coronavirus - Linkenheimer LLP CPAs & Advisors

Did You Get An Economic Impact Payment That Was Less Than You Expected?

Nearly everyone has heard about the Economic Impact Payments (EIPs) that the federal government is sending to help mitigate the effects of the coronavirus (COVID-19) pandemic. The IRS reports that in the first four weeks of the program, 130 million individuals received payments worth more than $200 billion.

However, some people are still waiting for a payment. And others received an EIP but it was less than what they were expecting. Here are some answers why this might have happened.

Basic amounts

If you’re under a certain adjusted gross income (AGI) threshold, you’re generally eligible for the full $1,200 ($2,400 for married couples filing jointly). In addition, if you have a “qualifying child,” you’re eligible for an additional $500.

Here are some of the reasons why you may receive less:

Your child isn’t eligible. Only children eligible for the Child […]

By Linkenheimer LLP|2020-09-03T20:02:55+00:00May 20th, 2020|individuals, New Tax Laws, single family|0 Comments

Fortunate Enough To Get A PPP Loan? Forgiven Expenses Aren’t Deductible

The IRS has issued guidance clarifying that certain deductions aren’t allowed if a business has received a Paycheck Protection Program (PPP) loan. Specifically, an expense isn’t deductible if both:

The payment of the expense results in forgiveness of a loan made under the PPP, and
The income associated with the forgiveness is excluded from gross income under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

PPP basics

The CARES Act allows a recipient of a PPP loan to use the proceeds to pay payroll costs, certain employee healthcare benefits, mortgage interest, rent, utilities and interest on other existing debt obligations.

A recipient of a covered loan can receive forgiveness of the loan in an amount equal to the sum of payments made for the following expenses during the 8-week “covered period” beginning on the loan’s origination date: 1) payroll costs, 2) interest on any covered mortgage obligation, 3) payment on any covered rent, and 4) covered utility payments.

The law provides that any forgiven loan amount “shall be excluded from gross income.”

Deductible expenses

So the question arises: If you pay for the above expenses with PPP funds, can you then deduct the expenses on your tax […]

By Linkenheimer LLP|2020-09-03T20:02:57+00:00May 18th, 2020|business, New Tax Laws, small business|0 Comments

Subchapter V: A Silver Lining For Small Businesses Mulling Bankruptcy

Many small businesses continue to struggle in the wake of the coronavirus (COVID-19) pandemic. Some have already closed their doors and are liquidating assets. Others, however, may have a relatively less onerous option: bankruptcy.

Although bankruptcy obviously isn’t an optimal outcome for any small company, there may be a silver lining: A new bankruptcy law — coupled with an under-the-radar provision of the Coronavirus Aid, Relief, and Economic Security (CARES) Act — has made the process quicker and easier. It may even allow you to retain your business.

New law made better

The law in question is the Small Business Reorganization Act of 2019. That’s right, it was passed just last year and took effect on February 19, 2020, about a month before the pandemic hit the country full force.

The Small Business Reorganization Act added a new subchapter to the U.S. bankruptcy code: Subchapter V. Its purpose is to streamline the reorganization process […]

By Linkenheimer LLP|2020-09-03T20:02:58+00:00May 7th, 2020|business, New Tax Laws, small business|0 Comments

California Tax Updates for May 7th

Update 1:

Are you selling goods in California? Now that so many people are looking for alternate ways to make an income due to the novel coronavirus (COVID-19) pandemic, selling goods from home is attracting a lot of people. Depending on the details, you may need a seller’s permit. The CA Dept. of Tax and Fee Administration (CDFTA) has issued an updated publication entitled “Do You Need a CA Seller’s Permit?” Generally, if you make three or more sales in a 12-month period, you are required to have a seller’s permit, even if the sales were made through internet auctions houses or websites or offered through online classified ads. Here’s more from the CDFTA: https://bit.ly/353Cd9v

Update 2:

San Francisco will require public health emergency leave for some employees during the novel coronavirus (COVID-19) pandemic. The federal Families First Coronavirus Response Act provides sick leave to employees who are unable to work or telework […]

By Linkenheimer LLP|2020-09-03T20:02:59+00:00May 7th, 2020|business, employer|0 Comments

The CARES Act Liberalizes Net Operating Losses

The Coronavirus Aid, Relief, and Economic Security (CARES) Act eliminates some of the tax-revenue-generating provisions included in a previous tax law. Here’s a look at how the rules for claiming certain tax losses have been modified to provide businesses with relief from the novel coronavirus (COVID-19) crisis.

NOL deductions

Basically, you may be able to benefit by carrying a net operating loss (NOL) into a different year — a year in which you have taxable income — and taking a deduction for it against that year’s income. The CARES Act includes favorable changes to the rules for deducting NOLs. First, it permanently eases the taxable income limitation on deductions.

Under an unfavorable provision included in the Tax Cuts and Jobs Act (TCJA), an NOL arising in a tax year beginning in 2018 and later and carried over to a later tax year couldn’t offset more than 80% of the taxable income for the carryover year (the later tax year), calculated before the NOL deduction. As explained below, under the TCJA, most NOLs arising in tax years ending after 2017 also couldn’t be carried back to earlier years and used to offset taxable income […]

By Linkenheimer LLP|2020-09-03T20:03:01+00:00May 4th, 2020|business, deduction, New Tax Laws|0 Comments