๐—˜๐—บ๐—ฝ๐—น๐—ผ๐˜†๐—ฒ๐—ฒ ๐—ฅ๐—ฒ๐˜๐—ฒ๐—ป๐˜๐—ถ๐—ผ๐—ป ๐—–๐—ฟ๐—ฒ๐—ฑ๐—ถ๐˜

๐—œ๐—ฅ๐—ฆ ๐—ฃ๐—ฟ๐—ผ๐˜ƒ๐—ถ๐—ฑ๐—ฒ๐˜€ ๐—š๐˜‚๐—ถ๐—ฑ๐—ฎ๐—ป๐—ฐ๐—ฒ ๐—ณ๐—ผ๐—ฟ ๐—˜๐—บ๐—ฝ๐—น๐—ผ๐˜†๐—ฒ๐—ฟ๐˜€ ๐—–๐—น๐—ฎ๐—ถ๐—บ๐—ถ๐—ป๐—ด ๐˜๐—ต๐—ฒ ๐—˜๐—บ๐—ฝ๐—น๐—ผ๐˜†๐—ฒ๐—ฒ ๐—ฅ๐—ฒ๐˜๐—ฒ๐—ป๐˜๐—ถ๐—ผ๐—ป ๐—–๐—ฟ๐—ฒ๐—ฑ๐—ถ๐˜ ๐—ณ๐—ผ๐—ฟ ๐Ÿฎ๐Ÿฌ๐Ÿฎ๐Ÿฌ: The IRS has issued a Notice on claiming the employee retention credit for calendar quarters in 2020. The guidance, which is similar to FAQs published on www.irs.gov , clarifies the credit and describes retroactive changes under the Taxpayer Certainty and Disaster Tax Relief Act of 2020. For example, the Notice explains how employers that received a PPP loan can claim the employee retention credit for 2020. The Notice also provides answers to the following questions: (1) who are eligible employers; (2) what constitutes full or partial suspension of trade or business operations; (3) what is a significant decline in gross receipts; (4) how much is the maximum amount of an eligible employer’s employee retention credit; (5) what are qualified wages; (6) how does an eligible employer claim the employee retention credit; and (7) how does an eligible employer substantiate the claim for the credit. Notice 2021-20.

For additional information see the IRS website at https://www.irs.gov/newsroom/irs-provides-guidance-for-employers-claiming-the-employee-retention-credit-for-2020-including-eligibility-rules-for-ppp-borrowers

 

PPP Update For Schedule C Filers

PPP Update for the Self-Employed SBA Revises Loan Calculation and Eligibility

A new SBA, Interim Final Rule revises loan amount calculations and eligibility to permit self-employed individuals who file Form 1040, Schedule C to calculate their maximum loan amount using gross income. It also removes the eligibility restriction that prevents businesses with owners who have non-financial fraud felony convictions in the last year from obtaining PPP loans and removes the eligibility restriction that prevents businesses with owners who are delinquent or in default on their Federal student loans from obtaining PPP loans.

The changes apply to both First Draw and Second Draw PPP loans. SBA forms have also been updated to reflect this new guidance. The new forms are SBA Form 2483-C (Borrower Application Form for Schedule C Filers Using Gross Income) and SBA Form 2483-SD-C (Second Draw Borrower Application Form for Schedule C Filers Using Gross Income).

 

PPP Changes Announced 2/22/2021

PPP Changes Announced by New Administration Intended to Create Greater Access for Small Business

Biden

In a Fact Sheet released by the White House 2/22/2021 the administration discloses that funding to small business has increased and that the administration will institute a 14-day period, starting Wednesday, during which only businesses with fewer than 20 employees can apply for relief through the program. In addition, they intend to help sole proprietors, independent contractors, and self-employed individuals receive more financial support.

The Fact Sheet includes the above along with a number other actions, some of which require congressional approval.

The administration plans to take to make PPP loans available to borrowers that were previously excluded due to things like, delinquent federal student, prior non-fraud felony convictions, and non-citizen small business owners who are lawfully in the U.S.

For additional information see the Fact Sheet on the White Houseโ€™s web site or talk to one of the Accounting, Tax and Business Advisory professionals at RMS Accounting.

