized Paycheck Protection Program (P4) Act, would allow businesses with fewer than 100 employees to apply for a second loan if they have used up (or are on way to exhaust) their first PPP loan and can show a 50% loss in revenue due to the COVID-19 pandemic. Business owners also must show they need the money for payroll and eligible non-payroll costs.

The bill would also extend the application deadline for PPP loans from June 30 to Dec. 30. And the deadline for a second loan would be Oct. 1. The SBA Administrator would have the discretion to extend the deadline if needed.

Disclaimer: This post contains no tax, legal, or financial advice.

COVID-19 Alert: New PPP loan forgiveness applications released

The US SBA and Treasury released a revised PPP loan forgiveness application this Wednesday. The application reflects changes made to the PPP by the Paycheck Protection Flexibility Act of 2020.

Borrowers that received loans before June 5 can choose between using the original eight-week covered period or the new 24-week covered period.

Health insurance costs for S corporation owners cannot be included when calculating payroll costs; however, retirement costs for S corporation owners are eligible costs.

Exemptions to loan forgiveness reductions, due to drop in wage or number of full time employees, can be applied as of the date the loan forgiveness application is submitted. Borrowers don’t have to wait until Dec. 31.

Disclaimer: This post contains no tax, financial, or legal advice.

NOTICE: SBA’s Economic Injury Disaster Loans and Advance Program REOPENED

With the reopening of the EIDL assistance and EIDL Advance application portal to all new applicants, additional small businesses will be able to receive these long-term, low interest loans and the emergency grant of $10,000.

The EIDL Advance will provide up to $10,000 ($1,000 per employee) of emergency economic relief to businesses that are currently experiencing temporary difficulties, and these emergency grants do not have to be repaid.

The loan interest rate is 3.75% for small businesses.

To keep payments affordable for small businesses, SBA offers loans with long repayment terms, up to a maximum of 30 years. Plus, the first payment is deferred for one year.

Disclaimer: The post contains no tax or legal advice.

Tax Alert: Rioting damage at your business? You may be able to claim casualty loss deductions

The recent riots around the country have resulted in many storefronts, office buildings and business properties being destroyed. In the case of stores or other businesses with inventory, some of these businesses lost products after looters ransacked their property. This damage was especially devastating because businesses were reopening after the COVID-19 pandemic eased.

A commercial insurance property policy should generally cover some, or all, of the losses. (You may also have a business interruption policy that covers losses for the time you need to close or limit hours due to rioting and vandalism.) But a business may also be able to claim casualty property loss or theft deductions on its tax return.

Here’s how a loss is figured for tax purposes: Your adjusted basis in the property MINUS any salvage value MINUS any insurance or reimbursement you receive or expect to receive.

Disclaimer: This post contains no tax or legal advice.

COVID-19 Update: Senate Passes Changes to Small Business PPP Loan Program, Sends Bill to Trump For Signature

The bill would extend the forgiveness period for PPP loans from 8 to 24 weeks.

It would also reduce payroll spending requirements from 75% of loan funds to 60%.

The loan return period is also increased from two to five years, if a portion of it doesn’t qualify for forgiveness.

Disclaimer: This post contains no tax or financial advice.

COVID-19 Update: More Flexibility In Spending PPP Loans To Come.

Yesterday, the House of Representatives passed new legislation to relax restrictions on PPP loan spending and forgiveness.

The bill would extend the forgiveness period for PPP loans from 8 to 24 weeks.

It would also reduce payroll spending requirements from 75% of loan funds to 60%.

This bill is now headed to the Senate, where it is expected to pass.

Disclaimer: This post contains no Financial or Tax Advice.

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COVID-19 Update: How Will My PPP Loan Forgiveness Be Reduced? A First Look At PPP Loan Forgiveness Application

The SBA PPP loan forgiveness application came out last Friday. In order for the loan to be forgiven, you must pay or incur at least 75% of the PPP loan amount for payroll costs and other 25% on qualified expense (rent, interest, utilities) within 8 weeks (56 days) of funding.

The amount forgiven will be decreased in proportion to the drop in workforce (headcount) and potentially pay. You can avoid the haircut (reduction in loan forgiveness), if your employees made at least 75 percent of what they averaged between Jan. 1 and March 31 or were paid between Feb. 15-April 26 what they made on Feb. 15.

