What Is The 14 Day Home Rental Strategy (aka The Augusta Rule)?

What Is The 14 Day Home Rental Strategy (aka The Augusta Rule)?

This is one strategy we often see clients overlook that can provide a good amount of tax savings. Do you use your home for business events such as shareholder meetings, team retreats, client meetings, employee meetings, etc? If so then, this is one you definitely want to be taking advantage of!

What Is The 14 Day Home Rental Strategy (aka The Augusta Rule)?

Tax Code: 280A(g): Notwithstanding any other provision of this section or section 183, if a dwelling unit is used during the taxable year by the taxpayer as a residence and such dwelling unit is actually rented for less than 15 days during the taxable year, then—

  1. no deduction otherwise allowable under this chapter because of the rental use of such dwelling unit shall be allowed, and
  2. the income derived from such use for the taxable year shall not be included in the gross income of such taxpayer under section 61.
  • Based on tax code, if you rented your home for 14 days or less you cannot write off the expenses attributed for that rental use BUT you also do not have to include that as rental income either.
  • Origins: Folks were renting out their homes for a week for short term events (golf tournaments, superbowl, etc) but they were stuck paying taxes on that. A short term rental like that is not an actual “rental property” which is when this law was put in place.
  • The Details
    • You can rent your home to your business.
    • Must be 14 days or less.
    • Must be a personal residence.
    • Your business must be a separate legal entity (a sole prop is the same as you and you cannot rent the house to yourself).

What Do I Need To Do To Implement The 14 Day Home Rental Strategy?

You need to do more than just write yourself a check and move on.

  • Need to have a qualifying occasion or reason for the rental. (Examples: shareholder meetings, retreats, client events, etc.)
  • The rental rate must be a fair market value.
  • If more than $600 for the year, you need to have business issue 1099-MISC to yourself. You can then zero it out on your Schedule E.
  • Note: This has no effect on the home office.

As you can tell this is a great strategy that you can implement to get a business deduction and pay no income taxes on that income received.

Of course there are some key things that you need to do to ensure that this is done right and you are clear of any risk during an audit.

As part of our Tax Minimization Program we discuss this strategy as well as a full implementation guide, sample lease agreement, spreadsheet for recording activity, etc. Be sure to sign-up for our program if you want access to that information. 

If you don’t have an accounting or tax advisor (or you need assistance with anything discussed), click here to book your complimentary strategy session with JETRO.

What Are Some Advanced Retirement Plan Options For High-Income Earners?

What Are Some Advanced Retirement Plan Options For High-Income Earners?

Are you a high income earner that is looking to take retirement plan a big step further? If so, this may be something you want to look into. I would highly recommend as a high income earner that you schedule a consult with us before making any decisions so we can ensure you have the right tax planning in place to match any plan decisions.

For this we want you to imagine a three tiered wedding cake with the smallest tiers on top and the largest on the bottom and then flip it upside down. These are the different layers you have when you are talking about pre-tax options in a 401k plan.

  • Smallest Option: 401k Plan Itself (EmployEE Contributions) – Up to $19,500
  • Middle Option: Profit Sharing (Employer Match) – Up to $58,000
  • Advanced Option: Cash Balance Plan (Type of defined benefit plan or pension plan) – $300k+ per year pre-tax.

What Is A Cash Balance Plan?

Cash Balance Plans are designed for the highly successful entrepreneur who want, or need, to save a lot more than a traditional 401(k) plan.

  • Work best with solo-preneurs or employers with small teams.
  • Allow you to contribute up to $300k+ pre-tax while saving you over 6-digits in taxes.
  • Basically you are layering a cash balance plan on top of a 401(k) plan & profit sharing.
  • Allows you to also recruit top candidates.
  • Every single plan is different with a fully custom design and flexibility.

If you are looking for professional advice and help in this area, we work directly with Life, Inc Retirement Services. Email us for an introduction or visit this page. 

