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Tag Archives: Covid-19

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IRS to Automatically Adjust Prior Filed 2020 Returns with Unemployment Income

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on April 6, 2021 by Lake Wylie Tax Services StaffApril 6, 2021

Unemployment-Benefits-and-2020-Tax-ReturnThe IRS announced on March 31, that it will take steps to automatically refund money this spring and summer to people who filed their tax return reporting unemployment compensation before the recent law change made by the American Rescue Plan Act.

The American Rescue Plan Act, signed on March 11, allows each taxpayer who earned less than $150,000 in modified adjusted gross income to exclude up to $10,200 of unemployment compensation from taxation. Since it applies to each taxpayer, married couples where both spouses received unemployment benefits may be able to exclude up to $20,400 if married filing status. The legislation excludes only 2020 unemployment benefits from taxes.

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Posted in Tax Central | Tagged Covid-19, taxes

Congress Has Authorized a Second Round of PPP Loans

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on January 15, 2021 by Lake Wylie Tax Services StaffJanuary 15, 2021

Congress Passes Second round of PPP LoansCongress passed, and President Trump signed, the Consolidated Appropriations Act, 2021. Included in its approximately 5,600 pages is a second draw of forgivable Paycheck Protection Program (PPP) loans. The first round allowed loans to businesses with 500 or fewer employees and to certain businesses with multiple locations, for which each location could not have more than 500 employees. Unfortunately, this opened the door to some large businesses gobbling up the allocated funding and shutting out the smaller businesses that the loans were intended to help until additional funding was authorized.

Unlike the prior loan program, this round will truly be limited to small businesses that incurred revenue losses.

Eligibility is limited to businesses

  • with 300 or fewer employees per physical location;
  • that had previously received a PPP loan; and
  • that can demonstrate that they sustained at least a 25% reduction in gross receipts in the first, second, or third quarter of 2020 relative to the same 2019 quarter. Businesses submitting an application on or after Jan. 1, 2021, are eligible to utilize the gross receipts from the fourth quarter of 2020.
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Posted in For Business | Tagged Business Expenses, Covid-19

Charitable Contributions Deduction Liberalized for 2021

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on January 12, 2021 by Lake Wylie Tax Services StaffJanuary 12, 2021

Charitable Giving Deductions changes for 2021As a means to stimulate charitable contributions during the COVID crisis, Congress made two notable changes for 2020—one allowing taxpayers that don’t itemize their deductions an above-the-line deduction for cash contributions of up to $300 and another for those itemizing their deductions to increase the maximum deduction for cash contributions to 100% of their adjusted gross income (AGI).

The recent COVID-related tax relief act, passed late in December, extends and enhances those liberalized charitable contribution deduction provisions. Here is a rundown on these charitable contribution tax benefits for 2021:

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Posted in Tax Central | Tagged Charity, Covid-19, Tax Deduction

Finally, The COVID Relief Package Is Law

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on December 28, 2020 by Lake Wylie Tax Services StaffDecember 28, 2020

COVID Relief Package Is LawAfter several months of the Republicans and Democrats not being able to agree on additional COVID-related tax relief and other matters, as 2020 was coming to an end, horses were traded, and deals were made so that Congress could put together the much-needed legislation. The result is a nearly 5,600-page omnibus bill, the Consolidated Appropriations Act, 2021, Included in that legislation are the “COVID-Related Tax Relief Act of 2020” (COVIDTRA) and the “Taxpayer Certainty and Disaster Tax Relief Act of 2020”. The bill was signed by the President on December 27.

This article provides an overview of the many tax provisions included in the legislation, including the 2nd round of economic impact payments, another round of targeted PPP loans for businesses, favorable tax treatment of expenses paid with forgiven loan proceeds, temporary expanded deduction for business meals, and modifications to charitable contributions—along with an excess of 30 new, altered, and extended tax provisions.

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Posted in Tax Central | Tagged COVID Relief Package, Covid-19

Don’t Miss Out on Year-End Tax-Planning Opportunities

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on October 26, 2020 by Lake Wylie Tax Services StaffOctober 26, 2020

Tax Planning Opportunities for 2020To say COVID-19 has made 2020 a disastrous year for just about everyone would be an understatement. In response to the economic slowdown and losses of income, Congress passed several extensive laws to benefit individuals and businesses that suffered financial hardship because of COVID-19. However, 2020 has given rise to more than the usual tax-planning opportunities. Thus, you may find it appropriate to schedule a tax-planning appointment well before the close of the year to take advantage of the tax benefits and strategies available for 2020. Although everyone’s situation is unique, the following are examples of tax opportunities and strategies that may apply to your circumstances.