PPP loan borrowers who cut employee-pay more than 25% can still avoid the haircut if they restore paychecks to Feb. 15 levels by June 30. PPP loan borrowers who drop the headcount can avoid the haircut if they laid off people between Feb. 15-April 26 and brought your workforce to Feb. 15 levels by June 30.

Haircut exemptions also exist if the employee quit voluntarily or asked the employer for their hours to be reduced.

Last, each employee total compensation CANNOT exceed $15,385 (100K annual salary limit) in 56 days period; anything paid over that amount won’t be eligible for loan forgiveness.

(If you have any questions or a prospective on the post, please leave it in the comments or hit the like button or share it if you find value in it.)

Disclaimer: This post contains no Financial or Tax Advice.

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How can Small Businesses in NJ, NY, and PA apply for SBA COVID-19 Economic Injury Disaster Loan?

President Donald Trump has made SBA’s Economic Injury Disaster Loans available to small businesses impacted by COVID-19. Eligibility for Economic Injury Disaster Loans is based on the financial impact of the Corona-virus (COVID-19) after January 31, 2020 & continuing. Disaster loans can provide vital economic assistance to small businesses to help overcome the temporary loss of revenue they are experiencing.

Loan Amount: Small businesses, private non-profit organizations of any size may qualify for Economic Injury Disaster Loans of up to $2 million to pay fixed debts, payroll, accounts payable, and other bills that can’t be paid because of the disaster’s impact. The actual amount of each loan is limited to the economic injury determined by SBA, less business interruption insurance and other recoveries up to the administrative lending limit.

Location: The disaster declaration makes SBA assistance available in the entire state of New Jersey, New York Counties (Bronx, New York, Orange, Rockland, Westchester) and Pennsylvania Counties (Bucks, Delaware, Monroe, Northampton, Philadelphia, Pike).

Rate: The interest rate is 3.75% for small businesses without credit available elsewhere; businesses with credit available elsewhere are not eligible. The interest rate for non-profits is 2.75%.

Loan Term: SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.

Requirements:

Credit History – Applicants must have a credit history acceptable to SBA.

Repayment – Applicants must show the ability to repay the loan.

Collateral – Collateral is required for all loans over $25,000. SBA takes real estate as collateral when it is available. SBA will not decline a loan for lack of collateral, but SBA will require the borrower to pledge collateral that is available.

Restrictions: Economic injury disaster loans cannot be used to refinance long term debts. Applicants who have not complied with the terms of previous SBA loans may not be eligible.

Application Filing Deadline: December 18, 2020.

Where to apply: Online at SBA.GOV

[ If you have any questions or a prospective on the post, please leave it in the comments or hit the like button or share it if you find value in it. ]

Disclaimer: This post contains no Financial or Tax Advice.

Tax Alert: IRS gives 3-month break to pay taxes in response to the COVID-19 Outbreak

Taxpayers and businesses will have until July 15, 2020 to pay their taxes this year. Normally, taxes are due by April 15 every year. The IRS is providing this special payment relief to individuals and businesses in response to the COVID-19 Outbreak.

Individual taxpayers owing up to $1 million in taxes can delay payment until July 15, as can corporate filers with tax debts up to $10 million.

This relief also includes estimated tax payments for tax year 2020 that are due on April 15, 2020. Penalties and interest will begin to accrue on any remaining unpaid balances as of July 16, 2020.

Disclaimer: This post contains no tax advice.

Tax Alert: Employer Obligations Under the Proposed Families First Coronavirus Act

The Families First Coronavirus Response Act (“Act”) was passed by the House of Representatives on March 13, 2020. The Act still requires Senate approval before it can be signed into law by President Trump. The Senate is expected to vote on the Act this week.

The Act requires private employers with fewer than 500 employees to provide 14 paid sick days and three months of paid family and medical leave to most employees during the coronavirus crisis.

The Act requires full wages to be paid for sick days but only two-thirds of normal wages to be paid for the emergency family and medical leave. However, the Act does provide the following payroll tax credits designed to offset the cost of providing the additional paid leave:

Sick Leave Credit – The credit is for a maximum of $511 per day per employee paid to employees who are receiving paid sick leave to care for themselves.

Family Leave Credit – The credit is for a maximum of $200 per day per employee while the employee is receiving paid family and medical leave, up to an aggregate of $10,000 in paid wages per employee.

