Answers

2021-02 What’s New With Federal Taxes

Certainly a lot going on with the Pandemic. Here is a brief update of what’s new.

Businesses

  1. Business Loss Limitations – Does not apply for 2018, 2019 and 2020 due to Pandemic.
  2. Business Interest Expense Limitations – Increase in amount allowed and elect to use 2019 income to calculate 2020 limit due to Pandemic
  3. Fringe Benefits – Qualified Education Perks now include payment of student loans.
  4. Meals – Usually qualified meals are 50% deductible, but for 2021 and 2022 they are 100% deductible due to Pandemic.
  5. Net Operating Losses – Corporations now can temporarily carryback losses due to Pandemic
  6. Payroll Protection Program – Second Draw PPP Loans now available for those that qualify.
  7. Payroll Taxes
    1. Employee retention credit
    2. Sick and Family Leave Payroll Credit
    3. Pushing off payment of employer payroll taxes

Individuals

  1. Economic Impact Payments
  2. Charitable Contributions
  3. Earned Income Credit
  4. Educator Expenses
  5. Education Expenses
  6. Health Plans
  7. Retirement Plans
  8. Net Operating Losses
  9. Virtual Currencies

Eligible Paycheck Protection Program expense deductibility update

The Treasury Department and the Internal Revenue Service issued updated guidance allowing deductions for the payments of eligible expenses when such payments would result (or be expected to result) in the forgiveness of a loan (covered loan) under the Paycheck Protection Program (PPP). Click on the links below for more info.

IRS News Release 2021-04

IRS Revenue Ruling 2021-02 PDF File

July 2014 W. Virginia Wine Country

Employee Retention Credit

The Internal Revenue Service urges employers to take advantage of the newly-extended employee retention credit, designed to make it easier for businesses that, despite challenges posed by COVID-19, choose to keep their employees on the payroll. Click the links below for more info.

IRS News Release 2021-21

IRS Covid-19 Related Employee Retention Credits FAQs

IRS Form 7200 – Advance payment of Employer Credits Due to Covid-19

July 2014 W. Virginia B&B Backroad

NJ Business Alternative Income Tax (BAIT)

Effective for tax years beginning on or after 1/1/2020, NJ Pass-Through Businesses can elect to pay tax due on the owner’s share of distributive proceeds. Click on the links below for more info.

NJ Division of Taxation Main BAIT page

NJ Division of Taxation BAIT FAQs

NJ Division of Taxation BAIT Forms

NJCPA Article

October 2015 Rock Ridge Lake Tree Line