On the link above you can setup a call to connect with an expert and get started right away. There is also a retirement plan evaluator which will guide you towards the best plan for your business.

If you don’t have an accounting or tax advisor (or you need assistance with anything discussed), click here to book your complimentary strategy session with JETRO.

What Is a Safe Harbor 401k or QACA Safe Harbor 401k?

What is a Safe Harbor 401k or QACA Safe Harbor 401k for Businesses?

When we are working with businesses that are leaning towards the 401k route we traditionally see them organize into a Safe Harbor 401k or QACA Safe Harbor 401k.

What Is A Safe Harbor 401k?

Safe Harbor 401(k) plan is a type of 401(k) with an employer match that allows you to avoid most annual compliance tests.

  • Contributions and Matching 
    • Contributions up to $19,500 for 2021.
    • Allows employer & highly compensated employees to maximize their own contributions.
    • Pre-approved IRS matching & vesting schedules.
  • Tax Advantages
    • Employer contributions are deductible business expenses.
    • Elective contributions and investments gains may enjoy tax deferral until distribution.
    • Offers both pre-tax and Roth options.
  • Filing and Compliance
    • Requires annual 5500 filing.
    • A Safe Harbor 401(k) allows the plan sponsor to automatically pass certain annual compliance testing to ensure IRS compliance.

What Is A QACA Safe Harbor 401k?

Qualified Automatic Contribution Arrangements (QACAs) 

  • Main Differences
    • QACA requires auto-enrollment and with that the employer may receive an additional $500 tax credit.
    • Matching Schedule is 3.5%
    • Vesting Schedule is 2 years.

If you are looking for professional advice and help in this area, we work directly with Life, Inc Retirement Services. Email us for an introduction or visit this page. 

On the link above you can setup a call to connect with an expert and get started right away. There is also a retirement plan evaluator which will guide you towards the best plan for your business.

If you don’t have an accounting or tax advisor (or you need assistance with anything discussed), click here to book your complimentary strategy session with JETRO.

What Is a Traditional 401k For Businesses?

What Is a Traditional 401k For Businesses?

When we are working with businesses that have employees and want to setup a more robust retirement option with more flexibility we look at a couple options:

  • Traditional 401k – Discussed in this article
  • Safe Harbor 401k or QACA Safe Harbor 401k – Discussed in next article

What Is a Traditional 401k and What Do I Need To Know About Traditional 401ks?

A traditional 401k is an employer-sponsored plan that gives employees a choice of investment options.

  • Contributions and Matching
    • Contributions up to $19,500 for 2021.
    • The ability to create a matching program to your company’s goals.
    • The ability to create a vesting schedule to your company’s goals.
    • Customized planning available.
  • Tax Advantages
    • Employer contributions are deductible business expenses.
    • Elective contributions and investments gains may enjoy tax deferral until distribution.
    • Offers both pre-tax and Roth options
  • Filing and Compliance
    • Requires annual 5500 filing.
    • Compliance requirements must be met.
    • Must offer to all qualifying employees.

If you are looking for professional advice and help in this area, we work directly with Life, Inc Retirement Services. Email us for an introduction or visit this page. 

On the link above you can setup a call to connect with an expert and get started right away. There is also a retirement plan evaluator which will guide you towards the best plan for your business.

If you don’t have an accounting or tax advisor (or you need assistance with anything discussed), click here to book your complimentary strategy session with JETRO.

What Is a SIMPLE IRA or Payroll Deducted IRA?

What Is a SIMPLE IRA or Payroll Deducted IRA?

When we are working with businesses that have employees and want to offer a retirement option but may not want to get too complicated with a 401k, we usually land on two main options:

  • SIMPLE IRA
  • Payroll Deducted IRA

What Is a SIMPLE IRA and What Do I Need To Know About SIMPLE IRAs?

SIMPLE IRA plan (Savings Incentive Match Plan for Employees) allows employees and employers to contribute to pre-tax IRAs set up for employees.