Self-Employed Tax Credit – Self-employed individuals will be entitled to a credit against the self-employment tax for their “sick-leave equivalent” amount. The details for documenting this credit are yet to be provided by the Department of the Treasury.

The sick leave and family leave credits are available to businesses that pay wages to employees in compliance with the Act’s paid leave requirements. These are payroll tax credits that apply against the 6.2% employer portion of the social security tax; the employee portion is not affected by the Act. These credits will be claimed on a quarterly basis.

Future Relief:

We continue to monitor these developments as well as future COVID-19 economic relief initiatives, including the possible delay of the April 15 tax deadline and how states will respond to new legislation and regulations. We will provide updates as more information becomes available.



Disclaimer: This post contains no tax or legal advice.

Tax Alert: Stolen Identity Refund Fraud (SIRF) Still Pervasive

With access to little more than your name, birthdate, and Social Security number, a stealer files a fraudulent tax return and collects a refund. Then, when you go to file your original return, the IRS blocks you because its records show your return has already been filed. Does this sound familiar? You are not alone.

As per the audit report of Treasury inspector General, this January, the IRS identified more than 3 million tax returns worth an estimated $14.7 billion in refunds that may have been fraudulently filed in 2019 filing season.

I encourage you all to be proactive in protecting your data and identity credentials. They are just as valuable as your cash in the bank. For example, If you believe your personal information has been compromised like you lose a wallet, a computer or a smart phone, be sure to notify the IRS along with your bank, and credit card issuers.

Note: This post is not a tax advice.

What is a B Corp? A New Business That Balances Purpose and Profit

A B-Corporation, is short for a Benefit Corporation. These B Corps, are for-profit companies that have been certified by the non-profit B Lab. Some big companies like Ben & Jerry’s, Stoneyfield Organic, Hootsuite, Etsy, and others, have taken the opportunity to become B-Corps. There are currently over 3,200 Certified B Corporations in more than 71 countries with one unifying goal: balancing purpose and profit.

Here is the interesting part:....https://www.linkedin.com/pulse/what-b-corp-new-business-balances-purpose-profit-chetan-dogra-cpa

What is a B Corp? A New Business That Balances Purpose and Profit A B-Corporation, is short for a Benefit Corporation. These B Corps, are for-profit companies that have been certified by the non-profit B Lab.

Tax Alert: Numerous Tax Limits Affecting Businesses Have Increased For 2020

Here are some that may be important to you and your business:

The amount of employees’ earnings that are subject to Social Security tax is capped for 2020 at $137,700 (up from $132,900 for 2019).

Section 179 expensing limit increased: $1.04 million (up from $1.02 million for 2019).

Income-based phase-out for certain limits on the Sec. 199A qualified business income deduction begins at:
Married filing jointly: $326,600 (up from $321,400 in 2019).

Employee contributions to 401(k) plans increased to $19,500 (up from $19,000 in 2019).

Qualified transportation fringe-benefits employee income exclusion: $270 per month (up from $265 in 2019).

Health Savings Account contributions:
Family coverage: $7,100 (up from $7,000 in 2019).

Note: This post contains general information subject to change and does not constitute professional advice.

Tax Alert: SECURE Act Provisions Impacting Employers

Whether you currently offer your employees a retirement plan (or are planning to do so), you should consider how these new rules may affect your current retirement plan:

Retirement plans adopted by filing due date of the return may be treated as in effect as of close of year.

Employers that are unrelated will be able to join together to create one retirement plan.

There’s an increased tax credit for small employer retirement plan startup costs.

There’s a new small employer automatic plan enrollment tax credit.

Expand retirement savings by increasing the auto enrollment safe harbor cap.

Increased penalties for failure-to-file retirement plan returns starting in 2020.

Allow long-term part-time employees to participate in 401(k) plans.

Note: This post contains general information subject to change and does not constitute professional advice.

Tax Alert: MEET THE 2020 1099-MISC TAX DEADLINE

The Form 1099-MISC is an IRS tax return used to report miscellaneous payments made to nonemployee individuals, such as independent contractors, during the calendar year.1099s are due to recipients and the IRS by January 31, 2020 for any person or company to whom your firm paid $600 or more for:

Rent
Services
Gross proceeds to an attorney
Any payments for which federal taxes were withheld under the backup withholding rules
Other categories also apply

Payments that are not reported on a Form 1099-MISC include:
Generally, payments to corporations (unless it is considered a "reportable payment" or it is an attorney, who must receive a Form 1099-MISC, regardless of corporation status).