Important Crypto & Virtual Currency Update

BitCoin

๐“๐ก๐ž ๐ˆ๐‘๐’ ๐ก๐š๐ฌ ๐ฆ๐จ๐ฏ๐ž๐ ๐ญ๐ก๐ž ๐ฏ๐ข๐ซ๐ญ๐ฎ๐š๐ฅ ๐œ๐ฎ๐ซ๐ซ๐ž๐ง๐œ๐ฒ ๐ช๐ฎ๐ž๐ฌ๐ญ๐ข๐จ๐ง from Schedule 1 of the 2019 Form 1040 to the first page of the 2020 Form 1040 and Form 1040-SR. The question asks, “At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?” ย Reportable items include but are not limited to (1) the receipt or transfer of virtual currency for free; (2) an exchange of virtual currency for goods or services; (3) a sale of virtual currency; (4) an exchange of virtual currency for other property; and (5) a disposition of a financial interest in virtual currency. For more information, go to www.IRS.gov/virtualcurrencyfaqs.

Economic Recovery Rebate Credit

The Economic Recovery Rebate Credit has caused many people to question their filing status. The amount of the credit as well as qualifying for the credit (payment) depends a lot on filing status and income. Dependents attending college have heard that they can get the credit only if their parents donโ€™t claim them and that what they receive will be greater than the amount their parents would receive if they were claimed as a dependent.

The truth is that filing status and dependency are not based on how you get the most money. Filing status is based on circumstances. Married people must file either, Married Filing Jointly or Married Filing Separatelyย unless they have not lived with their spouse at all during the last half of the year and provided more than half the expense of a household for a qualifying child or qualifying relative. Then they may qualify as a Head of Household.

If a taxpayer provides more than half the support of a Qualifying Child or Qualifying Relative, that person is a dependent of the taxpayer and should be included on the taxpayer’s return.

Thus, while it may seem prudent for a child that you support not to be shown on your return so that they can get an Economic Recovery Rebate Credit (payment), that is just not how the systems works. The question that must be answered is not, does someone else claim you as a dependent on their return, but could you be claimed by someone else as a dependent?

Chart of requirements for dependency

PPP and PPP2 Updates & Highlights

Payroll Protection Loan Update Banner

PPP updates include:

  • PPP borrowers can set their PPP loanโ€™s covered period to be any length between 8 and 24 weeks to best meet their business needs;
  • PPP loans will cover additional expenses, including operations expenditures, property damage costs, supplier costs, and worker protection expenditures;
  • The Programโ€™s eligibility is expanded to include 501(c)(6)s, housing cooperatives, direct marketing organizations, among other types of organizations;
  • The PPP provides greater flexibility for seasonal employees;
  • Certain existing PPP borrowers can request to modify their First Draw PPP Loan amount; and
  • Certain existing PPP borrowers are now eligible to apply for a Second Draw PPP Loan.

PPP2 takin a second bite:

A borrower is generally eligible for a Second Draw PPP Loan if the borrower:

  • Previously received a First Draw PPP Loan and will or has used the full amount only for authorized uses;
  • Has no more than 300 employees; and
  • Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.

For more information on SBAโ€™s assistance to small businesses, visit sba.gov/pppย orย treasury.gov/cares.

2020 Tax Organizer Avaliable

Did we complete your 2019 tax return?

If we completed your prior-year return we can provide you with a custom tax organizer that includes last year’s information so that you can compare it to this year’s information just send an email to info@RMSAccounting.com. Be sure to include your first and last name along with your address and phone number.

Your first tax year with RMS Accounting or just need help collecting your tax information?

Download our 2020 Tax Organizer right here.

2020 Tax Organizer

PPP Update – NEWS RELEASEย โ€“ 01/08/2020

SBA and Treasury Announce PPP Re-Opening; Issue New Guidance

WASHINGTONย โ€“ Theย U.S. Small Business Administration (SBA), in consultation with the Treasury Department, announced today that the Paycheck Protection Program (PPP) will re-open the week of January 11 for new borrowers and certain existing PPP borrowers. To promote access to capital, initially, only community financial institutions will be able to make First Draw PPP Loans on Monday, January 11, and Second Draw PPP Loans on Wednesday, January 13.ย  The PPP will open to all participating lenders shortly thereafter. Updated PPP guidance outlining Program changes to enhance its effectiveness and accessibility was released on January 6 in accordance with the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act.