  • Contributions and Matching
    • Contributions up to $13,500 for 2021.
    • Employer can choose from a 2% contribution to all eligible employees OR a 3% matching contribution (only those who choose to contribute).
  • Tax Advantages
    • Business contributions are deductible business expenses.
    • Investment gains are tax deferred until distribution.
    • Roth option NOT available.
  • Filing and Compliance
    • Employer does not need to file a 5500.
    • Discrimination testing is not required.
  • Notes
    • If you are a business owner with employees but want to keep retirement “simple”, this is a great easy option.

What Is A Payroll Deducted IRA and What Do I Need To Know About A Payroll Deducted IRA?

A placeholder until your company is ready to onboard a full on retirement plan.

  • Definition
    • An employee establishes an IRA (either a Traditional or a Roth IRA) with a financial institution.
    • The employee then authorizes a payroll deduction for the IRA.
    • The employer’s responsibility is simply to transmit the employee’s authorized deduction to the financial institution. 
  • Contributions and Matching
    • Contributions up to $6,000 for 2021.
    • Employer does NOT match contributions.
    • Employer deductions contributions from employee’s paycheck and sends to the financial institution.
    • All employees may participate.
  • Tax Advantages
    • Employee contributions and investment gains may enjoy tax deferral until distribution.
    • Both traditional and Roth IRAs available
  • Filing and Compliance
    • Employer does not need to file a 5500.
    • Discrimination testing is not required.
    • Once the employer submits the contributions, they have no further responsibility.

If you are looking for professional advice and help in this area, we work directly with Life, Inc Retirement Services. Email us for an introduction or visit this page. 

On the link above you can setup a call to connect with an expert and get started right away. There is also a retirement plan evaluator which will guide you towards the best plan for your business.

If you don’t have an accounting or tax advisor (or you need assistance with anything discussed), click here to book your complimentary strategy session with JETRO.

What Is A SEP IRA and Solo or Individual 401k?

What Is A SEP IRA and Solo or Individual 401k?

When we are working with businesses with no employees, outside of the owner(s), we usually land on two main options:

  • SEP IRA
  • Solo 401k (AKA Individual 401k)

Again, if you are looking to put away $6,000 or less per year towards retirement one of these plans would likely not be necessary and instead you could do a traditional IRA.

What Is a SEP IRA and What Do I Need To Know About SEP IRAs?

A SEP standards for Simplified Employee Pension.

  • Contributions and Matching
    • Able to contribute up to 25% of your salary (S Corp) or 20% of net income (Sole Prop or Single Member LLC) with a max of $58,000 (2021).
    • All contributions are pre-tax.
    • This in an employER only contribution, the employee does not personally contribute.
    • Employer MUST contribute the same percentage to all eligible employees.
    • You do not need to contribute every year.
    • Employer contributions can be made up to the due date (including extensions) for filing your tax return.
  • Tax Advantages
    • Business contributions are deductible business expenses.
    • Investment gains are tax deferred until distribution.
    • Roth option NOT available.
  • Filing and Compliance
    • Employer does not need to file a 5500.
    • Discrimination testing is not required.
  • Notes
    • If you are organized as an S Corp you often are trying to take as low of a reasonable salary as possible which can limit the amount of SEP IRA contributions since it is based on a max of 25% of your salary.

What Is a Solo 401k and What Do I Need To Know About Solo 401ks?

These can also be known as Individual 401ks.

  • Contributions and Matching
    • EmployEE contributions up to $19,500 (2021)
      • Catch-Up contributions up to $6,500 (Age 50+)
    • Additionally employER can contribute up to 25% of compensation.
    • Total Max Contributions (EE + ER): $58,000 (2021) – Not included Catch-Up
  • Tax Advantages
    • Business contributions are deductible business expenses.
    • Investment gains are tax deferred until distribution.
    • Offers both pre-tax & Roth options.
  • Filing and Compliance
    • May require annual 5500 filing.
    • Discrimination testing is not required due to having no employees.