Note: This post contains general information subject to change and does not constitute professional advice.

Tax Alert: SECURE Act Provisions Impacting Individuals

Here is a look at some important elements of the recently enacted SECURE Act that have an impact on individuals:

Ended the 70½ age limit for contributions to an IRA.

The required minimum distribution (RMD) age was raised from 70½ to 72 for retirement plan participants and IRA owners.

Stretch IRAs were partially eliminated – Shortened the distribution period for non-spouse inherited IRAs to a 10-year maximum.

Penalty-free withdrawals (up to $5,000 for each spouse) are now allowed for birth or adoption expenses.

Section 529 education savings plans distributions can now be used tax free to repay student loans (up to $10,000) of the beneficiary.

Tax Alert: New NJ Law Establishes an Elective Entity-Level Tax for Some Passthrough Entities

New law establishes an elective passthrough business alternative income tax for some passthrough entities (generally is a partnership, S corp., or LLC) with a corresponding income tax credit for members for taxable years beginning on or after Jan 1, 2020.

The bill is intended to provide a workaround to the federal $10,000 limitation on the state and local tax deduction. The federal deduction for the new state tax would be claimed at the entity level, but the members would receive a state credit. Importantly, taxpayers should analyze whether making the election and paying the entity-level tax will result in a lower overall tax burden. Not all pass-through entity members may benefit from the election and there may be other tax considerations that make the election undesirable.

Tax Alert: New NY Laws Affecting Employers in 2020

Effective Yesterday, Dec. 31, 2019, minimum wage in Westchester and Long Island increases to $13 an hour ( $15 in NYC), and more employees will be eligible to receive overtime pay because the salary threshold to exempt certain employees from overtime increases. In Westchester and Long Island, employees must make $975 weekly ($1125 NYC) to be exempted from overtime pay.

Effective Jan. 1, 2020, employees taking 10 Weeks Paid Family Leave will receive 60% of their average weekly wage up to a cap of $840.70.

NYC law provides a minimum of 40 hours of paid sick leave per year, with employees accruing, upon hire, one hour of paid leave per every 30 hours worked.

Effective Jan. 6, 2020, NY employers are forbidden from asking job applicants of their wage histories.

NY employers are now required to annually train their employees on sexual harassment prevention, and have until Oct. 9, 2020, to complete the annual training.

NY State human rights law now expressly prohibits discrimination against independent contractors.

Tax Alert: New NJ Laws Affecting Employers in 2020

Effective Jan. 1, 2020, the minimum wage in NJ increased to $11.00 ($10.30 if 5 employees or less).

Starting Jan. 1, 2020, NJ employers cannot request a job applicant’s salary history during the initial hiring process.

Starting Jan. 1, 2020, NJ employee working on an executive, administrative, or professional position (exempt employee) for an annual salary of less than $35,568 will be eligible for overtime pay, previous threshold was $23,660.

PTO: NJ employers are required to provide 40 hours of paid sick leave/PTO to all employees in a year.

Employers with 30 or more employees are required to provide employees with 12 weeks of family leave for a newly born or to care for a family member during each 24-month period.

Wage Payment Violation - If an employee wages are not paid properly, the employer will be held liable for 200% of the owed wages as well as the wages themselves.

Also, all employers are encouraged to keep abreast with current NJ discrimination, retaliation, and harassment rules.

Tax Alert: When Holiday Parties and Gifts Are Tax Deductible?

With Thanksgiving behind us, the holiday season is in full swing. At this time of year, your business may want to show its gratitude to employees and customers by giving them gifts or hosting holiday parties.

Holiday parties are fully tax deductible so long as they are primarily for the benefit of non-highly-compensated employees and their families.

Employee cash gifts/gift cards are included in an employee’s income regardless of how small. Noncash gifts (de minimis fringe benefits) aren’t included in your employee’s taxable income and are deductible by your business as long as they are reasonable amounts (many businesses use a cutoff of $75).

If you make gifts to customers, the gifts are deductible up to $25 per recipient per year. The $25 limit is for gifts to individuals. There’s no set limit on gifts to a company as long as they are reasonable (for example, a gift basket for all staff members of a customer).

Disclaimer: This Tax Alert contains no tax advice.