- Potential profitability of the business
- Potential Liability of the business
- Entity formation and tax type
- Industry specific regulatory/compliance requirements
- Accounting Method and Bookkeeping system
- Professionals to Hire
- Initial capital requirements including equipment purchases
- Hiring employees vs independent contractors
- State filing requirements
- Organization and startup costs
Category: Tax
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
- Business Loss Limitations – Does not apply for 2018, 2019 and 2020 due to Pandemic.
- Business Interest Expense Limitations – Increase in amount allowed and elect to use 2019 income to calculate 2020 limit due to Pandemic
- Fringe Benefits – Qualified Education Perks now include payment of student loans.
- Meals – Usually qualified meals are 50% deductible, but for 2021 and 2022 they are 100% deductible due to Pandemic.
- Net Operating Losses – Corporations now can temporarily carryback losses due to Pandemic
- Payroll Protection Program – Second Draw PPP Loans now available for those that qualify.
- Payroll Taxes
Individuals
- Economic Impact Payments
- Charitable Contributions
- Earned Income Credit
- Educator Expenses
- Education Expenses
- Health Plans
- Retirement Plans
- Net Operating Losses
- Virtual Currencies
2020 Long Term Capital Gain Rates
No longer the good ole days when all long term capital gains were taxed at 15%. There are three rates involved these days applied as follows.
2020 Individual Tax Brackets
Sometimes you just need a good ole Federal tax bracket schedule to see where you stand. Here’s 2020.
NJ Nexus and Covid-19
To address nexus issues during the coronavirus pandemic, New Jersey has implemented numerous temporary rules surrounding when a business is deemed to be doing business in NJ. Click on the link below for more info.
NJCPA Article – Nexus and Other COVID-Related New Jersey Tax Issues
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.
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 Covid-19 Related Employee Retention Credits FAQs
IRS Form 7200 – Advance payment of Employer Credits Due to Covid-19
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
IRS Earned Income Tax Credit
A very tricky credit to take so beware! Click on the links below for more info.
IRS Identity Protection PINs
With the rise in tax identity theft, this is becoming a Must! Click on the link below for more info.
SimonCPA, PC 