This round of the PPP continues to prioritize millions of Americans employed by small businesses by authorizing up to $284 billion toward job retention and certain other expenses through March 31, 2021, and by allowing certain existing PPP borrowers to apply for a Second Draw PPP Loan.

โ€œThe historically successful Paycheck Protection Program served as an economic lifeline to millions of small businesses and their employees when they needed it most,โ€ said Administrator Jovita Carranza.ย  โ€œTodayโ€™s guidance builds on the success of the program and adapts to the changing needs of small business owners by providing targeted relief and a simpler forgiveness process to ensure their path to recovery.โ€

โ€œThe Paycheck Protection Program has successfully provided 5.2 million loans worth $525 billion to Americaโ€™s small businesses, supporting more than 51 million jobs,โ€ said Treasury Secretary Steven T. Mnuchin.ย  โ€œThis updated guidance enhances the PPPโ€™s targeted relief to small businesses most impacted by COVID-19. ย We are committed to implementing this round of PPP quickly to continue supporting American small businesses and their workers.โ€

Key PPP updates include:

  • PPP borrowers can set their PPP loanโ€™s covered period to be any length between 8 and 24 weeks to best meet their business needs;
  • PPP loans will cover additional expenses, including operations expenditures, property damage costs, supplier costs, and worker protection expenditures;
  • The Programโ€™s eligibility is expanded to include 501(c)(6)s, housing cooperatives, direct marketing organizations, among other types of organizations;
  • The PPP provides greater flexibility for seasonal employees;
  • Certain existing PPP borrowers can request to modify their First Draw PPP Loan amount; and
  • Certain existing PPP borrowers are now eligible to apply for a Second Draw PPP Loan.

A borrower is generally eligible for a Second Draw PPP Loan if the borrower:

  • Previously received a First Draw PPP Loan and will or has used the full amount only for authorized uses;
  • Has no more than 300 employees; and
  • Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.

Covid-19 Funding Bill aka Consolidated Appropriations Act, 2021

Last night President Trump signed the Consolidated Appropriations Act, 2021, the act includes $900 billion in Covid-19 Stimulus. While we are in the processing of studying the new law so that we can present a Webinar that lays out what it means and what to expect we wanted to a little preview of what the law contains.

  • Expect to see an additional $600.00 per person in Economic Stimulus Payments for qualifying taxpayers including dependents under 17 years of age.
  • Unemployment benefits paid by the federal government have been extended through March 14, 2021, at a rate of $300.00 per week.
  • Charitable Contributions of $1,200.00 on Married Filing Jointly returns and $600.00 for all others may be deducted as an adjustment to income even if they donโ€™t itemize for 2020 and 2021.
  • Earned Income Credit & Child Tax Credits may be calculated using 2019 Earned income if it provides a larger credit than 2020 income.
  • Qualifying businesses may not tax the Employee Retention Credit even if they received forgiveness on a PPP loan.
  • Employee Retention Credit has increased from 50% to 70% and the revenue decrease required is lowered from 50% to 20%.
  • Families First Coronavirus Response Act, credit extended to the first quarter of 2021.
  • Business meals will be 100% deductible for 2021 and 2022 as long as the meal is provided by a restaurant.
  • Expenses paid with funds from forgiven PPP loans will be tax-deductible and PPP loans forgiven will add to the tax basis of the owner.
  • A Second round of PPP loans PPP2 will be available to business with less than 300 employees that has a 25% or more reduction in gross revenue in 2020 over 2019.
  • The bill funds many the government along with many other programs that are not Covid-19 related for the coming year.

Revenue Ruling Addresses Deductibility of PPP-funded Expenses

In a recent revenue ruling, the IRS presented two situations in which a taxpayer used funds from a Paycheck Protection Program (PPP) loan to pay eligible expenses. In the first situation, the taxpayer applied for forgiveness of the loan in November 2020, but did not receive a decision from the lender before the end of 2020. In the second situation, the taxpayer did not apply for forgiveness of the loan before the end of 2020, but expects to in 2021. Both taxpayers satisfied all requirements under the CARES Act for forgiveness of the loans. The IRS ruled that a PPP loan recipient that paid or incurred certain otherwise deductible expenses may not deduct those expenses in the tax year in which they were paid or incurred if, at the end of such tax year, the taxpayer reasonably expects to receive forgiveness of the covered loans, even if the taxpayer has not submitted an application for forgiveness of the loan by the end of such tax year. Rev. Rul. 2020-27.