Should I Do a SEP IRA or Solo 401k For My Business?

There is no right answer for every business but we are going to outline some general observations to consider.

  • Typically a Solo 401k will allow you to put more money towards retirement, especially with an S Corp owner looking to take the lowest reasonable salary possible.
    • Example: S Corp Owner with a salary of $80,000
      • SEP IRA: Max employER contribution is $20,000 (25% of $80k)
      • Solo 401k: Of your $80k salary, you could contribute as an employEE up to $19,500 and then the employER could match 25% for a total of $39,500 ($19,5000 + 25% of $80k)
    • For this reason we typically steer clients that want to max out retirement as much as possible towards a Solo 401k.
  • Contributions After 12/31
    • You can setup and fund a SEP IRA after the year has been completed.
    • You can fund the employER portion of a Solo 401k after the year is over but the employEE portion would need to be funded prior to year-end.
    • For this reason if the year is already over and you still want to reduce taxable income through a retirement contribution we will recommend going with a SEP IRA. You can then always go with a Solo 401k in the next year assuming you can get on top of it and get it setup and funded early on.
  • Both plans are fairly reasonable and have little compliance required. Note a Solo 401k may have additional compliance as your retirement account grows past a certain dollar amount but still not a huge burden.
  • General Rule of Thumb:
    • S Corp Looking to Max Retirement: Solo 401k
    • After Year-End, Looking to Contribute and Save Taxes: SEP IRA

If you are looking for professional advice and help in this area, we work directly with Life, Inc Retirement Services. Email us for an introduction or visit this page. 

On the link above you can setup a call to connect with an expert and get started right away. There is also a retirement plan evaluator which will guide you towards the best plan for your business.

If you don’t have an accounting or tax advisor (or you need assistance with anything discussed), click here to book your complimentary strategy session with JETRO.

What Retirement Options Are Available For Business Owners?

What Retirement Options Are Available For Business Owners?

When it comes to retirement planning for small business owners there are a lot of options available which can be confusing.

There is no one strategy that is perfect for everyone. Over the course of the next few weeks, we are going to go through the various retirement options that are available to business owners. We are going to break them down and hopefully help you get a better idea of what may be right for your business.

If you would like to get started on setting up a retirement plan and need connection you can email us, submit the form below, or visit our partners site here.

What Is Your Goal With a Retirement Plan?

Before you think about putting a retirement plan in place you need to think about what your goal is by starting one. 

  • Employer looking for their own retirement or tax savings.
  • Help recruit and retain high quality employees. 
  • Can be both!

What Retirement Plan Options Are Best For Businesses With No Outside Employees?

If you have no employees you will likely want to focus on one of the two options below.

  • SEP IRA
    • Allows the owner to contribute up to 25% of your income.
    • All contributions are pre-tax.
    • Employee contributions are NOT allowed. (employer must do same amount of contribution as their own)
  • Solo 401k (AKA Individual 401k)
    • Will allow the owner to contribute 100% of your income up to a certain point.
    • Allows the company to match your contribution.
    • Choice of Pre-tax or Roth Contributions.

What Retirement Plan Options Are Best For Businesses With Employees?

When you have employees outside of the owners you will want to look into the following options.

  • Payroll Deducted IRA
    • Gives your company the feel of a retirement plan for your employees, even if you’re not quite ready for a 401k.
    • Allows your employees to contribute towards retirement straight out of their paycheck.
    • Choice of Pre-tax or Roth contributions.
    • Matching contributions from the employer are not required.
  • Traditional 401k
    • Allows the owner to mold the plan around the goals of the company.
    • Can create your own matching and vesting schedule.
    • Multiple Investment Options.
    • Both Pre-tax and Roth options inside the plan.
  • SIMPLE IRA
    • “Turn-key” matching and vesting options.
    • Pre-tax contributions only.
    • Your choice of employment qualification into the plan.
    • No administration costs.
  • Safe Harbor 401k
    • Allows the owner to maximize contributions without relying on high employee participation.
    • “Turn-key” matching and vesting options for easy compliance testing.
    • Both Pre-tax and Roth Options inside the plan.

