(This article has been curated from a Forbes article written by our very own, Karla Dennis. To read the original article, please click here. )
If you are a business owner, paying close attention to all the years changes is one of the most important things you can do. Although this is not the most entertaining thing that happened in 2020, the new legislation that came in is one to pay attention to. So many 2020 changes, so little time right? We are here to give you a quick run-down and reminder of everything you need to keep in mind for tax season this year.
Table of Contents
4 Important 2020 Changes to Keep in Mind this Tax Season:
2020 Change #1: CARES ACT
Coronavirus Aid, Relief, and Economic Security (CARES) Act: Perhaps the most notable act of 2020, this one is one that we heard hundreds of times last year. The CARES Act generated major help for individuals and businesses through stimulus grants, loans, and tax credits. An example of a credit business owners was able to use was the ERC, the Employee Retention Credit. It was created to encourage business owners to keep employees on the payroll, this refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by the pandemic.
2020 Change #2: FFCRA
Families First Coronavirus Response Act (FFCRA): This act included several policies that impacted businesses, such as requiring employers to provide paid sick leave under certain conditions and expanded paid family leave and medical leave. It also provided tax credits for the payment of those benefits. Acts like these are exactly the kind you need to keep in mind for this tax season. Most importantly, if you are a business owner yourself.
2020 Change #3: PPP Loan
Paycheck Protection Program (PPP): This act provided forgivable loans to businesses that used the funds to cover at least 60% of employee payroll costs. The remaining 40% of the loan amount could be spent on mortgage interest, rent, and utility payments. The most important thing to remember as well is that these funds are not taxable. So, in case you were wondering, now you can breathe a little easier.
2020 Change #4: PPP Flexibility Act
PPP Flexibility Act: This law modified the PPP and made it quicker and simpler for a business to get forgiveness. It also gave businesses the ability to defer their payroll tax payments while still being eligible for the PPP loan forgiveness.
Why is this important?
Well, if you were one of those business owners who took advantage of one of these acts, it’s important to know how they will affect your taxes this year. You do not want to over-report or under-report. So you need to be assured of what happened in 2020, how it affected your business, and what are your tax implications.
On top of that, there were grants given as well. What does that mean for your business? Make sure to talk to your tax strategist and set a game plan for your taxes. Business owners will want to ensure they don’t miss out on valuable tax credits and end up overpaying their income taxes. What you don’t know will cost you when it is time to file your 2020 taxes.
To read more information regarding this topic, make sure to check out the full article on Forbes.
Karla Dennis and Associates, Inc. is proud to showcase our very own Karla Dennis. Not only is she CEO of our company, but she is also a FORBES member and provider. Make sure to check out all of her articles on Forbes. Karla has written on topics spanning from taxes, business, and real estate investing.