by NFS | Mar 17, 2021 | Archives, Blog Posts, COVID
Taxpayers will have more time to get their taxes in order this year.
The Internal Revenue Service has pushed back the deadline for the tax filing season about one month to May 15 from April 15.
This will give taxpayers additional time to file their 2020 tax returns and pay any amounts owed to the IRS. Because May 15 falls on a Saturday, the final deadline for filers may be the following Monday.
The move from the IRS and Treasury Department comes after calls to extend the tax season increased following the passage of the $1.9 trillion American Rescue Plan, which meant the agency was tasked with sending another round of stimulus payments while processing tax returns and refunds.
The IRS in January pushed back the start of tax season to Feb. 12. This gave the agency more time to prepare after December Covid relief bill, which included a second round of stimulus checks to Americans that the agency was charged with delivering.
At the time, the tax collector kept the typical April 15 filing deadline, even though it meant a shorter than usual filing season.
In February, the agency did extend the tax filing deadline to June 15 for individuals and businesses in Texas, which was declared a disaster area by the Federal Emergency Management Agency after winter storms left residents without power.
At the time of this extension, we are still unaware of which states will follow suit with the IRS and extend their individual filing dates as well. This means that although your federal tax returns aren’t due on April 15th, your state returns may still be.
Keep an eye out for more details from NFS. As we find out more, we will let you know.
UPDATED 03-19-2021: MASSACHUSETTS Department of Revenue Announced they will follow the IRS extending due date of individual tax filings and payments to May 17th, 2021.
by NFS | Mar 17, 2021 | Archives, Blog Posts, COVID
WASHINGTON – Today, the Internal Revenue Service, the U.S. Department of the Treasury and the Bureau of the Fiscal Service announced they disbursed approximately 90 million Economic Impact Payments from the American Rescue Plan. As announced last week, Economic Impact Payments are rolling out in tranches to millions of Americans in the coming weeks.
The first batch of payments were mostly sent by direct deposit, which some recipients started receiving this past weekend. As of today, all recipients of this first batch of direct deposit payments will have access to their funds. Here is additional information on this first batch of payments:
- These payments began processing on Friday, March 12. Some Americans saw the direct deposit payments as pending or as provisional payments in their accounts before today’s official payment date.
- The first batch of payments primarily went to eligible taxpayers who provided direct deposit information on their 2019 or 2020 returns, including people who don’t typically file a return but who successfully used the Non-Filers tool on IRS.gov last year.
- In total, this first batch included approximately 90 million payments, which are valued at more than $242 billion.
- The use of direct deposit to issue these payments means that they are being delivered remarkably faster than would otherwise be possible.
- While the majority of payments were delivered by direct deposit, which reach individual taxpayers more quickly than paper checks, Treasury mailed roughly 150,000 checks worth approximately $442 million.
- Finally, since this past weekend, more than 35 million people have received their stimulus payment status through the “Get My Payment” tool on IRS.gov, which is updated on a regular basis as updated information is available.
Additional batches and payments will be sent in the coming weeks by direct deposit and through the mail as a check or debit card. The vast majority of all Economic Impact Payments will be issued by direct deposit. No action is needed by most taxpayers; the payments are automatic and, in many cases, similar to how people received their first and second round of Economic Impact Payments in 2020.
Individuals can check the “Get My Payment” tool on IRS.gov to see the payment status of these payments. Additional information on these Economic Impact Payments, along with a Fact Sheet of Frequently Asked Questions, is available on IRS.gov.
by NFS | Mar 11, 2021 | Archives, Blog Posts, COVID
The American Rescue Plan Act of 2021 has been passed by the U.S. Senate and House of Representatives, and the President of the United States has signed it into law. The latest stimulus package succeeds the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 and the Consolidated Appropriations Act of 2021, recently passed in December 2020. The Act extends some aspects of the previous bills while also creating new recovery plans.
At almost two trillion dollars, the plan is designed to facilitate the United States’ recovery from the economic fallout and health effects of the COVID-19 pandemic by mitigating the economic effects of the pandemic with strategies to fight the virus itself. It provides for direct financial payments to individuals (up to $1,400 per individual and dependent), extends unemployment benefits, continues housing assistance and provides funds for state and local governments to help schools re-open safely, and subsidizes COVID-19 testing and vaccination programs.
