CONGRESS EXTENDS AND EXPANDS EMPLOYEE RETENTION CREDIT (NOW AVAILABLE TO PPP LOAN RECIPIENTS)

The Consolidated Appropriations Act of 2021 (Act), signed into law on December 27, 2020, contains significant enhancements and improvements to the Employee Retention Credit (ERC).  The ERC, which was created by the CARES Act on March 27, 2020, is designed to encourage employers (including tax-exempt entities) to keep employees on their payroll and continue providing health benefits…

Covid 19 Relief Bill Tackles Some Key PPP issues

Among many other things, the Covid Relief legislation, just passed by Congress ensures tax deductibility for business expenses paid with forgiven Paycheck Protection Program (PPP) loans, provides fresh PPP funding, and offers businesses facing severe revenue reductions the opportunity to apply for a second loan. Additionally, the bill raises the PPP simplified forgiveness limit from…

Gifts

Gifts Make gifts sheltered by the annual gift tax exclusion before the end of the year if doing so may save gift and estate taxes. The exclusion applies to gifts of up to $15,000 made in 2020 to each of an unlimited number of individuals. You cannot carry over unused exclusions from one year to…

Charitable Donations

Charitable Donations Currently, individuals who make cash contributions to publicly supported charities are permitted a charitable contribution deduction of up to 60% of their AGI. Contributions in excess of the 60% AGI limitation may be carried forward in each of the succeeding five years. The CARES Act suspends the AGI limitation for qualifying cash contributions…

HSA

HSA If you become eligible in December of 2020 to make health savings account (HSA) contributions, you can make a full year’s worth of deductible HSA contributions for 2020 ($3,550 single coverage/$7,100 family coverage and an extra $1,000 catchup if age 55 and older).

Kiddie Tax

Kiddie Tax The SECURE Act reinstates the kiddie tax previously suspended by the Tax Cuts and Jobs Act (TCJA). For tax years beginning after December 31, 2019, the unearned income of a child is no longer taxed at the same rates as estates and trusts. Instead, the unearned income of a child will be taxed…

Qualified Charitable Distributions From IRA

Qualified Charitable Distributions From IRA If you are age 70½ or older by the end of 2020, have traditional IRAs, and especially if you are unable to itemize your deductions, consider making 2020 charitable donations via qualified charitable distributions from your IRAs. These distributions are made directly to charities from your IRAs, and the amount…

Penalty Free Retirement Plan Withdrawal

Penalty Free Retirement Plan Withdrawal The CARES Act allows eligible individuals to withdraw up to $100,000 from qualified retirement plans during 2020 without incurring the 10% early distribution penalty. Individuals or their spouses, dependents or other household members affected by COVID-19 may qualify for this relief. Such taxable distributions can be included in gross income…