The new law is going to be a big deal for business owners. Here are some key takeaways that your clients should know about it!
The stimulus package passed by Congress in reply to the COVID-19 pandemic -the Coronavirus Aid Relief and Economic Security Act (CARES), is an act that does much more than provide enhanced unemployment benefits. In our next article, we will feature some key tax provisions affecting businesses, such as credits for retaining workers or payroll taxes delays with special rules designed especially for claiming business losses).
Employer retention credits: The CARES Act provides a credit against payroll taxes for wages paid to employees in 2020. This refundable tax equalizing amount applies equally throughout all calendar years until its expiration date November 30, 2025, when it will be retired forever. No other law can extend past 2026 without going into effect before then! The new legislation is available only if COVID-19 has forced your company, an outbreak currently sweeping through the country and shutting down or disinfecting operations across America – including those with reduced gross receipts below 50 percent of comparable quarters (i e., ending December 31).
Payroll tax delay: The CARES Act provides some relief for businesses affected by COVID-19. The employers may choose whether they would like to pay half of their Social Security tax liability in 2020, with the other half due after that point until 2022, when it will be spent entirely on behalf of an individual or business employing someone else instead (i e: self-employed).
Qualified improvement property: The TCJA has finally resolved a technical glitch in the law. This is because Congress intended for qualified improvement property placed into service after 2017 to be eligible for 15-year depreciation recovery periods, but due solely to an oversight on their behalf; these were not included within the statute, nor did they receive any benefit as such until now! The new legislation extends bonus Depreciation so that this too may apply retroactively going back 1/1/2018 – making businesses who filed last Year’s Return liable if they didn’t notice it wasn’t used beforehand and choose accordingly when filing again next year (or Before).
Net operating losses: The TCJA generally repeals the carryback rule but allows NOLs to be extend indefinitely based on a limit of 80% taxable income. This means that if you have 20 years’ worth of losses up until now, they can all still count towards your new maximum – not just some fraction as before!
Excess business losses: The TCJA limited business losses claimed by non-corporate taxpayers to $250,000 for single filers and joint filers. Any excess was treated as an NOL that had to be carried forward; these rules applied only in cases where owners were sole proprietors or certain members of pass-through entities like partnerships & LLCs (limited liability companies). But beginning with the 2020 tax year, these limitations no longer apply – so you can expect your tax bill this coming April 15 to be higher than it would have been otherwise!
Business interest: The TCJA limit for annual net business interest deductions is 30%. However, there’s an exception if you’re qualified as a small business. The CARES Act now increases this amount to 50% – which will be effective starting with the 2019 tax year and running through 2020!
Charitable contributions: The charity industry has been struggling with an increasing lack of donations from corporations, so it was decided that 25% would be too high a threshold for them. The CARES Act increases this limit to 10%. Furthermore, when corporations want to make donations to their inventory, there is currently no maximum amount you can give up until 2020. Still, now all food items will have one point more than before, which means any profits generated go directly towards feeding hungry people!
Final Thoughts
Help your clients maximize their tax and financial benefits by developing a game plan for the COVID-19 virus. There are many different ways you can do this, including helping them through government programs like the Paycheck Protection Program or Small Business Administration debt relief express loans from SBA as well expanded unemployment benefits when they’re out of work due to an adverse effect on business that will last a while longer than expected because people don’t want risk-taking jobs at all anymore after seeing how much damage one person could cause just by going postal without any warning whatsoever!