The new bill is nearly 600 pages long and includes many provisions. For your convenience, this email is to provide you with a high-level summary of the key highlights that have the greatest impact on both individuals and businesses.
- Direct Financial Payments: The legislation provides for a third economic impact payment to qualifying Americans. Individuals with adjusted gross incomes (AGIs) up to $75,000 and couples with AGIs up to $150,000 per year will receive direct payments of $1,400 per person. So will each of their dependents regardless of age. Payments to individuals with AGIs over $75,000 will be reduced until they phase out entirely at $80,000 ($160,000 for couples). Eligibility and benefit levels are based on 2019 or 2020 income tax filings. For households who have already filed their income tax return for 2020, the IRS will use that information to determine eligibility and size of payments. For households that haven’t yet filed for 2020, the IRS will review records from 2019 to determine eligibility and size of payment. That includes those who used the “non-filer portal” for previous rounds of payments.
- Extended Unemployment Benefits: The American Rescue Plan extends the current $300 per week supplement from March 14, 2021 to September 6, 2021. In addition, the first $10,200 in 2020 benefits is tax-free for families making $150,000 or less in adjusted gross income, thereby waiving taxes on up to $20,400 of unemployment benefits for married couples. Taxpayers who had taxes withheld from unemployment benefits in 2020 will be able to recover them when they file their 2020 taxes or through an amended tax return if they have already filed. If you are a client of QRGA, please know that we are handling this on your behalf. If you have already filed your 2020 taxes and are affected by this change, we will be contacting you to discuss amending your tax returns to take full advantage of this tax law change. For clients who have not filed but are affected, we will not finalize your tax return until we can incorporate the unemployment income exclusion of $10,200 for individuals or $20,400 for couples. If you have already filed your return this year and had unemployment benefits taxed, we will be in touch soon to file an amended return. The Act also provides a 100% subsidy of COBRA health insurance premiums so unemployed workers can remain on their employer healthcare plans through the end of September.
- Continued Housing Assistance: The national eviction moratorium which ends March 31, 2021 will not change under the plan but additional funding will provide relief to those behind on mortgages, rent and utility bills. The legislation includes $25 billion in emergency rental assistance and $10 billion for mortgage assistance.
- Expanded Child Tax Credit: The act provides monthly direct deposit payments totaling $3,000 a year for each child ages 6 to 17, and $3,600 for each child under age 6 for couples who make $150,000 or less and single parents who make $112,500 or less. For example, a family with one child under the age of 6 would receive $300 per month and $250 per month for children ages 6 to 17. As written, the bill provides for one year of credit payments.
- Tax-Free Student Loans: While the plan does not include student loan forgiveness, it does include a provision that any student loan forgiveness passed between December 30, 2020 and January 1, 2026 will be tax free. Under the current law, student loan forgiveness would be treated as taxable income.
- School Grants: The American Rescue Plan sets aside $130 billion for K-12 education. The money is allocated to assist schools in reopening safely by implementing measures such as reduced class sizes, improved ventilation, and the purchase of personal protective equipment.
- Pandemic Response: Approximately $50 billion will pay for continuing COVID-19 testing and contact tracing, $19 billion will help increase the size of the public health workforce and $16 billion will fund vaccination programs (vaccine distribution and supply chains).
- State and Local Government: The American Rescue Plan includes $350 billion in aid to state and local governments to help replace lost tax revenue due to the pandemic.
- Business Assistance: The Paycheck Protection Program (PPP) will receive an additional $7.25 billion and more non-profit organizations are now allowed to apply for forgivable loans to help cover payroll and other operating expenses. Additionally, the Small Business Administration gets $28 billion for a new, pandemic assistance grant program for restaurants and bars and another $15 billion for Emergency Injury Disaster Loans (EIDLs).
- No Change to Minimum Wage: Over the past several weeks there has been much debate over the gradual minimum wage increase to $15 per hour by the year 2025 that was included in the initial draft of the legislation. This measure has been removed from the final bill and the current federal minimum wage remains at $7.25 per hour.
