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2020 Tax Year-End Planning & Updates
2020 Tax Year-End Planning & Updates
2020 was an unprecedented year for billions of people across the globe, but small businesses were some of those who were impacted most severely. Here is a brief summary of some of the government and state assistance programs:
Coronavirus Aid, Relief, and Economic Security (CARES) Act
• Paycheck Protection Program (PPP) loans ◊ Available to virtually all small businesses with payroll costs ◊ Also, available to self-employed individuals and farmers ◊ Forgivable loans and the expenses paid with the PPP funds are now fully deductible • Economic Injury Disaster Loan (EIDL) ◊ Up to $2 million loan ◊ 3.75% interest rate and payments deferred for one year ◊ Up to 30-year term ◊ Up to $10,000 advance grant that does not have to be repaid • Nebraska Small Business Stabilization Grants ◊ $12,000 grant to small businesses in Nebraska ◊ Additional $12,000 to certain industries ◊ These applications are now closed • Families First Coronavirus Response Act (FFCRA) ◊ Tax credits to businesses for paying employees affected by COVID-19 • Employee Retention Credits ◊ Refundable credit for payroll taxes paid to employees during the year ◊ Also, applies to the first two quarters of 2021 ◊ Must have had a significant loss in revenue or been suspended due to government orders • Deferral of employer Social Security and Medicare taxes through December 31, 2021 ◊ Available to all employers ◊ Taxes must eventually be paid, but deferred until at least December 31, 2021 • Business related meals are now fully 100% deductible for 2021 and 2022. ◊ They were previously 50% deductible • Permanent extension of the energy-efficient commercial building deduction and the reduced excise tax rate on beer, wine, and spirit makers Additionally, 2020 proved to be a year that year-end tax planning was even more important and useful than usual. It will be crucial to pay attention to additional guidance, assistance and regulations that come out over the next few months regarding all of the above programs and how to access them if you are in need as well as how to properly account for them.