This is just the first blog in a series that we are doing on retirement options. In future posts we will be digging deeper into all of the strategies above and discussing them so you can have a better idea of what you want to implement in your business.

As mentioned, if you are looking for professional advice and help in this area we work directly with Life Inc Retirement Services. Email us or submit the form below and we can get an introduction out to you. You can also go directly to their site here and setup a call and go through a retirement plan evaluator. 

If you don’t have an accounting or tax advisor (or you need assistance with anything discussed), click here to book your complimentary strategy session with JETRO.

What Do I Need To Know About Sales Tax?

What Do I Need To Know About Sales Tax

Sales Tax – Those two words may have just given you anxiety.

Sales tax can be complex depending on the type of business you run and operate. Fortunately we were able to connect with Danny Wright from Peisner Johnson on a recent Small Business Tax Savings Podcast episode to help make this clear for us.

Fill out the form below if you would like an introduction to Danny to tackle your sales tax questions and issues. In the meantime here is some information we feel you need to know.

There are two critical components to determine where you have to collect sales tax: Nexus and the taxability of your products and services.

What Is Sales Tax Nexus?

At Peisner Johnson, they always say, “Start with Nexus”. There are two important types of nexus to be concerned about: Physical Nexus and Economic Nexus.

  • Nexus Definition: The qualifying criteria for a seller to be required to collect and pay taxes on sales in a state.
  • Physical Nexus: locations, employees, contractors, inventory, etc.
    • Physical nexus is when your business has a physical presence in a particular state. Physical nexus enables states to tax the sales of businesses that do business in their state, even if they’re headquartered elsewhere.
    • In most cases, physical presence means an office or a retail location. But a warehouse, remote employee, payroll or even a contractor can all trigger physical nexus. You can also develop physical nexus through inventory that’s stocked in a marketplace fulfillment center.
  • Economic Nexus: Revenue and transactional thresholds set by the various states.
    • In 2018, the Supreme Court decision South Dakota v. Wayfair, Inc. established the concept of economic nexus. This gave states the right to force out-of-state sellers to collect and remit sales and use tax if they meet or exceed a state’s economic threshold. In the last several years, this has dramatically increased the taxability of businesses, making them liable in states where they don’t have a physical presence.
    • So far, of the 45 states and DC that impose a sales tax, 43 have passed Economic Nexus laws (FL and MO are the holdouts).
    • Every state has its own economic threshold. Some states apply the law retroactively. Some don’t. States can define their thresholds based on retail, gross, taxable or marketplace sales.

Is My Product or Service Subject to Sales Tax?

After you determine your “Nexus Footprint”, it’s important to understand the taxability of your products and services.

  • For some, it might be as simple as only selling tangible products that are taxable in every jurisdiction, but for some, it can be quite complex.
  • You may sell supplements, food, medical supplies, eyewear, clothing, or a number of other goods which may be taxed at a reduced rate, or not taxed at all.
  • Those selling tangible products and services will likely face a much more complex structure.
  • We recommend you reach out to a sales tax expert to do a study on your product or service to determine the taxability of it.

When It Comes to Sales Tax, What Process Should I Follow?

Sales tax can be complex for some businesses, if you do not feel comfortable doing research on your own, hire a professional.

Follow These Steps:

  1. Conduct a Nexus Review
  2. Identify Your Taxability
  3. Get Registered and Address Unpaid Liability
  4. Collect & Remit Sales Tax Wherever You Have Nexus
  5. Create Your Audit Defense Plan

As mentioned, if you are looking for professional advice and help in this area we work directly with Peisner Johnson (Sales Tax Experts). Email us or submit the form below and we can get an introduction out to you so you can have them take care of steps 1-5 and you can rest easy knowing you are all set!

If you don’t have an accounting or tax advisor (or you need assistance with anything discussed), click here to book your complimentary strategy session with JETRO.