In summary, the American Rescue Plan stimulus package provides welcome assistance to facilitate the country’s recovery from the devastating economic and health effects of the COVID-19 pandemic. While the bill has been passed by Congress and signed into law by the President, there may be additional informational information and analysis on the legislation. As always, we will keep you updated along the way. In the meantime, your NFS team is here to answer any additional questions you may have.
by NFS | Dec 30, 2020 | Archives, Blog Posts, COVID
Treasury Secretary Steven Mnuchin said on Tuesday that some Americans will begin receiving $600 stimulus checks from the federal government as soon as tonight.
This comes two days after President Donald Trump signed into law a $900 billion stimulus package, which included the direct payments.
Mnuchin said that the stimulus checks will arrive in some bank accounts via direct deposit “as early as tonight and will continue into next week.” The department will also begin sending out paper checks on Wednesday.
Mnuchin said that later this week, Americans can check the status of their refund payments by going to this website.
The stimulus bill provides most Americans making less than $75,000 a year a direct payment of $600 (couples making less than $150,000 a year will get $1,200). Heads of households making $124,500 annually also will receive the full $600.
The amount given per child under the age of 17 will increase from $500 to $600.
Those making $75,000 to $87,000 ($150,000 to $164,000 for couples) will get a prorated check. Those making over $87,000 ($164,000 for couples) will not receive a check.
by NFS | Dec 28, 2020 | Archives, Blog Posts, COVID
The U.S. Senate and House of Representatives overwhelmingly passed, and the President of the United States signed into law, the COVID-19 relief bill that provides stimulus payments to individuals, extends weekly unemployment benefits and provides more than $300 billion in aid for small businesses. Totaling over $900 billion, it succeeds the Families First Coronavirus Response Act (FFCRA) and Coronavirus Aid, Relief and Economic Security Act (CARES) to provide continued support during the COVID-19 health crisis and associated economic fallout.
The new bill is over 5,500 pages long and is quite similar to previously passed legislation which we invite you to read about on the
COVID-19 page on the NFS website. For your convenience, this email is to provide you with a high-level summary of the key highlights for both individuals and businesses as well as details about Paycheck Protection Program (PPP) loans for small businesses.
INDIVIDUALS
- Stimulus Checks: The legislation provides for economic impact payments of $600 for individuals with incomes up to $75,000 per year and $1,200 for married couples who make up to $150,000 per year, as well as a $600 payment for each child dependent. Eligibility and benefit levels would be based on 2019 income tax filings or 2018 tax data if 2019 information is unavailable.
- Unemployment Insurance: $120 billion has been allocated to provide workers receiving unemployment benefits a $300 per week supplement from December 26, 2020 until March 14, 2021. This bill extends the Pandemic Unemployment Assistance (PUA) program with expanded coverage to self-employed, gig workers and others in nontraditional employment, as well as the Pandemic Emergency Unemployment Compensation (PEUC) program, which provides additional weeks of federally funded unemployment benefits to individuals who exhaust their regular state benefits.
- Temporary Moratorium on Eviction Filings: The national eviction moratorium will extend through January 21, 2021 prohibiting landlords from initiating legal action to recover possession of a rental unit or to charge fees, penalties or other charges to the tenant related to nonpayment of rent.
BUSINESSES
Perhaps most important is the long-awaited funding of the second round of PPP loans for small businesses and forgiveness rule changes that are extremely favorable to borrowers including the specification that qualified business expenses paid with PPP funds are tax-deductible. This is fantastic news for PPP loan borrowers as it supersedes IRS guidance which stated that expenses paid with PPP funds were not deductible.
The bill also extends other business tax provisions including a credit to retain workers during COVID-19 related closures, changes to the tax treatment of business losses and delays in payroll tax payments which you can read about on our website. For purposes of this email, we will focus on the business stabilization fund, corresponding PPP loans and newly added provisions.
- Stabilization Fund: $325 billion in aid has been made available for small businesses struggling after nine months of pandemic-related economic hardships. The bill provides more than $284 billion to the U.S. Small Business Association (SBA) for a second round of PPP loan funding to assist small businesses, self-employed individuals and non-profit organizations during the COVID-19 pandemic (see more information below) and allocates another $20 billion to provide EIDL grants to businesses in low-income communities. Additionally, live venues, independent movie theaters and cultural institutions that have closed will have access to $15 billion in dedicated funding with $12 billion set aside to help businesses in low-income and minority communities.
