The Employee Retention Credit for 2020 and 2021 has been expanded. The CARES Act provided a refundable tax credit against certain employment taxes equal to 50 percent of up to $10,000 of qualified wages paid after May 12, 2020 and before January 1, 2021. The Consolidated Appropriations Act provides a refundable credit equal to 70 percent of qualified wages paid between January 1, 2021 and July 1, 2021. Click here for further details on who qualifies for this credit and how it is calculated.
Author: John Stolte
COVID-19 Relief Bill
On December 21, 2020, The U.S. Senate and House of Representatives passed a $900 billion stimulus package. In addition to stimulus for individuals and businesses, the bill contains specific language that makes expenses paid for with PPP funds tax-deductible. In addition to the welcome news about the deductibility of PPP-related expenses, the bill provides for a “PPP 2” loan that is designed for those who did not apply for the first round of PPP as well as businesses that have suffered a significant economic impact due to the COVID-19 pandemic. More details of the bill can be found here.
Warning over Windows 7
The FBI has observed cyber criminals targeting computer network infrastructure after an operating system achieves end of life status due to a lack of security updates and new vulnerabilities discovered. They further warn that companies running Windows 7 systems, which have reached official end of life status, are now at a greater risk of getting hacked. Microsoft still allows Windows 7 systems to be upgraded to Windows 10 for free. To read more visit zdnet.com.
IRS SALT Cap
IRS releases proposed regulations providing owners of pass-through businesses (S corporations, partnerships, and LLCs treated as partnerships) a workaround for the $10,000 State and Local Tax deduction cap. The guidance indicates that if the business elects to pay state income taxes at the entity level, rather than at the individual level, the taxes can be deducted on the business return. In effect, this creates an offsetting credit which applies against the individual’s income tax liability. To read more visit taxfoundation.org.