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Posted in For Business, Tax Central | Tagged Covid-19, Tax Planning

Still Waiting for the IRS to Cash Your Check?

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on September 22, 2020 by Lake Wylie Tax Services StaffSeptember 22, 2020

Still waiting for IRS to cash your checkDuring the COVID-19 pandemic, the IRS has furloughed many of its employees or had them work from home to mitigate the spread of the virus. Many IRS offices remained shuttered for months, and a backlog of millions of pieces of unopened mail accumulated in trailers set up outside IRS facilities.

This includes unopened mail with payment checks, which creates a problem for many e-filed returns with tax due because the IRS computer shows a tax return filed but no payment made. Because the IRS utilizes a significant amount of automation, its computers began automatically spitting out tax-due notices, including to those who had mailed in payments. While most IRS facilities have reopened and IRS employees have returned to work, it will take them weeks, if not months, to get all of the backlogged mail opened and processed.

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Posted in Tax Central | Tagged Covid-19, taxes

If You Are Facing Foreclosure, Here Are Tax Issues You Will Confront

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on September 8, 2020 by Lake Wylie Tax Services StaffSeptember 8, 2020

Facing Foreclosure, Here Are Tax Issues You Will Confront As this pandemic continues to wreak havoc on people’s finances, the Federal Housing Finance Agency said that Fannie Mae and Freddie Mac will extend foreclosure moratoriums to December 31, 2020 and perhaps longer.

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Posted in Tax Central | Tagged Covid-19, Home and Mortgage

Is the Temporary Deferral of Employee Payroll Tax Worth It?

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on September 1, 2020 by Lake Wylie Tax Services StaffSeptember 1, 2020

Deferral of Employee Payroll TaxPresident Trump issued a Presidential Memorandum on August 8, 2020, that directs the Treasury Secretary to use his authority to defer the withholding, deposit and payment of employees’ portions of Social Security taxes from September 1 through December 31, 2020. The goal is to put more money in the pockets of workers during the COVID-19 pandemic emergency. The deferral applies to the 6.2% tax on wages or compensation paid for a bi-weekly pay period of less than $4,000 or the equivalent threshold amount for other pay periods. In other words, employees with annual wages up to $104,000 are generally eligible for the deferral.

Just a few days before the start of the deferral period, the IRS has issued guidance explaining that the due date for withholding and paying Social Security taxes has been postponed; they are now due between January 1, 2021 and April 30, 2021. This means that Social Security taxes not withheld in the last 4 months of 2020 are to be ratably withheld from employees’ wages during the first 4 months of 2021, along with the required withholding on the 2021 wages.

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Posted in For Business | Tagged Covid-19, Employee, taxes

What President Trump’s Executive Order Means for You

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on August 11, 2020 by Lake Wylie Tax Services StaffAugust 11, 2020

What_ President_Trumps_Executive_Order_MeansWe are still waiting for the dust to settle on what President Trump’s executive orders mean for taxpayers and business owners. There is a lot of talk about legal challenges and how Congress may react. But here is a summary of what we know now.

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Posted in Tax Central | Tagged Covid-19, Tax Central

Big Tax Breaks for Hiring Your Children in the Family Business

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on July 17, 2020 by Lake Wylie Tax Services StaffJuly 17, 2020

Big Tax Breaks for Hiring your childrenWith jobs at a premium during the COVID-19 pandemic, you might consider hiring your children to help out in your business. Financially, it makes more sense to keep the family employed rather than hiring strangers, provided, of course, that the family member is suitable for the job. Note, however, that wages paid to children and other relatives aren’t eligible for the Employee Retention Credit created by Congress in 2020 as part of the COVID-19 emergency relief measures for employers.

Rather than helping to support your children with your after-tax dollars, you can instead hire them in your business and pay them with tax-deductible dollars. Of course, the employment must be legitimate and the pay commensurate with the hours and the job worked. The following are typical situations encountered when hiring family members.

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Posted in For Business, Small Business, Small Business Taxes | Tagged Covid-19, Employee

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