[ad_1]
At the end of December, President Trump’s Consolidated Appropriations Act came into force. It envisaged a number of new tax changes, including changes to Paycheck Protection Program loans that began in 2020.
In the course of the year, the question of whether the expenses that the loan exempts from tax are also tax-deductible was criticized for the PPP loans. The IRS had previously stated that the expenses were not tax deductible. In the new law, we have determined that these expenses are tax-deductible. This will solve several potential problems some taxpayers / businesses may have faced if this expense had been excluded for tax purposes.
However, this can lead to some additional concerns. It is possible that these expenses could result in greater tax losses than previously expected for transit company owners. These owners and their tax advisers should look for base loss limits in these cases.
Another area of great interest regarding PPP loans is an additional $ 284 billion in funding available to small businesses. This additional round of funding will be available to a more limited group than the previous PPP loans.
First, a qualifying company cannot have more than 300 employees. Second, the eligible entity must be able to demonstrate that gross earnings for the fourth quarter of 2020 must have decreased by at least 25% in either the first, second, third or, if the application is after January 1, 2021, quarter of 2019. If that was eligible Company has been out of business for all of 2019, there are rules in place to determine if the company would meet this specific requirement. Also, the size of the loan amount has changed from the previous PPP loans. Earlier this year, a qualifying company could obtain a loan of up to $ 10 million. However, new PPP loans are capped at a maximum of $ 2 million.
Another tax benefit that has been expanded with the new legislation concerns wage tax credits. This bill extends the reimbursable wage tax breaks for paid sick and family leave, which came into effect earlier this year, up to the 31st amount to calculate their credit.
Another interesting point that has been included in the invoice is that the expenses for business meals incurred after December 31, 2020 are 100% tax deductible. Note that for this tax treatment, the food must be provided by a restaurant.
Josh Mullins, CPA, is a partner at Arledge & Associates PC, an Edmond-based accounting firm.
[ad_2]