How Can I Make Tax Season Stress Free and What Are The 2020 Tax Due Dates?

How Can I Make Tax Season Stress Free and What Are The 2020 Tax Due Dates

See ya 2020 and welcome to 2021. Happy New Year Everyone!

Although we are onto another year, 2020 is technically not over, we have tax returns to file yet!

In this blog post we are going to go through some things you can do early here in 2021 to make this tax season a breeze. Before beginning, the number one thing I can say is be proactive. Get your documents and financials in order right away. That doesn’t mean you need to file immediately, it just means you can gather everything and be prepared so that you are not scrambling down the road. 

Action Steps For Your Business Tax Return

Many of us are setup as a Partnership or S Corp and they are pass through entities which means we prepare those prior to tackling the personal return.

If you have a sole proprietorship or single member LLC then you will file your business tax return on your personal return via a Schedule C.

  • Complete Your Bookkeeping ASAP and Wrap Up 2020
    • The last thing you want to be doing is thinking about 2020 deep into 2021. Bite the bullet and get your bookkeeping completed now so you can start preparing your tax return. If you are a client of ours, make sure you complete all transaction questions in Google Drive.
  • Gather Documents 
    • Receipts – Gather all of your receipts for 2020 and put them on file should you need them down the road as backup support.
    • Bank Statements – These will be good to have on file should you need to go back or submit them to the IRS down the road.
    • Loan Documents/Balances – You will want to ensure any loans on your balance sheet match the balance your bank shows. Make sure you have interest separated from principal. If you had a PPP loan that was forgiven, be sure to alert your accountant.
    • Asset Purchases or Sales – If you made any asset purchases (not already on the books) or sold any of your assets throughout the year, be sure to alert your accountant.
    • Complete Accountable Plan – Complete the accountable plan for your business and add that activity to your books. Learn more about accountable plans.

Action Steps For Your Personal Tax Return

Make this the easiest tax season yet.

  • Gather Documents – If you are a client of ours, you will receive an invite to Intuit Link here at the beginning of January where you can create (or use your current) Intuit account to answer a questionnaire and upload tax related documents. Here are the documents to gather:
    • Last years tax return (for first time JETRO filers)
    • Payroll Documents
    • Various Forms Tax Forms:
      • W2 (Wages)
      • 1099s – Many different types: Non-Employee Compensation (1099-NEC), Interest (1099-INT), Dividends (1099-DIV), Stocks (1099-B or 1099-COMP), State Refunds or Unemployment Compensation (1099-G), Pension or Retirement (1099-R), Social Security Administation (SSA-1099), HSA Activity (1099-SA)
      • 1098 (Mortgage Interest)
      • K1s from Partnerships, S Corporations, Trusts, or Estates
      • 1095-A, B, or C for Health Insurance
      • Student Activity – 1098-E (Student Loan Interest) or 1098-T (Tuition Paid)
    • Real Estate Taxes Paid
    • Medical Expenses
    • Charitable Contributions
    • Child Care Expenses
    • Estimated Taxes Paid
  • It’s important to gather this information as it comes in and be on top of it. If you are able to provide your accountant with all these necessary documents it will make tax filing a breeze this year.

What Are The 2020 Tax Due Dates?

Keep note of these important due dates.

  • January 15, 2021
    • 4th Quarter 2020 Estimated Tax Payments Due
  • February 1, 2021
    • 1099-NEC/MISC Forms Due
  • March 15, 2021
    • S-Corporation Tax Returns (or extensions) Due
    • Partnership Tax Returns (or extensions) Due
    • Multi-Member LLC Tax Returns (or extensions) Due
  • April 15, 2021
    • Personal and Single Member LLC Tax Returns (or extensions) Due
    • C-Corporation Tax Returns (or extensions) Due

What Is The JETRO Tax Process?

If you are a client of ours, we created a page on our site specifically for you so you know what to expect this tax season!