- Meals & Entertainment Deduction: The bill temporarily allows a 100% business expense deduction for meals (rather than the current 50%) as long as the expense is for food or beverages provided by a restaurant and is paid or incurred after December 31, 2020 and before January 1, 2023.
- Extension of FFCRA Credits: Under the FFCRA, which went into effect on April 1, 2020, certain small employers were required to pay up to 10 weeks of qualified family leave when an adult couldn’t work because a dependent child was without school or care, and up to 2 weeks of sick leave for a variety of COVID-related issues. In turn, the employer would receive a fully refundable dollar for dollar payroll tax credit equal to the wages paid. This credit was set to expire on December 31, 2020 but has been extended through March 31, 2021.
- Extension of Employee Retention Credits (ERC): The ERC is extended to July 1, 2021. Businesses may now take the ERC and the PPP as employers who receive a PPP loan may still qualify for ERC on wages that are not paid for with forgiven PPP funds. For the first two quarters of 2021 (January 1 – June 30), the following changes apply:
- The credit percentage is increased from 50% to 70% of qualified wages.
-
- Qualified wages are increased from $10,000 in total per employee to $10,000 per quarter, per employee.
- Qualified wage restrictions apply at 500 employees, rather than 100.
- Drop in gross receipts requirement decreases from 50% to 20% over a prior quarter.
PPP2 LOAN SPECIFICS
ELIGIBILTY
- First-Time Borrowers: If a small business missed the first round of PPP funding, they will be eligible for a loan under PPP2 if they have 300 or fewer employees, making them eligible for other SBA loans. This includes sole proprietors, independent contractors and eligible, self-employed individuals. Non-profit organizations, including churches, are also eligible as are accommodation and food service operations (those with NAICS codes starting with 72) with fewer than 300 employees per physical location.
- Second-Time Borrowers (“Second Draw Loans”): Businesses who received a PPP loan during the first round of funding (PPP1) are eligible for another loan under PPP2 if they can prove to be “hardest hit” by the COVID-19 pandemic. These businesses must have 300 or fewer employees, be able to show a decrease in revenue of 25% or more in any quarter in 2020 compared to the same quarter in 2019 AND must have used or will use the full amount of their first PPP loan. The borrower can select the most appropriate quarter, and both PPP and EIDL funds from the SBA are not included in the calculation of revenue. Second-time borrowers can expect a tiered system, similar to the first round of funding, whereby certain loan amounts will only require self-certification of loan necessity (i.e. loans under $150,000 could be self-certified) while others will have documentation requirements. All loans will be subject to review by the Small Business Administration.
LOAN OVERVIEW
- Loan Amount: The maximum loan amount for a PPP2 loan is $2 million and is calculated by multiplying average total monthly payroll costs in the year prior to the loan or the calendar year by 2.5. In other words, the second round of PPP loans is meant to fund 2.5 months of payroll expenses. PPP borrowers with NAICS codes starting with 72 (hotels and restaurants) can get up to 3.5 times their average monthly payroll costs, again subject to a $2 million maximum loan amount.
- Loan Forgiveness: Qualified business expenses eligible for loan forgiveness are consistent with PPP1 and include payroll costs, covered mortgage interest, rent and utility payments with a 60/40 allocation between payroll and non-payroll expenses. They also include worker protection expenditures and facility modification costs to comply with COVID-19 federal health and safety guidelines, supplier costs essential to the borrower’s current operations and operating costs related to software or cloud computing services. Both first-time and second draw loans are eligible for forgiveness and must be spent within either 8 weeks or 24 weeks of loan origination. The legislation is simplifying and accelerating loan forgiveness for loan amounts of $150,000 or less by requiring borrowers to sign and submit a one-page form that attests to compliance with PPP requirements. The SBA must create the simplified forgiveness application form within 24 days of the bill’s enactment and may not require additional materials unless necessary to substantiate revenue loss requirements or satisfy relevant statutory or regulatory requirements. Borrowers are required to retain relevant records related to employment for four years and other records for three years, as the SBA may review and audit these loans to check for fraud.