Tax season is often a stressful time of the year for business owners and things are often completed as the last minute. It does not have to be that way. Make 2020 the year that your taxes are easy and you can focus on your business!

If you don’t have an accounting or tax advisor (or you need assistance with anything discussed), click here to book your complimentary strategy session with JETRO.

What Do I Need To Know About the COVID Relief Bill?

What Do I Need To Know About the COVID Relief Bill?

Congress has finally passed another COVID relief bill and we want to unpack what this means to both you personally as well as your business. This bill was over 5,500 pages long so what we outline here is a high level overview. It will take a bit of time for the SBA and banks to unpack much of this, so it will be evolving.

What Is Included In the COVID Relief Bill for Individuals?

This is specific to individuals, not businesses.

  • Relief Rebates or Stimulus Checks 
    • This works very similar to the first round that went out. It is based on your 2019 tax return information.
      • $600 per individual (Including qualifying children) – Note: Adult dependents are not eligible.
      • Starts to phase out at $75k (Single), $150k (Married), $112.5k (Head of Household) 
      • Nothing needs to be done to receive the rebate. If you had a high income in 2019 and phase out but in 2020 you do not expect to phase out, you will get the benefit when filing your 2020 tax return. 
  • Unemployment Benefits
    • Extends certain unemployment benefit items for 11 weeks.
    • Additional $300 per week to supplement state unemployment compensation.
  • Charitable Contributions
    • Above the line contribution is extended through 2021 at $300 (Single) and $600 (Married).
  • Flexible Savings Account (FSA)
    • Can be rolled from 2020 into 2021 and 2021 balances can be rolled into 2022.

What Is Included In the COVID Relief Bill for Businesses?

This would be specific to businesses.

  • Original Paycheck Protection Program (PPP)
    • Forgiveness is not taxable and businesses ARE able to deduct expenses paid with forgiven PPP funds. This is big!
    • Simplified forgiveness process for loans under $150k.
    • No longer deduct the amount of any EIDL advance (up to $10k) from the PPP forgiveness amount.
  • Paycheck Protection Program (PPP) 2.0
    • PPP Round 2 with some changes:
      • Must have at least a 25% drop in gross receipts in a 2020 quarter compared to the same quarter in 2019.
      • Limited to business with 300 employees or less.
      • Maximum loan size is $2MM.
      • Have used or will use the full amount of the original PPP loan
      • Qualifying expenses extended to include: property damage, supplier costs, or PPE equipment in addition to payroll, rent, utilities, etc.
  • Employee Retention Tax Credit (ERTC)
    • Employer may claim a 70% tax credit (up from 50%) on up to $10,000 in ages paid to employees per quarter (up from $10k per year) through July 1, 2021. This results in a maximum credit of $14k per employee (up from $5k).
    • To Qualify:
      • Must be suspended due to government actions related to COVID, or
      • Have a 20% decline in gross receipts during a calendar quarter when compared to the same quarter the previous year.
    • May use both the PPP and ERTC but cannot double benefit from both programs. Basically if you used payroll costs for your PPP forgiveness you cannot use the same dollars for the ERTC.
  • Economic Injury Disaster Loan (EIDL)
    • Extends deadline to apply to December 31, 2021
  • SBA 7a Loans
    • Loan debt relief extended 3 months (8 months for some industries).
    • Loan payments made on behalf of government here are not taxable.
  • Business Meals
    • 100% deductible for 2021 and 2022.

As we discussed this is a massive bill so things will continue to evolve and this is just scratching the service. If there are certain parts of the items discussed here that are relevant to you, definitely take some time to research further on those points.

Here are a few followup pieces that you can look into:

Tax Foundation: Congress Passes $900 Billion Coronavirus Relief Bill

CNN: Here’s what’s in the second stimulus package

CNet: Everything in the new stimulus bill: $600 stimulus, $300 unemployment checks, more

If you don’t have an accounting or tax advisor (or you need assistance with anything discussed), click here to book your complimentary strategy session with JETRO.