- Tax Deductibility for PPP Expenses: The new bill specifies that qualified business expenses paid with forgiven PPP loans are tax-deductible. This supersedes IRS guidance that such expenses could not be deducted and brings the policy in line with what the American Institute of Certified Public Accountants (AICPA) and hundreds of other business associations have argued was Congress’s intent when it created the original PPP as part of the $2 trillion CARES Act. The COVID-19 relief bill clarifies that “no deduction shall be denied, no tax attribute shall be reduced, and no basis increase shall be denied, by reason of the exclusion from gross income provided”. This means that both PPP loans and EIDL grants are not considered taxable income. Additionally, EIDL grants no longer reduce PPP loan forgiveness by the grant amount. Please note the deductibility guidance noted above relates to Federal income. We are awaiting guidance from Massachusetts (and most other states) regarding the deductibility of PPP loan forgiveness at the state level.
In summary, the new stimulus bill provides welcome tax relief to both businesses and individuals. While the bill has been passed by Congress and signed into law by the President, the SBA and U.S. Department of the Treasury are now tasked with providing interpretive guidance and forms for the new forgiveness rules, as well as loan applications and guidelines for second draw PPP loan borrowers. They will need time to translate the bill and will release information as they do. As always, we will keep you updated along the way. In the meantime, we recommend businesses that believe they may be eligible for a PPP2 loan should begin to prepare in order to expedite the application when it is released by the SBA.
As always, the NFS team is here to answer any additional questions you may have. We invite you to call the office at (800) 560-4637 to discuss your individual situation. And be sure to visit the
COVID-19 Update page on the QRGA website and follow us on
Facebook and
LinkedIn to stay up to date on news breaking information regarding the new stimulus bill and much, much more.
by NFS | Nov 10, 2020 | Archives, Blog Posts, COVID
WASHINGTON — The Internal Revenue Service today set November 10 as “National EIP Registration Day,” as the agency and partners across the country launch a final push to encourage everyone who doesn’t normally file a tax return to register to receive an Economic Impact Payment.
“National EIP Registration Day” will take place just a few days ahead of the extended November 21 registration deadline. This special event will feature support from IRS partner groups inside and outside of the tax community, including those that work with low-income and underserved communities. These groups will help spread the word about the new November 21 deadline and, in some cases, provide special support for people who still need to register for the payments.
The IRS has already sent nearly 9 million letters to people who may be eligible for the $1,200 Economic Impact Payments but don’t normally file a tax return. The letters, along with the special November 10 event, both urge people to use the Non-Filers: Enter Info Here tool, available exclusively on IRS.gov.
“Our partner groups have been a critical part of the unprecedented IRS outreach and education campaign this year to contact as many people as possible about these payments,” said IRS Commissioner Chuck Rettig. “As a result, millions of Americans have successfully used the Non-filers portal and received their Economic Impact Payment. Registration is quick and easy, and we urge everyone to share this information to reach as many people before time runs out on November 21.”
To support the ongoing effort as well as “National EIP Registration Day,” many partner groups have been working with the IRS, helping translate and making available Economic Impact Payment information and resources in 35 languages. The IRS also plans a special push on social media to support the final registration drive in multiple languages.
While most eligible U.S. taxpayers have automatically received their Economic Impact Payment, others who don’t have a filing obligation should use the Non-Filers tool to register with the IRS to get their money. Typically, this includes people who receive little or no income.
Since the Non-Filers tool launched in the spring, over 8 million people who normally aren’t required to file a tax return have registered for the payments. The IRS continues to work to reach others who haven’t used the tool yet, which led to the special mailing and the special Nov. 10 registration event.
The tool is designed for people with incomes typically below $24,400 for married couples, and $12,200 for singles who could not be claimed as a dependent by someone else. This includes couples and individuals who are experiencing homelessness.
Anyone using the Non-Filers tool can speed up the arrival of their payment by choosing to receive it by direct deposit. Those not choosing this option will get a check.
Beginning two weeks after they register, people can track the status of their payment using the Get My Payment tool, available only on IRS.gov.
IR-2020-242, October 23, 2020
